G.R. No.
192573 October 22, 2014 Record shows that respondent has already filed its position paper while complainant,
RICARDO N. AZUELO, Petitioner,
vs.
ZAMECO II ELECTRIC COOPERATIVE, INC., Respondent.
DECISION
REYES, J.:
Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of
Court seeking to annul and set aside the Decision2 dated February 26, 2010 and
Resolution3 dated June 10, 2010 issued by the Court of Appeals (CA) in CA-G.R. SP No.
107762, which affirmed the Decision4 dated September 22, 2008 and Resolution5 dated
December 15, 2008 of the National Labor Relations Commission (NLRC) in NLRC NCR
CA No. 052567-07.
The Facts
Petitioner Ricardo N. Azuelo (Azuelo) was employed by the respondent ZAMECO II
Electric Cooperative, Inc. (ZAMECO) as a maintenance worker. It appears that sometime
in March 2006, Azuelo filed with the Regional Arbitration Branch (RAB) of the NLRC in
San Fernando City, Pampanga a Complaint6 for illegal dismissal and non-payment of
benefits against ZAMECO. The complaint was docketed as NLRC Case No. RAB III-03-
9912-06 and was assigned to Labor Arbiter (LA) Mariano" L. Bactin (LA Bactin). After
several mediations, LA Bactin ordered the parties to submit their respective position
papers on July 14, 2006.
On July 14, 2006, Azuelo, instead of submitting his position paper, moved that the
submission of his position paper be extended to August 4, 2006, which was granted by
LA Bactin. On August 4, 2006, Azuelo again failed to submit his position paper. LA
Bactin then directed Azuelo to submit his position papers on August 22, 2006. On the
said date, Azuelo, instead of submitting his position paper, moved for the issuance of an
order directing ZAMECO to furnish him with a complete copy of the investigation report
as regards his dismissal. ZAMECO opposed the said motion, asserting that it has already
furnished Azuelo with a copy of its investigation report.
On November 6, 2006, LA Bactin issued an Order,7 which reads:
despite ample opportunity given him, failed to file his[,] leaving this office with no option
but to dismiss this case for lack of interest.
WHEREFORE, let this case be, as it is hereby dismissed for lack of[merit].
SO ORDERED.8
Azuelo received a copy of LA Bactin's Order dated November 6, 2006 on November 17,
2006. On November 21, 2006, Azuelo again filed a complaint with the RAB of the NLRC
in San Fernando City, Pampanga for illegal dismissal with money claims against
ZAMECO, containing the same allegations in his first complaint. The case was docketed
as NLRC Case No. RAB-III-11-10779-06 and was assigned to LA Reynaldo V. Abdon
(LA Abdon).
On December 20, 2006, ZAMECO filed a Motion to Dismiss9 the second complaint filed
by Azuelo on the ground of res judicata. ZAMECO pointed out that Azuelo had earlier
filed a similar complaint, which was dismissed by LA Bactin due to his unreasonable
failure to submit his position paper despite ample opportunity given to him by LA Bactin.
ZAMECO likewise averred that Azuelo should have appealed from LA Bactin's Order
dated November 6, 2006 instead of filing a complaint for illegal dismissal anew.
Azuelo opposed ZAMECO's motion to dismiss,10 alleging that the dismissal of his first
complaint by LA Bactin was without prejudice. He explained that his failure to submit his
position paper was due to ZAMECO's refusal to furnish him with the complete
documents pertaining to his illegal dismissal. He further claimed that, since the dismissal
of his first complaint was without prejudice, his remedy was either to file a motion for
reconsideration or to re-file the case within 10 days from receipt of the order of dismissal.
On March 12, 2007, LA Abdon issued an Order,11 which dismissed Azuelo's second
complaint for illegal dismissal on the ground of res judicata. LA Abdon pointed out that
the dismissal of Azuelo's first complaint for illegal dismissal was with prejudice; that the
appropriate remedy available to Azuelo against LA Bactin's dismissal of the first
complaint was to appeal from the same and not to file a second complaint for illegal
dismissal.
On appeal, the NLRC, in its Decision12 dated September 22, 2008, affirmed the Order
issued on March 12, 2007 by LA Abdon. The NLRC pointed out that LA Bactin gave
Azuelo ample opportunity to submit his position paper, which he still failed to do. That
his failure to prosecute his action for unreasonable length of time indeed warranted the
dismissal of his first complaint, which is deemed to be with prejudice, unless otherwise
1
stated. Considering that the Order issued on November 6, 2006 by LA Bactin did not
qualify the nature of the dismissal of the first complaint, the NLRC opined that the said
dismissal is with prejudice. Thus, the filing of the second complaint for illegal dismissal
is already barred by the prior dismissal of Azuelo' s first complaint.
Azuelo sought reconsideration13 of the Decision dated September 22, 2008 but it was
denied by the NLRC in its Resolution14 dated December 15, 2008.
Azuelo then filed a petition for certiorari15 with the CA, alleging that the NLRC gravely
abused its discretion in ruling that the dismissal of his first complaint was with prejudice,
thus constituting a bar to the filing anew of his complaint for illegal dismissal against
ZAMECO. He likewise asserted that, since the dismissal of his first complaint was
without prejudice, the remedy available to him, contrary to LA Abdon's ruling, was to re-
file his complaint, which he did.
On February 26, 2010, the CA rendered the herein assailed Decision,16 which denied the
petition for certiorari filed by Azuelo. The CA held that the NLRC did not commit any
abuse of discretion in affirming the dismissal of Azuelo' s second complaint for illegal
dismissal on the ground of res judicata. That the dismissal of the first complaint, which
was with prejudice, bars the filing of a subsequent complaint for illegal dismissal based
on the same allegations.
Azuelo's Motion for Reconsideration17 was denied by the CA in its Resolution18 dated
June 10, 2010.
Hence, the instant petition.
Issue
Essentially, the issue set forth by Azuelo for the Court's resolution is whether the
dismissal of his first complaint for illegal dismissal, on the ground of lack of interest on
his part to prosecute the same, bars the filing of another complaint for illegal dismissal
against ZAMECO based on the same allegations.
Ruling of the Court
The petition is denied.
At the outset, it should be stressed that in a petition for review under Rule 45 of the Rules
of Court, such as the instant petition, where the CA' s disposition in a labor case is sought
to be calibrated, the Court's review is quite limited. In ruling for legal correctness, the
Court has to view the CA decision in the same context that the petition for certiorari it
ruled upon was presented to it; the Court has to examine the CA decision from the prism
of whether it correctly determined the presence or absence of grave abuse .of discretion
in the NLRC decision before it, not on the basis of whether the NLRC decision on the
merits of the case was correct.19 "The phrase 'grave abuse of discretion' is well-defined in
our jurisprudence. It exists where an act of a court or tribunal is performed with a
capricious or whimsical exercise of judgment equivalent to lack of jurisdiction. The
abuse of discretion must be so patent and gross as to amount to an evasion of a positive
duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law, as where the power is exercised in an arbitrary and despotic
manner by reason of passion or personal hostility."20
After a thorough review of the records of the instant case, the Court finds that the CA did
not commit any reversible error in upholding the dismissal of Azuelo's second complaint
for illegal dismissal on the ground of res judicata. The NLRC did not abuse its discretion
in ruling that the Order issued on November 6, 2006 by LA Bactin, which dismissed the
first complaint filed by Azuelo, was an adjudication on the merits.
At the core of the instant petition is the determination of the nature of the dismissal of
Azuelo's first complaint, i.e., whether the dismissal is with prejudice as held by the labor
tribunals. The Order issued on November 6, 2006 by LA Bactin is silent as to the nature
of the dismissal; it merely stated that the complaint was dismissed due to Azuelo's failure,
despite ample opportunity afforded him, to submit his position paper.
Ultimately, the question that has to be resolved is this - whether the dismissal of a
complaint for illegal dismissal due to the unreasonable failure of the complainant to
submit his position paper amounts to a dismissal with prejudice.
The 2005 Revised Rules of Procedure of the NLRC (2005 Revised Rules), the rules
applicable at the time of the controversy, is silent as to the nature of the dismissal of a
complaint on the ground of unreasonable failure to submit a position paper by the
complainant. Nevertheless, the 2005 Revised Rules, particularly Section 3, Rule I thereof,
provides for the suppletory application of the Rules of Court to arbitration proceedings
before the LAs and the NLRC in the absence of any applicable provisions therein, viz:
Section 3. Suppletory Application of the Rules of Court. - In the absence of any
applicable provisions in these Rules, and in order to effectuate the objectives of the Labor
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. (Emphases ours)
The unjustified failure of a complainant in arbitration proceedings before the LA to
submit his position paper is akin to the case of a complainant's failure to prosecute his
2
action for an unreasonable length of time in ordinary civil proceedings. In both cases, the
complainants are remiss, sans reasonable cause, to prove the material allagations in their
respective complaints. Accordingly, the Court sees no reason not to apply the rules
relative to unreasonable failure to prosecute an action in ordinary civil proceedings to the
unjustified failure of a complainant to submit his position paper in arbitration proceedings
before the LA.
In this regard, Section 3, Rule 17 of the Rules of Court provides that:
Section 3. Dismissal due to fault of plaintiff. If, for no justifiable cause, the plaintiff
fails to appear on the date of the presentation of his evidence in chief on the complaint, or
to prosecute his action for an unreasonable length of time, or to comply with these Rules
or any order of the court, the complaint may be dismissed upon motion of the defendant
or upon the court's own motion, without prejudice to the right of the defendant to
prosecute his counterclaim in the same or in a separate action. This dismissal shall have
the effect of an adjudication upon the merits, unless otherwise declared by the court.
(Emphases ours)
"The dismissal of a case for failure to prosecute has the effect of adjudication on the
merits, and is necessarily understood to be with prejudice to the filing of another action,
unless otherwise provided in the order of dismissal. Stated differently, the general rule is
that dismissal of a case for failure to prosecute is to be regarded as an adjudication on the
merits and with prejudice to the filing of another action, and the only exception is when
the order of dismissal expressly contains a qualification that the dismissal is without
prejudice."21
Thus, in arbitration proceedings before the LA, the dismissal of a complaint on account
of the unreasonable failure of the complainant to submit his position paper is likewise
regarded as an adjudication on the merits and with prejudice to the filing of another
complaint, except when the
LA's order of dismissal expressly states otherwise.
As already stated, the Order dated November 6, 2006, which dismissed Azuelo's first
complaint due to his unreasonable failure to submit his position paper is unqualified. It is
thus considered as an adjudication on the merits and with prejudice to filing of another
complaint. Accordingly, the NLRC did not abuse its discretion when it affirmed LA
Abdon' s dismissal of the second complaint for illegal dismissal. Azuelo' s filing of a
second complaint for illegal dismissal against ZAMECO based on the same allegations
cannot be permitted lest the rule on res judicata be transgressed.
"Under the rule of res judicata, a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or their privies, in all later
suits and on all points and matters determined in the previous suit. The term literally
means a 'matter adjudged, judicially acted upon, or settled by judgment.' The principle
bars a subsequent suit involving the same parties, subject matter, and cause of action. The
rationale for the rule is that 'public policy requires that controversies must be settled with
finality at a given point in time."'22
Azuelo's insistence that the dismissal of his first complaint by LA Bactin was without
prejudice since he was not remiss in pursuing his complaint for illegal dismissal is plainly
untenable. To stress, the Order dated November 6, 2006 was unqualified; hence, the
dismissal is deemed with prejudice pursuant to Section 3, Rule 17 of the Rules of Court.
In any case, the Court finds Azuelo's failure to file his position paper, despite ample
opportunity therefor, unjustified. On this score, LA Abdon' s observation is instructive,
thus:
That complainant failed to prosecute his action for unreasonable length of time before
Labor Arbiter Bactin is supported by the records of the case. Records show that as early
as July 14, 2006, complainant was already required to submit his position paper on said
date. However, instead of submitting one, he requested for "more time" or until August 4,
2006 within which to submit his position paper x x x. Came August 4, 2006, complainant
failed to submit the required position paper and again requested for an extension of time
until August 22, 2006. The reason given was due [to] "voluminous workload" xx x.
Despite the extensions given to complainant, the latter failed to submit his position paper
on due date. Instead, what complainant submitted on August 22, 2006 is a Motion For the
Issuance of Order Directing Respondent to Furnish Complainant The Complete Copy of
Investigation Report. As correctly ruled by Labor Arbiter Abdon, the filing of the said
motion is of no moment. The fact remains that more than one (1) month has already
lapsed from the time complainant was first required to submit his position paper on July
14, 2006 up to the last extension on August 22, 2006. Further, if complainant really
intends to prosecute his case within the reasonable time, he should not have waited for
August 22, 2006 to file said motion.
It is also worth stressing that under Section 7, Rule V of the NLRC Rules of Procedure,
parties are directed to submit position paper within an inextendible period of ten (10)
calendar days from the date of termination of the mandatory conciliation and mediation
conference. Clearly, complainant went beyond this period.23 (Emphasis and italics in the
original)
If indeed Azuelo could not prepare his position paper due to the alleged refusal of
ZAMECO to furnish him with its investigation report on his dismissal, he should have
immediately sought the issuance of an order directing ZAMECO to produce the said
3
investigation report. However, Azuelo only moved for the production of the investigation
report on the due date of the third extension of time granted him by LA Bactin to submit
his position paper. It is thus apparent that Azuelo's motion seeking the production of the
investigation report is merely a ruse to further extend the period given to Azuelo within
which to submit his position paper.
Nonetheless, Azuelo contended that technical rules of procedure, such as the rule on
dismissals of actions due to the fault of the plaintiff under Section 3, Rule 17 of the Rules
of Court, does not apply to proceedings before the LAs and the NLRC. Hence, Azuelo
claimed, LA Abdon erred in dismissing his second complaint for illegal dismissal.
The Court does not agree.
Indeed, technical rules of procedure are not binding in labor cases.1wphi1 The LAs and
the NLRC are mandated to use every and all reasonable means to ascertain the facts in
each case speedily and objectively, without regard to technicalities of the law or
procedure.24 Nevertheless, though technical rules of procedure are not ends in themselves,
they are necessary for an effective and expeditious administration of justice.25
The non-applicability of technical rules of procedure in labor cases should not be made a
license to disregard the rights of employers against unreasonable and/or unjustified
claims. Azuelo was given sufficient chances to establish his claim against ZAMECO,
which he failed to do when he did not submit his position paper despite several
extensions granted him. He cannot now be allowed to raise anew his supposed illegal
dismissal as it would be plainly unjust to ZAMECO. It bears stressing that the
expeditious disposition of labor cases is mandated not only for the benefit of the
employees, but of the employers as well.
It should be made clear that when the law tilts the scale of justice in favor of labor, it is
but a recognition of the inherent economic inequality between labor and management.
The intent is to balance the scale of justice; to put up the two parties on relatively equal
positions. There may be cases where the circumstances warrant favoring labor over the
interests of management but never should the scale be so tilted if the result is an injustice
to the employer, Justicia remini regarda est (Justice is to be denied to none).26
Lastly, the Court notes that Azuelo sought the wrong remedy in assailing the Order dated
November 6, 2006 issued by LA Bactin. Considering that the dismissal of Azuelo's first
complaint was already an adjudication on the merits, he should have filed a verified
memorandum of appeal with the RAB of the NLRC in San Fernando City, Pampanga
within 10 calendar days from receipt of the said order pursuant to Section 1, Rule VI of
the 2005 Revised Rules instead of re-filing his complaint for illegal dismissal. 27 His
failure to do so rendered LA Bactin' s Order dated November 6, 2006, which dismissed
his first complaint for illegal dismissal, final and executory.
WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED.
The Decision dated February 26, 2010 and Resolution dated June 10, 2010 of the Court
of Appeals in CA-G.R. SP No. 107762 are hereby AFFIRMED.
G.R. No. 191825, October 05, 2016
DEE JAY'S INN AND CAFE AND/OR MELINDA FERRARIS, Petitioners, v. MA.
LORINA RAESES, Respondent.
DECISION
LEONARDO-DE CASTRO,** J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised
Rules of Court filed by petitioners Dee Jay's Inn and Cafe (DJIC) and Melinda Ferraris
(Ferraris) assailing the following: 1) Decision1 dated April 29, 2009 of the Court of
Appeals in CA-G.R. SP No. 01877-MIN, which set aside the Resolutions dated August
30, 20062 and November 30, 20063 of the National Labor Relations Commission (NLRC)
in NLRC CA No. M-009173-06 and ordered the remand of the case to the Labor Arbiter
for the computation of the monetary claims due respondent Ma. Lorina P. Raeses who
was declared to have been illegally dismissed by petitioners; and 2) Resolution4 dated
February 8, 2010 of the appellate court in the same case, which denied the Motion for
Reconsideration of petitioners and the Motion for Partial Reconsideration of respondent.
The factual antecedents are as follows:
chanRoblesvirtualLawlibraryPetitioner DJIC started its operation on December 8, 2002.
It was registered under Republic Act No. 9178 or the Barangay Micro Business
Enterprises Act. Petitioner Ferraris, the owner and manager of petitioner DJIC, engaged
the services of respondent and a certain Moonyeen J. Bura-ay (Moonyeen) as cashier and
cashier/receptionist, respectively, for a monthly salary of P3,000.00 each.5chanrobleslaw
Respondent filed before the Social Security System (SSS) Office a complaint against
petitioner Ferraris for non-remittance of SSS contributions. Respondent also filed before
the NLRC City Arbitration Unit (CAU) XII, Cotabato City, a complaint against
petitioners for underpayment/nonpayment of wages, overtime pay, holiday pay, service
incentive leave pay, 13thmonth pay, and moral and exemplary damages, docketed as
NLRC CAU Case No. RAB 12-01-00026-05.6chanrobleslaw
After conciliation efforts by the Labor Arbiter failed, the parties in NLRC CAU Case No.
RAB 12-01-00026-05 were ordered to submit their respective position papers. On
September 8, 2005, respondent filed her position paper, which already included a claim
for illegal dismissal.7chanrobleslaw
Respondent averred that sometime in January 2005, she asked from petitioner Ferraris the
latter's share as employer in the SSS contributions and overtime pay for the 11 hours of
work respondent rendered per day at petitioner DJIC. Petitioner Ferraris got infuriated
and told respondent to seek another employment. This prompted respondent to file her
complaints before the SSS Office and NLRC CAU XII. After learning of respondent's
4
complaints, petitioner Ferraris terminated respondent's employment on February 5, 2005.
Respondent submitted the Joint Affidavit of Mercy Joy Christine Bura-ay (Mercy) and
Mea Tormo (Mea) to corroborate her allegations.8chanrobleslaw
Petitioners countered that respondent and Moonyeen were not terminated from
employment. According to petitioners, petitioner DJIC incurred a shortage of P400.00 in
its earnings for February 4, 2005. That same day, petitioner Ferraris called respondent
and Moonyeen for a meeting but the two employees denied incurring any shortage.
Petitioner Ferraris lost her temper and scolded respondent and Moonyeen, and required
them to produce the missing P400.00. However, respondent and Moonyeen merely
walked out and did not report back to work anymore. To support their version of events,
petitioners submitted the affidavit of Ma. Eva Gorospe (Eva), another employee of
petitioners.
Petitioners further claimed that it was respondent herself who requested that the SSS
contributions not be deducted from her salary because it would only diminish her take-
home pay. Thus, respondent received from petitioners the amount of SSS contributions,
with the undertaking that she would, comply with the law by paying the SSS premiums
herself as self employed. Respondent recorded her weekly wages and payment of SSS
premiums in a notebook, which had since been missing.9chanrobleslaw
Petitioners additionally averred that since January 2002, respondent had been living in
petitioner Ferraris's ancestral home for free. Petitioner Ferraris even shouldered the cost
of P2,500.00 to have electrical connections installed at the house for the use of
respondent and her family. From 2002 to 2004, petitioner Ferraris admonished
respondent several times for bringing her child to work, which prevented respondent
from concentrating on her job at petitioner DJIC.10chanrobleslaw
On February 21, 2006, the Labor Arbiter rendered a Decision11 in favor of petitioners, but
granted respondent's claim for 13th month pay.
The Labor Arbiter did not give much credence to respondent's charge of illegal dismissal
because there was no positive or unequivocal act on the part of petitioners to support the
assertion that respondent was dismissed, thus:ChanRoblesVirtualawlibrary
The resolution of this case hinges on our determination of whether or not [respondent]
was illegally dismissed for her to be entitled to her money claims.
xxxx
In her position paper, the [petitioner Ferraris] categorically denied having terminated
[respondent]. The [respondent] after being reprimanded for shortages, she ceased to
report for work on February 5, 2005. This fact is attested to by [petitioners'] witness, a
co-employee of the [respondent] Ma. Eva Gorospe to the effect that [respondent] and co
employee Moonyeen Bura-ay scolded them for shortages during a meeting on February
5, 2005. The witness attested that they were not terminated but they did not report for
work anymore the following day up to the present. This gives weight to the fact that in
her complaint no illegal dismissal was contemplated by [respondent].
The records, on the other hand, is (sic) bereft of any evidence linking to the allegation of
dismissal. In fact, there is no positive or unequivocal act on the part of [petitioners] that
would buttressed (sic) a fact that [respondent] was dismissed. Thus, the High Court
said:ChanRoblesVirtualawlibrary
"While the general rule in dismissal cases is that the employer has the burden to prove
the dismissal was for just or authorized causes and after due process, said burden is
necessarily shifted to the employee if the alleged dismissal is denied by the employer
because a dismissal is supposedly a positive and unequivocal act by the employer.
Accordingly, it is the employee that bears the burden of proving that in fact he was
dismissed. An unsubstantiated allegation on the part of the employee cannot stand as the
same offends due process." (De Paul / King Philip Customs Tailor, et al. vs. NLRC, G.R.
No. 129824, March 10, 1999) Underscoring Ours.
The [respondent] did not controvert the [petitioners'] categorical denial and more, she
failed to demonstrate the burden. As such, the allegations of the [respondent] to the effect
that she was dismissed remains (sic) gratuitous. In fact the High Court in the same vein
said:ChanRoblesVirtualawlibrary
"The burden of proof lies upon who asserts it, not upon who denies, since by the nature of
things, he who denies a fact cannot produce any proof of it." (Sevillana vs. LT.
International Corp., et al., POEA-NLRC Case No. L-88-12-1048, 26 March 1991;
Aguilar vs. Maning International Corp., et al., POEA-NLRC Case No. L-88-08-728,
October 8, 1990).
In the case at Bench, the positive act and/or the unequivocal act of termination is
the Factum Probandum which the [respondent] miserably failed to
demonstrate.12chanroblesvirtuallawlibrary
The Labor Arbiter also pointed out a procedural defect in respondent's charge of illegal
dismissal against petitioners:ChanRoblesVirtualawlibrary
Besides, the [respondent] did not aver illegal dismissal as the same was not pleaded in her
verified complaint. She cannot be allowed to prove the same. The rule is clear that the
"verified position papers shall cover only those claims and causes of action raised in the
complaint x x x" (Rule V, Section 4, Par. 2, Rules of Procedure of the NLRC, as
Amended). Incidentally, there is no proof linking to the allegation of
dismissal.13chanroblesvirtuallawlibrary
The Labor Arbiter also noted that petitioner DJIC, as a registered Barangay Micro
Business Enterprise (BMBE), was exempted from the coverage of the Minimum Wage
Law.
The Labor Arbiter decreed in the end:ChanRoblesVirtualawlibrary
WHEREFORE, premises laid, judgment is hereby rendered dismissing the complaint in
the instant case for lack of.cause of action and for not being impressed with merit.
However, [petitioners] are hereby ordered, jointly and severally, to pay [respondent] the
amount of Five Hundred Pesos (Php500.00) representing 13th month pay
differential.14chanroblesvirtuallawlibrary
At around the same time, Moonyeen lodged before the NLRC CAU XII a complaint
against petitioners for unpaid overtime pay, docketed as RAB 12-01-00031-05. Later on,
Moonyeen similarly contended that she was illegally dismissed by petitioners and
demanded the payment of her salary differential, holiday premium pay, service incentive
leave pay, 13th month pay, and moral damages.15 The Labor Arbiter, in a Decision dated
February 20, 2006, subsequently dismissed Moonyeen's complaint, also finding that
Moonyeen miserably failed to demonstrate the positive or unequivocal act of termination
5
of her employment; but petitioners were liable for underpayment of Moonyeen's
13th month pay in the amount of P500.00.
Respondent and Moonyeen timely filed their respective appeals before the NLRC,
docketed as NLRC CA Nos. M-009173-06 and M-009174-06. Their appeals were
eventually consolidated.
The NLRC issued a Resolution dated August 30, 2006, dismissing the appeals of
respondent and Moonyeen for lack of merit and affirming en toto the Labor Arbiter's
Decisions dated February 20, 2006 and February 21, 2006. The NLRC
reasoned:ChanRoblesVirtualawlibrary
We uphold the findings of the Labor Arbiter. The records do not reveal of any written
document to show that [respondent and Moonyeen] were indeed dismissed. On the other
hand, [petitioners] vehemently denied having dismissed them. Therefore, under these
given facts, to the [respondent and Moonyeen] is shifted the burden to prove that their
dismissal had, in fact, taken place. The rule as exemplified by the Supreme Court is:
"Where the employee was not notified that he had been dismissed from employment
neither was [he] prevented from returning to his work, there is no illegal dismissal["]
(Chong Guan Trading vs. NLRC, 172 SCRA 831). For, indeed, the records do not bare
any positive or unequivocal act of [petitioners] notifying them of the termination of their
services, as observed by the Labor [Arbiter] a quo. It is our view that [respondent and
Moonyeen] miserably failed to establish by substantial evidence that they were
dismissed. Their verbal claim supported by self serving and biased statements of two (2)
witnesses, namely, Mercy Bura-ay and Mea Tormon, who like them have an ax to grind
being complainants themselves against the same [petitioners], did not substantially prove
their case. [Respondent and Moonyeen] did not deny [petitioners'] allegation that they x x
x were also the witnesses of Mercy Bura-ay and Mea Tormon in a separate case the latter
filed against the same [petitioners]. Thus, we find more expressive of truth the verbal
declaration of [petitioners], supported by a sworn statement x x x of one witness, Eva
Gorospe, that after [respondent and Moonyeen] were reprimanded, made to explain and
produce the Php400.00 shortage of their daily collection, they voluntarily ceased to report
to work anymore. We emphasize, it is not shown in the records that Gorospe was
motivated by ill-will or was coerced by the [petitioners] into executing her sworn
statement. [Respondent and Moonyeen] did not dispute that they were investigated by
[petitioner Ferraris] on February 4, 2005 regarding shortages of their collections. Such
investigation cannot by any stretch of imagination be considered dismissal of the
[respondent and Moonyeen]. On the contrary, we can only surmise that the investigation
generated a force compelling enough for [respondent and Moonyeen] to quit working [for
petitioners]. Their failure to report for work is an act they alone must bear the
consequences of. By their own act, they bargained away their security of tenure under the
law.
[Respondent and Moonyeen's] money claims of overtime pay, holiday pay and service
incentive leave pay must likewise fail. Overtime pay and holiday pay are some of
the extraordinary claims the burden of proof of which is shifted to the worker who must
prove he rendered overtime work or that he worked during holidays (Julio Cagampan, et
al. vs. NLRC, et al., 195 SCRA 533). No proof is placed on record by [respondent and
Moonyeen] to prove their claimed overtime and holiday work. [Respondent and
Moonyeen] cannot also avail of entitlement of service incentive pay under Article 95 of
the Labor Code who regularly employs more than ten (10) workers. Section 1, Rule of
Book III of the Implementing Rules of the Labor Code explicitly exempts establishments
regularly employing less than ten (10) workers from the coverage of the said provision.
Employing less than ten (10) workers, [petitioners are] thus exempted under the law.
However, we see no reason to disturb the award of 13th month pay. This is an admitted
claim and the [respondent and Moonyeen] must be entitled to the
same.16chanroblesvirtuallawlibrary
Respondent filed a Motion for Reconsideration which was denied by the NLRC in a
Resolution dated November 30, 2006.
Respondent sought recourse from the Court of Appeals by filing a Petition for Certiorari,
imputing grave abuse of discretion on the part of the NLRC in its issuance of the
Resolutions dated August 30, 2006 and November 30, 2006 in NLRC CA No. M-009173-
06. The Petition was docketed as CA-G.R. S No. 01877-MIN.
In its Decision dated April 29, 2009, the Court of Appeals granted respondent's Petition.
On the basis that any doubt should be resolved in favor of labor, the Court of Appeals
held that respondent was illegally dismissed:ChanRoblesVirtualawlibrary
We are constained to review [NLRC's] exercise of its discretion in affirming the Labor
Arbiter's findings on abandonment because such conclusion does not appear to have been
substantially proved and the same is repugnant to both law and jurisprudence.
The Labor biter, relying on the alleged ruling in De Paul, contended that the employee
has the burden to prove the fact of dismissal when such dismissal was denied by the
employer, as when the defense of the employee's abandonment was interposed. Thus, in
refusing to consider [respondent's] cause of action for illegal dismissal, the Labor Arbiter
found that [respondent] miserably failed to demonstrate any such positive or unequivocal
act on the part of Ferraris in terminating [respondent].
Reliance on De Paul seemed imprudent and misplaced, if not, devious because De
Paul was indefensibly misquoted in the Labor Arbiter's Decision, in that the alleged
ruling as quoted therein does not appear in the original printed text of the case in Volume
3[0]4 of the Supreme Court Reports Annotated (SCRA), pages 448-459.
Furthermore, the Labor Arbiter's contention on the shifting of the burden of proof is
incongruous with prevailing jurisprudence which requires the concurrence of two (2)
elements before an employee may be guilty of abandonment. The first is the failure to
report for work or absence without valid or justifiable reason. The second is a clear
intention to sever the employer-employee relationship. The second element is the more
determinativefactor and must be evinced by overt acts. Likewise, the burden of proof is
on the employer to show the employee's clear and deliberate intent to discontinue
his employment without any intention of returning; mere absence is not sufficient.
We agree with the observation that the joint testimony of Mercy Bura-ay and Mea Torno
in favor of [respondent], apparently returning a favor to [respondent] who also testified
for Bura-ay and Torno in a separate labor case against Ferraris, is tainted with bias and,
thus, cannot credibly and substantially prove the fact of [respondent's] alleged dismissal.
6
However, neither should the testimony of Eva Gorospe, Ferraris's lone witness, deserve
much probative weight in proving that [respondent] abandoned her job because mere
failure to report back to work on the part of [respondent], as Gorospe testified, falls short
of the substantial evidence required in proving the existence of abandonment.
Therefore, the Labor Arbiter, as well as [the NLRC], failed to appreciate that doubts
shroud the evidence presented by both parties, and both tribunals appeared oblivious of
the dictates of jurisprudence that such doubts should be resolved in favor of the worker,
as was pronounced in Nicario v. NLRC, et al.:ChanRoblesVirtualawlibrary
"It is a well-settled doctrine, that if doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter.
It is a time-honored rule that in controversies between a laborer and his master, doubts
reasonably arising from the evidence, or in the interpretation of agreements and writing
should be resolved in the former's favor. The policy is to extend the doctrine to a greater
number of employees who can avail of the benefits under the law, which is in consonance
with the avowed policy of the State to give maximum aid and protection of labor."
The foregoing doctrine should be applied in this case, especially since Ferraris did not
prove by substantial evidence a clear and deliberate intent on the part of [respondent] to
discontinue her employment without any intention of returning.
Furthermore; since there is an equipoise of evidence, as there is doubt as to where the
evidence of the parties tilt, Ferraris, the employer who has the burden of proving not only
abandonment but more importantly just cause for dismissal, is deemed to have failed in
discharging such burden.
Thus, We find no legal impediment in ruling that [respondent] was in fact terminated and
such termination was done illegally or without any valid cause, and in patent violation of
the procedural requirements of due process, anchored upon Ferraris's failure to discharge
her burden of proving abandonment by [respondent], including, as a corollary, the burden
of proving just cause for [respondent's] termination. In view of [respondent's] allegation
that she was dismissed on February 5, 2005, We shall reckon [respondent's] dismissal on
said date.17 (Citations omitted.)
The Court of Appeals, citing Rule V, Section 7(b) of the 2005 Rules of Procedure of the
NLRC and Tegimenta Chemical Phils. v. Buensalida,18 also ruled that the filing of the
position paper was the operative act which foreclosed the raising of other matters
constitutive of the cause of action; and respondent, by averring facts constituting her
alleged dismissal in her position paper, had properly pleaded a cause of action for illegal
dismissal, which should have been given cognizance by the Labor Arbiter.
For being illegally dismissed, the Court of Appeals found respondent entitled to the
following:ChanRoblesVirtualawlibrary
Corollary to our finding that [respondent] was in fact illegally terminated, [petitioners]
should be ordered to reinstate [respondent] without loss of seniority rights and other
privHeges, or, in case reinstatement would no longer be feasible, to pay
[respondent] separation pay equivalent to one (1) month salary for every year of service,
with payment in either cases of [respondent's] full backwages, inclusive of allowances,
and her other benefits or their monetary equivalent, computed from February 5, 2005, the
date [respondent] was illegally dismissed, up to the time of her actual reinstatement.
With respect [to] the other monetary claims, We find no cogent reason to disturb the
ruling of the Labor Arbiter in awarding [respondent] only the amount of Php500.00
representing [respondent's] 13th month pay differential.19chanroblesvirtuallawlibrary
The dispositive portion of the judgment of the Court of Appeals
reads:ChanRoblesVirtualawlibrary
WHEREFORE, premises considered, the petition is GRANTED. The Resolution
promulgated on August 30, 2006 by [the NLRC], affirming in toto the February 21, 2006
Decision of the Labor Arbiter dismissing [respondent's] complaint, including the
November 30, 2006 Resolution denying a motion for reconsideration thereof, are SET
ASIDE. The case should be remanded to the Labor Arbiter for the proper computation of
the monetary awards due to [respondent] as a result of her illegal dismissal. The Labor
Arbiter's grant of an award in the amount of Php500.00, representing [respondent's]
13th month pay differential, is maintained.20chanroblesvirtuallawlibrary
Petitioners and respondent filed a Motion for Reconsideration and Motion for Partial
Reconsideration, respectively, which were both denied by the Court of Appeals in a
Resolution dated February 8, 2010.
Petitioners now come before this Court via the instant Petition for Review
on Certiorari assigning a couple of errors on the part of the Court of
Appeals, viz.:ChanRoblesVirtualawlibrary
1. THE COURT OF APPEALS ERRED IN CONCLUDING THAT A CAUSE OF
ACTION BELATEDLY INCLUDED IN THE POSITION PAPER AND NOT
ORIGINALLY PLEADED IN THE COMPLAINT CAN STILL BE GIVEN
COGNIZANCE.
2. THE COURT OF APPEALS ERRED IN FINDING THAT THE NLRC ACTED
WITH GRAVE ABUSE OF DISCRETION ON THE BASIS THAT THE
DECISION LACKED FACTUAL PROOF AND ALSO IGNORED
ESTABLISHED JURISPRUDENCE.21
Petitioners argue that the present case is governed by the 2005 NLRC Rules of
Procedure, which had already supplanted the 2002 NLRC Rules of Procedure. Under the
2005 NLRC Rules of Procedure, only the causes of action that were pleaded in a
complaint would be entertained. Petitioners, in addition, assert that respondent was not
dismissed from employment; instead, respondent did not report for work anymore after
petitioner Ferraris scolded respondent and Moonyeen on February 4, 2005 regarding the
P400.00 shortage in the earnings of petitioner DJIC for the day. Petitioners insist that they
never used "abandonment" as a defense in the termination of respondent's employment;
and they merely alleged that respondent never returned to work anymore after the
scolding incident.
The Court first addresses the procedural issue raised by petitioners.
The record shows that respondent filed her complaint sometime in January 2005 and
position paper on September 8, 2005. During said period, the 2002 NLRC Rules of
Procedure, as amended by NLRC Resolution No. 01-02, was still in effect. The 2005
Revised Rules of Procedure of the NLRC only took effect on January 7,
2006.22chanrobleslaw
Section 4, Rule V of the 2002 NLRC Rules of Procedure, as amended,
provides:ChanRoblesVirtualawlibrary
7
Section 4. Submission of Position Papers/Memoranda. - Without prejudice to the
provisions of the last paragraph, Section 2, of this Rule, the Labor Arbiter shall direct
both parties to submit simultaneously their position papers with supporting documents
and affidavits within an inextendible period of ten (10) days from notice of termination of
the mandatory conference.
These verified position papers to be submitted shall cover only those claims and causes
of action raised in the complaint excluding those that may have been amicably settled,
and shall be accompanied by all supporting documents including the affidavits of their
respective witnesses which shall take the place of the latter's direct testimony. The
parties shall thereafter not be allowed to allege facts, or present evidence to prove
facts, not referred to and any cause or causes of action not included in the complaint
or position papers, affidavits and other documents. (Emphases supplied.)
Stated differently, the parties could allege and present evidence to prove any cause or
causes of action included, not only in the complaint, but in the position papers as well.
As the Court explained in Tegimenta Chemical Phils. v.
Buensalida23:ChanRoblesVirtualawlibrary
[T]he complaint is not the only document from which the complainant's cause of action is
determined in a labor case. Any aause of action that may not have been included in the
complaint or position paper, can no longer be alleged after the position paper is submitted
by the parties. In other words, the filing of the position paper is the operative act
which forecloses the raising of other matters constitutive of the cause of action. This
necessarily implies that the cause of action is finally ascertained only after both the
complaint and position paper are properly evaluated.
A cause of action is the delict or wrongful act or omission committed by the defendant in
violation of the primary right of the plaintiff. A complaint before the NLRC does not
contain specific allegations of these wrongful acts or omissions which constitute the
cause of action. All that it contains is the term by which such acts or omissions
complained of are generally known. It cannot therefore be considered as the final
determinant of the cause of action. (Citation omitted.)
In the more recent Our Haus Realty Development Corporation v. Parian,24 which
cited Samar-Med Distribution v. National Labor Relations Commission,25cralawred the
Court further expounded:ChanRoblesVirtualawlibrary
A claim not raised in the pro forma complaint may still be raised in the position paper.
Our Haus questions the respondents' entitlement to SIL pay by pointing out that this
claim was not included in the pro forma complaint filed with the NLRC. However, we
agree with the CA that such omission does not bar the labor tribunals from touching upon
this cause of action since this was raised and discussed in the respondents' position paper.
In Samar-Med Distribution v. National Labor Relations Commission, we
held:ChanRoblesVirtualawlibrary
Firstly, petitioner's contention that the validity of Gutang's dismissal should not be
determined because it had not been included in his complaint before the NLRC is bereft
of merit. The complaint of Gutang was a mere checklist of possible causes of action that
he might have against Roleda. Such manner of preparing the complaint was obviously
designed to facilitate the filing of complaints by employees and laborers who are thereby
enabled to expediently set forth their grievances in a general manner. But the non-
inclusion in the complaint of the issue on the dismissal did not necessarily mean that
the validity of the dismissal could not be an issue. The rules of the NLRC require the
submission of verified position papers by the parties should they fail to agree upon an
amicable settlement, and bar the inclusion of any cause of action not mentioned in the
complaint or position paper from the time of their submission by the parties. In view of
this, Gutang's cause of action should be ascertained not from a reading of his
complaint alone but also from a consideration and evaluation of both his complaint
and position paper. (Citations omitted.)
The Court observes herein that respondent could not have included the charge of illegal
dismis al in her complaint because she filed said complaint (which were for various
money claims against petitioners) in January 2005, and petitioners purportedly
dismissed her from employment only on February 5, 2005. However, since respondent
subsequently alleged and argued the matter of her illegal dismissal in her position paper
filed on September 8, 2005, then the Labor Arbiter could still take cognizance of the
same.
Nevertheless, on the substantive issue of whether or not respondent was illegally
dismissed, the Court answers in the negative.
The Court of Appeals was correct in its observation that the Labor Arbiter's quote on the
shifting of the burden of proof in dismissal cases, supposedly from De Paul, could not
actually be found in said case. Yet, it does not necessarily mean that the Labor Arbiter's
ruling on the matter was fallacious or entirely baseless.
In Exodus International Construction Corporation v. Biscocho,26 the Court pronounced
that "[i]n illegal dismissal cases, it is incumbent upon the employees to first establish the
fact of their dismiss before the burden is shifted to the employer to prove that the
dismissal was legal." The Court then explained that:ChanRoblesVirtualawlibrary
"[T]his Court is not unmindful of the rule that in cases of illegal dismissal, the employer
bears the burden of proof to prove that the termination was for a valid or authorized
cause." But "[b]efore the [petitioners] must bear the burden of proving that the dismissal
was legal, [the respondents] must first establish by substantial evidence" that indeed they
were dismissed. "[I]f there is no dismissal, then there can be no question as to the legality
or illegality thereof."27 (Citations omitted.)
The Court, in Caedo v. Kampilan Security and Detective Agency, Inc.,28 expressly
recognized the rule that:ChanRoblesVirtualawlibrary
In illegal dismissal cases, "[w]hile the employer bears the burden x x x to prove that the
termination was for a valid or authorized cause, the employee must first establish by
substantial evidence the fact of dismissal from service." The burden of proving the
allegations rests upon the party alleging and the proof must be clear, positive and
convincing. Thus, in this case, it is incumbent upon petitioner to prove his claim of
dismissal. (Citations omitted.)
The Court reiterated in Brown Madonna Press, Inc. v. Casas,29 that "[i]n illegal dismissal
cases, the employer has the burden of proving that the employee's dismissal was legal.
However, to discharge this burden, the employee must first prove, by substantial
evidence, that he had been dismissed from employment."
It bears to point out that in the case at bar, the Labor Arbiter, the NLRC, and even the
Court of Appeals, all consistently found that respondent was not able to present
substantial evidence of her dismissal. They all rejected the joint affidavit of Mercy and
8
Mea, submitted by respondent, for being partial and biased. It appears that Mercy and
Mea executed said affidavits to return a favor as respondent testified for them in their
own cases against petitioners. The Court of Appeals only deviated from the findings of
the Labor Arbiter and the NLRC by also disregarding Eva's affidavit, submitted by
petitioners to corroborate their allegations, for being insufficient to prove abandonment.
The appellate court then applied the equipoise doctrine: with all things considered equal,
all doubts must be resolved in favor of labor, that is, respondent.
Given the jurisprudence cited in the preceding paragraphs, the application by the Court of
Appeals of the equipoise doctrine and the rule that all doubts should be resolved in favor
of labor was misplaced. Without the joint affidavit of Mercy and Mea, there only
remained the bare allegation of respondent that she was dismissed by petitioners on
February 5, 2005, which hardly constitute substantial evidence of her dismissal. As both
the Labor Arbiter and the NLRC held, since respondent was unable to establish with
substantial evidence her dismissal from employment, the burden of proof did not shift to
petitioners to prove that her dismissal was for just or authorized cause.
As pointed out by petitioners, they never raised abandonment as a defense as there was
no dismissal in the first place. Petitioners did not argue that respondent abandoned her
work which justified her dismissal from employment. Petitioners merely alleged the fact
that respondent, after being scolded on February 4, 2005, no longer returned to work
beginning February 5, 2005, which was corroborated by one of petitioners' employees,
Eva, in her affidavit.
Similar to this case is the factual background in Nightowl Watchman & Security Agency,
Inc. v. Lumahan,30 in which Lumahan, the employee, asserted, but failed to prove, that he
was constructively dismissed; while Nightowl, the employer, alleged that Lumahan did
not report for work anymore by a certain date but did not raise abandonment as a defense.
Quoted extensively below are the relevant portions from the ruling of the Court
in Nightowl:ChanRoblesVirtualawlibrary
The CA erred in finding grave abuse of discretion in the NLRC's factual conclusion
that Lumahan was not dismissed from work.
In every employee dismissal case, the employer bears the burden of proving the
validity of the employee's dismissal, i.e., the existence of just or authorized cause for
the dismissal and the observance of the due process requirements. The employer's
burden of proof, however; presupposes that the employee had in fact been
dismissed, with the burden to prove the fact of dismissal resting on the employee.
Without any dismissal action on the part of the employer, valid or otherwise, no
burden to prove just or authorized cause arises.
We find that the CA erred in disregarding the NLRC's conclusion that there had been no
dismissal, and in immediately proceeding to tackle Nightowl's defense that Lumahan
abandoned his work.
The CA should have first considered whether there had been a dismissal in the first place.
To our mind, the CA missed this crucial point as it presumed that Lumahan had actually
been dismissed. The CA's failure to properly appreciate this point - which led to its
erroneous conclusion - constitutes reversible error that justifies the Court's exercise of its
factual review power.
We support the NLRC's approach of first evaluating whether the employee had been
dismissed, and find that it committed no grave abuse of discretion in factually concluding
that Lumahan had not been dismissed from work.
It should be remembered that in cases before administrative and quasi-judicial
agencies like the NLRC, the degree of evidence required to be met is substantial
evidence, or such amount of relevant evidence that a reasonable mind might accept
as adequate to justify a conclusion. In a situation where the word of another party is
taken against the other, as in this case, we must rely on substantial evidence because
a party alleging a critical fact must duly substantiate and support its allegation.
We agree with the NLRC that Lumahan stopped reporting for work on April 22, 1999,
and never returned, as Nightowl sufficiently supported this position with documentary
evidence.
In contrast, Lumahan failed to refute, with supporting evidence, Nightowl's contention
that he did not report for work on April 22, 1999, and failed as well to prove that he
continued working from such date to May 15, 1999. What we can only gather from his
claim was that he did not work from May 16, 1999 to June 8, 1999; but this was after the
substantially proven fact that he had already stopped working on April 22, 1999.
In addition, we find that Lumahan failed to substantiate his claim that he was
constructively dismissed when Nightowl allegedly refused to accept him back when he
allegedly reported for work from April 22, 1999 to June 9, 1999. In short, Lumahan did
not present any evidence to prove that he had, in fact, reported back to work.
xxxx
In the case before us, the CA clearly ignored certain compelling facts and misread the
evidence on record by relying on LA Demaisip's erroneous appreciation of facts. Under
the circumstances, the NLRC acted well within its jurisdiction in finding that Lumahan
had not been dismissed. Otherwise stated, by reversing the ruling that there was no
dismissal to speak of, the CA committed a reversible error in finding grave abuse of
discretion on the part of the NLRC.
Grave abuse of discretion implies a capricious and whimsical exercise of judgment
equivalent to lack of jurisdiction, or the exercise of power in an arbitrary or despotic
manner by reason of passion or personal hostility; or in a manner so patent and gross as
to amount to an evasion of positive duty enjoined or to act at all in contemplation of law.
It is not sufficient that a tribunal, or a quasi-judicial agency of the government, in the
exercise of its power, abused its discretion; such abuse must be grave.
All told, we cannot agree with the CA in finding that the NLRC committed grave abuse
of discretion in evaluating the facts based on the records and in concluding therefrom that
Lumahan had not been dismissed.
The CA erred when it considered "abandonment of work" generally understood in
employee dismissal situations despite the fact that Nightowl never raised it as a
defense.
9

As no dismissal was carried out in this case, any consideration of abandonment - as
a defense raised by an employer in dismissal situations - was clearly misplaced. To
our mind, the CA again committed a reversible error in considering that Nightowl
raised abandonment as a defense.
Abandonment, as understood under our labor laws, refers to the deliberate and
unjustified refusal of an employee to resume his employment. It is a form of neglect
of duty that constitutes just cause for the employer to dismiss the employee.
Under this construct, abandonment is a defense available against the employee who
alleges a dismissal. Thus, for the employer "to successfully invoke abandonment, whether
as a ground for dismissing an employee or as a defense, the employer bears the burden of
proving the employee's unjustified refusal to resume his employment." This burden, of
course, proceeds from the general rule that places the burden on the employer to prove
the validity of the dismissal.
The CA, agreeing with LA Demaisip, concluded that Lumahan was illegally dismissed
because Nightowl failed to prove the existence of an overt act showing Lumahan's
intention to sever his employment. To the CA, the fact that Nightowl failed to send
Lumahan notices for him to report back to work all the more showed no abandonment
took place.
The critical point the CA missed, however, was the fact that Nightowl never raised
abandonment as a defense. What Nightowl persistently argued was that Lumahan
stopped reporting for work beginning April 22, 1999; and that it had been waiting for
Lumahan to show up so that it could impose on him the necessary disciplinary action for
abandoning his post at Steelwork, only to learn that Lumahan had filed an illegal
dismissal complaint. Nightowl did not at all argue that Lumahan had abandoned his
work, thereby warranting the termination of his employment.
In a case where the employee was neither found to have been dismissed nor to have
abandoned his/her work, the general course of action is for the Court to dismiss the
complaint, direct the employee to return to work, and order the employer to accept the
employee.31 However, the Court recognized in Nightowl that when a considerable length
of time had already passed rendering it impossible for the employee to return to work, the
award of separation pay is proper. Considering that more than ten (10) years had passed
since respondent stopped reporting for work on February 5, 2005, up to the date of this
judgment, it is no longer possible and reasonable for the Court to direct respondent to
return to work and order petitioners to accept her. Under the circumstances, it is just and
equitable for the Court instead to award respondent separation pay in an amount
equivalent to one (1) month salary for every year of service, computed up to the time she
stopped working, or until February 4, 2005.
WHEREFORE, premises considered, the Petition is GRANTED. The Decision dated
April 29, 2009 and Resolution dated February 8, 2010 of the Court of Appeals in CA-
G.R. SP No. 01877-MIN is REVERSED and SET ASIDE. The Resolution dated August
30, 2006 of the National Labor Relations Commission in NLRC CA No. M-009173-06,
affirming en toto the Decision dated February 21, 2006 of the Labor Arbiter in RAB 12-
01-00026-05, is REINSTATED with MODIFICATION that petitioners Dee Jay's Inn
and Cafe and Melinda Ferraris, for just and equitable reasons extant in this case, are
additionally ORDERED to jointly and severally pay respondent Ma. Lorina P. Raeses
separation pay equivalent to one (1) month salary for every year of service, computed up
to the time she stopped working, or until February 4, 2005.

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

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

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

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

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

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

11
Respondent appealed from the aforesaid decision to the NLRC. However, the same was
denied in a Resolution6 dated February 10, 2011. The NLRC reasoned that respondents
appeal was not accompanied by neither a cash nor surety bond, thus, no appeal was
perfected from the decision of the Labor Arbiter. Pertinent portion of said resolution
reads:
Records disclose that the appeal was not accompanied by neither a cash nor surety bond
as mandated by Section 6, Rule VI of the 2005 Revised Rules of Procedure of the NLRC,
to wit
SECTION 6. BOND. In case the decision of the Labor Arbiter involves a monetary
award, an appeal by the employer may be perfected only upon the posting of a bond,
which shall either be in the form of cash deposit or surety bond equivalent in amount to
monetary award, exclusive of damages and attorneys fees.
The Supreme Court in Rural Bank of Coron (Palawan) Inc. vs. Annalisa Cortes,
December 6, 2006, emphasized that:
In the case at bar, petitioner did not post a full or partial appeal bond within the
prescribed period, thus, no appeal was perfected from the Decision of the Labor Arbiter.
For this reason, the decision sought to be appealed to the NLRC had become final and
executory, and therefore, immutable. Clearly then, the NLRC has no authority to entertain
the appeal much less to reverse the decision of the Labor Arbiter. Any amendment or
alteration made which substantially affects the final and executory judgment is null and
void for lack of jurisdiction, including the entire proceeding held for that purpose.
On account of this infirmity, We are (sic) do not have the jurisdictional competence to
entertain the appeal.
WHEREFORE, the appeal is DISMISSED for NonPerfection.
SO ORDERED.7
Respondent, thus, sought reconsideration of the NLRCs resolution.
In a Decision8 dated September 30, 2011, the NLRC granted respondents appeal and
reversed its earlier resolution. Its fallo reads:
WHEREFORE, premises considered, the appeal is GRANTED. The 08 December 2010
Decision if Reversed and a new one entered: a) dismissing the complaint for lack of
merit; and b) ordering respondent Manila Doctors College to pay [petitioner]s service
incentive leaves for the last three years.
SO ORDERED.9
Resultantly, petitioner filed a certiorari petition with the CA.
In a Resolution dated January 9, 2012, the CA held that since petitioner failed to file a
motion for reconsideration against the NLRC decision before seeking recourse to it via
a certiorari petition, the CA dismissed petitioners special civil action for certiorari, viz.:
It appears that petitioner has not shown that other than this special civil action under Rule
65, he has no plain, speedy and adequate remedy in the ordinary course of law against his
perceived grievance.
It is now settled in our jurisdiction that while it is true that the only way by which a labor
case may reach this Court is through a petition for certiorari under Rule 65 of the Rules
of Court, it must, however, be shown that the NLRC acted without or in excess of
jurisdiction, or with grave abuse of discretion, and there is no appeal, nor any plain,
speedy and adequate remedy in the ordinary course of law. Section 15, Rule VII of the
2005 Revised Rules of Procedure of the NLRC, which allows the aggrieved party to file a
motion for reconsideration of any decision, resolution or order of the NLRC, constitutes a
plain, speedy and adequate remedy which said party may avail of. Accordingly, in the
light of the doctrine of exhaustion of administrative remedies, a motion for
reconsideration must first be filed before the special civil action for certiorari may be
availed of.
In the instant case, the records do not show and neither does petitioner make a claim that
it filed a motion for reconsideration of the challenged decision before it came to us
through this action. It had not, as well, suggested any plausible reason for direct recourse
to this Court against the decision in question.
WHEREFORE, the instant special civil action for certiorari is DISMISSED.
SO ORDERED.10
Petitioner filed a motion for reconsideration against said resolution.
In a Resolution dated April 27, 2012, the CA denied petitioners motion for
reconsideration. It ruled that except for his bare allegations, petitioner failed to present
any plausible justification for dispensing with the requirement of a prior motion for
reconsideration. The CA further stated that although there are exceptions to the rule
that certiorari will not lie unless a motion for reconsideration is filed, petitioner
nevertheless failed to prove that his case falls within any of the recognized exceptions.
Accordingly, petitioner filed the present petition.
Petitioner raises the following grounds to support his petition:
I.
THE COURT OF APPEALS FAR DEPARTED FROM ACCEPTED AND USUAL
COURSE OF JURISPRUDENCE WHEN IT IGNORED THE GROSSLY ERRONEOUS
DECISION OF THE NLRC GIVING DUE COURSE TO AN APPEAL WITHOUT THE
POSTING OF A BOND AS MANDATED BY ARTICLE 223 OF THE LABOR CODE
AND THE 2005 NLRC RULES OF PROCEDURE.
II.
THE COURT OF APPEALS FAR DEPARTED FROM THE ACCEPTED AND USUAL
COURSE OF JURISPRUDENCE WHEN IT FAILED TO RULE THAT THE NLRC
DID NOT ACQUIRE JURISDICTION TO REVERSE THE 08 DECEMBER 2010
DECISION OF THE LABOR ARBITER IN FAVOR OF PETITIONER, HENCE, THE
SAME BECAME FINAL, EXECUTORY AND UNAPPEALABLE ON THE PART OF
RESPONDENTS.
III.
THE COURT OF APPEALS FAR DEPARTED FROM THE ACCEPTED AND USUAL
COURSE OF JURISPRUDENCE WHEN IT REQUIRED PETITIONER TO FILE
ANOTHER MOTION FOR RECONSIDERATION AND GIVE THE NLRC MULTIPLE
12
OPPORTUNITIES TO RECONSIDER THE CASE BEFORE FILING A PETITION
FOR CERTIORARI.
IV.
THE COURT OF APPEALS FAR DEPARTED FROM THE ACCEPTED AND USUAL
COURSE OF JURISPRUDENCE WHEN IT FAILED TO REALIZE THAT
CIRCUMSTANCES SURROUNDING THE INSTANT CASE, NONETHELESS,
FALLS UNDER THE EXCEPTIONS THE REQUIREMENT OF A MOTION FOR
RECONSIDERATION PRIOR TO THE FILING OF A PETITION FOR CERTIORARI.
V.
THE NLRC FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF
JURISPRUDENCE WHEN IT FAILED TO RULE THAT PETITIONER HAD
ALREADY ATTAINED REGULAR STATUS AND REVERSED THE FINDING OF
LABOR ARBITER AMANSEC THAT PETITIONER WAS ILLEGALLY
DISMISSED.11
Essentially, the issues are: (1) whether respondents appeal with the NLRC was perfected
despite its failure to post a bond; and (2) whether the CA erred in dismissing petitioners
Rule 65 petition.
Petitioner asserts that Section 223 of the Labor Code and Section 6, Rule VI of the 2005
Revised Rules of Procedure of the NLRC are consistent in saying that in case of
judgment involving a monetary amount, an appeal by the employer may be perfected
only upon posting a cash or surety bond. Thus, he argues that since the NLRC did not
acquire jurisdiction over the instant case, the decision of the Labor Arbiter had already
become final and executory.
Second, petitioner contends that a motion for reconsideration prior to the filing of
a certiorari petition admits of certain exceptions, that is, when the order appealed from is
a patent nullity and when there is urgency of relief. He argues that the instant case falls
under one of the exceptions, thus, it should be entertained by the court.
Conversely, respondent asserts that the decision of the Labor Arbiter does not impose a
clear and unqualified monetary obligation upon the respondent, thus, it has no obligation
to post a bond.
Respondent further avers that the CA did not commit grave abuse of discretion in
dismissing petitioners certiorari petition for failure to comply with the mandatory
requirement of filing a motion for reconsideration. It stresses that there is no showing
that the instant case falls under one of the recognized exceptions to the rule of filing a
prior motion for reconsideration.
There is merit in the petition.
At the outset, it must be emphasized that Article 22312 of the Labor Code states that an
appeal by the employer to the NLRC from a judgment of a Labor Arbiter, which involves
a monetary award, may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the NLRC, in an amount
equivalent to the monetary award in the judgment appealed from.13
Sections 4 (a) and 6 of Rule VI of the New Rules of Procedure of the NLRC, as amended,
reaffirm the explicit jurisdictional principle in Article 223.14 The relevant provisions state:
SECTION 4. Requisites for Perfection of Appeal. (a) The appeal shall be: 1) filed
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 type written or printed copies; and 5) accompanied by i) proof of payment of the
required appeal fee; ii) posting of a cash or surety bond as provided in Section 6 of
this Rule; iii) a certificate of nonforum shopping; and iv) proof of service upon the
other parties.
xxxx
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 the amount to the monetary award, exclusive of damages
and attorneys fees.15
The posting of a bond is indispensable to the perfection of an appeal in cases involving
monetary awards from the decisions 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. 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. Noncompliance 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.16
Here, it is undisputed that respondents appeal was not accompanied by any appeal bond
despite the clear monetary obligation to pay petitioner his separation pay in the amount of
P100,000.00. Since the posting of a bond for the perfection of an appeal is both
mandatory and jurisdictional, the decision of the Labor Arbiter sought to be appealed
before the NLRC had already become final and executory. Therefore, the NLRC had no
authority to entertain the appeal, much less to reverse the decision of the Labor Arbiter.
Nevertheless, assuming that the NLRC has jurisdiction to take cognizance of the instant
case, this Court would still be inclined to favor petitioner because the instant case falls
under one of the recognized exceptions to the rule that a motion for reconsideration is
necessary prior to the filing of a certiorari petition.
The general rule is that a motion for reconsideration is indispensable before resort to the
13
special civil action for certiorari to afford the court or tribunal the opportunity to correct
its error, if any. The rule is well settled that the filing of a motion for reconsideration is an
indispensable condition to the filing of a special civil action for certiorari.17
The rationale for the requirement of first filing a motion for reconsideration before the
filing of a petition for certiorari is that the law intends to afford the tribunal, board or
office an opportunity to rectify the errors and mistakes it may have lapsed into before
resort to the courts of justice can be had.18
However, said rule is subject to several recognized
exceptions:chanRoblesvirtualLawlibrary
(a) Where the order is a patent nullity, as where the court a quo has no jurisdiction;
(b) Where the questions raised in the certiorari proceedings have been duly raised
and passed upon by the lower court, or are the same as those raised and passed
upon in the lower court;
(c) Where there is an urgent necessity for the resolution of the question and any further
delay would prejudice the interests of the Government or of the petitioner or the
subject matter of the action is perishable;
(d) Where, under the circumstances, a motion for reconsideration would be useless;
(e) Where petitioner was deprived of due process and there is extreme urgency for
relief;
(f) Where, in a criminal case, relief from an order of arrest is urgent and the granting of
such relief by the trial court is improbable;
(g) Where the proceedings in the lower court are a nullity for lack of due process;
(h) Where the proceeding was ex parte or in which the petitioner had no opportunity to
object; and
(i) Where the issue raised is one purely of law or where public interest is involved.19
In the instant case, the NLRC had all the opportunity to review its ruling and correct
itself.
The NLRC issued a ruling on February 10, 2011 in favor of petitioner dismissing
respondents appeal on the ground that the latter failed to file an appeal bond. However,
upon a motion for reconsideration filed by respondent, the NLRC completely reversed
itself and set aside its earlier resolution dismissing the appeal. The NLRC had more than
enough opportunity to pass upon the issues raised by both parties on appeal of the ruling
of the Labor Arbiter and the subsequent motion for reconsideration of its resolution
disposing the appeal. Thus, another motion for reconsideration would have been useless
under the circumstances since the questions raised in the certiorari proceedings have
already been duly raised and passed upon by the NLRC.
In a similar case, the Labor Arbiter rendered a decision dismissing petitioners case for
lack of merit. On appeal, the NLRC rendered a decision reversing the decision of the
Labor Arbiter and ordered the respondent therein to pay petitioner full backwages,
separation pay, salary differentials, 13th month pay and allowances. Not satisfied,
respondent therein moved for reconsideration of the aforesaid NLRC resolution. The
NLRC, thereafter, granted respondents motion and reversed its previous ruling. In a like
manner, the petitioner therein filed a certiorari petition without first filing a motion for
reconsideration with the NLRC.20 Thus, the Court ruled in that case
The rationale for the requirement of first filing a motion for reconsideration before the
filing of a petition for certiorari is that the law intends to afford the tribunal, board or
office an opportunity to rectify the errors and mistakes it may have lapsed into before
resort to the courts of justice can be had. In the present case, the NLRC was already
given the opportunity to review its ruling and correct itself when the respondent
filed its motion for reconsideration of the NLRCs initial ruling in favor of
petitioner. In fact, it granted the motion for reconsideration filed by respondent and
reversed its previous ruling and reinstated the decision of the Labor Arbiter
dismissing the complaint of the petitioner. It would be an exercise in futility to
require the petitioner to file a motion for reconsideration since the very issues raised
in the petition for certiorari, i.e., whether or not the petitioner was constructively
dismissed by the respondent and whether or not she was entitled to her money
claims, were already duly passed upon and resolved by the NLRC. Thus, the NLRC
had more than one opportunity to resolve the issues of the case and in fact reversed
itself upon reconsideration. It is highly improbable or unlikely under the circumstances
that the Commission would reverse or set aside its resolution granting a motion for
reconsideration.21
All told, the petition is meritorious. However, since this Court is not a trier of facts, 22 we
cannot rule on the substantive issue of the case, i.e., whether petitioner has attained
regular status, inasmuch as the CA has not yet passed upon the factual issues raised by
the parties.
WHEREFORE, premises considered, the instant petition is hereby GRANTED and the
Resolutions dated January 9, 2012 and April 27, 2012, respectively, of the Court of
Appeals in CAG.R. SP No. 122596, are hereby REVERSED and SET ASIDE. The
case is REMANDED to the Court of Appeals for further proceedings.
SO ORDERED.
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.
14
x-----------------------x reasonableness in the determination of the compliant amount of the bond has been
formulated to allow the review of the arbiters award. However, that rule seemingly
G.R. No. 180149 becomes inadequate when the award staggers belief but is, nonetheless, supported by the
premises of the controversy. The enormity of the award cannot prevent the settlement of
SARA LEE CORPORATION, Petitioner, the dispute. The amount of award may vary case-to-case. But the law remains constant.
vs.
EMILINDA D. MACATLANG, ET AL., Respondents. Before us are six (6) consolidated petitions for review on certiorari pertaining to
the P3,453,664,710.66 (P3.45 Billion) appeal bond, which, as mandated by Article 233 of
x-----------------------x the Labor Code, is equivalent to the monetary award adjudged by the labor arbiter in the
cases. The first 5 petitions seek a relaxation of the rule while the last petition urges its
G.R. No. 180150 strict interpretation.

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

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

PEREZ, J.: I.

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

15
Aris Philippines Workers Confederation of Filipino Workers (Union), which represents
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 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
16
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 forum-shopping, absence of authorization from the employees for Emilinda
D. Macatlang to file said petition, and for failure to state the material dates.23
While the case was pending, the NLRC issued a Resolution on 19 December 2006 setting
aside the Decision of the labor arbiter and remanding the case to the "forum of origin for
further proceedings."24
In view of this related development, the Corporations filed their respective Manifestation
and Motion dated 30 January 2007 praying for the dismissal of the petition for certiorari
for being moot and academic.
On 26 March 2007, the Court of Appeals proceeded to reverse and set aside the 31 March
2006 NLRC Resolution and deemed it reasonable under the circumstances of the case to
order the posting of an additional appeal bond of 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 Resolution26dated 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 forum-shopping. 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 publication was made to SLPI.34
17
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 by some
other court, to increase his chances of obtaining a favorable decision if not in one court,
then in another.38
What is pivotal in determining whether forum shopping exists or not is the vexation
caused the courts and parties-litigants by a party who asks different courts and/or
administrative agencies to rule on the same or related cases and/or grant the same or
substantially the same reliefs, in the process creating the possibility of conflicting
decisions being rendered by the different courts and/or administrative agencies upon the
same issues.39
Forum shopping exists when the elements of litis pendentia are present, and when a final
judgment in one case will amount to res judicatain the other. For litis pendentia to be a
ground for the dismissal of an action, there must be: (a) identity of the parties or at least
such as to represent the same interest in both actions; (b) identity of rights asserted and
relief prayed for, the relief being founded on the same acts; and (c) the identity in the two
18
cases should be such that the judgment which may be rendered in one would, regardless
of which party is successful, amount to res judicata in the other.40
The Macatlang petition was filed on 8 September 2006 while the Abelardo petition was
filed 10 days later, or on 18 September 2006. Indeed, these two petitions assailed the
same order and resolution of the NLRC in NLRC CA No. 046685-05, entitled Emilinda
Macatlang, et al. v. Aris Philippines, Inc., et al., and sought for the dismissal of the
Corporations appeal for non-perfection because of failure to post the required appeal
bond. A judgment in either case would have, if principles are correctly applied, amounted
to res judicatain the other.
At first glance, it appears that there is also identity of parties in both petitions which is
indicative of forum-shopping. The Macatlang petition consists of 5,984 dismissed
employees of Aris while the Abelardo petition has 411 dismissed employees, all of which
were already included as petitioners in the Macatlang petition. With respect to these 411
petitioners, they could be declared guilty of forum shopping when they filed the Abelardo
petition despite the pendency of the Macatlang petition. As a matter of fact, the Abelardo
petition was dismissed by the Court of Appeals in a Resolution dated 17 November2006
on the ground of a defective certification on non-forum shopping, among others.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
19
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 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.
20
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 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,61Sy 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.
21
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.
69
In Banahaw Broadcasting Corporation v. Pacana III, 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 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.
22
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
23
both become more obscure if the employer would be permitted to subsequently employ
artifices to evade execution of judgment.
The decision to reduce the amount of appeal bond is not a blanket power to the NLRC,
because the discretion is not unbridled and is subject to strict guidelines because Art. 223
of the Labor Codeis a rule of jurisdiction that affords little leeway for liberal
interpretation. The order of the NLRC reducing the required appeal bond from Php 3.453
BILLION Pesos to only Php 9 MILLION Pesos is in grave abuse of its discretion and
therefore void, not to mention that it is per se unreasonable and without factual basis.
We have considered the circumstances and evidence presented in this case relative to the
motion to reduce appeal bond.1wphi1 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.
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 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
24
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.
G.R. No. 198967, March 07, 2016
JOSE EMMANUEL P. GUILLERMO, Petitioner, v. CRISANTO P.
USON, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking to annul and set aside the Court of Appeals Decision1 dated June 8, 2011
and Resolution2 dated October 7, 2011 in CA G.R. SP No. 115485, which affirmed in
toto the decision of the National Labor Relations Commission (NLRC).
The facts of the case follow.
On March 11, 1996, respondent Crisanto P. Uson (Uson) began his employment with
Royal Class Venture Phils., Inc. (Royal Class Venture) as an accounting
clerk.3 Eventually, he was promoted to the position of accounting supervisor, with a
salary of Php13,000.00 a month, until he was allegedly dismissed from employment on
December 20, 2000.4
On March 2, 2001, Uson filed with the Sub-Regional Arbitration . Branch No. 1,
Dagupan City, of the NLRC a Complaint for Illegal Dismissal, with prayers for
backwages, reinstatement, salaries and 13thmonth pay, moral and exemplary damages and
attorney's fees against Royal Class Venture.5
Royal Class Venture did not make an appearance in the case despite its receipt of
summons.6
On May 15, 2001, Uson filed his Position Paper7 as complainant.
On October 22, 2001, Labor Arbiter Jose G. De Vera rendered a Decision8 in favor of the
complainant Uson and ordering therein respondent Royal Class Venture to reinstate him
to his former position and pay his backwages, 13th month pay as well as moral and
exemplary damages and attorney's fees.
Royal Class Venture, as the losing party, did not file an appeal of the
decision.9 Consequently, upon Uson's motion, a Writ of Execution10 dated February 15,
2002 was issued to implement the Labor Arbiter's decision.
On May 17, 2002, an Alias Writ of Execution11 was issued. But with the judgment still
unsatisfied, a Second Alias Writ of Execution12 was issued on September 11, 2002.
25
Again, it was reported in the Sheriff's Return that the Second Alias Writ of Execution
dated September 11, 2002 remained "unsatisfied." Thus, on November 14, 2002, Uson
filed a Motion for Alias Writ of Execution and to Hold Directors and Officers of
Respondent Liable for Satisfaction of the Decision.13 The motion quoted from a portion
of the Sheriffs Return, which states:
chanRoblesvirtualLawlibrary
On September 12, 2002, the undersigned proceeded at the stated present business office
address of the respondent which is at Minien East, Sta. Barbara, Pangasinan to serve the
writ of execution. Upon arrival, I found out that the establishment erected thereat is not
[in] the respondent's name but JOEL and SONS CORPORATION, a family corporation
owned by the Guillermos of which, Jose Emmanuel F. Guillermo the General Manager of
the respondent, is one of the stockholders who received the writ using his nickname
"Joey," [and who] concealed his real identity and pretended that he [was] the brother of
Jose, which [was] contrary to the statement of the guard-on-duty that Jose and Joey
[were] one and the same person. The former also informed the undersigned that the
respondent's (sic) corporation has been dissolved.
On the succeeding day, as per [advice] by the [complainant's] counsel that the respondent
has an account at the Bank of Philippine Islands Magsaysay Branch, A.B. Fernandez
Ave., Dagupan City, the undersigned immediately served a notice of garnishment, thus,
the bank replied on the same day stating that the respondent [does] not have an account
with the branch.14ChanRoblesVirtualawlibrary
On December 26, 2002, Labor Arbiter Irenarco R. Rimando issued an Order15 granting
the motion filed by Uson. The order held that officers of a corporation are jointly and
severally liable for the obligations of the corporation to the employees and there is no
denial of due process in holding them so even if the said officers were not parties to the
case when the judgment in favor of the employees was rendered.16 Thus, the Labor
Arbiter pierced the veil of corporate fiction of Royal Class Venture and held herein
petitioner Jose Emmanuel Guillermo (Guillermo), in his personal capacity, jointly and
severally liable with the corporation for the enforcement of the claims of Uson.17
Guillermo filed, by way of special appearance, a Motion for Reconsideration/To Set
Aside the Order of December 26, 2002.18 The same, however, was not granted as, this
time, in an Order dated November 24, 2003, Labor Arbiter Nia Fe S. Lazaga-Rafols
sustained the findings of the labor arbiters before her and even castigated Guillenno for
his unexplained absence in the prior proceedings despite notice, effectively putting
responsibility on Guillermo for the case's outcome against him.19
On January 5, 2004, Guillermo filed a Motion for Reconsideration of the above
Order,20 but the same was promptly denied by the Labor Arbiter in an Order dated
January 7, 2004.21
On January 26, 2004, Uson filed a Motion for Alias Writ of Execution,22 to which
Guillermo filed a Comment and Opposition on April 2, 2004.23
On May 18, 2004, the Labor Arbiter issued an Order24 granting Uson's Motion for the
Issuance of an Alias Writ of Execution and rejecting Guillermo's arguments posed in his
Comment and Opposition.
Guillermo elevated the matter to the NLRC by filing a Memorandum of Appeal with
Prayer for a (Writ of) Preliminary Injunction dated June 10, 2004.25cralawred
In a Decision26 dated May 11, 2010, the NLRC dismissed Guillermo's appeal and denied
his prayers for injunction.
On August 20, 2010, Guillermo filed a Petition for Certiorari27 before the Court of
Appeals, assailing the NLRC decision.
On June 8, 2011, the Court of Appeals rendered its assailed Decision28 which denied
Guillermo's petition and upheld all the findings of the NLRC.
The appellate court found that summons was in fact served on Guillermo as President and
General Manager of Royal Class Venture, which was how the Labor Arbiter acquired
jurisdiction over the company.29 But Guillermo subsequently refused to receive all notices
of hearings and conferences as well as the order to file Royal Class Venture's position
paper.30 Then, it was learned during execution that Royal Class Venture had been
dissolved.31 However, the Court of Appeals held that although the judgment had become
final and executory, it may be modified or altered "as when its execution becomes
impossible or unjust."32 It also noted that the motion to hold officers and directors like
Guillermo personally liable, as well as the notices to hear the same, was sent to them by
registered mail, but no pleadings were submitted and no appearances were made by
anyone of them during the said motion's pendency.33 Thus, the court held Guillermo
liable, citing jurisprudence that hold the president of the corporation liable for the latter's
obligation to illegally dismissed employees.34Finally, the court dismissed Guillermo's
allegation that the case is an intra-corporate controversy, stating that jurisdiction is
determined by the allegations in the complaint and the character of the relief sought. 35
From the above decision of the appellate court, Guillermo filed a Motion for
Reconsideration36 but the same was again denied by the said court in the assailed
Resolution37 dated October 7, 2011.
Hence, the instant petition.
Guillermo asserts that he was impleaded in the case only more than a year after its
Decision had become final and executory, an act which he claims to be unsupported in
law and jurisprudence.38 He contends that the decision had become final, immutable and
unalterable and that any amendment thereto is null and void.39 Guillermo assails the so-
called "piercing the veil" of corporate fiction which allegedly discriminated against him
when he alone was belatedly impleaded despite the existence of other directors and
officers in Royal Class Venture.40 He also claims that the Labor Arbiter has no
jurisdiction because the case is one of an intra-corporate controversy, with the
complainant Uson also claiming to be a stockholder and director of Royal Class
Venture.41
In his Comment,42 Uson did not introduce any new arguments but merely
cited verbatim the disquisitions of the Court of Appeals to counter Guillermo's assertions
in his petition.
26

To resolve the case, the Court must confront the issue of whether an officer of a
corporation may be included as judgment obligor in a labor case for the first time only
after the decision of the Labor Arbiter had become final and executory, and whether the
twin doctrines of "piercing the veil of corporate fiction" and personal liability of
company officers in labor cases apply.
The petition is denied.
In the earlier labor cases of Claparols v. Court of Industrial Relations43 and A.C. Ransom
Labor Union-CCLU v. NLRC,44 persons who were not originally impleaded in the case
were, even during execution, held to be solidarity liable with the employer corporation
for the latter's unpaid obligations to complainant-employees. These included a newly-
formed corporation which was considered a mere conduit or alter ego of the originally
impleaded corporation, and/or the officers or stockholders of the latter
corporation.45 Liability attached, especially to the responsible officers, even after final
judgment and during execution, when there was a failure to collect from the employer
corporation the judgment debt awarded to its workers.46 In Naguiat v. NLRC,47 the
president of the corporation was found, for the first time on appeal, to be solidarily liable
to the dismissed employees. Then, in Reynoso v. Court of Appeals,48 the veil of corporate
fiction was pierced at the stage of execution, against a corporation not previously
impleaded, when it was established that such corporation had dominant control of the
original party corporation, which was a smaller company, in such a manner that the
latter's closure was done by the former in order to defraud its creditors, including a
former worker.
The rulings of this Court in A.C. Ransom, Naguiat, and Reynoso, however, have since
been tempered, at least in the aspects of the lifting of the corporate veil and the
assignment of personal liability to directors, trustees and officers in labor cases. The
subsequent cases of McLeod v. NLRC,49Spouses Santos v. NLRC50 and Carag v.
NLRC,51 have all established, save for certain exceptions, the primacy of Section 3152 of
the Corporation Code in the matter of assigning such liability for a corporation's debts,
including judgment obligations in labor cases. According to these cases, a corporation is
still an artificial being invested by law with a personality separate and distinct from that
of its stockholders and from that of other corporations to which it may be connected. 53 It
is not in every instance of inability to collect from a corporation that the veil of corporate
fiction is pierced, and the responsible officials are made liable. Personal liability attaches
only when, as enumerated by the said Section 31 of the Corporation Code, there is a
wilfull and knowing assent to patently unlawful acts of the corporation, there is gross
negligence or bad faith in directing the affairs of the corporation, or there is a conflict of
interest resulting in damages to the corporation.54 Further, in another labor
case, Pantranco Employees Association (PEA-PTGWO), et al. v. NLRC, et al.,55 the
doctrine of piercing the corporate veil is held to apply only in three (3) basic areas,
namely: ( 1) defeat of public convenience as when the corporate fiction is used as a
vehicle for the evasion of an existing obligation; (2) fraud cases or when the corporate
entity is used to justify a wrong, protect fraud, or defend a crime; or (3) alter ego cases,
where a corporation is merely a farce since it is a mere alter ego or business conduit of a
person, or where the corporation is so organized and controlled and its affairs are so
conducted as to make it merely an instrumentality, agency, conduit or adjunct of another
corporation. In the absence of malice, bad faith, or a specific provision of law making a
corporate officer liable, such corporate officer cannot be made personally liable for
corporate liabilities.56 Indeed, in Reahs Corporation v. NLRC,57 the conferment of liability
on officers for a corporation's obligations to labor is held to be an exception to the general
doctrine of separate personality of a corporation.
It also bears emphasis that in cases where personal liability attaches, not even all officers
are made accountable. Rather, only the "responsible officer," i.e., the person directly
responsible for and who "acted in bad faith" in committing the illegal dismissal or any act
violative of the Labor Code, is held solidarily liable, in cases wherein the corporate veil is
pierced.58 In other instances, such as cases of so-called corporate tort of a close
corporation, it is the person "actively engaged" in the management of the corporation
who is held liable.59 In the absence of a clearly identifiable officer(s) directly responsible
for the legal infraction, the Court considers the president of the corporation as such
officer.60
The common thread running among the aforementioned cases, however, is that the veil of
corporate fiction can be pierced, and responsible corporate directors and officers or even
a separate but related corporation, may be impleaded and held answerable solidarily in a
labor case, even after final judgment and on execution, so long as it is established that
such persons have deliberately used the corporate vehicle to unjustly evade the judgment
obligation, or have resorted to fraud, bad faith or malice in doing so. When the shield of a
separate corporate identity is used to commit wrongdoing and opprobriously elude
responsibility, the courts and the legal authorities in a labor case have not hesitated to step
in and shatter the said shield and deny the usual protections to the offending party, even
after final judgment. The key element is the presence of fraud, malice or bad faith. Bad
faith, in this instance, does not connote bad judgment or negligence but imports a
dishonest purpose or some moral obliquity and conscious doing of wrong; it means
breach of a known duty through some motive or interest or ill will; it partakes of the
nature of fraud.61
As the foregoing implies, there is no hard and fast rule on when corporate fiction may be
disregarded; instead, each case must be evaluated according to its peculiar
circumstances.62 For the case at bar, applying the above criteria, a finding of personal and
solidary liability against a corporate officer like Guillermo must be rooted on a
satisfactory showing of fraud, bad
faith or malice, or the presence of any of the justifications for disregarding the corporate
fiction. As stated in McLeod,63 bad faith is a question of fact and is evidentiary, so that the
records must first bear evidence of malice before a finding of such may be made.
It is our finding that such evidence exists in the record. Like the A. C. Ransom,
and Naguiat cases, the case at bar involves an apparent family corporation. As in those
two cases, the records of the present case bear allegations and evidence that Guillermo,
the officer being held liable, is the person responsible in the actual running of the
company and for the malicious and illegal dismissal of the complainant; he, likewise, was
shown to have a role in dissolving the original obligor company in an obvious "scheme to
avoid liability" which jurisprudence has always looked upon with a suspicious eye in
order to protect the rights of labor.64
27
Part of the evidence on record is the second page of the verified Position Paper of
complainant (herein respondent) Crisanto P. Uson, where it was clearly alleged that Uson
was "illegally dismissed by the President/General Manager of respondent corporation
(herein petitioner) Jose Emmanuel P. Guillermo when Uson exposed the practice of the
said President/General Manager of dictating and undervaluing the shares of stock of the
corporation."65 The statement is proof that Guillermo was the responsible officer in
charge of running the company as well as the one who dismissed Uson from
employment. As this sworn allegation is uncontroverted - as neither the company nor
Guillermo appeared before the Labor Arbiter despite the service of summons and notices
- such stands as a fact of the case, and now functions as clear evidence of Guillermo's bad
faith in his dismissal of Uson from employment, with the motive apparently being anger
at the latter's reporting of unlawful activities.
Then, it is also clearly reflected in the records that it was Guillermo himself, as President
and General Manager of the company, who received the summons to the case, and who
also subsequently and without justifiable cause refused to receive all notices and orders
of the Labor Arbiter that followed.66This makes Guillermo responsible for his and his
company's failure to participate in the entire proceedings before the said office. The fact
is clearly narrated in the Decision and Orders of the Labor Arbiter, Uson's Motions for
the Issuance of Alias Writs of Execution, as well as in the Decision of the NLRC and the
assailed Decision of the Court of Appeals,67 which Guillermo did not dispute in any of his
belated motions or pleadings, including in his petition for certiorari before the Court of
Appeals and even in the petition currently before this Court.68 Thus, again, the same now
stands as a finding of fact of the said lower tribunals which binds this Court and which it
has no power to alter or revisit.69 Guillermo's knowledge of the case's filing and existence
and his unexplained refusal to participate in it as the responsible official of his company,
again is an indicia of his bad faith and malicious intent to evade the judgment of the labor
tribunals.
Finally, the records likewise bear that Guillermo dissolved Royal Class Venture and
helped incorporate a new firm, located in the same address as the former, wherein he is
again a stockl1older. This is borne by the Sherif11s Return which reported: that at Royal
Class Venture's business address at Minien East, Sta. Barbara, Pangasinan, there is a new
establishment named "Joel and Sons Corporation," a family corporation owned by the
Guillermos in which Jose Emmanuel F. Guillermo is again one of the stockholders; that
Guillermo received the writ of execution but used the nickname "Joey" and denied being
Jose Emmanuel F. Guillermo and, instead, pretended to be Jose's brother; that the guard
on duty confirmed that Jose and Joey are one and the same person; and that the
respondent corporation Royal Class Venture had been dissolved.70 Again, the facts
contained in the Sheriffs Return were not disputed nor controverted by Guillermo, either
in the hearings of Uson's Motions for Issuance of Alias Writs of Execution, in subsequent
motions or pleadings, or even in the petition before this Court. Essentially, then, the facts
form part of the records and now stand as further proof of Guillermo's bad faith and
malicious intent to evade the judgment obligation.
The foregoing clearly indicate a pattern or scheme to avoid the obligations to Uson and
frustrate the execution of the judgment award, which this Court, in the interest of justice,
will not countenance.
As for Guillermo's assertion that the case is an intra-corporate controversy, the Court
sustains the finding of the appellate court that the nature of an action and the jurisdiction
of a tribunal are determined by the allegations of the complaint at the time of its filing,
irrespective of whether or not the plaintiff is entitled to recover upon all or some of the
claims asserted therein.71 Although Uson is also a stockholder and director of Royal Class
Venture, it is settled in jurisprudence that not all conflicts between a stockholder and the
corporation are intra-corporate; an examination of the complaint must be made on
whether the complainant is involved in his capacity as a stockholder or director, or as an
employee.72 If the latter is found and the dispute does not meet the test of what qualities
as an intra-corporate controversy, then the case is a labor case cognizable by the NLRC
and is not within the jurisdiction of any other tribunal.73 In the case at bar, Uson's
allegation was that he was maliciously and illegally dismissed as an Accounting
Supervisor by Guillermo, the Company President and General Manager, an allegation
that was not even disputed by the latter nor by Royal Class Venture. It raised no intra-
corporate relationship issues between him and the corporation or Guillermo; neither did it
raise any issue regarding the regulation of the corporation. As correctly found by the
appellate court, Uson's complaint and redress sought were centered alone on his dismissal
as an employee, and not upon any other relationship he had with the company or with
Guillermo. Thus, the matter is clearly a labor dispute cognizable by the labor
tribunals.chanrobleslaw
WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated June 8,
2011 and Resolution dated October 7, 2011 in CA G.R. SP No. 115485 are AFFIRMED.
SO ORDERED.cralawlawlibrary
March 19, 2014
G.R. No. 177493
ERIC GODFREY STANLEY LIVESEY, Petitioner,
vs.
BINSWANGER PHILIPPINES, INC. and KEITH ELLIOT, Respondent.
DECISION
BRION, J.:
28
We resolve this petition for review on certiorari1 assailing the decision2 dated August 18,
2006 and the resolution3dated March 29, 2007 of the Court of Appeals (CA) in CA-G.R.
SP No. 94461.
The Antecedents
In December 2001, petitioner Eric Godfrey Stanley Livesey filed a complaint for illegal
dismissal with money claims4 against CBB Philippines Strategic Property Services, Inc.
(CBB) and Paul Dwyer. CBB was a domestic corporation engaged in real estate
brokerage and Dwyer was its President.
Designated as Acting Member in lieu of Associate Justice Estela M. Perlas-Bernabe, per
Special Order No. 1650 dated March 13, 2014.
Livesey alleged that on April 12, 2001, CBB hired him as Director and Head of Business
Space Development, with a monthly salary of US$5,000.00; shareholdings in CBBs
offshore parent company; and other benefits. In August 2001, he was appointed as
Managing Director and his salary was increased to US$16,000.00 a month. Allegedly,
despite the several deals for CBB he drew up, CBB failed to pay him a significant portion
of his salary. For this reason, he was compelled to resign on December 18, 2001. He
claimed CBB owed him US$23,000.00 in unpaid salaries.
CBB denied liability. It alleged that it engaged Livesey as a corporate officer in April
2001: he was elected Vice-President (with a salary of P75,000.00/month), and thereafter,
he became President (at P1,200,000.00/year). It claimed that Livesey was later designated
as Managing Director when it became an extension office of its principal in Hongkong.5
On December 17, 2001, Livesey demanded that CBB pay him US$25,000.00 in unpaid
salaries and, at the same time, tendered his resignation. CBB posited that the labor arbiter
(LA) had no jurisdiction as the complaint involved an intra-corporate dispute.
In his decision dated September 20, 2002,6 LA Jaime M. Reyno found that Livesey had
been illegally dismissed. LA Reyno ordered CBB to reinstate Livesey to his former
position as Managing Director and to pay him US$23,000.00 in accrued salaries (from
July to December 2001), and US$5,000.00 a month in back salaries from January 2002
until reinstatement; and 10% of the total award as attorneys fees.
Thereafter, the parties entered into a compromise agreement 7 which LA Reyno approved
in an order dated November 6, 2002.8 Under the agreement, Livesey was to receive
US$31,000.00 in full satisfaction of LA Reynos decision, broken down into
US$13,000.00 to be paid by CBB to Livesey or his authorized representative upon the
signing of the agreement; US$9,000.00 on or before June 30, 2003; and US$9,000.00 on
or before September 30, 2003. Further, the agreement provided that unless and until the
agreement is fully satisfied, CBB shall not: (1) sell, alienate, or otherwise dispose of all
or substantially all of its assets or business; (2) suspend, discontinue, or cease its entire,
or a substantial portion of its business operations; (3) substantially change the nature of
its business; and (4) declare bankruptcy or insolvency.
CBB paid Livesey the initial amount of US$13,000.00, but not the next two installments
as the company ceased operations. In reaction, Livesey moved for the issuance of a writ
of execution. LA Eduardo G. Magno granted the writ,9 but it was not enforced. Livesey
then filed a motion for the issuance of an alias writ of execution,10 alleging that in the
process of serving respondents the writ, he learned "that respondents, in a clear and
willful attempt to avoid their liabilities to complainant x x x have organized another
corporation, [Binswanger] Philippines, Inc."11 He claimed that there was evidence
showing that CBB and Binswanger Philippines, Inc. (Binswanger) are one and the same
corporation, pointing out that CBB stands for Chesterton Blumenauer
Binswanger.12 Invoking the doctrine of piercing the veil of corporate fiction, Livesey
prayed that an alias writ of execution be issued against respondents Binswanger and
Keith Elliot, CBBs former President, and now Binswangers President and Chief
Executive Officer (CEO).
The Compulsory Arbitration Rulings
In an order13 dated March 22, 2004, LA Catalino R. Laderas denied Liveseys motion for
an alias writ of execution, holding that the doctrine of piercing the corporate veil was
inapplicable in the case. He explained that the stockholders of the two corporations were
not the same. Further, LA Laderas stressed that LA Reynos decision had already become
final and could no longer be altered or modified to include additional respondents.
Livesey filed an appeal which the National Labor Relations Commission (NLRC) granted
in its decision14 dated September 7, 2005. It reversed LA Laderas March 22, 2004 order
and declared the respondents jointly and severally liable with CBB for LA Reynos
decision15 of September 20, 2002 in favor of Livesey. The respondents moved for
reconsideration, filed by an Atty. Genaro S. Jacosalem,16 not by their counsel of record at
the time, Corporate Counsels Philippines, Law Offices. The NLRC denied the motion in
its resolution of January 6, 2006.17The respondents then sought relief from the CA
through a petition for certiorari under Rule 65 of the Rules of Court.
The respondents charged the NLRC with grave abuse of discretion for holding them
liable to Livesey and in exercising jurisdiction over an intra-corporate dispute. They
maintained that Binswanger is a separate and distinct corporation from CBB and that
Elliot signed the compromise agreement in CBBs behalf, not in his personal capacity. It
29
was error for the NLRC, they argued, when it applied the doctrine of piercing the veil of
corporate fiction to the case, despite the absence of clear evidence in that respect.
For his part, Livesey contended that the petition should be dismissed outright for being
filed out of time. He claimed that the respondents counsel of record received a copy of
the NLRC resolution denying their motion for reconsideration as early as January 19,
2006, yet the petition was filed only on May 15, 2006. He insisted that in any event, there
was ample evidence supporting the application of the doctrine of piercing the veil of
corporate fiction to the case.
The CA Decision
The CA granted the petition,18 reversed the NLRC decision19 of September 7, 2005 and
reinstated LA Laderas order20 of March 22, 2004. The CA found untenable Liveseys
contention that the petition for certiorari was filed out of time, stressing that while there
was no valid substitution or withdrawal of the respondents former counsel, the NLRC
impliedly recognized Atty. Jacosalem as their new counsel when it resolved the motion
for reconsideration which he filed.
On the merits of the case, the CA disagreed with the NLRC finding that the respondents
are jointly and severally liable with CBB in the case. It emphasized that the mere fact that
Binswanger and CBB have the same President is not in itself sufficient to pierce the veil
of corporate fiction of the two entities, and that although Elliot was formerly CBBs
President, this circumstance alone does not make him answerable for CBBs liabilities,
there being no proof that he was motivated by malice or bad faith when he signed the
compromise agreement in CBBs behalf; neither was there proof that Binswanger was
formed, or that it was operated, for the purpose of shielding fraudulent or illegal activities
of its officers or stockholders or that the corporate veil was used to conceal fraud,
illegality or inequity at the expense of third persons like Livesey.
Livesey moved for reconsideration, but the CA denied the motion in its resolution dated
March 29, 2007.21 Hence, the present petition.
The Petition
Livesey prays for a reversal of the CA rulings on the basis of the following arguments:
1. The CA erred in not denying the respondents petition for certiorari dated May 12,
2006 for being filed out of time.
Livesey assails the CAs reliance on the Courts pronouncement in Rinconada Telephone
Co., Inc. v. Hon. Buenviaje22 to justify its ruling that the receipt on March 17, 2006 by
Atty. Jacosalem of the NLRCs denial of the respondents motion for reconsideration was
the reckoning date for the filing of the petition for certiorari, not the receipt of a copy of
the same resolution on January 19, 2006 by the respondents counsel of record, the
Corporate Counsels Philippines, Law Offices. The cited Courts pronouncement reads:
In view of respondent judges recognition of Atty. Santos as new counsel for petitioner
without even a valid substitution or withdrawal of petitioners former counsel, said new
counsel logically awaited for service to him of any action taken on his motion for
reconsideration. Respondent judges sudden change of posture in insisting that Atty.
Maggay is the counsel of record is, therefore, a whimsical and capricious exercise of
discretion that prevented petitioner and Atty. Santos from taking a timely appeal[.] 23
With the above citation, Livesey points out, the CA opined that a copy of the NLRC
resolution denying the respondents motion for reconsideration should have been served
on Atty. Jacosalem and no longer on the counsel of record, so that the sixty (60)-day
period for the filing of the petition should be reckoned from March 17, 2006 when Atty.
Jacosalem secured a copy of the resolution from the NLRC (the petition was filed by a
Jeffrey Jacosalem on May 15, 2006).24 Livesey submits that the CAs reliance on
Rinconada was misplaced. He argues that notwithstanding the signing by Atty. Jacosalem
of the motion for reconsideration, it was only proper that the NLRC served a copy of the
resolution on the Corporate Counsels Philippines, Law Offices as it was still the
respondents counsel at the time.25 He adds that Atty. Jacosalem never participated in the
NLRC proceedings because he did not enter his appearance as the respondents counsel
before the labor agency; further, he did not even indicate his office address on the motion
for reconsideration he signed.
2. The CA erred in not applying the doctrine of piercing the veil of corporate fiction to
the case.
Livesey bewails the CAs refusal to pierce Binswangers corporate veil in his bid to make
the company and Elliot liable, together with CBB, for the judgment award to him. He
insists that CBB and Binswanger are one and the same corporation as shown by the
"overwhelming evidence" he presented to the LA, the NLRC and the CA, as follows:
a.CBB stands for "Chesterton Blumenauer Binswanger."26
b.After executing the compromise agreement with him, through Elliot, CBB
ceased operations following a transaction where a substantial amount of CBB
shares changed hands. Almost simultaneously with CBBs closing (in July
2003), Binswanger was established with its headquarters set up beside CBBs
office at Unit 501, 5/F Peninsula Court Building in Makati City.27
30
 c.Key CBB officers and employees moved to Binswanger led by Elliot, former
CBB President who became Binswangers President and CEO; Ferdie Catral,
former CBB Director and Head of Operations; Evangeline Agcaoili and Janet
Pei.
d.Summons served on Binswanger in an earlier labor case was received by
Binswanger using CBBs receiving stamp.28
e.A Leslie Young received on August 23, 2003 an online query on whether CBB
was the same as Blumaneuver Binswanger (BB). Signing as Web Editor,
Binswanger/CBB, Young replied via e-mail:29
We are known as either CBB (Chesterton Blumenauer Binswanger) or as Chesterton
Petty Ltd. in the Philippines. Contact info for our office in Manila is as follows:
Manila Philippines
CBB Philippines Unit 509, 5th Floor
Peninsula Court, Paseo de Roxas corner Makati Avenue
1226 Makati City Philippines Contact: Keith Elliot
f. In a letter dated August 21, 2003,30 Elliot noted a Binswanger bid solicitation for a
project with the Philippine National Bank (PNB) which
was actually a CBB project as shown by a CBB draft proposal to PNB dated January 24,
2003.31
g.The affidavit32 dated October 1, 2003 of Hazel de Guzman, another former CBB
employee who also filed an illegal dismissal case against the company, attested to the
existence of Liveseys documentary evidence in his own case and who deposed that at
one time, Elliot told her of CBBs plan to close the corporation and to organize another
for the purpose of evading CBBs liabilities.
33
h.The findings of facts of LA Veneranda C. Guerrero who ruled in De Guzmans favor
that bolstered his own evidence in the present case.
3. The CA erred in not holding Elliot liable for the judgment award.
Livesey questions the CAs reliance on Laperal Development Corporation v. Court of
Appeals,34 Sunio, et al. v. NLRC, et al.,35 and Palay, Inc., et al. v. Clave, etc., et al.,36 in
support of its ruling that Elliot is not liable to him for the LAs award. He argues that in
these cases, the Court upheld the separate personalities of the corporations and their
officers/employees because there was no evidence that the individuals sought to be held
liable were in bad faith or that there were badges of fraud in their actions against the
aggrieved party or parties in said cases. He reiterates his submission to the CA that the
circumstances of the present case are different from those of the cited cases. He posits
that the closure of CBB and its immediate replacement by Binswanger could not have
been possible without Elliots guiding hand, such that when CBB ceased operations,
Elliot (CBBs President and CEO) moved to Binswanger in the same position. More
importantly, Livesey points out, as signatory for CBB in the compromise agreement
between him (Livesey) and CBB, Elliot knew that it had not been and would never be
fully satisfied.
Livesey thus laments Elliots devious scheme of leaving him an unsatisfied award,
stressing that Elliot was the chief orchestrator of CBB and Binswangers fraudulent act of
evading the full satisfaction of the compromise agreement. In this light, he submits that
the Courts ruling in
A.C. Ransom Labor Union-CCLU v. NLRC,37 which deals with the issue of who is liable
for the workers backwages when a corporation ceases operations, should apply to his
situation.
The RespondentsPosition
Through their comment38 and memorandum,39 the respondents pray that the petition be
denied for the following reasons:
1. The NLRC had no jurisdiction over the dispute between Livesey and CBB/Dwyer as it
involved an intra-corporate controversy; under Republic Act No. 8799, the Regional Trial
Court exercises jurisdiction over the case.
As shown by the records, Livesey was appointed as CBBs Managing Director during the
relevant period and was also a shareholder, making him a corporate officer.
2.There was no employer-employee relationship between Livesey and Binswanger.
Under Article 217 of the Labor Code, the labor arbiters and the NLRC have jurisdiction
only over disputes where there is an employer- employee relationship between the
parties.
3.The NLRC erred in applying the doctrine of piercing the veil of corporate fiction to the
case based only on mere assumptions. Point by point, they take exception to Liveseys
submissions as follows:
a.The e-mail statement in reply to an online query of Young (CBBs Web Editor)
that CBB is known as Chesterton Blumenauer Binswanger or Chesterton Petty.
31
 Ltd. to establish a connection between CBB and Binswanger is inconclusive as
there was no mention in the statement of Binswanger Philippines, Inc.
b.The affidavit of De Guzman, former CBB Associate Director, who also
resigned from the company like Livesey, has no probative value as it was self-
serving and contained only misrepresentation of facts, conjectures and surmises.
c.When Binswanger was organized and incorporated, CBB had already been
abandoned by its Board of Directors and no longer subsidized by CBB-
Hongkong; it had no business operations to work with.
d.The mere transfer of Elliot and Catral from CBB to Binswanger is not a
ground to pierce the corporate veil in the present case absent a clear evidence
supporting the application of the doctrine. The NLRC applied the doctrine on the
basis only of LA Guerreros decision in the De Guzman case.
e.The respondents petition for certiorari was filed on time. Atty. Jacosalem, who
was presumed to have been engaged as the respondents counsel, was deemed to
have received a copy of the NLRC resolution (denying the motion for
reconsideration) on March 17, 2006 when he requested and secured a copy from
the NLRC. The petition was filed on May 15, 2006 or fifty-nine (59)days from
March 17, 2006. Atty. Jacosalem may have failed to indicate his address on the
motion for reconsideration he filed but that is not a reason for him to be
deprived of the notices and processes of the case.
The Courts Ruling
The procedural question
The respondents petition for certiorari before the CA was filed out of time. The sixty
(60)-day filing period under Rule 65 of the Rules of Court should have been counted
from January 19, 2006, the date of receipt of a copy of the NLRC resolution denying the
respondents motion for reconsideration by the Corporate Counsels Philippines, Law
Offices which was the respondents counsel of record at the time. The respondents cannot
insist that Atty. Jacosalems receipt of a copy of the resolution on March 17, 2006 as the
reckoning date for the filing of the petition as we shall discuss below.
The CA chided the NLRC for serving a copy of the resolution on the Corporate Counsels
Philippines, Law Offices, instead of on Atty. Jacosalem as it believed that the labor
tribunal impliedly recognized Atty. Jacosalem as the respondents counsel when it acted
on the motion for reconsideration that he signed. As we see it, the fault was not on the
NLRC but on Atty. Jacosalem himself as he left no forwarding address with the NLRC, a
serious lapse that even he admitted.40 This is a matter that cannot just be taken for granted
as it betrays a careless legal representation that can cause adverse consequences to the
other party.
To our mind, Atty. Jacosalems non-observance of a simple, but basic requirement in the
practice of law lends credence to Liveseys claim that the lawyer did not formally enter
his appearance before the NLRC as the respondents new counsel; if it had been
otherwise, he would have supplied his office address to the NLRC. Also, had he
exercised due diligence in the performance of his duty as counsel, he could have inquired
earlier with the NLRC and should not have waited as late as March 17, 2006 about the
outcome of the respondents motion for reconsideration which was filed as early as
October 28, 2005.
To reiterate, the filing of the respondents petition for certiorari should have been
reckoned from January 19, 2006 when a copy of the subject NLRC resolution was
received by the Corporate Counsels Philippines, Law Offices, which, as of that date, had
not been discharged or had withdrawn and therefore remained to be the respondents
counsel of record. Clearly, the petition for certiorari was filed out of time. Section 6(a),
Rule III of the NLRC Revised Rules of Procedure provides that "[f]or purposes of appeal,
the period shall be counted from receipt of such decisions, resolutions, or orders by the
counsel or representative of record."
We now come to the issue of whether the NLRC had jurisdiction over the controversy
between Livesey and CBB/Dwyer on the ground that it involved an intra-corporate
dispute.
Based on the facts of the case, we find this issue to have been rendered academic by the
compromise agreement between Livesey and CBB and approved by LA Reyno.41 That
CBB reneged in the fulfillment of its obligation under the agreement is no reason to
revive the issue and further frustrate the full settlement of the obligation as agreed upon.
The substantive aspect of the case
Even if we rule that the respondents appeal before the CA had been filed on time, we
believe and so hold that the appellate court committed a reversible error of judgment in
its challenged decision.
The NLRC committed no grave abuse of discretion in reversing LA Laderas ruling as
there is substantial evidence in the records that Livesey was prevented from fully
receiving his monetary entitlements under the compromise agreement between him and
CBB, with Elliot signing for CBB as its President and CEO. Substantial evidence is more
32
than a scintilla; it means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.42
Shortly after Elliot forged the compromise agreement with Livesey, CBB ceased
operations, a corporate event that was not disputed by the respondents. Then Binswanger
suddenly appeared. It was established almost simultaneously with CBBs closure, with no
less than Elliot as its President and CEO. Through the confluence of events surrounding
CBBs closure and Binswangers sudden emergence, a reasonable mind would arrive at
the conclusion that Binswanger is CBBs alter ego or that CBB and Binswanger are one
and the same corporation. There are also indications of badges of fraud in Binswangers
incorporation. It was a business strategy to evade CBBs financial liabilities, including its
outstanding obligation to Livesey.
The respondents impugned the probative value of Liveseys documentary evidence and
insist that the NLRC erred in applying the doctrine of piercing the veil of corporate
fiction in the case to avoid liability. They consider the NLRC conclusions as mere
assumptions.
We disagree.
It has long been settled that the law vests a corporation with a personality distinct and
separate from its stockholders or members. In the same vein, a corporation, by legal
fiction and convenience, is an entity shielded by a protective mantle and imbued by law
with a character alien to the persons comprising it.43 Nonetheless, the shield is not at all
times impenetrable and cannot be extended to a point beyond its reason and policy.
Circumstances might deny a claim for corporate personality, under the "doctrine of
piercing the veil of corporate fiction."
Piercing the veil of corporate fiction is an equitable doctrine developed to address
situations where the separate corporate personality of a corporation is abused or used for
wrongful purposes.44 Under the doctrine, the corporate existence may be disregarded
where the entity is formed or used for non-legitimate purposes, such as to evade a just
and due obligation, or to justify a wrong, to shield or perpetrate fraud or to carry out
similar or inequitable considerations, other unjustifiable aims or intentions, 45 in which
case, the fiction will be disregarded and the individuals composing it and the two
corporations will be treated as identical.46
In the present case, we see an indubitable link between CBBs closure and Binswangers
incorporation. CBB ceased to exist only in name; it re-emerged in the person of
Binswanger for an urgent purpose
to avoid payment by CBB of the last two installments of its monetary obligation to
Livesey, as well as its other financial liabilities. Freed of CBBs liabilities, especially that
owing to Livesey, Binswanger can continue, as it did continue, CBBs real estate
brokerage business.
Liveseys evidence, whose existence the respondents never denied, converged to show
this continuity of business operations from CBB to Binswanger.1wphi1 It was not just
coincidence that Binswanger is engaged in the same line of business CBB embarked on:
(1) it even holds office in the very same building and on the very same floor where CBB
once stood; (2) CBBs key officers, Elliot, no less, and Catral moved over to Binswanger,
performing the tasks they were doing at CBB; (3) notwithstanding CBBs closure,
Binswangers Web Editor (Young), in an e-mail correspondence, supplied the information
that Binswanger is "now known" as either CBB (Chesterton Blumenauer Binswanger or
as Chesterton Petty, Ltd., in the Philippines; (4) the use of Binswanger of CBBs
paraphernalia (receiving stamp) in connection with a labor case where Binswanger was
summoned by the authorities, although Elliot claimed that he bought the item with his
own money; and (5) Binswangers takeover of CBBs project with the PNB.
While the ostensible reason for Binswangers establishment is to continue CBBs
business operations in the Philippines, which by itself is not illegal, the close proximity
between CBBs disestablishment and Binswangers coming into existence points to an
unstated but urgent consideration which, as we earlier noted, was to evade CBBs
unfulfilled financial obligation to Livesey under the compromise agreement.47
This underhanded objective, it must be stressed, can only be attributed to Elliot as it was
apparent that Binswangers stockholders had nothing to do with Binswangers operations
as noted by the NLRC and which the respondents did not deny.48 Elliot was well aware of
the compromise agreement between Livesey and CBB, as he "agreed and accepted" the
terms of the agreement49 for CBB. He was also well aware that the last two installments
of CBBs obligation to Livesey were due on June 30, 2003 and September 30, 2003.
These installments were not met and the reason is that after the alleged sale of the
majority of CBBs shares of stock, it closed down.
With CBBs closure, Livesey asked why people would buy into a corporation and simply
close it down immediately thereafter? 50 The answer
to pave the way for CBBs reappearance as Binswanger. Elliots "guiding hand," as
Livesey puts it, is very much evident in CBBs demise and Binswangers creation. Elliot
knew that CBB had not fully complied with its financial obligation under the compromise
agreement. He made sure that it would not be fulfilled when he allowed CBB's closure,
despite the condition in the agreement that "unless and until the Compromise Amount has
been fully settled and paid by the Company in favor of Mr. Livesey, the Company shall
33
not x x x suspend, discontinue, or cease its entire or a substantial portion of its business
operations[.]"51
What happened to CBB, we believe, supports Livesey's assertion that De Guzman, CBB's
former Associate Director, informed him that at one time Elliot told her of CBB 's plan to
close the corporation and organize another for the purpose of evading CBB 's liabilities to
Livesey and its other financial liabilities.52 This wrongful intent we cannot and must not
condone, for it will give a premium to an iniquitous business strategy where a corporation
is formed or used for a non-legitimate purpose, such as to evade a just and due
obligation.53 We, therefore, find Elliot as liable as Binswanger for CBB 's unfulfilled
obligation to Livesey.
WHEREFORE, premises considered, we hereby GRANT the petition. The decision dated
August 18, 2006 and the Resolution dated March 29, 2007 of the Court of Appeals are
SET ASIDE. Binswanger Philippines, Inc. and Keith Elliot (its President and CEO) are
declared jointly and severally liable for the second and third installments of CBB 's
liability to Eric Godfrey Stanley Livesey under the compromise agreement dated October
14, 2002. Let the case record be remanded to the National Labor Relations Commission
for execution of this Decision.
Costs against the respondents.
SO ORDERED.
G.R. No. 197003 February 11, 2013
NERIE C. SERRANO, Petitioner,
vs.
AMBASSADOR HOTEL, INC. and YOLANDA CHAN, Respondents.
DECISION
VELASCO, JR., J.:
Before Us is a Petition for Review on Certiorari under Rule 45 assailing and seeking to
set aside the Decision 1and Resolution2 dated March 26, 2010 and May I9, 20 II,
respectively, of the Court of Appeals ( CA) in CA-G.R. SP No. 100612, affirming with
modification the May 24, 2007 Resolution3 of the National Labor Relations Commission
(NLRC), Third Division, in NLRC Case No. 040480-04 (NCR Case No. 00-04-04580-
03 ).
Records yield the following facts:
Petitioner Nerie C. Serrano (Serrano) was hired by respondent
Ambassador Hotel, Inc. (AI-II) in 1969 as an accountant4 when the hotel was still under
construction. When hotel operations began in I971, AI-II installed Serrano as the head of
the accounting department.5 In I972, Serrano was tasked to assist in the canvass and
purchase of merchandise, as well as handle the random checking of foodstuff and bar
stock inventories, as additional duties.6
Sometime in 1998, an intra-corporate controversy erupted within AHI. At the time,
respondent Yolanda Chan (Chan), then the general cashier of AHI, brought to the
attention of AHIs President, her father Simeon Nicolas Chan (Simeon), the alleged
commission by Serrano of acts of misappropriation.7 Thereafter, the AHI board met and
passed several resolutions, namely: (1) Resolution No. 6, Series of 1998, dismissing
Simeon as the President and declaring all executive positions vacant and abolished; (2)
Resolution No. 7, Series of 1998, designating Chan as the new president of AHI; and (3)
Resolution No. 10, Series of 1998, dismissing Serrano for insubordination and loss of
trust and confidence.8
Simeon, however, refused to honor the foregoing resolutions and instead barred Yolanda
Chan from entering the hotel premises.9 Chan, in turn, invoked her right as a stockholder
of AHI and demanded to be given the right to inspect the books and records of the hotel.
Upon the order of Simeon, Serrano resisted Chans demand,10prompting the latter to file a
case before the Securities and Exchange Commission (SEC). Chans right to inspect the
books was sustained by the SEC and finally by this Court in G.R. No. 156574,
entitled Nerie Serrano v. Yolanda Chan, on March 17, 2003.11 In the meantime, the
Regional Trial Court of Manila, Branch 46, issued a Decision sustaining the legality of
AHIs Board Resolutions.12
On April 10, 2001, Chan assumed the presidency of, and brought her own staff to work in
AHI. Soon after, she issued Memo No. YCC-2001-2002 dated April 16, 2001, directing
Serrano to prepare a detailed account report of AHIs assets, to turn over all of AHIs cash
and bank accounts to Chan, and to stop dealing and/or transacting for and in behalf of the
hotel.13 Other than the preparation of the account report, Serrano alleged that she was not
given any job assignment but was told to report directly and daily to Chan. Due to this
new working arrangement, Serrano, so she claimed, was forced to file her retirement on
July 31, 2001, 30 days before its effectivity. Thereafter, she prepared all the necessary
accounting documents for a smooth turnover.14
On August 7, 2001, Serrano received a letter from Chan stating that the former can no
longer avail of her retirement pay from AHI, since she had already received a lump sum
amount of PhP 137,205.07, and has been receiving monthly pensions, from the Social
Security System (SSS) for retiring in May 2000.15 Serrano claimed that she was not paid
her 13th month pay for the years 1999, 2000, and 2001.16 Even her salary from March 1,
2000 up to August 31, 2001, she added, was not paid, together with allowances from May
16, 2000 to February 28, 2001, service charge from August 2000 to April 2001, and
service incentive leave pay for the year 2001.17
It is upon the foregoing factual backdrop that Serrano had filed a complaint against AHI
and/or Chan for the nonpayment of salaries, 13th month pay, separation pay, retirement
benefits, and damages before the labor arbiter.18
Finding that AHI failed to discharge the burden to prove that Serrano had been paid her
salaries and other monetary benefits19 inclusive of her retirement pay,20 Labor Arbiter
Fatima Jambaro-Franco ruled for Serrano. By a Decision dated April 28, 2004, the labor
arbiter awarded Serrano the total amount of PhP 1,323,693.36 representing her retirement
benefits and other monetary awards,21 viz:
34
WHEREFORE, premises considered, judgment is hereby rendered ordering the
respondents Ambassador Hotel, Inc. and/or Yolanda Chan to jointly and severally pay
complainant Nerie C. Serrano the amount of ONE MILLION THREE HUNDRED
TWENTY THREE THOUSAND SIX HUNDRED NINETY THREE PESOS &
36/100 (P1,323,693.36) representing her retirement benefits and other monetary award as
earlier computed plus attorneys fees.
On appeal, the NLRC modified the labor arbiters Decision by deleting the award
representing Serranos retirement pay, thereby reducing the award to only PhP
324,680.40. The NLRC gave credence to respondents claim that the SSS had already
paid Serrano her retirement pay so that she is no longer entitled to receive the same
monetary benefit awarded by the labor arbiter. 22 The dispositive portion of the NLRC
Decision provided, thus:
PREMISES CONSIDERED, the Decision of May 7, 2004 is hereby MODIFIED by
deletion of the award representing retirement pay. Respondents are directed to pay
complainant the following:
13th month pay
1999
2000
2001 P98,388.00
Unpaid salary
3/1/01 - 8/31//01 = 6 months
P32,796 x 6 mos. P295,164.00
- 196,776.00
10% attorney's fees - 29,516.40
- P324,680.40
Petitioner Serrano and respondents AHI and Chan interposed separate petitions for
certiorari assailing the NLRC Decision, after their respective motions for reconsideration
were denied.24 At the CA, Serranos petition docketed as CA-G.R. SP No. 100569,
entitled Nerie Serrano v. National Labor Relations Commission (Third Division),
Ambassador Hotel, Inc. and Yolanda Chan, was raffled to the CAs Special Eighth (8th)
Division, while that of respondents AHI and Chans, docketed as CA-G.R. SP No.
100612, entitled Ambassador Hotel, Inc. and Yolanda Chan in her capacity as President
of Ambassador Hotel, Inc. v. NLRC and Nerie C. Serrano, went to the CAs Special
Fourth (4th) Division.
On November 4, 2008 in CA-G.R. SP No. 100569, the appellate courts Special 8th
Division issued a Decision25 reversing the NLRCs Decision and reinstating and
affirming the labor arbiters Decision. The CA Special 8th Division declared the
deletion of the retirement pay award by the NLRC erroneous, the retirement pay under
Article 287 of the Labor Code, as amended, being separate from the retirement benefits
claimable by a qualified employee under the Social Security Law. It explained that
respondents Chan and AHI failed to prove that Serrano already received all her salaries
and benefits.26 Thus, the CA Special 8th Division disposed:
WHEREFORE, the decision of the NLRC is hereby REVERSED and that of the Labor
Arbiter dated 28 April 2004 is REINSTATED and AFFIRMED.27
In its August 24, 2009 Resolution,28 the former CA Special 8th Division denied
respondents motion for reconsideration. Hence, respondents Chan and AHI filed before
this Court a Petition for Review on Certiorari dated October 15, 2009, docketed as G.R.
No. 189313, praying that the November 4, 2008 and August 24, 2009 Decision and
Resolution of the CA Special 8th Division be annulled and set aside. 29
In a Resolution dated December 16, 2009,30 this Court dismissed respondents petition
stating that:
Acting on the petition for review on certiorari assailing the Decision dated 04 November
2008 and Resolution dated 24 August 2009 of the Court of Appeals in CA-G.R. SP No.
100569, the Court resolves to DENY the petition for failure to sufficiently show that the
appellate court committed any reversible error in the challenged decision and resolution
as to warrant the exercise by this Court of its discretionary appellate jurisdiction. 31
In its March 17, 2010 Resolution,32 the Court denied with finality respondents Chan and
AHIs motion for reconsideration.33 On May 14, 2010, the Resolution of this Court in
G.R. No. 189313 became final and executory,34 thereby effectively reinstating with
finality the Decision of the labor arbiter.
Meanwhile, in their petition for certiorari under consideration by the appellate courts
Special 4th Division, respondents AHI and Chan argued against Serranos entitlement to
any monetary award and, thus, faulted the NLRC for granting her the reduced amount of
PhP 324,680.40.
Sustaining for the most part the respondents arguments, the CA Special 4th Division
issued the presently assailed Decision dated March 26, 2010, which affirms with
modification the NLRC Decision by deleting the award of unpaid salaries and thereby
further reducing the monetary award to PhP 27,376.80. The CA Special 4th Division
tagged Serranos unilateral computation of her salaries and benefits as self-serving. To the
CA Special 4th Division, the NLRC should have considered the Bureau of Internal
Revenue documents and payslips presented by respondents AHI and Chan, which proved
that Serranos monthly salary was only PhP 12,444, and not PhP 32,796.35 As for the
claimed unpaid salaries from March 1, 2001 to August 1, 2001, the CA Special 4th
Division was of the position that there is no dispute that Serrano already retired in 2000
and she failed to prove her allegation that she rendered services for AHI thereafter.
Hence, the appellate court found that NLRCs grant of unpaid salary is
erroneous.36 The fallo of the CA Special 4th Division assailed Decision declared, thus:
WHEREFORE, premises considered, the NLRCs Decision dated May 24, 2007 is
hereby MODIFIED in that Ambassador Hotel is directed to pay private respondent the
following:
a.) 13th month pay: x x x
b.) Attorneys fees equivalent to 10% of the judgment award in the amount
of P2,488.80.
The award of unpaid salaries representing six months, from 3/1/01 to 8/31/01
at P32,796.00 or a total of P196,776.00 is hereby deleted for lack of merit.37
Petitioners motion for reconsideration having been denied, she now comes to this Court
via the instant petition praying, in the main, that the Decision in CA-G.R. SP No. 100612
of the Special 4th Division be declared without legal effect for effectively contradicting a
final and executory Decision of this Court in G.R. No. 189313.
The petition is meritorious.
35
This Courts December 16, 200938 Resolution and March 17, 2010 Resolution39 denying
the motion for reconsideration with finality in G.R. No. 189313 should have immediately
written finis to the controversy between the parties regarding the benefits of petitioner
Serrano. The appellate courts Special 4th Division ought to have immediately dismissed
respondents certiorari petition docketed as CA-G.R. SP No. 100612 in view of this
Courts final pronouncements in G.R. No. 189313. The principle of "bar by prior
judgment," one of the two concepts embraced in the doctrine of res judicata, the other
being labeled as "conclusiveness of judgment," demands such action. Section 47(b), Rule
39 of the Rules of Court on the effect of a former judgment is clear:
SEC. 47. Effect of final judgments or final orders. The effect of a judgment or final
order rendered by a court of the Philippines, having jurisdiction to pronounce the
judgment or final order, may be as follows:
xxxx
(b) x x x [T]he judgment or final order is, with respect to the matter directly
adjudged or as to any other matter that could have been raised in relation
thereto, conclusive between the parties and their successors in interest by title
subsequent to the commencement of the action or special proceeding, litigating for the
same thing and under the same title and in the same capacity x x x. (Emphasis supplied.)
By the doctrine of res judicata, "a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or their privies in all later
suits on all points and matters determined in the former suit."40 To apply this doctrine in
the form of a "bar by prior judgment," there must be identity of parties, subject matter,
and causes of action as between the first case where the first judgment was rendered and
the second case that is sought to be barred.41 All these requisites are present in the case at
bar:
First, the parties in both G.R. No. 189313 and CA-G.R. SP No. 100612, which is the
subject of Our present review, are petitioner Serrano and respondents Chan and AHI.
Second, G.R. No. 189313 and CA-G.R. SP No. 100612 both deal with the same subject
matter: Serranos entitlement to monetary benefits under the pertinent labor laws as an
employee of respondents AHI and Chan.
Lastly, both G.R. No. 189313 and CA-G.R. SP No. 100612 originated from one and the
same complaint lodged before the labor arbiter where Serrano alleged the nonpayment of
her salaries, 13th month pay, and retirement benefits as the cause of action.
Our ruling in G.R. No. 189313 affirming in essence the Decision of the labor arbiter that
granted Serranos claimed unpaid salary, 13th month pay, and retirement benefits, among
others, is, therefore, conclusive on Serrano and respondents Chan and AHI on the matter
of the formers entitlement or non-entitlement to the benefits thus awarded. As a
necessary corollary, it was a grave error on the part of the appellate court to render a
decision in CA-G.R. SP No. 100612 that runs counter to the final ruling in G.R. No.
189313. Said CA Decision offends the principle of res judicataa basic postulate to the
end that controversies and issues once decided on the merits by a court of competent
jurisdiction shall remain in repose. As it were, the decision in G.R. No. 189313, the prior
judgment, constitutes in context an absolute bar to any subsequent action not only as to
every matter which was offered to sustain or defeat Serranos demand or claim but also as
to any other admissible matter which might have been offered. 42
It need not be stressed that a final judgment may no longer be modified in any respect,
even if the modification is meant to correct erroneous conclusions of fact and
law.43 In Gallardo-Corro v. Gallardo, We explained that this principle of the immutability
of final judgments is an important aspect of the administration of justice as it ensures an
end to litigations:
Nothing is more settled in law than that once a judgment attains finality it thereby
becomes immutable and unalterable. It may no longer be modified in any respect, even
if the modification is meant to correct what is perceived to be an erroneous conclusion of
fact or law, and regardless of whether the modification is attempted to be made by the
court rendering it or by the highest court of the land. Just as the losing party has the right
to file an appeal within the prescribed period, the winning party also has the correlative
right to enjoy the finality of the resolution of his case. The doctrine of finality of
judgment is grounded on fundamental considerations of public policy and sound practice,
and that, at the risk of occasional errors, the judgments or orders of courts must become
final at some definite time fixed by law; otherwise, there would be no end to litigations,
thus setting to naught the main role of courts of justice which is to assist in the
enforcement of the rule of law and the maintenance of peace and order by settling
justiciable controversies with finality.44 (Emphasis supplied.)
This precept has been reiterated, time and again, in countless cases. 45 Hence, to ensure
against judicial confusion and the seeming conflict in the judiciarys decisions, courts
must be constantly vigilant in extending their judicial gaze to cases related to the matters
submitted for their resolution. Certainly, to ignore the concept of judicial notice and
disregard a finding previously made by this Court and/or by a court of equal rank in a
related case on the same issue, as here, is ridiculous and illogical.46 Not only will it add to
the clogged dockets of the courts, but worse, it will cause the cruel and unnecessary
repeated vexation of a person on the same cause47that could have otherwise been avoided
by the simple expedience of consolidating the cases.48
The Court has observed that in some instances, two separate petitions brought before it
arose from two (2) conflicting decisions rendered by two (2) divisions of the CA when
said decisions arose from one case or actually involve the same parties and cause of
action or common questions of facts or law. This is a bane to the efficient, effective and
expeditious administration of justice which should be addressed at the earliest possible
time.
The procedure on consolidation of cases in the CA is embodied in Sec. 3, Rule III of the
Internal Rules of the CA which reads:
Sec. 3. Consolidation of Cases.When related cases are assigned to different Justices,
they shall be consolidated and assigned to one Justice.
(a) Upon motion of a party with notice to the other party/ies, or at the instance of
the Justice to whom any of the related cases is assigned, upon notice to the
parties, consolidation shall ensue when the cases involve the same parties and/or
related questions of fact and/or law.1wphi1
(b) Consolidated cases shall pertain to the Justice
(1) To whom the criminal case with the lowest docket number is
assigned, if they are of the same kind;
(2) To whom the criminal case with the lowest docket number is
assigned, if two or more of the cases are criminal and the others are
civil or special;
(3) To whom the criminal case is assigned and the others are civil or
special; and
(4) To whom the civil case is assigned, or to whom the civil case with
the lowest docket number is assigned, if the cases involved are civil and
special.
36
While Sec. 3(a) above appears to be a sound rule, perhaps a better and more effective
system can be set up to preclude the recurrence of conflicting decisions involving the
same case or parties and cause of action emanating from two CA divisions. It is suggested
that the CA consider the procedure in this Court that the duty to determine whether
consolidation is necessary or mandatory falls on the shoulders of the Clerk of Court
(COC) and the Division Clerks of Courts. Rather than rely on the interested party to
register a motion to consolidate or the Justice to whom the case is assigned, it is best that
it should be the Clerk of Court and the Division Clerks of Court of the CA who should be
responsible for the review and consolidation of similarly intertwined cases. The rollos of
cases are initially transmitted to them for verification of the requirements of the petition,
more particularly the certification against forum shopping where parties state the
pendency of related cases and are in a better position to identify and determine if
consolidation of cases is proper. Once there exists two related cases, the Division Clerk of
Courts shall immediately inform the COC of such fact. The COC, in turn, shall posthaste
inform the two Justices of the need for consolidation and that said cases shall be referred
to the Justice who was assigned the lower numbered case. This will hopefully prevent a
Division from deciding a case which has already been decided by another division.
WHEREFORE, the Court GRANTS the petition and SETS ASIDE the Decision and
Resolution dated March 26, 2010 and May 19, 2011, respectively, of the CA in CA-G.R.
SP No. 100612. The CA is ordered to adopt immediately a more effective system in its
Internal Rules to avoid two (2) divisions independently and separately deciding two (2)
cases which originated from a case decided by a court a quo or which involved the same
parties and cause of action oc common questions of law or facts to prevent the rendition
of conflicting decisions by two divisions which should otherwise have been consolidated
in the first place.
SO ORDERED.
G.R. No. 178564 January 15, 2014
INC. SHIPMANAGEMENT, INC., CAPTAIN SIGFREDO E. MONTERROYO
AND/OR INTERORIENT NAVIGATION LIMITED, Petitioners,
vs.
ALEXANDER L. MORADAS, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on Certiorari1 are the Decision2 dated October 31,
2006 and Resolution3 dated June 25, 2007 of the Court of Appeals (CA) in CA-G.R. SP
No. 84769 which granted respondent Alexander L. Moradas's (respondent) claim to
permanent total disability benefits in the amount of US 60,000.00, or its peso equivalent,
and attorney's fees.
The Facts
On July 17, 2000, respondent was employed as wiper for the vessel MV Commander
(vessel) by petitioner INC Shipmanagement, Inc. for its principal, petitioner Interorient
Navigation, Ltd. (petitioners), for a period of 10 months, with a basic monthly salary of
US 360.00, plus benefits.4
On October 13, 2000, respondent claimed that while he was disposing of the garbage in
the incinerator room of the vessel, certain chemicals splashed all over his body because
of an explosion.5 He was sent to the Burns Unit of the Prince of Wales Hospital on the
same day wherein he was found to have suffered deep burns. Eventually, upon his own
request, respondent was sent home.6
On October 21, 2000, he was admitted to the St. Lukes Medical Center.7 Subsequently,
he was diagnosed to have sustained "thermal burns, upper and lower extremities and
abdomen, 2-3, 11%"8 for which he underwent debridement. He was referred to a
physical therapist for his subsequent debridement through hydrotherapy. On November
10, 2000, the attending physician, Dr. Natalio G. Alegre II, reported that the respondents
thermal burns were healing well and that they were estimated to fully heal within a period
of 3 to 4 months.9
Claiming that the burns rendered him permanently incapable of working again as a
seaman, respondent demanded10 for the payment of his full disability benefits under
Section 20 (B) in relation to Sections 30 and 30-A of the Philippine Overseas
Employment Agency (POEA) Standard Employment Contract (POEA-SEC), in the
amount of US$60,000.00, which petitioners refused to heed.11 Thus, respondent filed a
complaint against petitioners for the same, seeking as well moral and exemplary
damages, including attorneys fees.
In their position paper,12 petitioners denied respondents claims, contending that his injury
was self-inflicted and, hence, not compensable under Section 20 (D) of the POEA-SEC.
They denied that the vessels incinerator exploded and claimed that respondent burned
himself by pouring paint thinner on his overalls and thereafter set himself on fire. They
averred that he was led to commit such act after he was caught last October 10,
200013stealing the vessels supplies during a routine security inspection conducted by
Captain Bodo Wirth (Captain Wirth) where respondent was informed that he was to be
dismissed.14 They also stated that just before they discovered respondent to be burning,
the vessels engine room became flooded.15 They ascribed the flooding incident to
37
respondent, having been seen by fellow crew members standing at the railing around the
portside seachest and looking at it16 and that when the bilge level alarm sounded, he was
seen disappearing up to the boiler deck leaving small patches of water on the floor, on the
steps, and on the deck where he had been.17 In support thereof, petitioners submitted the
report of the ship captain on the flooding as extracted from the vessels deck logbook18 as
well as the affidavits and statements executed by the vessels officers and crew members
relative to the flooding and burning incidents. Based on the said affidavits and
statements, the vessels bosun, Antonio Gile (Gile), attested that he saw respondent go to
the paint room and there soak his hands in a can full of thinner. Respondent then
proceeded to the incinerator door where he was set ablaze. Gile further pointed out that
there was no fire in the incinerator at that time.19 Also, Chief Officer Antonino S. Bejada
(Bejada) testified that prior to the burning incident, he had ordered an ordinary seaman
who had been burning deck waste in the incinerator to extinguish the fire with water and
close up the incinerator door because of bad weather conditions. Bejada then checked the
incinerator after the burning incident and found unburnt cardboard cartons inside with no
sign of explosion and that the steel plates surrounding it were cool to the touch. He also
noticed that the respondents overalls had patches of green paint on the arms and body
and smelled strongly of thinner. An open paint tin can was found near the place of the
incident and a cigarette lighter lying beside respondent20 which oiler Edgardo Israel
confirmed was borrowed from him even though he knew that the former did not
smoke.21 Finally, petitioners denied respondents claim for damages and attorneys fees
for lack of factual and legal bases.22
In his Reply to the position paper,23 respondent denied burning himself, contending that
such act was contrary to human nature and logic and that there was no showing that he
was mentally unfit.24 Further, he posited that the affidavits and statements submitted by
the vessels officers and crew members have no probative value for being mere hearsay
and self-serving.25 He equally insisted on his claim for moral and exemplary damages and
attorneys fees.26
Meanwhile, or on February 29, 2001, petitioner Captain Sigfredo E. Monterroyo filed a
complaint27 for disciplinary action against respondent before the POEA for his various
infractions committed on board the vessel, namely: (a) act of dishonesty for stealing the
vessels supplies on October 10, 2000; (b) act of sabotage committed on October 13,
2000; and (c) grave misconduct for inflicting the injury to himself. 28
The LA Ruling
In a Decision29 dated April 15, 2003, the Labor Arbiter (LA) ruled in favor of petitioners,
dismissing respondents complaint for lack of merit. The LA held that respondents injury
was self-inflicted and that no incinerator explosion occurred that would have caused the
latters injuries.30] The LA gave more credence to the corroborating testimonies of the
petitioners witnesses that respondents botched attempts to sabotage the vessel and steal
its supplies may have motivated him to inflict injuries to himself.31 Lastly, the LA denied
respondents claim for moral and exemplary damages as well as attorneys fees since he
failed to prove any evident bad faith or malice on petitioners part.32
The NLRC Ruling
On appeal, the National Labor Relations Commission (NLRC), in a Decision33 dated
January 30, 2004, sustained the findings of the LA and held, inter alia, that while some of
the statements and affidavits of the vessels officers and crew members were not
notarized, the corroborating testimonial evidence must be taken as a whole. In this
accord, it gave due credence to the questioned evidence absent any showing that the
petitioners were motivated by ill will.34 Also, it pointed out that respondents mental or
physical fitness was not at issue since he was motivated to inflict injury to himself for
reasons related to his impending discharge and not because of his disposition.35
Respondent filed a motion for reconsideration but the same was denied in a
Resolution36 dated March 31, 2004. Dissatisfied, he filed a petition for certiorari before
the CA.
The CA Ruling
On October 31, 2006, the CA rendered the assailed Decision,37 holding that grave abuse
of discretion tainted the NLRC ruling.
It found no logical and causal connection between the act of pilferage as well as the act of
causing the flooding in the engine room and the conclusion that respondents injury was
self-inflicted. It added that it was contrary to human nature and experience for respondent
to burn himself.38 Further, the CA noted that the location of the burns on the different
parts of respondents body was more consistent with respondents assertion that certain
chemicals splashed all over his body rather than petitioners theory of self-inflicted
injury.39 Moreover, it pointed out that no evidence was presented to show that respondent
had no business near the engine room.40 In the same vein, it observed that the mere
finding of a cigarette lighter was inadequate to justify the conclusion that he burned
himself.41 Consequently, for petitioners failure to discharge the burden of proving that
respondents injury was directly attributable to him as required under Section 20 (D) of
the POEA-SEC, the CA found that the NLRC gravely abused its discretion and, thus,
held petitioners liable to pay respondent permanent total disability benefits in the amount
of US$60,000.00, or its peso equivalent.42
On the other hand, respondents claims for moral and exemplary damages were denied
for lack of basis but the CA awarded him attorneys fees in the amount of P50,000.00.43
38
Aggrieved, petitioners moved for reconsideration which was, however, denied in a
Resolution44 dated June 25, 2007. Hence, this petition.
The Issue Before The Court
The essential issue in this case is whether or not the CA erred in finding that the NLRC
gravely abused its discretion when it denied respondents claim for disability benefits.
The Courts Ruling
The petition is meritorious.
A. Preliminary Matters: Framework of
Review and Governing Rules
At the outset, the Court deems it proper to elucidate on the framework in which the
review of this case had been conducted, in conjunction with the applicable governing
rules to analyze its substantive merits.
The Courts jurisdiction in cases brought before it from the CA via Rule 45 of the Rules
of Court is generally limited to reviewing errors of law. The Court is not the proper venue
to consider a factual issue as it is not a trier of facts. This rule, however, is not ironclad
and a departure therefrom may be warranted where the findings of fact of the CA are
contrary to the findings and conclusions of the NLRC and LA, as in this case. In this
regard, there is therefore a need to review the records to determine which of them should
be preferred as more conformable to evidentiary facts.45
With respect to the applicable rules, it is doctrinal that the entitlement of seamen on
overseas work to disability benefits"is a matter governed, not only by medical findings,
but by law and by contract. The material statutory provisions are Articles 191 to 193
under Chapter VI (Disability Benefits) of the Labor Code, in relation [to] Rule X of the
Rules and Regulations Implementing Book IV of the Labor Code. By contract, the
POEA-SEC, as provided under Department Order No. 4, series of 2000 of the
Department of Labor and Employment, and the parties Collective Bargaining Agreement
bind the seaman and his employer to each other."46
In the foregoing light, the Court observes that respondent executed his contract of
employment on July 17, 2000,47 incorporating therein the terms and conditions of the
2000 POEA-SEC which took effect on June 25, 2000. However, since the
implementation of the provisions of the foregoing 2000 POEA-SEC was temporarily
suspended48 by the Court on September 11, 2000, particularly Section 20, paragraphs (A),
(B), and (D) thereof, and was lifted only on June 5, 2002, through POEA Memorandum
Circular No. 2, series of 2002,49 the determination of respondents entitlement to the
disability benefits should be resolved under the provisions of the 1996 POEA-SEC as it
was, effectively, the governing circular at the time respondents employment contract was
executed.
The prevailing rule under Section 20 (B) of the 1996 POEA-SEC on compensation and
benefits for injury or illness was that an employer shall be liable for the injury or illness
suffered by a seafarer during the term of his contract. There was no need to show that
such injury was work-related except that it must be proven to have been contracted
during the term of the contract. The rule, however, is not absolute and the employer may
be exempt from liability if he can successfully prove that the cause of the seamans injury
was directly attributable to his deliberate or willful act as provided under Section 20 (D)
thereof, to wit:
D. No compensation shall be payable in respect of any injury, incapacity, disability or
death of the seafarer resulting from his willful or criminal act, provided however, that the
employer can prove that such injury, incapacity, disability or death is directly attributable
to seafarer.
Hence, the onus probandi falls on the petitioners herein to establish or substantiate their
claim that the respondents injury was caused by his willful act with the requisite
quantum of evidence. In labor cases, as in other administrative proceedings, only
substantial evidence or such relevant evidence as a reasonable mind might accept as
sufficient to support a conclusion is required.50 To note, considering that substantial
evidence is an evidentiary threshold, the Court, on exceptional cases, may assess the
factual determinations made by the NLRC in a particular case. In Career Philippines
Shipmanagement, Inc. v. Serna,51 the Court expressed the following view:
Accordingly, we do not re-examine conflicting evidence, re-evaluate the credibility of
witnesses, or substitute the findings of fact of the NLRC, an administrative body that has
expertise in its specialized field. Nor do we substitute our "own judgment for that of the
tribunal in determining where the weight of evidence lies or what evidence is credible."
The factual findings of the NLRC, when affirmed by the CA, are generally conclusive on
this Court.
Nevertheless, there are exceptional cases where we, in the exercise of our discretionary
appellate jurisdiction may be urged to look into factual issues raised in a Rule 45 petition.
For instance, when
In view of which POEA Memorandum Circular No. 11, series of 2000, issued on 12
September 2000 enforcing the Temporary restraining Order issued by the Supreme Court
39
in a Resolution dated 11 September 2000, on the implementation of the abovementioned
provision is hereby Rescinded.
xxxx
the petitioner persuasively alleges that there is insufficient or insubstantial evidence on
record to support the factual findings of the tribunal or court a quo , as Section 5, Rule
133 of the Rules of Court states in express terms that in cases filed before administrative
or quasi-judicial bodies, a fact may be deemed established only if supported by
substantial evidence.52 (Emphases supplied; citations omitted)
The evident conflict between the NLRCs and CAs factual findings as shown in the
records of this case prompts the Court to sift through their respective factual
determinations if only to determine if the NLRC committed grave abuse of discretion in
reaching its disposition, keeping in mind that the latters assessment should only meet the
threshold of substantial evidence.
B. Application
In view of the above-discussed considerations and after a judicious scrutiny of the facts
on record, the Court holds that the CA erred in attributing grave abuse of discretion on
the part of the NLRC in affirming the LAs dismissal of respondents complaint. This is
based on the Courts observation that the NLRC had cogent legal bases to conclude that
petitioners have successfully discharged the burden of proving by substantial evidence
that respondents injury was directly attributable to himself. The reasons therefor are as
follows:
First, records bear out circumstances which all lead to the reasonable conclusion that
respondent was responsible for the flooding and burning incidents.
Records show that the LA and NLRC gave credence to the corroborating testimonies of
the crewmen pointing to respondent as the person who deliberately caused the flooding
incident. In particular, respondent was seen alone in the vicinity of the portside seachest
which cover was found to have been intentionally removed and thereby caused the
flooding. He was also seen disappearing up to the boiler deck just when the bilge level
alarm sounded with patches of water left on the floor plates and on the stairways.
Respondent neither denied nor proffered any explanation on the foregoing claims
especially when all of his fellow engine room staff, except him, responded to the alarm
and helped pump out the water in the engine room.53 As to the burning, respondent failed
to successfully controvert Giles claim that he saw the former go to the paint room, soak
his hands in a can full of thinner and proceed to the incinerator door where he was set
ablaze. In fact, respondents burnt overalls conform to the aforesaid claim as it had green
paint on the arms and body and smelled strongly of thinner, while the open paint tin can
that was found in the vicinity contained solvent which had the same green color found on
the overalls.
Second, respondents version that the burning was caused by an accident is hardly
supported by the evidence on record.
The purported explosion in the incinerator was belied by Gile who also claimed that there
was no fire in the incinerator room at the time respondent got burned. This was
corroborated by Bejada who testified having ordered an ordinary seaman that was
burning deck waste in the incinerator early that day to extinguish the fire with water and
close up the incinerator door because of bad weather conditions. Accordingly, an
inspection of the incinerator after the incident showed that there were unburnt cardboard
cartons found inside with no sign of explosion and the steel plates surrounding it were
cool to the touch. Further, as aptly discerned by the LA, if there was really an incinerator
explosion, then respondents injury would have been more serious.54
Respondent debunked Giles claim by merely asserting in his Answer and Rejoinder
before the POEA that the latter could not have been in the room at the time he got burned
as he was not the first person to rescue him and concluded that he could not have soaked
his hands in a can full of thinner considering the extent of damage caused to his
hands.55 This argument is riddled with serious flaws: Gile could have been the second
man in, and still personally know the matters he has alleged. Also, that respondent soaked
his hands in thinner is not denied by the fact that the greatest damage was not caused to it
since the fire could have started at some part of his body considering that his overalls also
had flammable chemicals. Reason also dictates that he could have extinguished the fire
on his hands sooner than the other parts of his body. In any event, the medical records of
respondent, particularly the report56 issued by the Prince of Wales Hospital Burns
Surgery, show that he suffered from "deep burn area" that was distributed over his left
upper limb, right hand, left flank and both thighs.57 To assert that respondents hands
should have suffered the greatest damage is plainly argumentative and records are bereft
of showing as to the exact degree of burn suffered for each part.
To add, Bejadas statement that respondents burnt overalls had patches of green paint on
the arms and body and strongly smelled of thinner conforms with Giles claim that he
soaked his hands in a can of thinner before approaching the incinerator (thinner may be
found in a paint room). Such fact further fortifies petitioners assertion that his injury was
self-inflicted as a prudent man would not dispose of garbage in the incinerator under such
condition.
And if only to placate other doubts, the CAs finding that "some chemicals splashed [on
respondents] body"58should not automatically mean that the "splashing" was caused by
40
pure accident. It is equally reasonable to conclude that the "splashing" as may be
inferred from both the LAs and NLRC"s findings was a by-product of respondents
botched sabotage attempt.
While respondent contended that the affidavits and statements of the vessels officers and
his fellow crew members should not be given probative value as they were biased, self-
serving, and mere hearsay, he nonetheless failed to present any evidence to substantiate
his own theory. Besides, as correctly pointed out by the NLRC, the corroborating
affidavits and statements of the vessels officers and crew members must be taken as a
whole and cannot just be perfunctorily dismissed as self-serving absent any showing that
they were lying when they made the statements therein.59
Third, petitioners theory that respondents burns were self-inflicted gains credence
through the existence of motive.
At this juncture, the Court finds it important to examine the existence of motive in this
case since no one actually saw what transpired in the incinerator room. To this end, the
confluence of the circumstances antecedent to the burning should be examined in
conjunction with the existing accounts of the crew members. That said, both the LA and
the NLRC made a factual finding that prior to the burning incident, respondent was
caught pilfering the vessels supplies for which he was told that he was to be relieved
from his duties. This adequately supports the reasonable conclusion that respondent may
have harbored a grudge against the captain and the chief steward who denied giving him
the questioned items.1wphi1 At the very least, it was natural for him to brood over
feelings of resentment considering his impending dismissal. These incidents shore up the
theory that he was motivated to commit an act of sabotage which, however, backfired
into his own burning.
In this relation, the Court observes that a definitive pronouncement on respondents
mental unfitness need not be reached since the totality of the above-stated circumstances
already figures into the rational inference that respondents burning was not a product of
an impaired mental disposition but rather an incident which sprung from his own volition.
Mental impairment connotes the lack of control over ones action. If the actor is
conscious of what he is doing, as respondent was in this case by sabotaging the ship, then
a finding of mental unfitness is not needed. Differing from the CA s take on the matter, it
is not contrary to human experience or logic for a spurned man to resort to tactics of
desperation, however ludicrous or extreme those tactics may be, or however untoward or
unfortunate its consequences may turn out, as in this case.
All told, petitioners having established through substantial evidence that respondent s
injury was self-inflicted and, hence, not compensable pursuant to Section 20 (D) of the
1996 POEA-SEC, no grave abuse of discretion can be imputed against the NLRC in
upholding the dismissal by the LA of his complaint for disability benefits. It is well-
settled that an act of a court or tribunal can only be considered to be tainted with grave
abuse of discretion when such act is done in a capricious or whimsical exercise of
judgment as is equivalent to lack of jurisdiction.60 For the reasons herein detailed, the
Court finds these qualities of capriciousness or whimsicality wanting in the case at bar
and thus, holds that the CA erred in ruling that grave abuse of discretion exists.
WHEREFORE, the petition is GRANTED. The Decision dated October 31, 2006 and
Resolution dated June 25, 2007 of the Court of Appeals in CA-G.R. SP No. 84769 are
REVERSED and SET ASIDE. Accordingly, the Decision dated January 30, 2004 of the
National Labor Relation Commission dismissing respondent Alexander L. Moradas s
complaint for permanent total disability benefits and other money claims is hereby
REINSTATED.
SO ORDERED.
G.R. No. 203115, December 07, 2015
ISLAND OVERSEAS TRANSPORT CORPORATION/PINE CREST SHIPPING
CORPORATION/CAPT. EMMANUEL L. REGIO, Petitioners, v. ARMANDO M.
BEJA, Respondent.
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 assails the March 28, 2012 Decision2 and August
13, 2012 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 113550 affirming
the October 26, 2009 Decision4 and February 15, 2010 Resolution5 of the National Labor
Relations Commission (NLRC), which ordered petitioners Island Overseas Transport
Corporation/Pine Crest Shipping Corporation/Capt. Emmanuel L. Regio (petitioners) to
pay respondent Armando M. Beja (Beja) US$110,000.00 as permanent total disability
benefits and 10% thereof as attorney's fees.
Antecedent Facts
On March 6, 2007, Beja entered into a Contract of Employment6 with petitioner Island
Overseas Transport Corp. for and on behalf of its foreign principal, petitioner Pine Crest
Shipping Corporation, for a period of nine months as Second Assistant Engineer for the
vessel M/V Atsuta. Beja underwent the pre-employment medical examination, where he
was declared fit for work. He boarded the vessel on March 14, 2007.
41
 Below Ratings Above AB
In November 2007, Beja experienced pain and swelling of his right knee, which he
immediately reported to the Master of the vessel. On November 10, 2007, he was brought 100 82,500 110,000 137,500
to a hospital in Italy and was diagnosed to have Arthrosynovitis. He underwent
arthrocentesis of the right knee, was referred to an orthopedic surgeon and was advised to 75 61,900 82,500 103,150
take a rest.7 However, while in Spain, the pain in his right knee recurred and persisted. He 60 49,500 66,000 82,500
was brought to a physician on November 19, 2007 and was advised to be medically
repatriated. 50 41,250 55,000 68,750

Upon arrival in Manila on November 22, 2007, petitioners referred him to Nicomedes G.
Cruz (NGC) Medical Clinic for evaluation. The Magnetic Resonance Imaging of his right
knee showed Chronic Tenosynovitis with Vertical Tear, Postero-Lateral
Meniscus and Probable Tear Anterior Cruciate and Lateral Collateral Ligaments.8 Beja
underwent physical therapy and was advised to undergo operation.9 On April 23, 2008,
Anterior Cruciate Ligament Reconstruction and Partial Menisectomy of the Medial
Meniscus was done on his right knee at Medical Center Manila. 10 After the operation,
petitioners sent him for rehabilitation at St. Luke's Medical Center under the supervision
of Dr. Reynaldo R. Rey-Matias (Dr. Matias).
Meantime, while undergoing therapy, or on May 15, 2008, Beja filed a
complaint11 against petitioners for permanent total disability benefits, medical expenses,
sickness allowance, moral and exemplary damages and attorney's fees. Beja alleged that
his knee injury resulted from an accident he sustained on board the vessel when a
drainage pipe fell on his knee. He claimed that from the time of his repatriation on
November 22, 2007, his knee has not recovered which rendered him incapable of
returning to his customary work as seafarer. This, according to him, clearly entitles him
to permanent total disability benefits pursuant to AMOSUP-JSU Collective Bargaining
Agreement (CBA) which provides:
Article 28.1:chanRoblesvirtualLawlibrary
A seafarer who surfers permanent disability as a result of an accident whilst in the
employment of the Company regardless of fault, including, accidents occurring while
travelling to or from the ship, and whose ability to work as a seafarer is reduced as a
result thereof, but excluding permanent disability due to willful acts, shall in addition to
sick pay, be entitled to compensation, according to the provisions of this
Agreement.12ChanRoblesVirtualawlibrary
He claimed for compensation in the amount of US$137,500.00 in accordance with the
degree of disability and rate of compensation indicated in the said CBA, to wit:
Disability
In the event a seafarer suffers permanent disability in accordance with the provisions of
Article 28 of this Agreement, the scale of compensation provided for under Article 28.3
shall, unless more favourable benefits are negotiated, be:chanRoblesvirtualLawlibrary
xxxx
Effective from 1st January to 31st December, 2007
Degree of Disability Rate of Compensation (US$)
% Ratings, AB & Junior Officers & Senior Officers (4)
40 33,000 44,000 55,000
30 24,750 33,000 41,250
20 16,500 22,000 27,500
10 8,250 11,000 13,750
Note: "Senior Officers" for the purpose of this clause means Master, Chief Officer, Chief
Engineer and 1st Engineer.13ChanRoblesVirtualawlibrary
On May 26, 2008, the company-designated physician, Dr. Nicomedes G. Cruz (Dr. Cruz),
issued an assessment of Beja's disability:
1. Prognosis - guarded.
2. Combined disability grading under the POEA schedule of disabilities:
a. Grade 10 - stretching leg of the ligaments of a knee resulting in instability of the
joint.
b. Grade 13 - slight atrophy of calf muscles without apparent shortening or joint
lesion or disturbance of weight-bearing line.14
After more than three months of therapy, Dr. Matias issued on August 28, 2008 a medical
report15stating that Beja is still under pain as verified by the Visual Analog System which
measures his pain at 6 out of 10 (10 being the highest measure of pain) and is having
difficulty in his knee movements. Thereafter, on August 30, 2008, Beja consulted an
orthopedic surgeon, Dr. Nicanor F. Escutin (Dr. Escutin), who examined and certified him
to be unfit for sea duty in whatever capacity due to pain and difficulty of the use of his
right knee despite the operation and therapy performed on him.16
Proceedings before the Labor Arbiter
During the preliminary conference, petitioners offered to pay Beja the amount of
US$13,345.00, corresponding to the combined disability grading given by Dr. Cruz,
which is disability Grade 10 (US$50,000 x 20.15%) and Grade 13 (US$50,000 x 6.72%)
under the Schedule of Disability Allowances in the POEA Standard Employment
Contract (POEA- SEC). Beja, however, rejected petitioners' offer and reiterated his claim
for total disability benefits as strengthened by the certification of Dr. Escutin that he
suffers from a permanent total disability, which he claimed, confirmed the findings of Dr.
Matias.
Petitioners, however, insisted that the combined disability assessment given by Dr. Cruz,
who for months continuously treated and monitored Beja's condition, prevails over that
rendered by Dr. Escutin, who examined Beja only once and whose diagnosis was merely
42
based on the medical reports and findings of the company-designated physicians.
Petitioners further disclaimed Beja's entitlement to disability claim under the CBA as it
expressly requires the parties to consult a third doctor whose opinion shall be binding on
them. Since Beja failed to observe this procedure which is also mandated under the
POEA-SEC, the finding of Dr. Cruz deserves utmost respect. Petitioners also asseverated
that Beja already received his sickness allowance by presenting several vouchers.17
In a Decision18 dated February 27, 2009, the Labor Arbiter awarded Beja maximum
disability benefits under the CBA. The Labor Arbiter did not give credence to the
assessment given by Dr. Cruz as it was issued after the lapse of 120 days which, by
operation of law, transformed Beja's disability to total and permanent. Moreover, despite
continued physical therapy, Bejars condition did not improve even beyond the 240-day
maximum medical treatment period. The Labor Arbiter found doubtful Dr. Cruz's
assessment considering that he was not the one who performed the operation on Beja's
knee. The Labor Arbiter denied Beja's claim for sickness allowance since payment
thereof was fully substantiated by evidence presented by petitioners. The dispositive
portion of the Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered against the above-
named respondents ISLAND OVERSEAS TRANSPORT CORP. and/or PINE CREST
SHIPPING CORP. and/or CAPT. EMMANUEL L. REGIO, who are hereby ordered to
pay, jointly and severally, complainant's Permanent Total Disability benefits in the
amount of US DOLLARS ONE HUNDRED THIRTY SEVEN THOUSAND FIVE
HUNDRED (US$137,500.00), in Philippine currency at the prevailing rate of exchange
at the time of payment, plus ten percent (10%) thereof as attorney's fees.
SO ORDERED.19ChanRoblesVirtualawlibrary
Proceedings before the National Labor Relations Commission
On appeal, petitioners attributed error in the Labor Arbiter in granting Beja the maximum
disability benefits under the CBA. Petitioners argued that since Dr. Cruz made an
assessment on May 26, 2008 or before the lapse of the maximum 240-day treatment
period from the date of Beja's repatriation on November 22, 2007, mere was no factual
basis in ruling that Beja is entitled to full disability benefits. They cited Vergara v.
Hammonia Maritime Services, Inc.,20 where it was pronounced that only after the lapse of
240 days of continuous medical treatment without any assessment given by the company
doctor that a medically repatriated seafarer could be adjudged as permanently and totally
disabled. They also claimed that the CBA is inapplicable in Beja's case because Beja
failed to comply with the procedure regarding the third doctor referral and more
importantly, no proof was adduced to show that his medical condition resulted from an
accident Petitioners presented a certification21 of the Master of vessel M/V Atsuta,
Captain Henry M. Tejado, and a written declaration22 of the vessel's Chief Engineer,
Ramon B. Ortega, both confirming that Beja neither met an accident on board nor was
injured during his stay in the vessel under their command. Finally, petitioners contended
that assuming that the CBA applies, the award of US$137,500.00 is erroneous as Beja is
not a Senior Officer. In fine, petitioners insisted that the disability assessment given by
Dr. Cruz based on the POEA-SEC is binding and controlling.
Beja, however, disputed petitioners' belated and self-serving denial that an accident took
place and insisted that his failure to resume his work as Second Engineer for more than
240 days resulted in his entitlement to the maximum disability benefit under the CBA, as
correctly ruled by the Labor Arbiter.
In a Decision23 dated October 26, 2009, the NLRC sustained the Labor Arbiter's finding
that Beja is permanently and totally disabled. It found Dr. Cruz's disability assessment
premature and inaccurate considering that it was issued only a month after Beja's surgery
when the latter was still under medical evaluation and treatment. On the other hand, it
found Dr. Escutin's evaluation of Beja's condition more credible as it conforms to Dr.
Matias' medical report which was rendered after four months of therapy following the
operation. The NLRC likewise ruled that Beja is entitled to compensation under the CBA
for an accident-sustained disability. It noted that his medical records reveal indications of
tear and injury on his right knee that could have resulted from an accident on board. It,
however, reduced the award from US$137,500.00 to US$110,000.00 as Beja was only a
Second Engineer and not a Senior Officer, thus:
WHEREFORE, premises considered, the Decision appealed from is hereby declared
Modified to the extent only that complainant's permanent total disability award should be
US Dollars 110,000.00 (US$110,000.00). All other dispositions are hereby Affirmed.
SO ORDERED.24ChanRoblesVirtualawlibrary
Petitioners' motion for reconsideration25 was denied in the NLRC Resolution26 dated
February 15, 2010.
Proceedings before the Court of Appeals
Petitioners filed a Petition for Certiorari with Prayer for the Urgent Issuance of a Writ of
Preliminary Injunction and/or Temporary Restraining Order27 to enjoin the enforcement/
execution of the NLRC judgment. In a Resolution28 dated June 23, 2010, the CA denied
Petitioners' application for the issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction.
On March 28, 2012, the CA rendered a Decision29 denying the Petition for Certiorari and
affirming the NLRC ruling. Trie CA similarly found that Beja's injury resulting from an
accident while on board the vessel. It likewise found merit in Dr. Escutin's disability
report declaring Beja unfit to work since his injury has prevented him from performing
his customary work as Second Engineer for more than 240 days and thus entitles him to
permanent total disability benefits in accordance with the CBA.
Petitioners sought reconsideration30 of the CA Decision. In a CA Resolution31 dated
August 13, 2012, petitioners' motion was denied.
Issues
Hence, petitioners filed the present Petition for Review on Certiorari raising the
following grounds:
I. In awarding permanent total disability benefits in favor of the Respondent in
utter disregard of extant case laws outlining the instances when and how a
temporary total disability can be converted into a permanent total one.
II. In relying on the opinion of Respondent's chosen doctor to justify an award of
disability compensation contrary to the clear edicts of the POEA Contract, the
CBA and of the Supreme Court in jurisprudential precedents on the proper
43
 establishment and/or determination of a seafarer's entitlement to disability
benefits.
III. In awarding benefits based on the compensation provided in the parties' CBA
when the said agreement unequivocally confines compensation to injuries
arising from accident, which is absolutely wanting in this case.
IV. In sustaining the award of attorney's fees albeit [without] legal and factual
substantiation.32
Petitioners assert that Beja cannot be automatically declared as permanently and totally
disabled by the mere lapse of 120 days without any assessment or certification of fit to
work being issued. Citing Vergara, they argue that the 120-day period may be extended
up to the maximum of 240 days if the seafarer requires further medical attention. Since
Dr. Cruz's assessment was issued within the 240-day medical treatment period, albeit
beyond 120 days, this could serve as the basis for determining Beja's disability and the
degree thereof. In short, Beja should have been declared as partially disabled with Grades
10 and 13 disability under the POEA-SEC, as assessed by Dr. Cruz.
Moreover, they posit that Beja's complaint was prematurely filed and lacked cause of
action for total and permanent disability benefits. According to petitioners, the lack of a
second opinion from Beja's chosen physician at the time of the filing of the complaint and
a third-doctor opinion is fatal to Beja's cause, for without a binding third opinion, the
assessment of the company-designated physician stands.
Further, they insist that Beja is not entitled to compensation under the parties' CB A
which is only confined to injuries arising from accident.
Our Ruling
The Petition is partially meritorious.
The parties' CBA is inapplicable.
Beja based his claim for full disability benefits under the CBA, claiming that his
disability resulted from an accident while in the employ of petitioners and that petitioners'
belated denial cannot negate the applicability of the CBA provisions.
We are not convinced.
While, indeed, petitioners did not dispute, before the Labor Arbiter, the fact that Beja met
an accident while performing his duties, they, however, disputed the same in their appeal
with the NLRC by submitting the certifications of the Master of the vessel and Chief
Engineer that no accident happened under their command. We have held that "rules of
procedure and evidence should not be applied in a very rigid and technical sense in labor
cases in order that technicalities would not stand in the way of equitably and completely
resolving the rights and obligations of the parties."33 The Court is, thus, not precluded to
examine and admit this evidence, even if presented only on appeal before the NLRC, if
only to dispense substantial justice.
We, however, note that Beja has not presented any proof of his allegation that he met an
accident on board the vessel. There was no single evidence to show that Beja was injured
due to an accident while doing his duties in the vessel. No accident report existed nor any
medical report issued indicating that he met an accident while on board. Beja's claim was
simply based on pure allegations. Yet, evidence was submitted by petitioners disputing
Beja's allegation. The certifications by the Master of the vessel and Chief Engineer
affirmed that Beja never met an accident on board nor was he injured while in the
performance of his duties under their command. Beja did not dispute these certifications
nor presented any contrary evidence. "It is an inflexible rule that a party alleging a critical
fact must support his allegation with substantial evidence, for any decision based on
unsubstantiated allegation cannot stand without offending due process."34
The Court also takes notice of the fact that Beja's medical condition cannot be solely
attributable to accidents. His injury could have possibly been caused by other factors such
as chronic wear and tear35 and aging.36 Thus, the NLRC's conclusion that the tear and
injury on Beja's knee was caused by an accident on board had no factual basis but was
anchored merely on speculation. The Court cannot, however, rest its rulings on mere
speculation and presumption.37
Thus, we find the CBA inapplicable; the determination of Beja's entitlement to disability
benefits must, consequently, be governed by the POEA-SEC and relevant labor laws.
Beja is entitled to a total and permanent disability compensation of US$60,000.00 under
the POEA-SEC.
Article 192(c)(1) of the Labor Code provides that:
Art. 192. Permanent total disability. - x x x
(c) The following disabilities shall be deemed total and
permanent:chanRoblesvirtualLawlibrary
(1) Temporary total disability lasting continuously for more than one hundred twenty
days, except as otherwise provided for in the Rules;
The Rule referred to in this Labor Code provision is Section 2, Rule X of the Amended
Rules on Employees Compensation (AREC) implementing Title II, Book IV of the Labor
Code, which states:
Sec. 2. Period of Entitlement (a) The income benefit shall be paid beginning on the
first day of such disability. If caused by an injury or sickness it shall not be paid longer
than 120 consecutive days except where such injury or sickness still requires medical
attendance beyond 120 days but not to exceed 240 days from onset of disability in which
case benefit for temporary total disability shall be paid. However, the System may declare
the total and permanent status at any time after 120 days of continuous temporary total
disability as may be warranted by the degree of actual loss or impairment of physical or
mental functions as determined by the System.
Section 20 B (3) of the POEA-SEC, meanwhile provides that:
3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness
allowance equivalent to his basic wage until he is declared fit to work or the degree of
permanent disability has been assessed by the company-designated physician but in no
case shall this period exceed one hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a post-employment medical
examination by a company-designated physician within three working days upon his
44
return except when he is physically incapacitated to do so, in which case, a written notice
to the agency within the same period is deemed as compliance. Failure of the seafarer to
comply with the mandatory reporting requirement shall result in his forfeiture of the right
to claim the above benefits.
If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be
agreed jointly between the employer and the seafarer. The third doctor's decision shall be
final and binding on both parties.
In Vergara,38 this Court has ruled that the aforequoted provisions should be read in
harmony with each other, thus: (a) the 120 days provided under Section 20 B(3) of the
POEA-SEC is the period given to the employer to determine fitness to work and when
the seafarer is deemed to be in a state of total and temporary disability; (b) the 120 days
of total and temporary disability may be extended up to a maximum of 240 days should
the seafarer require further medical treatment; and (c) a total and temporary disability
becomes permanent when so declared by the company-designated physician within 120
or 240 days, as the case may be, or upon the expiration of the said periods without a
declaration of either fitness to work or disability assessment and the seafarer is still
unable to resume his regular seafaring duties.
39
Thus, although Section 32 of the POEA-SEC states that only those injuries or
disabilities classified as Grade 1 are considered total and permanent, a partial and
permanent disability could, by legal contemplation, become total and permanent.40 The
Court ruled in Kestrel Shipping Co., Inc. v. Munar,41viz.:
Indeed, under Section 32 of the POEA-SEC, only those injuries or disabilities that are
classified as Grade 1 may be considered as total and permanent. However, if those
injuries or disabilities with a disability grading from 2 to 14, hence, partial and
permanent, would incapacitate a seafarer from performing his usual sea duties for a
period of more than 120 or 240 days, depending on the need for further medical
treatment, then he is, under legal contemplation, totally and permanently disabled. In
other words, an impediment should be characterized as partial and permanent not only
under the Schedule of Disabilities found in Section 32 of the POEA-SEC but should be
so under the relevant provisions of the Labor Code and the Amended Rules on Employee
Compensation (AREC) implementing Title II, Book IV of the Labor Code. That while the
seafarer is partially injured or disabled, he is not precluded from earning doing the same
work he had before his injury or disability or that he is accustomed or trained to do.
Otherwise, if his illness or injury prevents him from engaging in gainful employment for
more than 120 or 240 days, as the case may be, he shall be deemed totally and
permanently disabled.
Moreover, the company-designated physician is expected to arrive at a definite
assessment of the seafarer's fitness to work or permanent disability within the period of
120 or 240 days. That should he fail to do so and the seafarer's medical condition remains
unresolved, the seafarer shall be deemed totally and permanently
disabled.42ChanRoblesVirtualawlibrary
Beja was repatriated on November 21, 2007. Roughly a month after his right knee
operation or on May 26, 2008, Dr. Cruz rendered a Grade 10 and 13 partial disability
grading of his medical condition. Thereafter, Beja's medical treatment, supervised by
another company-referred doctor, Dr. Matias, continued. On August 28, 2008, Dr. Matias
issued a medical report declaring that Beja has not yet fully recovered despite continued
therapy. Hence, although he was given Grades 10 and 13 combined disability rating by
Dr. Cruz, this assessment may only be considered as tentative because he still continued
his physical therapy sessions, which even went beyond 240 days.
In Sealanes Marine Services, Inc. v. Dela Torre,43 the seafarer was repatriated on August
4, 2010 and underwent rehabilitation until July 20, 2011, exceeding the 240 days allowed
to declare him either fit to work or permanently disabled. A partial disability rating of
Grade 11 was issued by the company-designated physician on March 10, 2011 but the
Court deemed this assessment only an interim one because of De La Torre's continued
physical therapy sessions. The Court then granted De La Torre the maximum disability
compensation because despite his long treatment and rehabilitation, he was unable to go
back to work as a seafarer. In applying the Kestrel ruling, the Court held that if the
seafarer's illness or injury prevents him from engaging in gainful employment for more
than 240 days, then he shall be deemed totally and permanently disabled. The Court
ratiocinated that while the seafarer is partially injured or disabled, he must not be
precluded from earning or doing the same work he had before his injury or disability or
that which he is accustomed or trained to do.
In Belchem Philippines, Inc. v. Zafra, Jr.,44 the Court stressed that partial disability exists
only if a seafarer is found capable of resuming sea duties within the 120/240-day period.
The premise is such that partial injuries did not disable a seafarer to earn wages in the
same kind of work or similar nature for which he was trained.
In this case, there was no assessment that Beja was found fit to resume sea duties before
the end of the 240-day period. Also Beja's allegation that he has not been able to perform
his usual activities has not been contradicted by petitioners or by contrary documentary
evidence. In fact, in his medical report dated August 28, 2008, Dr. Matias opined that
there was still difficulty in Beja's knee movements. Beja should, therefore, be deemed to
be suffering permanent total disability.
It must also be stressed that Dr. Cruz did not even explain how he arrived at the partial
permanent disability assessment of Beja. Dr. Cruz merely stated that Beja was suffering
from impediment Grades 10 and 13 disability but without any justification for such
conclusion. Petitioners' claim that Beja only suffered a partial disability has undoubtedly
no basis on record.
Petitioners still argue that Beja's complaint is premature and as of its filing, no cause of
action for total and permanent disability benefits had set in. They contend that despite the
lapse of the 120-day period, Beja was still considered under a state of temporary total
disability at the time he filed his complaint. In this regard, we quote the following
pronouncements in Kestrel, which involved the same circumstances as in the case at
bar:chanRoblesvirtualLawlibrary
In this case, the following are undisputed: (a) when Munar filed a complaint for total and
permanent disability benefits on April 17, 2007, 181 days had lapsed from the time he
signed-off from M/V Southern Unity on October 18, 2006; (b) Dr. Chua issued a
disability grading on May 3, 2007 or after the lapse of 197 days; and (c) Munar secured
the opinion of Dr. Chiu on May 21, 2007; (d) no third doctor was consulted by the
parties; and (e) Munar did not question the competence and skill of the company-
designated physicians and their familiarity with his medical condition.
45

It may be argued that these provide sufficient grounds for the dismissal of Munar's
complaint. Considering that the 240-day period had not yet lapsed when the NLRC was
asked to intervene, Munar's complaint is premature and no cause of action for total and
permanent disability benefits had set in. While beyond the 120-day period, Dr. Chua's
medical report dated May 3, 2007 was issued within the 240-day period. Moreover,
Munar did not contest Dr. Chua's findings using the procedure outlined under Section 20-
B(3) of the POEA-SEC. For being Munar's attending physicians from the time he was
repatriated and given their specialization in spine injuries, the findings of Dr. Periquet
and Dr. Lim constitute sufficient bases for Dr. Chua's disability grading. As Munar did
not allege, much less, prove the contrary, there exists no reason why Dr. Chiu's
assessment should be preferred over that of Dr. Chua.
It must be noted, however, that when Munar filed his complaint, Dr. Chua had not yet
determined the nature and extent of Munar's disability. Also, Munar was still undergoing
physical therapy and his spine injury had not yet been fully addressed. Furthermore,
when Munar filed a claim for total and permanent disability benefits, more than 120 days
had gone by and the prevailing y rule then was that enunciated by this Court in Crystal
Shipping, Inc. v. Natividad that total and permanent disability refers to the seafarer's
incapacity to perform his customary sea duties for more than 120 days. Particularly:
Permanent disability is the inability of a worker to perform his job for more than
120 days, regardless of whether or not he loses the use of any part of his body. As
gleaned from the records, respondent was unable to work from August 18, 1998 to
February 22, 1999, at the least, or more than 120 days, due to his medical treatment. This
clearly shows that his disability was permanent.
Total disability, on the other hand, means the disablement of an employee to earn wages
in the same kind of work or similar nature that he was trained for, or accustomed to
perform, or any kind of work which a person of his mentality and attainments could do. It
does not mean absolute helplessness. In disability compensation, it is not the injury which
is compensated, but rather it is the incapacity to work resulting in the impairment of one's
earning capacity.
xxxx
Petitioners tried to contest the above findings by showing that respondent was able to
work again as a chief mate in March 2001. Nonetheless, this information does not alter
the fact that as a result of his illness, respondent was unable to work as a chief mate for
almost three years. It is of no consequence that respondent was cured after a couple
of years. The law does not require that the illness should be incurable. What is
important is that he was unable to perform his customary work for more than 120
days which constitutes permanent total disability. An award of a total and permanent
disability benefit would be germane to the purpose of the benefit, which is to help the
employee in making ends meet at the time when he is unable to work. x x x
Consequently, that after the expiration of the 120-day period, Dr. Chua had not yet made
any declaration as to Munar's fitness to work and Munar had not yet fully recovered and
was still incapacitated to work sufficed to entitle the latter to total and permanent
disability benefits.
In addition, that it was by operation of law that brought forth the conclusive presumption
that Munar is totally and permanently disabled, there is no legal compulsion for him to
observe the procedure prescribed under Section 20-B(3) of the POEA-SEC. A seafarer's
compliance with such procedure presupposes that the company-designated physician
came up with an assessment as to his fitness or unfitness to work before the expiration of
the 120-day or 240-day periods. Alternatively put, absent a certification from the
company-designated physician, the seafarer had nothing to contest and the law steps in to
conclusively characterize his disability as total and permanent.
This Court's pronouncements in Vergara presented a restraint against the indiscriminate
reliance on Crystal Shipping such that a seafarer is immediately catapulted into filing a
complaint for total and permanent disability benefits after the expiration of 120 days from
the time he signed off from the vessel to which he was assigned. Particularly, a seafarer's
inability to work and the failure of the company-designated physician to determine fitness
or unfitaess to work despite the lapse of 120 days will not automatically bring about a
shift in the seafarer's state from total and temporary to total and permanent, considering
that the condition of total and temporary disability may be extended up to a maximum of
240 days.
Nonetheless, Vergara was promulgated on October 6, 2008, or more than two (2) years
from the time Munar filed his complaint and observance of the principle of prospectivity
dictates that Vergara should not operate to strip Munar of his cause of action for total and
permanent disability that had already accrued as a result of his continued inability to
perform his customary work and the failure of the company-designated physician to issue
a final assessment.45 (Emphasis in the original)
More importantly, in Montierro v. Rickmers Marine Agency Phils., Inc.46 and Eyana v.
Philippine Transmarine Carriers, Inc.,47 the Court applied the ruling in Kestrel, that if the
maritime compensation complaint was filed prior to October 6, 2008, the rule on the 120-
day period, during which the disability assessment should have been made in accordance
with Crystal Shipping, Inc. v. Natividad,48 that is, the doctrine then prevailing before the
promulgation of Vergara on October 6, 2008, stands; if, on the other hand, the complaint
was filed from October 6, 2008 onwards, the 240-day rule applies.
In the case at bar, Beja filed the complaint on May 15, 2008. Dr. Cruz issued his
assessment only on May 26, 2008 or 187 days from Beja's repatriation on November 21,
2007. Therefore, due to Dr. Cruz's failure to issue a disability rating within the 120-day
period, a conclusive presumption that Beja is totally and permanently disabled arose.
Consequently, there was no need for Beja to secure an opinion from his own doctor or
resort to a third doctor as prescribed under Section 20 B (3) of the POEA-SEC.
In sum, the CA is correct in affirming the NLRC's award of permanent total disability
benefit to Beja. It, however, erred in pertaining to the parties' CBA in granting the award
relative to the amount due. The Schedule of Disability Allowances under Section 32 of
the POEA-SEC should instead apply. Under this section, Beja is entitled to US$60,000.00
(US$50,000.00 x 120%) corresponding to Grade 1 Disability assessment.
The award of attorney's fees is likewise justified in accordance with Article 2208
(2)49 and (8)50 of the Civil Code since Beja was compelled to litigate to satisfy his claims
for disability benefits.
46

WHEREFORE, the Petition is PARTIALLY GRANTED. The March 28, 2012
Decision and August 13, 2012 Resolution of the Court of Appeals in CA-G.R. SP No.
113550 are MODIFIED in that petitioners, Island Overseas Transport Corp./Pine Crest
Shipping Corp./Capt. Emmanuel L. Regio, are ordered to jointly and solidarily pay
respondent Armando M. Beja total and permanent disability benefits in the amount of
US$60,000.00 or its equivalent amount in Philippine currency at the time of payment,
plus 10% thereof as attorney's fees.
SO ORDERED.
G.R. No. 195654, November 25, 2015
REYNALDO INUTAN, HELEN CARTE, NOEL AYSON, IVY CABARLE,
NOELJAMILI, MARITES HULAR, ROLITOAZUCENA, RAYMUNDO TUNOG,
ROGER BERNAL, AGUSTEV ESTRE, MARILOU SAGUN, AND ENRIQUE
LEDESMA, JR., Petitioners, v. NAPAR CONTRACTING & ALLIED SERVICES,
NORMAN LACSAMANA,*** JONAS INTERNATIONAL, INC., AND PHILIP
YOUNG, Respondent.
DECISION
DEL CASTILLO, J.:
A judicially approved compromise agreement has the effect and authority of res
judicata.2 It is final, binding on the parties, and enforceable through a writ of execution.
Article 2041 of the Civil Code, however, allows the aggrieved party to rescind the
compromise agreement and insist upon his original demand upon failure and refusal of
the other party to abide by the compromise agreement.
This Petition for Review on Certiorari2 assails the August 27, 2010 Decision3 of the
Court of Appeals (CA) in CA-G.R. SP No. 106724, which dismissed the Petition
for Certiorari filed by Reynaldo Inutan (Inutan), Helen Carte (Carte), Noel Ayson
(Ayson), Ivy Cabarle (Cabarle), Noel Jamili (Jamili), Maritess Hular (Hular), Rolito
Azucena (Azucena), Raymundo Tunog (Tunog), Jenelyn Sancho, Wilmar Bolonias,
Roger Bernal (Bernal), Agustin Estre (Estre), Marilou Sagun (Sagun), and Enrique
Ledesma, Jr. (Ledesma), against respondents Napar Contracting & Allied Services
(Napar), Norman Lacsamana (Lacsamana), Jonas International, Inc. (Jonas), and Philip
Young (Young), and affirmed the June 26, 2008 Decision4 and October 14, 2008
Resolution5 of the National Labor Relations Commission (NLRC) in NLRC CA No.
041474-04 dismissing the consolidated complaints against respondents for illegal
dismissal with money claims on the ground of res judicata. Likewise assailed is the CA's
February 10, 2011 Resolution6 which denied the Motion for Reconsideration.
Factual Antecedents
Petitioners Inutan, Carte, Ayson, Cabarle, Jamili, Hular, Azucena, Tunog, Bernal, Estre,
Sagun, and Ledesma were employees of respondent Napar, a recruitment agency owned
and managed by respondent Lacsamana. Napar assigned petitioners at respondent Jonas,
a corporation engaged in the manufacture of various food products with respondent
Young as its President, to work as factory workers, machine operator, quality control
inspector, selector, mixer, and warehouseman.
Sometime in September of 2002, petitioners and other co-workers (complainants) filed
before the Arbitration Branch of the NLRC three separate complaints for wage
differentials, 13th month pay, overtime pay, holiday pay, premium pay for holiday and rest
day, service incentive leave pay, and unpaid emergency cost of living allowance
(ECOLA) against respondents, docketed as NLRC NCR Case Nos. 09-76698-2002, 09-
08152-2002, and 09-08046-2002, which complaints were consolidated before Labor
Arbiter Jaime M. Reyno (LA Reyno).
On January 13, 2003, complainants and respondents entered into a Joint Compromise
Agreement7which reads:chanRoblesvirtualLawlibrary
JOINT COMPROMISE AGREEMENT
COMPLAINANTS and the RESPONDENTS, through their' respective counsel,
respectfully submit the following Compromise Agreement.
WHEREAS, the parties (except Susana Larga) deciding to finally write "finis" to the
instant case, have agreed to settle the instant case and to enter into a Compromise
Agreement.
NOW THEREFORE, for and in consideration of the terms and conditions herein below
stipulated, the parties do hereby agree:
1. That the complainants should be considered regular employees of
Napar Contracting and Allied Services reckoned from their date of hire
and are entitled to all the benefits under the law due to regular
employees;
2. That the complainants shall be re-assigned by Napar Contracting and
Allied Services and shall ensure that they will be given work within
forty five days (45) or until February 26,2002;
3. That in case Napar Contracting and Allied Services failed to re assign
or provide them work, complainants shall be reinstated in their payroll
or be given their salary equivalent to the existing minimum wage x x x;
4. That the complainants shall each receive the amount of SEVEN
THOUSAND PESOS as payment for their monetary claims and which
amount shall be considered in any future litigation;
5. That upon signing of this agreement and compliance with the
stipulations herein provided, the cases shall be deemed and considered
fully and completely satisfied and the complainants hereby release,
remiss and forever discharge the herein respondents, from any and all
claims arising from the above cases;
47
 6. The parties herein respectfully pray unto this Honorable Commission to
approve this Compromise Agreement and thereafter an Order be issued
declaring the judgment in the above-entitled cases fully and completely
satisfied.
IN WITNESS WHEREFORE, the parties have hereunto set their hands this 13th day of
January 2003.8ChanRoblesVirtualawlibrary
cralawlawlibrary
In an Order9 dated January 16, 2003, LA Reyno approved the Joint Compromise
Agreement, enjoined the parties to fully comply with its terms and dismissed the case
without prejudice.
In accordance with the Joint Compromise Agreement, complainants, on several instances,
reported to Napar. They were paid P7,000.00 each as part of the agreement but were
required by Napar; (1) to submit their respective bio-data/resume and several documents
such as Police Clearance, NBI Clearance, Barangay Clearance, Mayor's Permit, Health
Certificate, drug test results, community tax certificate, eye test results and
medical/physical examination results; (2) to attend orientation seminars; (3) to undergo
series of interviews; and (4) to take and pass qualifying examinations, before they could
be posted to their new assignments. These requirements, according to Napar, are needed
to properly assess complainants' skills for new placement with the agency's other clients.
Complainants failed to fully comply, hence they were not given new assignments.
Proceedings before the Labor Arbiter
Sensing Napar's insincerity in discharging its obligation in reassigning them,
complainants filed anew before the Arbitration Branch of the NLRC four separate
Complaints10 for illegal dismissal, non-payment of 13th month pay, wage differentials,
overtime pay, service incentive leave pay, holiday pay, premium pay for holiday and rest
day, and moral and exemplary damages against respondents, docketed as NLRC NCR
Case Nos. 00-0505557-2003, 00-05-06187-2003, 00-05-06605-2003,11 and 00-07-07792-
2003. These complaints were consolidated.
In their Position Paper,12 complainants averred that Napar's failure to reinstate or provide
them work without any condition, in consonance with the terms of the Joint Compromise
Agreement, constitutes illegal constructive dismissal. They prayed for backwages plus
separation pay in lieu of reinstatement.
Respondents, in their Position Paper,13 claimed that they have fulfilled their obligation
under the agreement when Napar required complainants to report for work, to submit
documentary requirements, to undergo seminars and training, and to pass qualifying
exams. They contended that complainants were the ones who violated the agreement
when they refused to comply with the foregoing requirements in order to assess their
working capabilities and skills for their next posting. As such, they were deemed to have
waived their right to be reassigned. They argued that complainants should not have filed
new complaints but should have instead moved for the execution of the Joint
Compromise Agreement. They then argued that the Labor Arbiter who approved the said
Joint Compromise Agreement or LA Reyno has exclusive jurisdiction to act on the
complaints.
In a Decision14 dated July 29, 2004, Labor Arbiter Pablo C. Espiritu, Jr. (LA Espiritu)
held that the conditions of the Joint Compromise Agreement particularly regarding
reinstatement/reassignment of complainants were violated thereby justifying rescission of
the Joint Compromise Agreement. LA Espiritu noted that complainants were correct in
re-filing the complaints as this was an available remedy under the NLRC Rules of
Procedure when their previous complaints were dismissed without prejudice. He struck
down respondents' contention that a motion for execution of the compromise agreement
was the proper remedy, ratiocinating that the dismissal of the cases was approved without
prejudice and therefore cannot be the subject of an execution.
LA Espiritu then ruled that complainants were constructively dismissed as they were
placed on temporary off-detail without any work for more than six months despite being
regular employees of Napar. Doubting respondents' intention of reinstating complainants,
LA Espiritu observed that the submission of requirements and compliance with the
procedures for rehiring should not be imposed on complainants who are not newly-hired
employees. Thus, Napar and Lacsamana were held jointly and severally liable to pay
complainants their separation pay in lieu of reinstatement due to the already
strainedrelations of the parties.
Respondents Jonas/Young, as indirect employers of complainants, were held jointly and
severally liable with Napar/Lacsamana for wage differentials, 13 month pay differentials,
service incentive leave pay, unpaid ECOLA, and holiday pay to some complainants, less
the P7,000.00 already received from respondents. The claims for premium pay for
holiday, rest day, overtime pay, and moral and exemplary damages were denied for lack
of merit.
Proceedings before the National Labor Relations Commission
All parties appealed to the NLRC.
Complainants filed a partial appeal, arguing that LA Espiritu erred in not awarding
backwages as well as wage and 13th month pay differentials to nine of them.
Respondents, for their part, argued that LA Espiritu erred in failing to recognize the final
and binding effect of the Joint Compromise Agreement, contending that complainants are
barred from rescinding the agreement for having received P7,000.00 each as partial
compliance and refusing to comply with the requirements for their reassignment.
Respondents Napar and Lacsamana, in their Memorandum on Appeal,15 vehemently
denied having illegally dismissed complainants and averred that they have the
prerogative to impose certain requirements in order to determine their working skills vis-
a-vis their new postings. And since they refused to comply, they have waived their right
to be reassigned. Respondents Jonas/Young, meanwhile, in its Notice of Appeal
Memorandum of Appeal,16 asserted that they cannot be held solidarity liable with
respondents Napar and Lacsamana since only Napar is obligated to reassign complainants
under the Joint Compromise Agreement.
In a Decision17 dated June 26, 2008, the NLRC granted respondents' appeal. It ruled that
48
the approval of the Joint Compromise Agreement by LA Reyno operates as res
judicata between the parties and renders it unappealable and immediately executory. It
held that complainants had no cause of action when they re-filed their complaints for
being barred by res judicata. The NLRC, in disposing of the case, ordered the issuance of
a writ of execution to enforce the Joint Compromise Agreement,
thus:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the appeal of respondents is GRANTED, while that
of the complainants is DISMISSED for lack of merit. The Decision of Labor Arbiter
Pablo C. Espiritu, Jr. dated July 29, 2004 is REVERSED and SET ASIDE, and a new one
is rendered DISMISSING the above-entitled complaints for having been barred by res
judicata. The Order of Labor Arbiter Jaime Reyno dated January 16, 2003 finding the
Compromise Agreement entered into by the parties on January 13, 2003 to be in order
and not contrary to law and approving the same, stands valid, effective and should be
enforced. Let the records of this case be forwarded to the Labor Arbiter for the issuance
of a writ of execution to enforce the said Compromise Agreement.
SO ORDERED.18ChanRoblesVirtualawlibrary
cralawlawlibrary
Complainants filed a Motion for Reconsideration,19 averring that the NLRC gravely erred
in ordering the issuance of a writ of execution despite the absence of a final judgment or
a judgment on the merits. They stand on their right to rescind the Joint Compromise
Agreement and to insist on their original demands when respondents violated the
compromise agreement and on their right to re-file their cases as sanctioned by the rules
in cases of provisional dismissal of cases,
Napar and Lacsamana, on the other hand, filed a Motion for Partial
Reconsideration20 praying for the modification of the NLRC Decision in that
complainants be declared to have waived their right to their claims under the Joint
Compromise Agreement for likewise violating the agreement.
Both motions were denied in the NLRC Resolution21 dated October 14, 2008.
Proceedings before the Court of Appeals
In their Petition for Certiorari22 filed before the CA, complainants insisted on their right
to rescind the Joint Compromise Agreement under Article 204123 of the Civil Code and
on their right to re-file their complaints under Section 16, Rule V of the NLRC Rules of
Procedure.24
Napar and Lacsamana filed a Comment25 on the Petition. Jonas and Young, however,
failed to file a comment. As the CA did not acquire jurisdiction over Jonas and Young and
on the basis of complainants' manifestation that Jonas and Young had already ceased
operation, Jonas and Young were dropped as party respondents by the CA in its
Resolution26 of December 16, 2009.
On August 27, 2010, the CA rendered a Decision27 affirming the NLRC. The CA
considered the January 16, 2003 Order of LA Reyno, which approved the Joint
Compromise Agreement, as a judgment on the merits, and held that the second set of
complaints was barred by res judicata. According to the C A, the complainants, in re-
filing their complaints due to respondents' unwarranted refusal to provide them work,
were essentially seeking to enforce the compromise agreement and were not insisting on
their original demands that do not even include a claim for illegal dismissal. Thus, the CA
ruled that complainants should have moved for the execution of the Joint Compromise
Agreement instead of filing a separate and independent action for illegal dismissal. The
CA dismissed the Petition, viz.:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the instant petition for certiorari is DISMISSED for
lack of merit. Accordingly, the June 26, 2008 Decision and October 14, 2008 Resolution
of public respondent National Labor Relations Commission are AFFIRMED.
SO ORDERED.28cralawlawlibrary
Complainants filed a Motion for Reconsideration29 but it was likewise denied by the CA
in its Resolution30 dated February 10, 2011.
Twelve of the complainants, herein petitioners, instituted the present Petition for Review
on Certiorari.
Issues
Petitioners presented the following issues:chanRoblesvirtualLawlibrary
I
WHETHER THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT
PETITIONERS' COMPLAINT IS ALREADY BARRED BY RES JUDICATA.
II
WHETHER THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT, IN
FILING THE SECOND COMPLAINT, THE PETITIONERS ARE ENFORCING THE
JOINT COMPROMISE AGREEMENT AND NOT RESCINDING IT. THUS, THE
PETITIONERS SHOULD HAVE MOVED FOR THE ISSUANCE OF A WRIT OF
EXECUTION BEFORE THE LABOR ARBITER INSTEAD OF FILING A SECOND
COMPLAINT.
III
WHETHER THE PETITIONERS ARE ENTITLED TO SEPARATION PAY IN LIEU
OF REINSTATEMENT AND FULL BACKWAGES.31cralawlawlibrary
Petitioners argue that the CA, in ordering the execution of the Joint Compromise
Agreement, has deprived them of their right of rescission under Article 2041 of the Civil
Code. They posit that due to the blatant violation by the respondents of the provisions of
the Joint Compromise Agreement, they only exercised the option accorded to them by
law of rescinding the agreement and of insisting upon their original demands by filing
anew their Complaints. The inclusion of illegal dismissal in their causes of action is, for
petitioners, a necessary consequence of their subsequent dismissal and the blatant
omission of respondents' commitment to reinstate them. Petitioners thus pray for the
payment of separation pay in lieu of reinstatement and full backwages as a consequence
of their illegal dismissal.
49

Napar and Lacsamana on the other hand, aver that petitioners' sole remedy was to move
for the execution of the Joint Compromise Agreement. They aver that petitioners cannot
be allowed to rescind the agreement after having violated the same and having already
enjoyed its benefits. After all, the Joint Compromise Agreement is final, binding and
constitutes as res judicata between them.
Our Ruling
The Petition has merit. Petitioners' right to rescind the Joint Compromise Agreement and
right to re-file their complaints must prevail.
Petitioners validly exercised the
option of rescinding the Joint
CompromiseAgreement under
Article 2041 of the Civil Code
Article 2028 of the Civil Code defines a compromise agreement as a contract whereby
the parties make reciprocal concessions in order to avoid litigation or put an end to one
already commenced. If judicially approved, it becomes more than a binding contract; it is
a determination of a controversy and has the force and effect of a judgment.32 Article 227
of the Labor Code provides that any compromise settlement voluntarily agreed upon by
the parties with the assistance of the Bureau of Labor Relations or the regional office of
the Department of Labor and Employment shall be final and binding upon the parties.
Compromise agreements between employers and workers have often been upheld as
valid and accepted as a desirable means of settling disputes.33
Thus, a compromise agreement, once approved, has the effect of res judicata between the
parties and should not be disturbed except for vices of consent, forgery, fraud,
misrepresentation, and coercion.34 A judgment upon compromise is therefore not
appealable, immediately executory, and can be enforced by a writ of
execution.35 However, this broad precept enunciated under Article 203736 of the Civil
Code has been qualified by Article 2041 of the same Code which recognizes the right of
an aggrieved party to either (1) enforce the compromise by a writ of execution, or (2)
regard it as rescinded and insist upon his original demand, upon the other party's failure
or refusal to abide by the compromise. In a plethora of cases,37 the Court has recognized
the option of rescinding a compromise agreement due to non-compliance with its terms.
We explained in Chavez v. Court of Appeals:38chanroblesvirtuallawlibrary
A compromise has upon the parties the effect and authority of res judicata; but there shall
be no execution except in compliance with a judicial compromise.cralawlawlibrary
Thus, we have held that a compromise agreement which is not contrary to law, public
order, public policy, morals or good customs is a valid contract which is the law between
the parties themselves. It has upon them the effect and authority of res judicata even if
not judicially approved, and cannot be lightly set aside or disturbed except for vices of
consent and forgery.
However, in Heirs of Zari, et al v. Santos, we clarified that the broad precept enunciated
in Art, 2037 is qualified by Art. 2041 of the same Code, which provides:
If one of the parties fails or refuses to abide by the compromise, the other party may
either enforce the compromise or regard it as rescinded and insist upon his original
demand.
We explained, viz.:
[B]efore the onset of the new Civil Code, there was no right to rescind compromise
agreements. Where a party violated the terms of a compromise agreement, the only
recourse open to the other party was to enforce the terms thereof.
When the new Civil Code came into being, its Article 2041 xxx created for the first
time the right of rescission. That provision gives to the aggrieved party the right to "either
enforce the compromise or regard it as rescinded and insist upon his original
demand." Article 2041 should obviously be deemed to qualify the broad precept
enunciated in Article 2037 that "[a] compromise has upon the parties the effect and
authority of res judicata.
In exercising the second option under Art. 2041, the aggrieved party may, if he chooses,
bring the suit contemplated or involved in his original demand, as if there had never been
any compromise agreement, without bringing an action for rescission. This is because he
may regard the compromise as already rescinded by the breach thereof of the other
party.cralawlawlibrary
To reiterate, Article 2041 confers upon the party concerned the authority, not only to
regard the compromise agreement as rescinded but also, to insist upon his original
demand. We find that petitioners validly exercised this option as there was breach and
non-compliance of the Joint Compromise Agreement by respondents.
It is undisputed that Napar failed to reassign and provide work to petitioners. Napar,
however, puts the blame on petitioners for their alleged deliberate refusal to comply with
the requirements for reassignment to other clients. Napar claims that the imposition of
these so-called "reassessment procedures" will efficiently guide them on where to assign
petitioners; it likewise posits that it is a valid exercise of its management prerogative to
assign workers to their principal employer.
At the outset, it must be emphasized that there was no indication that petitioners
deliberately refused to comply with the procedures prior to their purported reassignment.
Petitioners alleged that they reported to Napar several times waiting for tlieir assignment
and that Napar was giving them a run-around even as they tried to comply with the
requirements. These matters were not disputed by respondents. Thus, we cannot agree
with respondents were the ones who violated the compromise agreement. Moreover, we
are not persuaded by Napar's assertion that petitioners' reassignment cannot be effected
without compliance with the requirements set by it. Petitioners are regular employees of
Napar; thus, their reassignment should not involve any reduction in rank, status or
salary.39 As aptly noted by LA Espiritu, petitioners are not newly-hired employees.
Considering further that they are ordinary factory workers, they do not need special
training or any skills assessment procedures for proper placement. While we consider
Napar's decision to require petitioners to submit documents and employment clearances,
to attend seminars and interviews and take examinations, which according to Napar is
imperative in order for it to effectively carry out its business objective, as falling within
the ambit of management prerogative, this undertaking should not, however, deny
petitioners their constitutional right of tenure. Besides, there is no evidence nor any
50
allegation proffered that Napar has no available clients where petitioners can be assigned
to work in the same position they previously occupied. Plainly, Napar's scheme of
requiring petitioners to comply with reassessment procedures only seeks to prevent
petitioners' immediate reassignment.
"We have held that management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, working
methods, time, place and manner of work, processes to be followed, supervision of
workers, working regulations, transfer of employees, work supervision, lay off of
workers and discipline, dismissal and recall of workers. The exercise of management
prerogative, however, is not absolute as it must be exercised in good faith and with due
regard to the rights of labor."40 Such "cannot be used as a subterfuge by the employer to
rid himself of an undesirable worker."41
Respondents' non-compliance with the strict terms of the Joint Compromise Agreement
of reassigning petitioners and ensuring that they will be given work within the required
time constitutes repudiation of the agreement. As such, the agreement is considered
rescinded in accordance with Article 2041 of the Civil Code. Petitioners properly chose to
rescind the compromise agreement and exercised the option of filing anew their
complaints, pursuant to Art. 2041. It was error on the part of the CA to deny petitioners
the right of rescission.
Still, respondents insist that petitioners cannot seek rescission for they have already
enjoyed the benefits of the Joint Compromise Agreement. According to respondents,
petitioners' acceptance of the amount of P7,000.00 each bars them from repudiating and
rescinding the agreement.
The contention lacks merit for the following reasons. First, petitioners never accepted the
meager amount of P7,000.00 as full satisfaction of their claims as they also expected to
be reassigned and reinstated in their jobs. In other words, their acceptance of the amount
of P7,000.00 each should not be interpreted as full satisfaction of all their claims, which
included reinstatement in their jobs. The amount of P7,000.00 is measly compared to the
amount of monetary award granted by LA Espiritu and therefore makes the agreement
unconscionable and against public policy,42 At this point, it is worth noting that even
quitclaims are ineffective in barring recovery for the full measure of the worker's rights
and that acceptance of benefits therefrom does not amount to estoppel.43 Lastly, it must be
emphasized that the Joint Compromise Agreement expressly provided that each of the
complainants shall receive P7,000.00 as payment for their monetary claims and "which
amount shall be considered in any future litigation."44 By virtue of this stipulation, the
parties in entering into the agreement did not rule out the possibility of any future claims
in the event of non-compliance. As correctly ruled by LA Espiritu, this proviso showed
that petitioners were not barred from raising their money claims in the future.
Section 16 of Rule V of the NLRC Rules
of Procedure allows petitioners to re-file their
complaints which were previously dismissed
without prejudice
The Court also takes into account the circumstance that petitioners' previous complaints
were dismissed without prejudice. "A dismissal without prejudice does not operate as a
judgment on the merits."45 As contrasted from a dismissal with prejudice which disallows
and bars the filing of. a complaint, a dismissal without prejudice "does not bar another
action involving the same parties, on the same subject matter and theory."46 The NLRC
Rules of Procedure, specifically Section 16 of Rule V thereof, provides the remedy of
filing for a revival or re-opening of a case which was dismissed without prejudice within
10 days from receipt of notice of the order of dismissal and of re-filing the case after the
lapse of the 10-day period. Petitioners are thus not barred from re-filing their Complaints.
In choosing to rescind the Joint Compromise Agreement and re-file their complaints,
petitioners can rightfully include their claim of illegal dismissal. The CA took off from
the wrong premise that petitioners, in re-filing their case, cannot be said to have opted to
rescind the compromise agreement since they were not insisting on their original claim. It
must be noted that when petitioners initially filed their first set of complaints for wage
differentials, 13th month pay, overtime pay, holiday pay, premium pay for holiday and rest
day, service incentive leave pay, and unpaid ECOLA (that does not include the claim of
illegal dismissal), subsequent events transpired which brought about their unceremonious
suspension and dismissal from work. This then led to the parties entering into the Joint
Compromise Agreement whereby respondents undertook to reinstate petitioners and pay
them the sum of P7,000.00 in partial satisfaction of their claims. The compromise
agreement evinces and shows that petitioners' reinstatement was part of their original
demands. Besides, respondents acknowledged that the first and second sets of Complaints
filed by petitioners are similar in nature. Respondents even admitted that the issues raised
in the first set of Complaints were similar to the issues raised by petitioners when they
filed anew their Complaints. Nevertheless, the filing of a separate action for illegal
dismissal shall only go against the rule on multiplicity of suits. It is settled that a plaintiff
may join several distinct demands, controversies or rights of action in one declaration,
complaint or petition.47 This is to avert duplicity and multiplicity of suits that would
farther delay the disposition of the case.
In view of the foregoing, we find that both the NLRC and CA gravely erred in dismissing
petitioners' Complaints on the ground of res judicata. LA Espiritu correctly assumed
jurisdiction and properly took cognizance of petitioners' consolidated complaints for
illegal dismissal and other monetary claims.
Petitioners are entitled to separation pay
and full backwages as well as to the other
monetary awards granted by the
Labor Arbiter
We, likewise, subscribe to LA Espiritu's ruling that petitioners, as regular employees, are
deemed to have been constructively and illegally dismissed by respondents. Being on
floating status and off-detailed for more than six months, not having been reinstated and
reassigned by respondents, petitioners are considered to have been constructively
dismissed.48 Settled is the rule that an employee who is unjustly dismissed from work
shall be entitled to reinstatement, or separation pay if reinstatement is no longer viable,
and to his full backwages.49
LA Espiritu awarded petitioners separation pay in lieu of reinstatement. The Court agrees
51
that the award of separation pay is warranted due to the already strained relations
between the parties.50 However, aside from separation pay, petitioners, for having been
illegally dismissed, should also be awarded full backwages, inclusive of allowances and
their other benefits or their monetary equivalent computed from November 9, 2002 (the
date of their last work assignment or from the time compensation was withheld from
them) up to the date of finality of this Decision.
While petitioners failed to raise the matter of entitlement to backwages before the CA,
this does not prevent the Court from considering their entitlement to the same. The Court
has discretionary authority to take up new issues on appeal if it finds that their
consideration is necessary in arriving at a just decision.
Anent the other monetary claims in petitioners' complaints, the awards granted to them
by LA Espiritu stand undisturbed for petitioners' failure to question the same on appeal
before the CA and even before this Court. Hence, we sustain the award of wage
differentials, 13th month pay differentials, service incentive leave pay, unpaid ECOLA,
and holiday pay less the P7;000.00 already received by them.
WHEREFORE, the Petition is GRANTED. The August 27, 2010 Decision and
February 10, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 106724
are REVERSED and SET ASIDE. The July 29, 2004 Decision of the Labor Arbiter
Pablo C. Espiritu, Jr. in NLRC NCR Case Nos. 00-05-05557-2003, 00-05-06187-2003,
00-05-06605-2003 and 00-07-07792-2003 is REINSTATED. In addition, respondents
Napar Contracting & Allied Services and Norman Lacsamana are held jointly and
severally liable to pay petitioners Reynaldo Inutan, Helen Carte, Noel Ayson, Ivy
Cabarle, Noel Jamili, Maritess Hular, Rolito Azucena, Raymundo Tunog, Roger Bernal,
Agustin Estre, Marilou Sagun, and Enrique Ledesma, Jr. full backwages, inclusive of
allowances and their other benefits or their monetary equivalent computed from
November 9, 2002 up to the date of finality of this Decision.
SO ORDERED.chanroblesvirtuallawlibrary
G.R. No. 198675, September 23, 2015
ILAW BUKLOD NG MANGGAGAWA (IBM) NESTLE PHILIPPINES, INC.
CHAPTER (ICE CREAM AND CHILLED PRODUCTS DIVISION), ITS
OFFICERS, MEMBERS, BONIFACIO T. FLORENDO, EMILIANO B. PALANAS
AND GENEROSO P. LAXAMANA, Petitioners, v. NESTLE PHILIPPINES,
INC., Respondent.
DECISION
PERALTA, J.:
Assailed in the instant petition for review on certiorari under Rule 45 of the Rules of
Court are the Resolutions1 of the Court of Appeals (CA), dated June 30, 20112 and
September 28, 2011,3respectively, in CA-G.R. SP No. 118459. The June 30, 2011
Resolution dismissed herein petitioners' petition for review, while the September 28, 2011
Resolution denied petitioners' Motion for Reconsideration.
The factual and procedural antecedents of the case are as
follows:chanRoblesvirtualLawlibrary
On January 13, 1997, herein petitioner union staged a strike against herein respondent
company's Ice Cream and Chilled Products Division, citing, as grounds, respondent's
alleged violation of the collective bargaining agreement (CBA), dismissal of union
officers and members, discrimination and other unfair labor practice (ULP) acts.
As a consequence, respondent filed with the National Labor Relations Commission
(NLRC) a Petition for Injunction with Prayer for Issuance of Temporary Restraining
Order, Free Ingress and Egress Order, and Deputization Order.
On January 20, 1997, a temporary restraining order was issued by the NLRC. Thereafter,
on February 7, 1997, the NLRC issued a preliminary injunction.
On February 26, 1997, respondent filed a Petition to Declare Strike Illegal.
Subsequently, on April 2, 1997, then Department of Labor and Employment (DOLE)
Acting Secretary, issued an Order assuming jurisdiction over the strike and certifying the
same to the NLRC.
On June 2, 1997, petitioner union filed a petition for certiorari with this Court,
questioning the above order of the Acting DOLE Secretary.
However, after a series of conciliation meetings and discussions between the parties, they
agreed to resolve their differences and came up with a compromise which was embodied
in a Memorandum of Agreement (MOA) dated August 4, 1998, pertinent portions of
which are as follows:cralawlawlibrary
xxxx
1. The COMPANY [herein respondent] shall cau6e the dismissal of all criminal cases
against dismissed employees arising out of or as consequences of the strike that started on
January 13, 1997.
Future illegal acts of the UNION [herein petitioner] shall not be covered by this
agreement.
2. The UNION shall unqualifiedly withdraw its Petition for Certiorari pending with the
Supreme Court.
3. The COMPANY and the UNION shall jointly file a motion to withdraw any and all
actions pending with the NLRC including the Certified Case, arising out of or as
consequences of the strike that started on Jan. 13, 1997.
4. As a consequence of the strike leading to the execution of this Memorandum of
Agreement, the UNION shall cease and desist from picketing any office or factory of the
COMPANY as well as any government agency or office of the Courts. It shall likewise
remove streamers, barricades and structures that it had put up around the
COMPANY'S Aurora Plant in Quezon City upon the execution of this Agreement and
shall forever cease and desist from re-establishing the same.
52

5. The COMPANY shall issue the corresponding Certificates of Past Employment to all
dismissed employees.
6. The COMPANY shall continue to recognize the UNION as the certified bargaining
agent of all rank-and-file daily-paid employees of its Ice Cream and Chilled Products
Division up to the life of the existing Collective Bargaining Agreement.
7. The UNION shall immediately elect a new set of officers who will replace its
dismissed officers. The newly-elected officers shall exclusively come from the UNION
membership who are active employees of the COMPANY. The UNION shall inform the
COMPANY of the said newly-elected officers.
8. The COMPANY shall pay dismissed employees their accrued benefits (i.e. Unpaid
wages, proportionate 13th and 14th months pay and vacation leave (VL) commutation), if
any, up to the date of their actual work in accordance with the existing CBA and
COMPANY programs and policies and consistent with the COMPANY'S existing
guidelines. Their respective accountabilities shall be deducted from the said accrued
benefits and that the payment of the same shall furthermore be subject to the execution
and submission to the COMPANY by the dismissed employees of the corresponding
individual releases and quitclaims.
9. The COMPANY and the UNION agree that this Agreement shall constitute a final
resolution of all issues related to or arising from the strike that started on January 13,
1997, including the dismissal of a total of one-hundred thirty (132) (sic) UNION officers
and members, who are all represented by Atty. Potenciano A. Flores, Jr., as herein
provided.
x x x x4chanrobleslaw
On August 6, 1998, the parties filed a Joint Motion to Dismiss stating that they are no
longer interested in pursuing the petition for injunction filed by respondent as a
consequence of the settlement of their dispute.
On October 12, 1998, the NLRC issued its Decision approving the parties' compromise
agreement and granting their Joint Motion to Dismiss.
On January 25, 2010, or after a lapse of more than eleven (11) years from the time of
execution of the subject MO A, petitioners filed with the NLRC a Motion for Writ of
Execution contending that they have not been paid the amounts they are entitled to in
accordance with the MOA.
Respondent filed its Opposition to the Motion for Writ of Execution contending that
petitioners' remedy is already barred by prescription because, under the 2005 Revised
Rules of the NLRC, a decision or order may be executed on motion within five (5) years
from the date it becomes final and executory and that the same decision or order may
only be enforced by independent action within a period often (10) years from the date of
its finality.
On November 18, 2010, the NLRC promulgated its Resolution denying petitioners'
application for the issuance of a writ of execution on the ground of prescription.
Petitioners filed a Motion for Reconsideration but the NLRC, in its Resolution dated
February 14, 2011, dismissed it for lack of merit.
Petitioners then filed a petition for certiorari with the CA questioning the above
Resolutions of the NLRC. The basic issue raised before the CA was whether or not
petitioners' claim for payment is barred by prescription.
On June 30, 2011, the CA issued the first of its questioned Resolutions dismissing
petitioners' certiorari petition on the ground that it is a wrong mode of appeal. The CA
held that petitioners' appeal involves a pure question of law which should have been
taken directly to this Court via a petition for review on certiorari under Rule 45 of the
Rules of Court.
Petitioners filed a Motion for Reconsideration, but the CA denied it in its second
questioned Resolution.
Hence, the instant petition for review on certiorari raising the following Assignment of
Errors, to wit:cralawlawlibrary
Reversible Error No. 1
The Court of Appeals erred in misappreciating the facts of the case.
Reversible Error No. 2
The Court of Appeals erred in sustaining that the Petitioners' demand to be paid has
prescribed.5chanrobleslaw
Like petitioners' petition for certiorari filed with the CA, the main issue raised in the
present petition is whether petitioners' claim is already barred by prescription.
Petitioners' basic contention is that respondent cannot invoke the defense of prescription
because it is guilty of deliberately causing delay in paying petitioners' claims and that
petitioners, on the other hand, are entitled to protection under the law because they had
been vigilant in exercising their right as provided for under the subject MOA.
The Court is not persuaded.
There is no dispute that the compromise agreement between herein petitioner union,
representing its officers and members, and respondent company was executed on August
4, 1998 and was subsequently approved via the NLRC Decision dated October 12, 1998.
However, considering petitioners' allegation that the terms and conditions of the
agreement have not been complied with by respondent, petitioners should have moved
for the issuance of a writ of execution.
It is wrong for petitioners' counsel to argue that since the NLRC Decision approving the
parties' compromise agreement was immediately executory, there was no need to file a
motion for execution. It is settled that when a compromise agreement is given judicial
53
approval, it becomes more than a contract binding upon the parties.6 Having been
sanctioned by the court, it is entered as a determination of a controversy and has the force
and effect of a judgment.7 It is immediately executory and not appealable, except for
vices of consent or forgery.8The non-fulfillment of its terms and conditions justifies
the issuance of a writ of execution; in such an instance, execution becomes a ministerial
duty of the court.9 Stated differently, a decision on a compromise agreement is final and
executory.10 Such agreement has the force of law and is conclusive between the
parties.11 It transcends its identity as a mere contract binding only upon the parties
thereto, as it becomes a judgment that is subject to execution in accordance with the
Rules.12
In this respect, the law and the rules provide the mode and the periods within which a
party may enforce his right.
The most relevant rule in the instant case is Section 8, Rule XI, 2005 Revised Rules of
Procedure of the NLRC which states that:cralawlawlibrary
Section 8. Execution By Motion or By Independent Action. - A decision or order may be
executed on motion within five (5) years from the date it becomes final and executory.
After the lapse of such period, the judgment shall become dormant, and may only be
enforced by an independent action within a period of ten (10) years from date of its
finality.
chanrobleslaw
In the same manner, pertinent portions of Sections 4 (a) and 6, Rule III, of the NLRC
Manual on Execution of Judgment, provide as follows:cralawlawlibrary
Section 4. Issuance of a Writ: - Execution shall issue upon an order, resolution or
decision that finally disposes of the actions or proceedings and after the counsel of record
and the parties have been duly furnished with the copies of the same in accordance with
the NLRC Rules of Procedure, provided:cralawlawlibrary
a) The Commission or Labor Arbiter shall, motu proprio or upon motion of any interested
party, issue a writ of execution on a judgment only within five (5) years from the date it
becomes final and executory, x x x
xxx xxx xxx
Section 6. Execution by Independent Action. - A judgment after the lapse of five (5) years
from the date it becomes final and executory and before it is barred by prescription, may
only be enforced by an independent action.chanrobleslaw
Similarly, Section 6, Rule 39 of the Rules of Court, which can be applied in a suppletory
manner, provides:cralawlawlibrary
Sec. 6. Execution by motion or by independent action. - A final and executory judgment
or order may be executed on motion within five (5) years from the date of its entry. After
the lapse of such time, and before it is barred by the statute of limitations, a judgment
may be enforced by action. The revived judgment may also be enforced by motion within
five years from the date of its entry and, thereafter, by action before it is barred by the
statute of limitations.
chanrobleslaw
Article 1144 of the Civil Code may, likewise be applied, as it provides that an action
upon a written contract must be brought within ten years from the time the right of action
accrues.
It is clear from the above law and rules that a judgment may be executed on motion
within five years from the date of its entry or from the date it becomes final and
executory. After the lapse of such time, and before it is barred by the statute of
limitations, a judgment may be enforced by action. If the prevailing party fails to have the
decision enforced by a mere motion after the lapse of five years from the date of its entry
(or from the date it becomes final and executory), the said judgment is reduced to a mere
right of action in favor of the person whom it favors and must be enforced, as are all
ordinary actions, by the institution of a complaint in a regular form. 13
In the present case, the five-and ten-year periods provided by law and the rules are more
than sufficient to enable petitioners to enforce their right under the subject MOA. In this
case, it is clear that the judgment of the NLRC, having been based on a compromise
embodied in a written contract, was immediately executory upon its issuance on October
12, 1998. Thus, it could have been executed by motion within five (5) years. It was not.
Nonetheless, it could have been enforced by an independent action within the next five
(5) years, or within ten (10) years from the time the NLRC Decision was promulgated. It
was not. Therefore, petitioners' right to have the NLRC judgment executed by mere
motion as well as their right of action to enforce the same judgment had prescribed by the
time they filed their Motion for Writ of Execution on January 25, 2010.
It is true that there are instances in which this Court allowed execution by motion even
after the lapse of five years upon meritorious grounds. However, in instances when this
Court allowed execution by motion even after the lapse of five years, there is, invariably,
only one recognized exception, i.e., when the delay is caused or occasioned by actions of
the judgment debtor and/or is incurred for his benefit or advantage.14 In the present case,
there is no indication that the delay in the execution of the MOA, as claimed by
petitioners, was caused by respondent nor was it incurred at its instance or for its benefit
or advantage.
It is settled that the purpose of the law (or rule) in prescribing time limitations for
enforcing judgments or actions is to prevent obligors from sleeping on their rights. 15 In
this regard, petitioners insist that they are vigilant in exercising their right to pursue
payment of the monetary awards in their favor. However, a careful review of the records
at hand would show that petitioners failed to prove their allegation. The only evidence
presented to show that petitioners ever demanded payment was a letter dated May 22,
2008, signed by one Atty. Calderon, representing herein individual petitioners, addressed
to respondent company and seeking proof that the company has indeed complied with the
provisions of the subject MOA.16 Considering that the NLRC Decision approving the
MOA was issued as early as October 12, 1998, the letter from petitioners' counsel, which
was dated almost ten years after the issuance of the NLRC Decision, can hardly be
considered as evidence of vigilance on the part of petitioners. No proof was ever
presented showing that petitioners did not sleep on their rights. Despite their claims to the
contrary, the records at hand are bereft of any evidence to establish that petitioners
exerted any effort to enforce their rights under the subject MOA, either individually,
through their union or their counsel. It is a basic rule in evidence that each party must
prove his affirmative allegation, that mere allegation is not evidence.17 Indeed, as
allegation is not evidence, the rule has always been to the effect that a party alleging a
54
critical fact must support his allegation with substantial evidence which has been
construed to mean such relevant evidence as a reasonable mind will accept as adequate to
support a conclusion.18Unfortunately, petitioners failed in this respect.
Even granting, for the sake of argument, that the records of the case were lost, as alleged
by petitioners, leading to the delay in the enforcement of petitioners' rights, such loss of
the records cannot be regarded as having interrupted the prescriptive periods for filing a
motion or an action to enforce the NLRC Decision because such alleged loss could not
have prevented petitioners from attempting to reconstitute the records and, thereafter,
filing the required motion or action on time.19
As a final note, it bears to reiterate that while the scales of justice usually tilt in favor of
labor, the present circumstances prevent this Court from applying the same in the instant
petition. Even if our laws endeavor to give life to the constitutional policy on social
justice and on the protection of labor, it does not mean that every labor dispute will be
decided in favor of the workers.20 The law also recognizes that management has rights
which are also entitled to respect and enforcement in the interest of fair play.21 Stated
otherwise, while the Court fully recognizes the special protection which the Constitution,
labor laws, and social legislation accord the workingman, the Court cannot, however,
alter or amend the law on prescription to relieve petitioners of the consequences of their
inaction. Vigilantibus, non dormientibus, jura subveniunt - Laws come to the assistance
of the vigilant, not of the sleeping.22chanroblesvirtuallawlibrary
WHEREFORE, the instant petition is DENIED. The Resolutions of the Court of
Appeals, dated June 30, 2011 and September 28, 2011, respectively, in CA-G.R. SP No.
118459, are AFFIRMED.
G.R. No. 180962 February 26, 2014
PIDLTRANCO SERVICE ENTERPRISES, INC., represented by its Vice-President
for Administration, M/GEN. NEMESIO M. SIGAYA, Petitioner,
vs.
PHILTRANCO WORKERS UNION-ASSOCIATION OF GENUINE LABOR
ORGANIZATIONS (PWU-AGLO), represented by JOSE JESSIE
OLIVAR, Respondent.
DECISION
DEL CASTILLO, J.:
While a government office1 may prohibit altogether the filing of a motion for
reconsideration with respect to its decisions or orders, the fact remains that certiorari
inherently requires the filing of a motion for reconsideration, which is the tangible
representation of the opportunity given to the office to correct itself. Unless it is filed,
there could be no occasion to rectify. Worse, the remedy of certiorari would be
unavailing. Simply put, regardless of the proscription against the filing of a motion for
reconsideration, the same may be filed on the assumption that rectification of the decision
or order must be obtained, and before a petition for certiorari may be instituted.
This Petition for Review on Certiorari2 seeks a review and setting aside of the September
20, 2007 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 100324,4 as well
as its December 14, 2007 Resolution5 denying petitioners Motion for Reconsideration.
Factual Antecedents
On the ground that it was suffering business losses, petitioner Philtranco Service
Enterprises, Inc., a local land transportation company engaged in the business of carrying
passengers and freight, retrenched 21 of its employees. Consequently, the company
union, herein private respondent Philtranco Workers Union-Association of Genuine
Labor Organizations (PWU-AGLU), filed a Notice of Strike with the Department of
Labor and Employment (DOLE), claiming that petitioner engaged in unfair labor
practices. The case was docketed as NCMB-NCR CASE No. NS-02-028-07.
Unable to settle their differences at the scheduled February 21, 2007 preliminary
conference held before Conciliator-Mediator Amorsolo Aglibut (Aglibut) of the National
Conciliation and Mediation Board (NCMB), the case was thereafter referred to the Office
of the Secretary of the DOLE (Secretary of Labor), where the case was docketed as Case
No. OS-VA-2007-008.
After considering the parties respective position papers and other submissions, Acting
DOLE Secretary Danilo P. Cruz issued a Decision6 dated June 13, 2007, the dispositive
portion of which reads, as follows:
WHEREFORE, premises considered, we hereby ORDER Philtranco to:
1. REINSTATE to their former positions, without loss of seniority rights, the
ILLEGALLY TERMINATED 17 "union officers", x x x, and PAY them
BACKWAGES from the time of termination until their actual or payroll
reinstatement, provided in the computation of backwages among the seventeen
55
 (17) who had received their separation pay should deduct the payments made to
them from the backwages due them.
2. MAINTAIN the status quo and continue in full force and effect the terms and
conditions of the existing CBA specifically, Article VI on Salaries and Wages
(commissions) and Article XI, on Medical and Hospitalization until a new
agreement is reached by the parties; and
3. REMIT the withheld union dues to PWU-AGLU without unnecessary delay.
The PARTIES are enjoined to strictly and fully comply with the provisions of the existing
CBA and the other dispositions of this Decision.
SO ORDERED.7
Petitioner received a copy of the above Decision on June 14, 2007. It filed a Motion for
Reconsideration on June 25, 2007, a Monday. Private respondent, on the other hand,
submitted a "Partial Appeal."
In an August 15, 2007 Order8 which petitioner received on August 17, 2007, the Secretary
of Labor declined to rule on petitioners Motion for Reconsideration and private
respondents "Partial Appeal", citing a DOLE Regulation9 which provided that voluntary
arbitrators decisions, orders, resolutions or awards shall not be the subject of motions for
reconsideration. The Secretary of Labor held:
WHEREFORE, the complainants and the respondents respective pleadings are hereby
NOTED as pleadings that need not be acted upon for lack of legal basis.
SO ORDERED. 10
The Assailed Court of Appeals Resolutions
On August 29, 2007, petitioner filed before the CA an original Petition for Certiorari and
Prohibition, and sought injunctive relief, which case was docketed as CA-G.R. SP No.
100324.
On September 20, 2007, the CA issued the assailed Resolution which decreed as follows:
WHEREFORE, premises considered, the instant Petition for Certiorari and Prohibition
with Prayer for Temporary Restraining Order and Preliminary Injunction is hereby
DISMISSED. Philtrancos pleading entitled "Reiterating Motion for The Issuance of Writ
of Preliminary Injunction and/or Temporary Restraining Order" is NOTED.
SO ORDERED.11
The CA held that, in assailing the Decision of the DOLE voluntary arbitrator, petitioner
erred in filing a petition for certiorari under Rule 65 of the 1997 Rules, when it should
have filed a petition for review under Rule 43 thereof, which properly covers decisions of
voluntary labor arbitrators.12 For this reason, the petition is dismissible pursuant to
Supreme Court Circular No. 2-90.13 The CA added that since the assailed Decision was
not timely appealed within the reglementary 15-day period under Rule 43, the same
became final and executory. Finally, the appellate court ruled that even assuming for the
sake of argument that certiorari was indeed the correct remedy, still the petition should be
dismissed for being filed out of time. Petitioners unauthorized Motion for
Reconsideration filed with the Secretary of Labor did not toll the running of the
reglementary 60-day period within which to avail of certiorari; thus, from the time of its
receipt of Acting Labor Secretary Cruzs June 13, 2007 Decision on June 14 or the
following day, petitioner had until August 13 to file the petition yet it filed the same
only on August 29.
Petitioner filed a Motion for Reconsideration, which was denied by the CA through the
second assailed December 14, 2007 Resolution. In denying the motion, the CA held that
the fact that the Acting Secretary of Labor rendered the decision on the voluntary
arbitration case did not remove the same from the jurisdiction of the NCMB, which thus
places the case within the coverage of Rule 43.
Issues
In this Petition,14 the following errors are assigned:
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE
PETITIONER AVAILED OF THE ERRONEOUS REMEDY IN FILING A PETITION
FOR CERTIORARI UNDER RULE 65 INSTEAD OF UNDER RULE 43 OF THE
RULES OF COURT.
THE HONORABLE COURT OF APPEALS ERRED WHEN IT HELD THAT THE
PETITION FOR CERTIORARI WAS FILED OUT OF TIME.
THE HONORABLE COURT OF APPEALS ERRED WHEN IT DISMISSED THE
PETITION OUTRIGHT ON THE BASIS OF PURE TECHNICALITY.15
Petitioners Arguments
In its Petition and Reply,16 petitioner argues that a petition for certiorari under Rule 65
and not a petition for review under Rule 43 is the proper remedy to assail the June 13,
56
2007 Decision of the DOLE Acting Secretary, pointing to the Courts pronouncement in
National Federation of Labor v. Hon. Laguesma17 that the remedy of an aggrieved party
against the decisions and discretionary acts of the NLRC as well as the Secretary of
Labor is to timely file a motion for reconsideration, and then seasonably file a special
civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.
Petitioner adds that, contrary to the CAs ruling, NCMB-NCR CASE No. NS-02-028-07
is not a simple voluntary arbitration case. The character of the case, which involves an
impending strike by petitioners employees; the nature of petitioners business as a public
transportation company, which is imbued with public interest; the merits of its case; and
the assumption of jurisdiction by the Secretary of Labor all these circumstances
removed the case from the coverage of Article 262,18 and instead placed it under Article
263,19 of the Labor Code. Besides, Rule 43 does not apply to judgments or final orders
issued under the Labor Code.20
On the procedural issue, petitioner insists that it timely filed the Petition for Certiorari
with the CA, arguing that Rule 65 fixes the 60-day period within which to file the petition
from notice of the denial of a timely filed motion for reconsideration, whether such
motion is required or not. It cites the Courts pronouncement in ABS-CBN Union
Members v. ABS-CBN Corporation21 that "before a petition for certiorari under Rule 65
of the Rules of Court may be availed of, the filing of a motion for reconsideration is a
condition sine qua non to afford an opportunity for the correction of the error or mistake
complained of" and since "a decision of the Secretary of Labor is subject to judicial
review only through a special civil action of certiorari x x x [it] cannot be resorted to
without the aggrieved party having exhausted administrative remedies through a motion
for reconsideration".
Respondents Arguments
In its Comment,22 respondent argues that the Secretary of Labor decided Case No. OS-
VA-2007-008 in his capacity as voluntary arbitrator; thus, his decision, being that of a
voluntary arbitrator, is only assailable via a petition for review under Rule 43. It further
echoes the CAs ruling that even granting that certiorari was the proper remedy, the same
was filed out of time as the filing of a motion for reconsideration, which was an
unauthorized pleading, did not toll the running of the 60-day period. Finally, it argues that
on the merits, petitioners case could not hold water as it failed to abide by the
requirements of law in effecting a retrenchment on the ground of business losses.
Our Ruling
The Court grants the Petition.
It cannot be said that in taking cognizance of NCMB-NCR CASE No. NS-02-028-07, the
Secretary of Labor did so in a limited capacity, i.e., as a voluntary arbitrator. The fact is
undeniable that by referring the case to the Secretary of Labor, Conciliator-Mediator
Aglibut conceded that the case fell within the coverage of Article 263 of the Labor Code;
the impending strike in Philtranco, a public transportation company whose business is
imbued with public interest, required that the Secretary of Labor assume jurisdiction over
the case, which he in fact did. By assuming jurisdiction over the case, the provisions of
Article 263 became applicable, any representation to the contrary or that he is deciding
the case in his capacity as a voluntary arbitrator notwithstanding.
It has long been settled that the remedy of an aggrieved party in a decision or resolution
of the Secretary of Labor is to timely file a motion for reconsideration as a precondition
for any further or subsequent remedy, and then seasonably file a special civil action for
certiorari under Rule 65 of the 1997 Rules on Civil Procedure.23 There is no distinction:
when the Secretary of Labor assumes jurisdiction over a labor case in an industry
indispensable to national interest, "he exercises great breadth of discretion" in finding a
solution to the parties dispute.24 "[T]he authority of the Secretary of Labor to assume
jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to national interest includes and extends to all questions and
controversies arising therefrom. The power is plenary and discretionary in nature to
enable him to effectively and efficiently dispose of the primary dispute."25 This wide
latitude of discretion given to the Secretary of Labor may not be the subject of appeal.
Accordingly, the Secretary of Labors Decision in Case No. OS-VA-2007-008 is a proper
subject of certiorari, pursuant to the Courts pronouncement in National Federation of
Labor v. Laguesma,26 thus:
Though appeals from the NLRC to the Secretary of Labor were eliminated, presently
there are several instances in the Labor Code and its implementing and related rules
where an appeal can be filed with the Office of the Secretary of Labor or the Secretary of
Labor issues a ruling, to wit:
xxxx
(6) Art. 263 provides that the Secretary of Labor shall decide or resolve the labor dispute
[over] which he assumed jurisdiction within thirty (30) days from the date of the
assumption of jurisdiction. His decision shall be final and executory ten (10) calendar
days after receipt thereof by the parties.
From the foregoing we see that the Labor Code and its implementing and related rules
generally do not provide for any mode for reviewing the decision of the Secretary of
Labor. It is further generally provided that the decision of the Secretary of Labor shall be
57
final and executory after ten (10) days from notice. Yet, like decisions of the NLRC
which under Art. 223 of the Labor Code become final after ten (10) days, decisions of the
Secretary of Labor come to this Court by way of a petition for certiorari even beyond the
ten-day period provided in the Labor Code and the implementing rules but within the
reglementary period set for Rule 65 petitions under the 1997 Rules of Civil Procedure. x
xx
xxxx
In fine, we find that it is procedurally feasible as well as practicable that petitions for
certiorari under Rule 65 against the decisions of the Secretary of Labor rendered under
the Labor Code and its implementing and related rules be filed initially in the Court of
Appeals. Paramount consideration is strict observance of the doctrine on the hierarchy of
the courts, emphasized in St. Martin Funeral Homes v. NLRC, on "the judicial policy that
this Court will not entertain direct resort to it unless the redress desired cannot be
obtained in the appropriate courts or where exceptional and compelling circumstances
justify availment of a remedy within and calling for the exercise of our primary
jurisdiction."27
On the question of whether the Petition for Certiorari was timely filed, the Court agrees
with petitioners submission. Rule 65 states that where a motion for reconsideration or
new trial is timely filed, whether such motion is required or not, the petition shall be filed
not later than 60 days counted from the notice of the denial of the motion.28 This can only
mean that even though a motion for reconsideration is not required or even prohibited by
the concerned government office, and the petitioner files the motion just the same, the 60-
day period shall nonetheless be counted from notice of the denial of the motion. The very
nature of certiorari which is an extraordinary remedy resorted to only in the absence of
plain, available, speedy and adequate remedies in the course of law requires that the
office issuing the decision or order be given the opportunity to correct itself. Quite
evidently, this opportunity for rectification does not arise if no motion for reconsideration
has been filed. This is precisely what the Court said in the ABS-CBN Union Members
case, whose essence continues to this day. Thus:
Section 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code,
provides:
"The Secretary shall have fifteen (15) calendar days within which to decide the appeal
from receipt of the records of the case. The decision of the Secretary shall be final and
inappealable." x x x
The aforecited provision cannot be construed to mean that the Decision of the public
respondent cannot be reconsidered since the same is reviewable by writ of certiorari
under Rule 65 of the Rules of Court. As a rule, the law requires a motion for
reconsideration to enable the public respondent to correct his mistakes, if any. In Pearl S.
Buck Foundation, Inc., vs. NLRC, this Court held:
"Hence, the only way by which a labor case may reach the Supreme Court is through a
petition for certiorari under Rule 65 of the Rules of Court alleging lack or excess of
jurisdiction or grave abuse of discretion. Such petition may be filed within a reasonable
time from receipt of the resolution denying the motion for reconsideration of the NLRC
decision." x x x
Clearly, before a petition for certiorari under Rule 65 of the Rules of Court may be
availed of, the filing of a motion for reconsideration is a condition sine qua non to afford
an opportunity for the correction of the error or mistake complained of.
So also, considering that a decision of the Secretary of Labor is subject to judicial review
only through a special civil action of certiorari and, as a rule, cannot be resorted to
without the aggrieved party having exhausted administrative remedies through a motion
for reconsideration, the aggrieved party, must be allowed to move for a reconsideration of
the same so that he can bring a special civil action for certiorari before the Supreme
Court.29
Indeed, what needs to be realized is that while a government office may prohibit
altogether the filing of a motion for reconsideration with respect to its decisions or orders,
the fact remains that certiorari inherently requires the filing of a motion for
reconsideration, which is the tangible representation of the opportunity given to the office
to correct itself. Unless it is filed, there could be no occasion to rectify. Worse, the
remedy of certiorari would be unavailing. Simply put, regardless of the proscription
against the filing of a motion for reconsideration, the same may be filed on the
assumption that rectification of the decision or order must be obtained, and before a
petition for certiorari may be instituted.
Petitioner received a copy of the Acting Secretary of Labors Decision on June 14,
2007.1wphi1 It timely filed a Motion for Reconsideration on June 25, which was a
Monday, or the first working day following the last day (Sunday, June 24) for filing the
motion. But for lack of procedural basis, the same was effectively denied by the Secretary
of Labor via his August 15, 2007 Order which petitioner received on August 17. It then
filed the Petition for Certiorari on August 29, or well within the fresh 60-day period
allowed by the Rules from August 17. Given these facts, the Court finds that the Petition
was timely filed.
Going by the foregoing pronouncements, the CA doubly erred in dismissing CA-G.R. SP
No. 100324.
58
WHEREFORE, the Petition is GRANTED. The assailed September 20, 2007 and SO ORDERED.
December 14, 2007 Resolutions of the Court of Appeals are REVERSED and SET
ASIDE. The Petition in CA-G.R. SP No. 100324 is ordered REINSTATED and the Court
of Appeals is DIRECTED to RESOLVE the same with DELIBERATE DISPATCH.

59