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Quitclaim not bar to filing of dismissal case
[G.R. No. 191475. December 11, 2013.]
PHILIPPINE CARPET MANUFACTURING CORPORATION, PACIFIC CARPET MANUFACTURING
CORPORATION, MR. PATRICIO LIM and MR. DAVID LIM,petitioners, vs. IGNACIO B. TAGYAMON,
PABLITO L. LUNA, FE B. BADAYOS, GRACE B. MARCOS, ROGELIO C. NEMIS, ROBERTO B. ILAO,
ANICIA D. DELA CRUZ and CYNTHIA L. COMANDAO, respondents.
DECISION
PERALTA, J p:

The Case
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Court of
Appeals (CA) Decision dated July 7, 2009 and Resolution dated February 26, 2010 in CA-G.R. SP No. 105236.
The assailed decision granted the petition for certiorari filed by respondents Ignacio B. Tagyamon (Tagyamon),
Pablito I. Luna (Luna), Fe B. Badayos (Badayos), Grace B. Marcos (Marcos), Rogelio C. Nemis (Nemis), Roberto
B. Ilao (Ilao), Anicia D. Dela Cruz (Dela Cruz), and Cynthia L. Comandao (Comandao), the dispositive portion of
which reads:
WHEREFORE, the petition is GRANTED. The private respondent is hereby ordered to reinstate the petitioners
with full backwages less the amounts they received as separation pays. In case reinstatement would no longer
be feasible because the positions previously held no longer exist, the private respondent shall pay them
backwages plus, in lieu of reinstatement, separation pays equal to one (1) month pay, or one-half (1/2) month
pay for every year of service, whichever is higher. In addition, the private respondent is hereby ordered to pay
the petitioners moral damages in the amount of P20,000.00 each.
SO ORDERED.

The Facts
Petitioner Philippine Carpet Manufacturing Corporation (PCMC) is a corporation registered in the Philippines
engaged in the business of manufacturing wool and yarn carpets and rugs. Respondents were its regular and
permanent employees, but were affected by petitioner's retrenchment and voluntary retirement
programs. cEASTa
On March 15, 2004, Tagyamon, Luna, Badayos, Dela Cruz, and Comandao received a uniformly worded
Memorandum of dismissal, to wit:
This is to inform you that in view of a slump in the market demand for our products due to the uncompetitiveness of our price, the company is constrained to reduce the number of its workforce. The long-term
effects of September 11 and the war in the Middle East have greatly affected the viability of our business and we
are left with no recourse but to reorganize and downsize our organizational structure.
We wish to inform you that we are implementing a retrenchment program in accordance with Article 283 of the
Labor Code of the Philippines, as amended, and its implementing rules and regulations.
In this connection, we regret to advise you that you are one of those affected by the said exercise, and your
employment shall be terminated effective at the close of working hours on April 15, 2004.
Accordingly, you shall be paid your separation pay as mandated by law. You will no longer be required to report
for work during the 30-day notice period in order to give you more time to look for alternative employment.
However, you will be paid the salary corresponding to the said period. We shall process your clearance and other
documents and you may claim the payables due you on March 31, 2004.
Thank you for your services and good luck to your future endeavors.
1

As to Marcos, Ilao, and Nemis, they claimed that they were dismissed effective March 31, 2004, together with
fifteen (15) other employees on the ground of lack of market/slump in demand. PCMC, however, claimed that
they availed of the company's voluntary retirement program and, in fact, voluntarily executed their respective
Deeds of Release, Waiver, and Quitclaim.
Claiming that they were aggrieved by PCMC's decision to terminate their employment, respondents filed separate
complaints for illegal dismissal against PCMC, Pacific Carpet Manufacturing Corporation, Mr. Patricio Lim and Mr.
David Lim. These cases were later consolidated. Respondents primarily relied on the Supreme Court's decision
in Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas (Philcea case), as to the validity of the
company's retrenchment program. They further explained that PCMC did not, in fact, suffer losses shown by its
acts prior to and subsequent to their termination. They also insisted that their acceptance of separation pay and
signing of quitclaim is not a bar to the pursuit of illegal dismissal case.
PCMC, for its part, defended its decision to terminate the services of respondents being a necessary
management prerogative. It pointed out that as an employer, it had no obligation to keep in its employ more
workers than are necessary for the operation of his business. Thus, there was an authorized cause for dismissal.
Petitioners also stressed that respondents belatedly filed their complaint as they allowed almost three years to
pass making the principle of laches applicable. Considering that respondents accepted their separation pay and
voluntarily executed deeds of release, waiver and quitclaim, PCMC invoked the principle of estoppel on the part
of respondents to question their separation from the service. Finally, as to Marcos, Ilao and Nemis, PCMC
emphasized that they were not dismissed from employment, but in fact they voluntarily retired from employment
to take advantage of the company's program.
On August 23, 2007, Labor Arbiter (LA) Donato G. Quinto, Jr. rendered a Decision dismissing the complaint for
lack of merit. The LA found no flaw in respondents' termination as they voluntarily opted to retire and were
subsequently re-employed on a contractual basis then regularized, terminated from employment and were paid
separation benefits. In view of respondents' belated filing of the complaint, the LA concluded that such action is
a mere afterthought designed primarily for respondents to collect more money, taking advantage of the 2006
Supreme Court decision.
On appeal, the National Labor Relations Commission (NLRC) sustained the LA decision. In addition to the LA
ratiocination, the NLRC emphasized the application of the principle of laches for respondents' inaction for an
unreasonable period.
Still undaunted, respondents elevated the matter to the CA in a petition for certiorari. In reversing the earlier
decisions of the LA and the NLRC, the CA refused to apply the principle of laches, because the case was
instituted prior to the expiration of the prescriptive period set by law which is four years. It stressed that said
principle cannot be invoked earlier than the expiration of the prescriptive period. Citing the Court's decision in
the Philcea case, the CA applied the doctrine of stare decisis, in view of the similar factual circumstances of the
cases. As to Ilao, Nemis and Marcos, while acknowledging their voluntary resignation, the CA found the same
not a bar to the illegal dismissal case because they did so on the mistaken belief that PCMC was losing
money. With the foregoing findings, the CA ordered that respondents be reinstated with full backwages less the
amounts they received as separation pay. In case of impossibility of reinstatement, the CA ordered PCMC to pay
respondents backwages and in lieu of reinstatement, separation pay equal to one month pay or 1/2 month pay
for every year of service whichever is higher, plus moral damages.

The Issues
Aggrieved, petitioners come before the Court in this petition for review on certiorari based on this ground, to wit:
IN RENDERING ITS DISPUTED DECISION AND RESOLUTION, THE COURT A QUO HAS DECIDED A QUESTION
OF SUBSTANCE NOT IN ACCORD WITH LAW AND/OR ESTABLISHED JURISPRUDENCE.
a)Res Judicata should not be followed if to follow it is to perpetuate error (Philippine Trust Co., and Smith Bell &
Co. vs. Mitchell, 59 Phil. 30, 36 (1933). The (Supreme) Court is not precluded from rectifying errors of judgment
2

if blind and stubborn adherence to the doctrine of immutability of final judgments would involve the sacrifice of
justice for technicality (Heirs of Maura So vs. Obliosca, G.R. No. 147082, January 28, 2008, 542 SCRA
406) DaIACS
b)Not all waivers and quitclaims are invalid as against public policy. Waivers that represent a voluntary and
reasonable settlement of the laborer's claims are legitimate and should be respected by the Court as the law
between the parties (Gamo-gamo vs. PNOC Shipping and Transport Corp., G.R. No. 141707, May 2,
2002; Alcasero vs. NLRC, 288 SCRA 129) Where the persons making the waiver has done so voluntarily, with a
full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction
must be recognized as valid and binding undertaking (Periquet vs. NLRC, 186 SCRA 724 [1990];Magsalin vs.
Coca Cola Bottlers Phils., Inc. vs. National Organization of Working Men (N.O.W.M.], G.R. No. 148492, May 2,
2003).
Petitioners contend that the Philcea case decided by this Court and relied upon by the CA in the assailed decision
was based on erroneous factual findings, inapplicable financial statement, as well as erroneous analysis of such
financial statements. They, thus, implore the Court to revisit the cited case in order to dispense with substantial
justice. They explain that the Court made conclusions based on erroneous information. Petitioners also insist
that the doctrines of res judicata and law of the case are not applicable, considering that this case does not
involve the same parties as the Philcea case. They likewise point out that not all respondents were involuntarily
separated on the ground of redundancy as some of them voluntarily availed of the company's Voluntary
Separation Program. They further contend that respondents are guilty not only of laches but also of estoppel in
view of their inaction for an unreasonable length of time to assail the alleged illegal dismissal and in voluntarily
executing a release, quitclaim and waiver.

The Court's Ruling
Laches
Laches has been defined as the failure or neglect for an unreasonable and unexplained length of time to do that
which by exercising due diligence, could or should have been done earlier, thus, giving rise to a presumption
that the party entitled to assert it either has abandoned or declined to assert it. It has been repeatedly held by
the Court that:
. . . Laches is a doctrine in equity while prescription is based on law. Our courts are basically courts of law not
courts of equity. Thus, laches cannot be invoked to resist the enforcement of an existing legal right. . . . Courts
exercising equity jurisdiction are bound by rules of law and have no arbitrary discretion to disregard them.
InZabat Jr. v. Court of Appeals . . ., this Court was more emphatic in upholding the rules of procedure. We said
therein: ADTCaI
As for equity which has been aptly described as a "justice outside legality," this is applied only in the absence of,
and never against, statutory law or, as in this case, judicial rules of procedure. Aequetas nunguam contravenit
legis. The pertinent positive rules being present here, they should preempt and prevail over all abstract
arguments based only on equity.

Thus, where the claim was filed within the [four-year] statutory period, recovery therefore cannot be barred by
laches. Courts should never apply the doctrine of laches earlier than the expiration of time limited for the
commencement of actions at law."
An action for reinstatement by reason of illegal dismissal is one based on an injury to the complainants' rights
which should be brought within four years from the time of their dismissal pursuant to Article 1146 of the Civil
Code. Respondents' complaint filed almost 3 years after their alleged illegal dismissal was still well within the
prescriptive period. Laches cannot, therefore, be invoked yet. To be sure, laches may be applied only upon the
most convincing evidence of deliberate inaction, for the rights of laborers are protected under the social justice
provisions of the Constitution and under the Civil Code.
3

Stare Decisis
The main issue sought to be determined in this case is the validity of respondents' dismissal from employment.
Petitioners contend that they either voluntarily retired from the service or terminated from employment based on
an authorized cause. The LA and the NLRC are one in saying that the dismissal was legal. The CA, however, no
longer discussed the validity of the ground of termination. Rather, it applied the Court's decision in the Philcea
case where the same ground was thoroughly discussed. In other words, the appellate court applied the doctrine
of stare decisis and reached the same conclusion as the earlier case.
Under the doctrine of stare decisis, when a court has laid down a principle of law as applicable to a certain state
of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the
same, even though the parties may be different. Where the facts are essentially different, however, stare
decisisdoes not apply, for a perfectly sound principle as applied to one set of facts might be entirely
inappropriate when a factual variant is introduced.
The question, therefore, is whether the factual circumstances of this present case are substantially the same as
the Philcea case.
We answer in the affirmative.
This case and the Philcea case involve the same period which is March to April 2004; the issuance of
Memorandum to employees informing them of the implementation of the cost reduction program; the
implementation of the voluntary retirement program and retrenchment program, except that this case involves
different employees; the execution of deeds of release, waiver, and quitclaim, and the acceptance of separation
pay by the affected employees.
The illegality of the basis of the implementation of both voluntary retirement and retrenchment programs of
petitioners had been thoroughly ruled upon by the Court in the Philcea case. It discussed the requisites of both
retrenchment and redundancy as authorized causes of termination and that petitioners failed to substantiate
them. In ascertaining the bases of the termination of employees, it took into consideration petitioners' claim of
business losses; the purchase of machinery and equipment after the termination, the declaration of cash
dividends to stockholders, the hiring of 100 new employees after the retrenchment, and the authorization of full
blast overtime work for six hours daily. These, said the Court, are inconsistent with petitioners' claim that there
was a slump in the demand for its products which compelled them to implement the termination programs. In
arriving at its conclusions, the Court took note of petitioners' net sales, gross and net profits, as well as net
income. The Court, thus, reached the conclusion that the retrenchment effected by PCMC is invalid due to a
substantive defect. We quote hereunder the Court's pronouncement in the Philcea case, to wit:
Respondents failed to adduce clear and convincing evidence to prove the confluence of the essential requisites
for a valid retrenchment of its employees. We believe that respondents acted in bad faith in terminating the
employment of the members of petitioner Union.
Contrary to the claim of respondents that the Corporation was experiencing business losses, respondent
Corporation, in fact, amassed substantial earnings from 1999 to 2003. It found no need to appropriate its
retained earnings except on March 23, 2001, when it appropriated P60,000,000.00 to increase production
capacity. . . .
xxx xxx xxx
The evidence on record belies the P22,820,151.00 net income loss in 2004 as projected by the SOLE. On March
29, 2004, the Board of Directors approved the appropriation of P20,000,000.00 to purchase machinery to
improve its facilities, and declared cash dividends to stockholders at P30.00 per share. . . .
xxx xxx xxx

4

It bears stressing that the appropriation of P20,000,000.00 by the respondent Corporation on September 16,
2004 was made barely five months after the 77 Union members were dismissed on the ground that respondent
Corporation was suffering from "chronic depression." Cash dividends were likewise declared on March 29, 2004,
barely two weeks after it implemented its "retrenchment program."
If respondent Corporation were to be believed that it had to retrench employees due to the debilitating slump in
demand for its products resulting in severe losses, how could it justify the purchase of P20,000,000.00 worth of
machinery and equipment? There is likewise no justification for the hiring of more than 100 new employees,
more than the number of those who were retrenched, as well as the order authorizing full blast overtime work
for six hours daily. All these are inconsistent with the intransigent claim that respondent Corporation was
impelled to retrench its employees precisely because of low demand for its products and other external causes.
xxx xxx xxx
That respondents acted in bad faith in retrenching the 77 members of petitioner is buttressed by the fact that
Diaz issued his Memorandum announcing the cost-reduction program on March 9, 2004, after receipt of the
February 10, 2004 letter of the Union president which included the proposal for additional benefits and wage
increases to be incorporated in the CBA for the ensuing year. Petitioner and its members had no inkling, before
February 10, 2004, that respondent Corporation would terminate their employment. Moreover, respondent
Corporation failed to exhaust all other means to avoid further losses without retrenching its employees, such as
utilizing the latter's respective forced vacation leaves. Respondents also failed to use fair and reasonable criteria
in implementing the retrenchment program, and instead chose to retrench 77 of the members of petitioner out
of the dismissed 88 employees. Worse, respondent Corporation hired new employees and even rehired the
others who had been "retrenched."
As shown by the SGV & Co. Audit Report, as of year end December 31, 2003, respondent Corporation increased
its net sales by more than P8,000,000.00. Respondents failed to prove that there was a drastic or severe
decrease in the product sales or that it suffered severe business losses within an interval of three (3) months
from January 2004 to March 9, 2004 when Diaz issued said Memorandum. Such claim of a depressed market as
of March 9, 2004 was only a pretext to retaliate against petitioner Union and thereby frustrate its demands for
more monetary benefits and, at the same time, justify the dismissal of the 77 Union members.
xxx xxx xxx
In contrast, in this case, the retrenchment effected by respondent Corporation is invalid due to a substantive
defect, non-compliance with the substantial requirements to effect a valid retrenchment; it necessarily follows
that the termination of the employment of petitioner Union's members on such ground is, likewise, illegal. As
such, they (petitioner Union's members) are entitled to reinstatement with full backwages.
We find no reason to depart from the above conclusions which are based on the Court's examination of the
evidence presented by the parties therein. As the respondents here were similarly situated as the union
members in the Philcea case, and considering that the questioned dismissal from the service was based on the
same grounds under the same circumstances, there is no need to relitigate the issues presented herein. In short,
we adopt the Court's earlier findings that there was no valid ground to terminate the employees.
A closer look at petitioners' arguments would show that they want the Court to re-examine our decision in
the Philcea case allegedly on the ground that the conclusions therein were based on erroneous interpretation of
the evidence presented.
Indeed, in Abaria v. National Labor Relations Commission, although the Court was confronted with the same
issue of the legality of a strike that has already been determined in a previous case, the Court refused to apply
the doctrine of stare decisis insofar as the award of backwages was concerned because of the clear erroneous
application of the law. We held therein that the Court abandons or overrules precedents whenever it realizes
that it erred in the prior decision. The Court's pronouncement in that case is instructive:
5

The doctrine though is not cast in stone for upon a showing that circumstances attendant in a particular case
override the great benefits derived by our judicial system from the doctrine of stare decisis, the Court is justified
in setting it aside. For the Court, as the highest court of the land, may be guided but is not controlled by
precedent. Thus, the Court, especially with a new membership, is not obliged to follow blindly a particular
decision that it determines, after re-examination, to call for a rectification.
The Abaria case, however, is not applicable in this case. There is no reason to abandon the Court's ruling in
the Philcea case.
Do we apply the aforesaid decision to all the respondents herein? Again, we answer in the affirmative.
Just like the union members in the Philcea case, respondents Tagyamon, Luna, Badayos, Dela Cruz, and
Comandao received similarly worded memorandum of dismissal effective April 15, 2004 based on the same
ground of slump in the market demand for the company's products. As such, they are similarly situated in all
aspects as the union members. With respect to respondents Marcos, Nemis and Ilao, although they applied for
voluntary retirement, the same was not accepted by petitioner. Instead, it issued notice of termination dated
March 6, 2004 to these same employees. And while it is true that petitioner paid them separation pay, the
payment was in the nature of separation and not retirement pay. In other words, payment was made because of
the implementation of the retrenchment program and not because of retirement. As their application for availing
of the company's voluntary retirement program was based on the wrong premise, the intent to retire was not
clearly established, or rather that the retirement is involuntary. Thus, they shall be considered discharged from
employment. Consequently, they shall be treated as if they are in the same footing as the other respondents
herein and the union members in the Philcea case.
Waivers, Releases and Quitclaims
"As a rule, deeds of release and quitclaim cannot bar employees from demanding benefits to which they are
legally entitled or from contesting the legality of their dismissal. The acceptance of those benefits would not
amount to estoppel." To excuse respondents from complying with the terms of their waivers, they must locate
their case within any of three narrow grounds: (1) the employer used fraud or deceit in obtaining the waivers;
(2) the consideration the employer paid is incredible and unreasonable; or (3) the terms of the waiver are
contrary to law, public order, public policy, morals, or good customs or prejudicial to a third person with a right
recognized by law. The instant case falls under the first situation.
As the ground for termination of employment was illegal, the quitclaims are deemed illegal as the employees'
consent had been vitiated by mistake or fraud. The law looks with disfavor upon quitclaims and releases by
employees pressured into signing by unscrupulous employers minded to evade legal responsibilities. The
circumstances show that petitioner's misrepresentation led its employees, specifically respondents herein, to
believe that the company was suffering losses which necessitated the implementation of the voluntary
retirement and retrenchment programs, and eventually the execution of the deeds of release, waiver and
quitclaim.
It can safely be concluded that economic necessity constrained respondents to accept petitioners' monetary offer
and sign the deeds of release, waiver and quitclaim. That respondents are supervisors and not rank-and-file
employees does not make them less susceptible to financial offers, faced as they were with the prospect of
unemployment. The Court has allowed supervisory employees to seek payment of benefits and a manager to
sue for illegal dismissal even though, for a consideration, they executed deeds of quitclaims releasing their
employers from liability.
. . . There is no nexus between intelligence, or even the position which the employee held in the company when
it concerns the pressure which the employer may exert upon the free will of the employee who is asked to sign a
release and quitclaim. A lowly employee or a sales manager, as in the present case, who is confronted with the
same dilemma of whether [to sign] a release and quitclaim and accept what the company offers them, or [to
refuse] to sign and walk out without receiving anything, may do succumb to the same pressure, being very well
6

aware that it is going to take quite a while before he can recover whatever he is entitled to, because it is only
after a protracted legal battle starting from the labor arbiter level, all the way to this Court, can he receive
anything at all. The Court understands that such a risk of not receiving anything whatsoever, coupled with the
probability of not immediately getting any gainful employment or means of livelihood in the meantime,
constitutes enough pressure upon anyone who is asked to sign a release and quitclaim in exchange of some
amount of money which may be way below what he may be entitled to based on company practice and policy or
by law.
The amounts already received by respondents as consideration for signing the releases and quitclaims should be
deducted from their respective monetary awards.
WHEREFORE, premises considered, the petition is hereby DENIED. The Court of Appeals Decision dated July
7, 2009 and Resolution dated February 26, 2010 in CA-G.R. SP No. 105236 are AFFIRMED.
SO ORDERED.
||| (Philippine Carpet Manufacturing Corp. v. Tagyamon, G.R. No. 191475, [December 11, 2013])

Burden of proof of employer-employee relationship
[G.R. No. 192558. February 15, 2012.]
BITOY JAVIER (DANILO P. JAVIER), petitioner, vs. FLY ACE CORPORATION/FLORDELYN
CASTILLO, respondents.
DECISION
MENDOZA, J p:
This is a petition under Rule 45 of the Rules of Civil Procedure assailing the March 18, 2010 Decision of the
Court of Appeals (CA) and its June 7, 2010 Resolution, in CA-G.R. SP No. 109975, which reversed the May 28,
2009 Decision of the National Labor Relations Commission (NLRC) in the case entitled Bitoy Javier v. Fly
Ace/Flordelyn Castillo, holding that petitioner Bitoy Javier (Javier) was illegally dismissed from employment and
ordering Fly Ace Corporation (Fly Ace) to pay backwages and separation pay in lieu of reinstatement.
Antecedent Facts
On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of salaries and other labor
standard benefits. He alleged that he was an employee of Fly Ace since September 2007, performing various
tasks at the respondent's warehouse such as cleaning and arranging the canned items before their delivery to
certain locations, except in instances when he would be ordered to accompany the company's delivery vehicles,
as pahinante; that he reported for work from Monday to Saturday from 7:00 o'clock in the morning to 5:00
o'clock in the afternoon; that during his employment, he was not issued an identification card and payslips by
the company; that on May 6, 2008, he reported for work but he was no longer allowed to enter the company
premises by the security guard upon the instruction of Ruben Ong (Mr. Ong), his superior; that after several
minutes of begging to the guard to allow him to enter, he saw Ong whom he approached and asked why he was
being barred from entering the premises; that Ong replied by saying, "Tanungin mo anak mo;" that he then
went home and discussed the matter with his family; that he discovered that Ong had been courting his
daughter Annalyn after the two met at a fiesta celebration in Malabon City; that Annalyn tried to talk to Ong and
convince him to spare her father from trouble but he refused to accede; that thereafter, Javier was terminated
from his employment without notice; and that he was neither given the opportunity to refute the cause/s of his
dismissal from work.

7

To support his allegations, Javier presented an affidavit of one Bengie Valenzuela who alleged that Javier was a
stevedore or pahinante of Fly Ace from September 2007 to January 2008. The said affidavit was subscribed
before the Labor Arbiter (LA).
For its part, Fly Ace averred that it was engaged in the business of importation and sales of groceries. Sometime
in December 2007, Javier was contracted by its employee, Mr. Ong, as extra helper on a pakyaw basis at an
agreed rate of P300.00 per trip, which was later increased to P325.00 in January 2008. Mr. Ong contracted
Javier roughly 5 to 6 times only in a month whenever the vehicle of its contracted hauler, Milmar Hauling
Services, was not available. On April 30, 2008, Fly Ace no longer needed the services of Javier. Denying that he
was their employee, Fly Ace insisted that there was no illegal dismissal. Fly Ace submitted a copy of its
agreement with Milmar Hauling Services and copies of acknowledgment receipts evidencing payment to Javier
for his contracted services bearing the words, "daily manpower(pakyaw/piece rate pay)" and the latter's
signatures/initials.
Ruling of the Labor Arbiter
On November 28, 2008, the LA dismissed the complaint for lack of merit on the ground that Javier failed to
present proof that he was a regular employee of Fly Ace. He wrote:
Complainant has no employee ID showing his employment with the Respondent nor any document showing that
he received the benefits accorded to regular employees of the Respondents. His contention that Respondent
failed to give him said ID and payslips implies that indeed he was not a regular employee of Fly Ace considering
that complainant was a helper and that Respondent company has contracted a regular trucking for the delivery
of its products.
Respondent Fly Ace is not engaged in trucking business but in the importation and sales of groceries. Since there
is a regular hauler to deliver its products, we give credence to Respondents' claim that complainant was
contracted on "pakiao" basis.
As to the claim for underpayment of salaries, the payroll presented by the Respondents showing salaries of
workers on "pakiao" basis has evidentiary weight because although the signature of the complainant appearing
thereon are not uniform, they appeared to be his true signature.
xxx xxx xxx
Hence, as complainant received the rightful salary as shown by the above described payrolls, Respondents are
not liable for salary differentials.
Ruling of the NLRC
On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the argument of Javier and
immediately concluded that he was not a regular employee simply because he failed to present proof. It was of
the view that a pakyaw-basis arrangement did not preclude the existence of employer-employee relationship.
"Payment by result . . . is a method of compensation and does not define the essence of the relation. It is a
mere method of computing compensation, not a basis for determining the existence or absence of an employeremployee relationship." The NLRC further averred that it did not follow that a worker was a job contractor and
not an employee, just because the work he was doing was not directly related to the employer's trade or
business or the work may be considered as "extra" helper as in this case; and that the relationship of an
employer and an employee was determined by law and the same would prevail whatever the parties may call it.
In this case, the NLRC held that substantial evidence was sufficient basis for judgment on the existence of the
employer-employee relationship. Javier was a regular employee of Fly Ace because there was reasonable
connection between the particular activity performed by the employee (as a 'pahinante') in relation to the usual
business or trade of the employer (importation, sales and delivery of groceries). He may not be considered as an
independent contractor because he could not exercise any judgment in the delivery of company products. He
was only engaged as a "helper."
8

Finding Javier to be a regular employee, the NLRC ruled that he was entitled to a security of tenure. For failing
to present proof of a valid cause for his termination, Fly Ace was found to be liable for illegal dismissal of Javier
who was likewise entitled to backwages and separation pay in lieu of reinstatement. The NLRC thus ordered:
WHEREFORE, premises considered, complainant's appeal is partially GRANTED. The assailed Decision of the
labor arbiter is VACATED and a new one is hereby entered holding respondent FLY ACE CORPORATION guilty of
illegal dismissal and non-payment of 13th month pay. Consequently, it is hereby ordered to pay complainant
DANILO "Bitoy" JAVIER the following:
1. Backwages - P45,770.83
2. Separation pay, in lieu of reinstatement - 8,450.00
3. Unpaid 13th month pay (proportionate) - 5,633.33
–––––––––
TOTAL - P59,854.16
=========
All other claims are dismissed for lack of merit.
SO ORDERED.
Ruling of the Court of Appeals
On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a former employee of Fly Ace and
reinstated the dismissal of Javier's complaint as ordered by the LA. The CA exercised its authority to make its
own factual determination anent the issue of the existence of an employer-employee relationship between the
parties. According to the CA:
xxx xxx xxx
In an illegal dismissal case the onus probandi rests on the employer to prove that its dismissal was for a valid
cause. However, before a case for illegal dismissal can prosper, an employer-employee relationship must first be
established. . . . it is incumbent upon private respondent to prove the employee-employer relationship by
substantial evidence.
xxx xxx xxx
It is incumbent upon private respondent to prove, by substantial evidence, that he is an employee of petitioners,
but he failed to discharge his burden. The non-issuance of a company-issued identification card to private
respondent supports petitioners' contention that private respondent was not its employee.
The CA likewise added that Javier's failure to present salary vouchers, payslips, or other pieces of evidence to
bolster his contention, pointed to the inescapable conclusion that he was not an employee of Fly Ace. Further, it
found that Javier's work was not necessary and desirable to the business or trade of the company, as it was only
when there were scheduled deliveries, which a regular hauling service could not deliver, that Fly Ace would
contract the services of Javier as an extra helper. Lastly, the CA declared that the facts alleged by Javier did not
pass the "control test." He contracted work outside the company premises; he was not required to observe
definite hours of work; he was not required to report daily; and he was free to accept other work elsewhere as
there was no exclusivity of his contracted service to the company, the same being co-terminous with the trip
only. Since no substantial evidence was presented to establish an employer-employee relationship, the case for
illegal dismissal could not prosper.
The petitioners moved for reconsideration, but to no avail.
9

Hence, this appeal anchored on the following grounds:
I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER WAS
NOT A REGULAR EMPLOYEE OF FLY ACE.
II.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER IS
NOT ENTITLED TO HIS MONETARY CLAIMS.
The petitioner contends that other than its bare allegations and self-serving affidavits of the other employees,
Fly Ace has nothing to substantiate its claim that Javier was engaged on a pakyaw basis. Assuming that Javier
was indeed hired on a pakyaw basis, it does not preclude his regular employment with the company. Even the
acknowledgment receipts bearing his signature and the confirming receipt of his salaries will not show the true
nature of his employment as they do not reflect the necessary details of the commissioned task. Besides, Javier's
tasks as pahinante are related, necessary and desirable to the line of business by Fly Ace which is engaged in
the importation and sale of grocery items. "On days when there were no scheduled deliveries, he worked in
petitioners' warehouse, arranging and cleaning the stored cans for delivery to clients." More importantly, Javier
was subject to the control and supervision of the company, as he was made to report to the office from Monday
to Saturday, from 7:00 o'clock in the morning until 5:00 o'clock in the afternoon. The list of deliverable goods,
together with the corresponding clients and their respective purchases and addresses, would necessarily have
been prepared by Fly Ace. Clearly, he was subjected to compliance with company rules and regulations as
regards working hours, delivery schedule and output, and his other duties in the warehouse.
The petitioner chiefly relied on Chavez v. NLRC, where the Court ruled that payment to a worker on a per trip
basis is not significant because "this is merely a method of computing compensation and not a basis for
determining the existence of employer-employee relationship." Javier likewise invokes the rule that, "in
controversies between a laborer and his master, . . . doubts reasonably arising from the evidence should be
resolved in the former's favour. The policy is reflected is no less than the Constitution, Labor Code and Civil
Code."
Claiming to be an employee of Fly Ace, petitioner asserts that he was illegally dismissed by the latter's failure to
observe substantive and procedural due process. Since his dismissal was not based on any of the causes
recognized by law, and was implemented without notice, Javier is entitled to separation pay and backwages.
In its Comment, Fly Ace insists that there was no substantial evidence to prove employer-employee relationship.
Having a service contract with Milmar Hauling Services for the purpose of transporting and delivering company
products to customers, Fly Ace contracted Javier as an extra helper or pahinante on a mere "per trip basis."
Javier, who was actually a loiterer in the area, only accompanied and assisted the company driver when Milmar
could not deliver or when the exigency of extra deliveries arises for roughly five to six times a month. Before
making a delivery, Fly Ace would turn over to the driver and Javier the delivery vehicle with its loaded company
products. With the vehicle and products in their custody, the driver and Javier "would leave the company
premises using their own means, method, best judgment and discretion on how to deliver, time to deliver, where
and [when] to start, and manner of delivering the products."
Fly Ace dismisses Javier's claims of employment as baseless assertions. Aside from his bare allegations, he
presented nothing to substantiate his status as an employee. "It is a basic rule of evidence that each party must
prove his affirmative allegation. If he claims a right granted by law, he must prove his claim by competent
evidence, relying on the strength of his own evidence and not upon the weakness of his opponent." Invoking
the case of Lopez v. Bodega City, Fly Ace insists that in an illegal dismissal case, the burden of proof is upon the
complainant who claims to be an employee. It is essential that an employer-employee relationship be proved by
substantial evidence. Thus, it cites:
10

In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee
was for a valid cause. However, before a case for illegal dismissal can prosper, an employer-employee
relationship must first be established.
Fly Ace points out that Javier merely offers factual assertions that he was an employee of Fly Ace, "which are
unfortunately not supported by proof, documentary or otherwise." Javier simply assumed that he was an
employee of Fly Ace, absent any competent or relevant evidence to support it. "He performed his contracted
work outside the premises of the respondent; he was not even required to report to work at regular hours; he
was not made to register his time in and time out every time he was contracted to work; he was not subjected
to any disciplinary sanction imposed to other employees for company violations; he was not issued a company
I.D.; he was not accorded the same benefits given to other employees; he was not registered with the Social
Security System (SSS) as petitioner's employee; and, he was free to leave, accept and engage in other means of
livelihood as there is no exclusivity of his contracted services with the petitioner, his services being co-terminus
with the trip only. All these lead to the conclusion that petitioner is not an employee of the respondents."
Moreover, Fly Ace claims that it had "no right to control the result, means, manner and methods by which Javier
would perform his work or by which the same is to be accomplished." In other words, Javier and the company
driver were given a free hand as to how they would perform their contracted services and neither were they
subjected to definite hours or condition of work.
Fly Ace likewise claims that Javier's function as a pahinante was not directly related or necessary to its principal
business of importation and sales of groceries. Even without Javier, the business could operate its usual course
as it did not involve the business of inland transportation. Lastly, the acknowledgment receipts bearing Javier's
signature and words "pakiao rate," referring to his earned salaries on a per trip basis, have evidentiary weight
that the LA correctly considered in arriving at the conclusion that Javier was not an employee of the company.
The Court affirms the assailed CA decision.
It must be noted that the issue of Javier's alleged illegal dismissal is anchored on the existence of an employeremployee relationship between him and Fly Ace. This is essentially a question of fact. Generally, the Court does
not review errors that raise factual questions. However, when there is conflict among the factual findings of the
antecedent deciding bodies like the LA, the NLRC and the CA, "it is proper, in the exercise of Our equity
jurisdiction, to review and re-evaluate the factual issues and to look into the records of the case and re-examine
the questioned findings." In dealing with factual issues in labor cases, "substantial evidence — that amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion — is sufficient."
As the records bear out, the LA and the CA found Javier's claim of employment with Fly Ace as wanting and
deficient. The Court is constrained to agree. Although Section 10, Rule VII of the New Rules of Procedure of the
NLRC allows a relaxation of the rules of procedure and evidence in labor cases, this rule of liberality does not
mean a complete dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the
facts speedily and objectively with little regard to technicalities or formalities but nowhere in the rules are they
provided a license to completely discount evidence, or the lack of it. The quantum of proof required, however,
must still be satisfied. Hence, "when confronted with conflicting versions on factual matters, it is for them in the
exercise of discretion to determine which party deserves credence on the basis of evidence received, subject
only to the requirement that their decision must be supported by substantial evidence." Accordingly, the
petitioner needs to show by substantial evidence that he was indeed an employee of the company against which
he claims illegal dismissal.
Expectedly, opposing parties would stand poles apart and proffer allegations as different as chalk and cheese. It
is, therefore, incumbent upon the Court to determine whether the party on whom the burden to prove lies was
able to hurdle the same. "No particular form of evidence is required to prove the existence of such employeremployee relationship. Any competent and relevant evidence to prove the relationship may be admitted. Hence,
while no particular form of evidence is required, a finding that such relationship exists must still rest on some
substantial evidence. Moreover, the substantiality of the evidence depends on its quantitative as well as
11

itsqualitative aspects." Although substantial evidence is not a function of quantity but rather of quality, the . . .
circumstances of the instant case demand that something more should have been proffered. Had there been
other proofs of employment, such as . . . inclusion in petitioner's payroll, or a clear exercise of control, the Court
would have affirmed the finding of employer-employee relationship."
In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such claim
by the requisite quantum of evidence. "Whoever claims entitlement to the benefits provided by law should
establish his or her right thereto . . . ." Sadly, Javier failed to adduce substantial evidence as basis for the grant
of relief.
In this case, the LA and the CA both concluded that Javier failed to establish his employment with Fly Ace. By
way of evidence on this point, all that Javier presented were his self-serving statements purportedly showing his
activities as an employee of Fly Ace. Clearly, Javier failed to pass the substantiality requirement to support his
claim. Hence, the Court sees no reason to depart from the findings of the CA.
While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made to work in the
company premises during weekdays arranging and cleaning grocery items for delivery to clients, no other proof
was submitted to fortify his claim. The lone affidavit executed by one Bengie Valenzuela was unsuccessful in
strengthening Javier's cause. In said document, all Valenzuela attested to was that he would frequently see
Javier at the workplace where the latter was also hired as stevedore. Certainly, in gauging the evidence
presented by Javier, the Court cannot ignore the inescapable conclusion that his mere presence at the workplace
falls short in proving employment therein. The supporting affidavit could have, to an extent, bolstered Javier's
claim of being tasked to clean grocery items when there were no scheduled delivery trips, but no information
was offered in this subject simply because the witness had no personal knowledge of Javier's employment status
in the company. Verily, the Court cannot accept Javier's statements, hook, line and sinker.
The Court is of the considerable view that on Javier lies the burden to pass the well-settled tests to determine
the existence of an employer-employee relationship, viz.: (1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. Of
these elements, the most important criterion is whether the employer controls or has reserved the right to
control the employee not only as to the result of the work but also as to the means and methods by which the
result is to be accomplished.
In this case, Javier was not able to persuade the Court that the above elements exist in his case. He could not
submit competent proof that Fly Ace engaged his services as a regular employee; that Fly Ace paid his wages as
an employee, or that Fly Ace could dictate what his conduct should be while at work. In other words, Javier's
allegations did not establish that his relationship with Fly Ace had the attributes of an employer-employee
relationship on the basis of the above-mentioned four-fold test. Worse, Javier was not able to refute Fly Ace's
assertion that it had an agreement with a hauling company to undertake the delivery of its goods. It was also
baffling to realize that Javier did not dispute Fly Ace's denial of his services' exclusivity to the company. In short,
all that Javier laid down were bare allegations without corroborative proof.
Fly Ace does not dispute having contracted Javier and paid him on a "per trip" rate as a stevedore, albeit on
a pakyaw basis. The Court cannot fail to note that Fly Ace presented documentary proof that Javier was indeed
paid on a pakyaw basis per the acknowledgment receipts admitted as competent evidence by the LA.
Unfortunately for Javier, his mere denial of the signatures affixed therein cannot automatically sway us to ignore
the documents because "forgery cannot be presumed and must be proved by clear, positive and convincing
evidence and the burden of proof lies on the party alleging forgery."
Considering the above findings, the Court does not see the necessity to resolve the second issue presented.
One final note. The Court's decision does not contradict the settled rule that "payment by the piece is just a
method of compensation and does not define the essence of the relation." Payment on a piece-rate basis does
not negate regular employment. "The term 'wage' is broadly defined in Article 97 of the Labor Code as
12

remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time,
task, piece or commission basis. Payment by the piece is just a method of compensation and does not define the
essence of the relations. Nor does the fact that the petitioner is not covered by the SSS affect the employeremployee relationship. However, in determining whether the relationship is that of employer and employee or
one of an independent contractor, each case must be determined on its own facts and all the features of the
relationship are to be considered." Unfortunately for Javier, the attendant facts and circumstances of the instant
case do not provide the Court with sufficient reason to uphold his claimed status as employee of Fly Ace.
While the Constitution is committed to the policy of social justice and the protection of the working class, it
should not be supposed that every labor dispute will be automatically decided in favor of labor. Management
also has its rights which are entitled to respect and enforcement in the interest of simple fair play. Out of its
concern for the less privileged in life, the Court has inclined, more often than not, toward the worker and upheld
his cause in his conflicts with the employer. Such favoritism, however, has not blinded the Court to the rule that
justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable
law and doctrine.
WHEREFORE, the petition is DENIED. The March 18, 2010 Decision of the Court of Appeals and its June 7,
2010 Resolution, in CA-G.R. SP No. 109975, are herebyAFFIRMED.
SO ORDERED.
||| (Javier v. Fly Ace Corp., G.R. No. 192558, [February 15, 2012])

Evidence presented for the first time on appeal
[G.R. No. 186344. February 20, 2013.]
LEOPARD SECURITY AND INVESTIGATION AGENCY, petitioner, vs. TOMAS QUITOY, RAUL SABANG
and DIEGO MORALES, respondents.
DECISION
PEREZ, J p:
Is an award of separation pay proper despite lack of showing of illegal dismissal? This is the main issue in this
Rule 45 Petition for Review on Certiorari assailing the Decision dated 26 September 2008 rendered and the
Resolution dated 21 January 2009 issued by the Twentieth Division of the Court of Appeals (CA) in CA-G.R. SP
No. 03097.
The factual antecedents are not in dispute.
Alongside Numeriano Ondong, respondents Tomas Quitoy, Raul Sabang and Diego Morales were hired as
security guards by petitioner Leopard Security and Investigation Agency (LSIA) which maintained its office at
BCC House, 537 Shaw Boulevard, Mandaluyong City. All being residents of Cebu City, respondents were
assigned by LSIA to the different branches of its only client in said locality, Union Bank of the Philippines (Union
Bank). On 1 April 2005, it appears that Union Bank served a notice to LSIA, terminating the parties' security
service contract effective at the end of business hours of 30 April 2005. Thru its representative,
RogelioMorales, LSIA informed respondents on 29 April 2005 of the termination of its contract with Union Bank
which had decided to change its security provider. Upon Morales' instruction, respondents went to the Union
Bank Cebu Business Park Branch on 30 April 2005, for the turnover of their service firearms to Arnel Cortes,
Union Bank's Chief Security Officer. On 3 May 2005, respondents and Ondong filed a complaint for illegal
dismissal, unpaid 13th month pay and service incentive leave pay (SILP), moral and exemplary damages as well
as attorney's fees against LSIA, its President, Jose Poe III, Union Bank, its Regional Service and Operations
Officer, Catherine Cheung, Herbert Hojas, Protectors Services, Inc. (PSI) and Capt. Gerardo Jaro. With the
13

complaint already docketed as RAB Case No. 07-05-0979-2005 before the Regional Arbitration Branch No. VII of
the National Labor Relations Commission (NLRC) in Cebu City, it appears that LSIA sent on 10 May 2005 a
notice requiring respondents to report for work to its Mandaluyong City office. In an Order dated 6 June 2005,
Cheung and Hojas were later dropped as parties-respondents from the case upon motion of respondents. In
view of Ondong's execution of a quitclaim, on the other hand, his complaint was likewise dismissed with
prejudice, resulting in the exclusion of PSI and Jaro as parties-respondents from the case.
In support of their complaint, respondents averred that they were hired and assigned by LSIA to the different
Cebu City branches of Union Bank which directly paid their salaries and whose branch managers exercised direct
control and supervision over them. Required to work from 7:30 a.m. to 9:00 p.m. daily, respondents claimed
that they took orders and instructions from Union Bank's branch managers since LSIA had no administrative
personnel in Cebu City. Respondents further asserted that, after introducing himself as a representative of LSIA
on 29 April 2005, Morales belatedly informed them that their services would be terminated at the end of the
office hours on the same business day. Directed by Morales to report to Union Bank's Cebu Business Park Branch
the next day, respondents maintained that they surrendered their service firearms to Cortes who told them that
Union Bank would be engaging the services of another security agency effective the next working day. Not even
reimbursed their firearm bond nor told that Union Bank had no monetary obligation to them, respondents
claimed they were constrained to file their complaint and to pray that the former be held jointly and severally
liable with LSIA for their claims.
In its position paper, LSIA, on the other hand, asseverated that upon being hired, respondents opted for an
assignment in Cebu City and were, accordingly, detailed at the different branches of Union Bank in said locality.
Informed by Union Bank on 1 April 2005 of the termination of their security service contract effective 30 April
2005, LSIA claimed that it relieved respondents from their assignments by the end of the business hours of the
latter date. Petitioners would, on 10 May 2005, direct respondents to report for work at its Mandaluyong City
office. As respondents failed to do so, LSIA alleged that it issued show cause letters on 21 June 2005, requiring
the former to explain why they should not be administratively sanctioned for their unexplained absences. As the
avowed direct employer of respondents, LSIA also prayed that Union Bank be dropped from the case and that
the complaint be altogether dismissed for lack of merit. Invoking the security service contract it executed with
LSIA from which its lack of an employer-employee relationship with respondents could be readily gleaned, Union
Bank, in turn, asserted that the complaint should be dismissed as against it for lack of cause of action.
On 6 April 2006, Labor Arbiter Violeta Ortiz-Bantug rendered a Decision, finding LSIA liable for the illegal
dismissal of respondents. Faulting LSIA for informing respondents of the termination of their services only on 30
April 2005 despite Union Bank's 1 April 2005 advice of the termination of its security service contract, the Labor
Arbiter ruled that the 10 May 2005 report to work order did not show a sincere intention on the part of LSIA to
provide respondents with other assignments. Aside from respondents' claims for backwages, LSIA was ordered
by the Labor Arbiter to pay the former's claim for separation pay on the ground that reinstatement was no
longer feasible under the circumstances. Although absolved from liability for the foregoing awards upon the
finding that LSIA was an independent contractor, Union Bank was, however, held jointly and severally liable with
said security agency for the payment of respondents' claims for proportionate 13th month pay and SILP for the
three years immediately preceding the institution of the case.
On appeal, the foregoing decision was modified in the 20 March 2007 Decision rendered by the Fourth Division
of the NLRC in NLRC Case No. V-000570-2006. Applying the principle that security agencies like LSIA are allowed
to put security guards on temporary off-detail or floating status for a period not exceeding six months, the NLRC
discounted the factual and legal bases for the illegal dismissal determined by the Labor Arbiter as well as the
backwages awarded in favor of respondents. Finding that the filing of the complaint on 3 May 2005 was
premature, the NLRC took note of the fact that respondents did not even protest against the report to work
order issued by LSIA. Even then, the NLRC upheld the Labor Arbiter's award of separation pay on the theory that
reinstatement was no longer viable. The awards of proportionate 13th month pay and SILP for which Union Bank
and LSIA were held solidarily liable were likewise sustained for failure of the latter to discharge the burden of
proving payment of said labor standard benefits. Belatedly submitting documents to prove its payment of SILP,
14

LSIA filed a motion for reconsideration of the foregoing decision which was, however, denied for lack of merit in
the NLRC's 23 July 2007 Resolution.
Dissatisfied, LSIA filed the Rule 65 Petition for Certiorari docketed before the CA as CA-G.R. SP No. 03097.
Calling attention to the impropriety of the award of separation pay absent a finding of illegal dismissal, LSIA also
faulted the NLRC for ignoring the evidence it submitted alongside its motion for reconsideration to prove the
payment of respondents' SILP for the years 2003, 2004 and 2005. On 26 September 2008, the then Twentieth
Division of the CA rendered the herein assailed decision, affirming the NLRC's 23 July 2007 Decision and denying
LSIA's petition for lack of merit. Applying the principle that respondents could not be considered illegally
dismissed before the lapse of six months from their being placed on floating status by LSIA, the CA justified the
awards of separation pay, proportionate 13th month pay and SILP in the following wise:
In another vein, however, . . . respondents were caught off guard when Rogelio Morales, [LSIA's] representative
summarily told them not to report to Union Bank anymore. They did not understand its implications as no one
bothered to explain what would happen to them. At any rate, it is clear as day that . . . respondents no longer
wish to continue their employment with [LSIA] because of the shabby treatment previously given them. Their
relations have obviously turned sour. Such being the case, separation pay, in lieu of reinstatement, is proper.
Separation pay is granted where reinstatement is no longer advisable because of strained relations between the
employer and the employee.
xxx xxx xxx
The burden of proving payment of holiday pay and salary differentials belong to the employer, not the
employee. Here [LSIA] failed to present proofs that . . . respondents received payment for [SILP] and thirteenth
month pay which accrued to them under the law. As the labor arbiter ruled, however, payment of [SILP] shall
only be for the last three (3) years of . . . respondents' service taking into consideration the provisions on
prescription of money claims and proportionate 13th month pay for the year 2004.
Aggrieved by the foregoing decision as well as the CA's 21 January 2009 denial of their motion for
reconsideration thereof, LSIA and Poe filed the Petition for Review on Certiorari at bench, on the following
grounds:
I
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT UPHELD THE NLRC DECISION
AWARDING TO RESPONDENTS SEPARATION PAY DESPITE ITS FINDINGS THAT THEY WERE NOT
ILLEGALLY DISMISSED.
II
THE COURT OF APPEALS ERRED WHEN IT UPHELD THE NLRC DECISION AWARDING TO
RESPONDENTS SERVICE INCENTIVE LEAVE PAY FOR THE YEARS 2003, 2004 AND 2005.
In urging the grant of their petition, LSIA and Poe argue that, upon discounting the factual basis for
respondents' claim that they were illegally dismissed from employment, the CA should have disallowed the
award of separation pay awarded by the Labor Arbiter and the NLRC. They insist that like backwages, separation
pay is the legal consequence of a finding of illegal dismissal and should, perforce, be deleted in the absence
thereof, particularly when no evidence was adduced to prove the strained relations between the employer and
employee. LSIA and Poe also fault the CA for ignoring the Bank Advice Slips and On Demand Statement of
Account belatedly submitted alongside the motion for reconsideration they filed before the NLRC, to prove
payment of respondents' SILP for the years 2004 and 2005. In their comment to the petition, on the other
hand, respondents insist that they have been illegally dismissed from employment and that the Labor Arbiter's
determination to that effect was erroneously reversed by both the NLRC and the CA.
The petition is impressed with merit.
15

Applying Article 286 of the Labor Code of the Philippines by analogy, this Court has repeatedly recognized that
security guards may be temporarily sidelined by their security agency as their assignments primarily depend on
the contracts entered into by the latter with third parties. Temporary "off-detail" or "floating status" is the
period of time when security guards are in between assignments or when they are made to wait after being
relieved from a previous post until they are transferred to a new one. It takes place when, as here, the security
agency's clients decide not to renew their contracts with the agency, resulting in a situation where the available
posts under its existing contracts are less than the number of guards in its roster. For as long as such
temporary inactivity does not continue for a period exceeding six months, it has been ruled that placing an
employee on temporary "off-detail" or "floating status" is not equivalent to dismissal.
In the case at bench, respondents were informed on 29 April 2005 that they were going to be relieved from duty
as a consequence of the 30 April 2005 expiration of the security service contract between Union Bank and LSIA.
While respondents lost no time in immediately filing their complaint on 3 May 2005, the record equally shows
that they were directed by LSIA to report for work at its Mandaluyong City office on 10 May 2005 or a mere ten
days from the time the former were effectively sidelined. Considering that a security guard is only considered
illegally dismissed from service when he is sidelined from duty for a period exceeding six months, we find that
the CA correctly upheld the NLRC's ruling that respondents were not illegally dismissed by LSIA. Parenthetically,
said ruling is binding on respondents who did not appeal either the decision rendered by the NLRC or the CA in
line with the entrenched procedural rule in this jurisdiction that a party who did not appeal cannot assign such
errors as are designed to have the judgment modified.
Having correctly ruled out illegal dismissal of respondents, the CA reversibly erred, however, when it sustained
the NLRC's award of separation pay on the ground that the parties' relationship had already been strained. For
one, liability for the payment of separation pay is a legal consequence of illegal dismissal where reinstatement is
no longer viable or feasible. Under Article 279 of the Labor Code, an illegally dismissed employee is entitled to
the twin reliefs of full backwages and reinstatement without loss of seniority rights. Aside from the instances
provided under Articles 283 and 284 of the Labor Code, separation pay is, however, granted when
reinstatement is no longer feasible because of strained relations between the employer and the employee. In
cases of illegal dismissal, the accepted doctrine is that separation pay is available in lieu of reinstatement when
the latter recourse is no longer practical or in the best interest of the parties.
As a relief granted in lieu of reinstatement, however, it consequently goes without saying that an award of
separation pay is inconsistent with a finding that there was no illegal dismissal. Standing alone, the doctrine of
strained relations will not justify an award of separation pay, a relief granted in instances where the common
denominator is the fact that the employee was dismissed by the employer. Even in cases of illegal dismissal, the
doctrine of strained relations is not applied indiscriminately as to bar reinstatement, especially when the
employee has not indicated an aversion to returning to work or does not occupy a position of trust and
confidence in or has no say in the operation of the employer's business. Although litigation may also engender
a certain degree of hostility, it has likewise been ruled that the understandable strain in the parties' relations
would not necessarily rule out reinstatement which would, otherwise, become the rule rather than the exception
in illegal dismissal cases.
Our perusal of the position paper they filed a quo shows that, despite erroneously believing themselves to have
been illegally dismissed, respondents had alleged no circumstance indicating the strained relations between
them and LSIA and had even alternatively prayed for reinstatement alongside the payment of separation
pay. Since application of the doctrine of strained relations presupposes a question of fact which must be
demonstrated and adequately supported by evidence, the CA clearly erred in ruling that the parties' relations
had already soured and that an award of separation pay in favor of respondents is proper. Apprised by Union
Bank on 1 April 2005 that it was no longer renewing its security service contract after 30 April 2005, LSIA may
have tarried in informing respondents of the fact only on 29 April 2005. As correctly ruled by the NLRC, however,
the resultant inconvenience to respondents cannot detract from the fact that the employer-employee relationship
between the parties still subsisted and had yet to be severed when respondents filed their complaint on 3 May
2005.
16

Absent illegal dismissal on the part of LSIA and abandonment of employment on the part of respondents, we
find that the latter's reinstatement without backwages is, instead, in order. In addition to respondent's
alternative prayer therefor in their position paper, reinstatement is justified by LSIA's directive for them to report
for work at its Mandaluyong City office as early of 10 May 2005. As for the error ascribed the CA for failing to
correct the NLRC's disregard of the evidence showing LSIA's payment of respondents' SILP, suffice it to say that
the NLRC is not precluded from receiving evidence, even for the first time on appeal, because technical rules of
procedure are not binding in labor cases. Considering that labor officials are, in fact, encouraged to use all
reasonable means to ascertain the facts speedily and objectively, with little resort to technicalities of law or
procedure, LSIA correctly faults the CA for likewise brushing aside the evidence of SILP payments it submitted
during the appeal stage before the NLRC.
The record shows that respondents were uniformly awarded SILP at the rate of P666.00 for the period May 3 to
December 31, 2002, P1,000.00 for the period January 1 to December 31, 2003, P1,040.00 for the period January
1 to December 31, 2004 and P347.36 for the period January 1 to May 3, 2005 or a total of P3,053.36 each. The
Bank Advice Slips and On Demand Statement of Account submitted by LSIA before the NLRC shows uniform
payments of SILP to respondents in the sum of P1,025 for the year 2004 which should, therefore, be deducted
from the award of said benefit in favor of respondent. Although LSIA also submitted a Bank Advice Slip showing
a supposed P1,065.00 payment of SILP for the year 2005 in favor of respondent Sabang only, the absence of an
On Demand Statement of Account for said amount impels Us to disallow the further deduction thereof from the
SILP award.
WHEREFORE, premises considered, the petition is GRANTED and the assailed Decision dated 26 September
2008 is, accordingly, MODIFIED to direct the reinstatement of respondents in lieu of the award of separation
pay and to deduct the sum of P1,025.00 from the SILP individually awarded in favor of respondents. The rest
isAFFIRMED.
SO ORDERED.
||| (Leopard Security and Investigation Agency v. Quitoy, G.R. No. 186344, [February 20, 2013])

Contempt powers of the NLRC
[G.R. No. 176085. February 8, 2012.]
FEDERICO S. ROBOSA, ROLANDO E. PANDY, NOEL D. ROXAS, ALEXANDER ANGELES, VERONICA
GUTIERREZ, FERNANDO EMBAT, and NANETTE H. PINTO, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION (First Division), CHEMO-TECHNISCHE MANUFACTURING, INC. and its
responsible officials led by FRANKLIN R. DE LUZURIAGA, and PROCTER & GAMBLE PHILIPPINES,
INC., respondents.
DECISION
BRION, J p:
We resolve the petition for review on Certiorari seeking the reversal of the resolutions of the Court of
Appeals (CA) rendered on February 24, 2006 and December 14, 2006 in CA-G.R. SP No. 80436.
Factual Background
Federico S. Robosa, Rolando E. Pandy, Noel D. Roxas, Alexander Angeles, Veronica Gutierrez, Fernando Embat
and Nanette H. Pinto (petitioners) were rank-and-file employees of respondent Chemo-Technische
Manufacturing, Inc. (CTMI), the manufacturer and distributor of "Wella" products. They were officers and
members of the CTMI Employees Union-DFA (union). Respondent Procter and Gamble Philippines, Inc. (P &
GPI) acquired all the interests, franchises and goodwill of CTMI during the pendency of the dispute.
17

Sometime in the first semester of 1991, the union filed a petition for certification election at CTMI. On June 10,
1991, Med-Arbiter Rasidali Abdullah of the Office of the Department of Labor and Employment in the National
Capital Region (DOLE-NCR) granted the petition. The DOLE-NCR conducted a consent election on July 5, 1991,
but the union failed to garner the votes required to be certified as the exclusive bargaining agent of the
company.
On July 15, 1991, CTMI, through its President and General Manager Franklin R. de Luzuriaga, issued a
memorandum announcing that effective that day: (1) all sales territories were demobilized; (2) all vehicles
assigned to sales representatives should be returned to the company and would be sold; (3) sales
representatives would continue to service their customers through public transportation and would be given
transportation allowance; (4) deliveries of customers' orders would be undertaken by the warehouses; and (5)
revolving funds for ex-truck selling held by sales representatives should be surrendered to the cashier (for Metro
Manila) or to the supervisor (for Visayas and Mindanao), and truck stocks should immediately be surrendered to
the warehouse.
On the same day, CTMI issued another memorandum informing the company's sales representatives and sales
drivers of the new system in the Salon Business Group's selling operations.
The union asked for the withdrawal and deferment of CTMI's directives, branding them as union busting acts
constituting unfair labor practice. CTMI ignored the request. Instead, it issued on July 23, 1991 a notice of
termination of employment to the sales drivers, due to the abolition of the sales driver positions.
On August 1, 1991, the union and its affected members filed a complaint for illegal dismissal and unfair labor
practice, with a claim for damages, against CTMI, De Luzuriaga and other CTMI officers. The union also moved
for the issuance of a writ of preliminary injunction and/or temporary restraining order (TRO).
The Compulsory Arbitration Proceedings
The labor arbiter handling the case denied the union's motion for a stay order on the ground that the issues
raised by the petitioners can best be ventilated during the trial on the merits of the case. This prompted the
union to file on August 16, 1991 with the National Labor Relations Commission (NLRC), a petition for the
issuance of a preliminary mandatory injunction and/or TRO.
On August 23, 1991, the NLRC issued a TRO. It directed CTMI, De Luzuriaga and other company executives to
(1) cease and desist from dismissing any member of the union and from implementing the July 23, 1991
memorandum terminating the services of the sales drivers, and to immediately reinstate them if the dismissals
have been effected; (2) cease and desist from implementing the July 15, 1991 memorandum grounding the
sales personnel; and (3) restore the status quo ante prior to the formation of the union and the conduct of the
consent election.
Allegedly, the respondents did not comply with the NLRC's August 23, 1991 resolution. They instead moved to
dissolve the TRO and opposed the union's petition for preliminary injunction.
On September 12, 1991, the NLRC upgraded the TRO to a writ of preliminary injunction. The respondents
moved for reconsideration. The union opposed the motion and urgently moved to cite the responsible CTMI
officers in contempt of court.
On August 25, 1993, the NLRC denied the respondents' motion for reconsideration and directed Labor Arbiter
Cristeta Tamayo to hear the motion for contempt. In reaction, the respondents questioned the NLRC orders
before this Court through a petition for certiorari and prohibition with preliminary injunction. The Court dismissed
the petition for being premature. It also denied the respondents' motion for reconsideration, as well as a second
motion for reconsideration, with finality. This notwithstanding, the respondents allegedly refused to obey the
NLRC directives. The respondents' defiance, according to the petitioners, resulted in the loss of their
employment.
18

Meanwhile, the NLRC heard the contempt charge. On October 31, 2000, it issued a resolution dismissing the
charge. It ordered the labor arbiter to proceed hearing the main case on the merits.
The petitioners moved for, but failed to secure, a reconsideration from the NLRC on the dismissal of the
contempt charge. They then sought relief from the CA by way of a petition for certiorari under Rule 65.
The CA Decision
The CA saw no need to dwell on the issues raised by the petitioners as the question it deemed appropriate for
resolution is whether the NLRC's dismissal of the contempt charge against the respondents may be the proper
subject of an appeal. It opined that the dismissal is not subject to review by an appellate court. Accordingly, the
CA Special Sixth Division dismissed the petition in its resolution of February 24, 2006.
The CA considered the prayer of P & GPI to be dropped as party-respondent moot and academic.
The petitioners sought a reconsideration, but the CA denied the motion in its resolution of December 14,
2006. Hence, the present Rule 45 petition.
The Petition
The petitioners charge the CA with grave abuse of discretion in upholding the NLRC resolutions, despite the
reversible errors the labor tribunal committed in dismissing the contempt charge against the respondents. They
contend that the respondents were guilty of contempt for their failure (1) to observe strictly the NLRC status
quoorder; and (2) to reinstate the dismissed petitioners and to pay them their lost wages, sales
commissions, per diems, allowances and other employee benefits. They also claim that the NLRC, in effect,
overturned this Court's affirmation of the TRO and of the preliminary injunction.
The petitioners assail the CA's reliance on the Court's ruling that a contempt charge partakes of a criminal
proceeding where an acquittal is not subject to appeal. They argue that the facts obtaining in the present case
are different from the facts of the cases where the Court's ruling was made. They further argue that by the
nature of this case, the Labor Code and its implementing rules and regulations should apply, but in any event,
the appellate court is not prevented from reviewing the factual basis of the acquittal of the respondents from the
contempt charges.
The petitioners lament that the NLRC, in issuing the challenged resolutions, had unconstitutionally applied the
law. They maintain that not only did the NLRC unconscionably delay the disposition of the case for more than
twelve (12) years; it also rendered an unjust, unkind and dubious judgment. They bewail that "[f]or some
strange reason, the respondent NLRC made a queer [somersault] from its earlier rulings which favor the
petitioners."
The Case for the Respondents

Franklin K. De Luzuriaga
De Luzuriaga filed a Comment on May 17, 2007 and a Memorandum on December 4, 2008, praying for a
dismissal of the petition.
De Luzuriaga argues that the CA committed no error when it dismissed the petition for certiorari since the
dismissal of the contempt charge against the respondents amounted to an acquittal where review by an
appellate court will not lie. In any event, he submits, the respondents were charged with indirect contempt
which may be initiated only in the appropriate regional trial court, pursuant to Section 12, Rule 71 of the Rules
of Court. He posits that the NLRC has no jurisdiction over an indirect contempt charge. He thus argues that the
petitioners improperly brought the contempt charge before the NLRC.
Additionally, De Luzuriaga points out that the petition raises only questions of facts which, procedurally, is not
allowed in a petition for review on certiorari. Be this as it may, he submits that pursuant to Philippine Long
Distance Telephone Company, Inc. v. Tiamson, factual findings of labor officials, who are deemed to have
19

acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but
even finality. He stresses that the CA committed no reversible error in not reviewing the NLRC's factual findings.
Further, De Luzuriaga contends that the petitioners' verification and certification against forum shopping is
defective because it was only Robosa and Pandy who executed the document. There was no indication that they
were authorized by Roxas, Angeles, Gutierrez, Embat and Pinto to execute the required verification and
certification.
Lastly, De Luzuriaga maintains that the petitioners are guilty of forum shopping as the reliefs prayed for in the
petition before the CA, as well as in the present petition, are the same reliefs that the petitioners may be entitled
to in the complaint before the labor arbiter.

P & GPI
As it did with the CA when it was asked to comment on the petitioners' motion for reconsideration, P & GPI
prays in its Comment and Memorandum that it be dropped as a party-respondent, and that it be excused from
further participating in the proceedings. It argues that inasmuch as the NLRC resolved the contempt charge on
the merits, an appeal from its dismissal through a petition for certiorari is barred. Especially in its case, the
dismissal of the petition for certiorari is correct because it was never made a party to the contempt proceedings
and, thus, it was never afforded the opportunity to be heard. It adds that it is an entity separate from CTMI. It
submits that it cannot be made to assume any or all of CTMI's liabilities, absent an agreement to that effect but
even if it may be liable, the present proceedings are not the proper venue to determine its liability, if any.
On December 16, 2008, the petitioners filed a Memorandum raising essentially the same issues and arguments
laid down in the petition.
The Court's Ruling

Issues
The parties' submissions raise the following issues:
(1)whether the NLRC has contempt powers;
(2)whether the dismissal of a contempt charge is appealable; and
(3)whether the NLRC committed grave abuse of discretion in dismissing the contempt charge against the
respondents.
On the first issue, we stress that under Article 218 of the Labor Code, the NLRC (and the labor arbiters) may
hold any offending party in contempt, directly or indirectly, and impose appropriate penalties in accordance with
law. The penalty for direct contempt consists of either imprisonment or fine, the degree or amount depends on
whether the contempt is against the Commission or the labor arbiter. The Labor Code, however, requires the
labor arbiter or the Commission to deal with indirect contempt in the manner prescribed under Rule 71 of the
Rules of Court.
Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt
proceedings before the trial court. This mode is to be observed only when there is no law granting them
contempt powers. As is clear under Article 218 (d) of the Labor Code, the labor arbiter or the Commission is
empowered or has jurisdiction to hold the offending party or parties in direct or indirect contempt. The
petitioners, therefore, have not improperly brought the indirect contempt charges against the respondents
before the NLRC.
The second issue pertains to the nature of contempt proceedings, especially with respect to the remedy available
to the party adjudged to have committed indirect contempt or has been absolved of indirect contempt charges.
In this regard, Section 11, Rule 71 of the Rules of Court states that the judgment or final order of a court in a
case of indirect contempt may be appealed to the proper court as in a criminal case. This is not the point at
20

issue, however, in this petition. It is rather the question of whether the dismissal of a contempt charge, as in the
present case, is appealable. The CA held that the NLRC's dismissal of the contempt charges against the
respondents amounts to an acquittal in a criminal case and is not subject to appeal.
The CA ruling is grounded on prevailing jurisprudence.
In Yasay, Jr. v. Recto, the Court declared:
A distinction is made between a civil and [a] criminal contempt. Civil contempt is the failure to do something
ordered by a court to be done for the benefit of a party. A criminal contempt is any conduct directed against the
authority or dignity of the court.
The Court further explained in Remman Enterprises, Inc. v. Court of Appeals and People v. Godoy the character
of contempt proceedings, thus —
The real character of the proceedings in contempt cases is to be determined by the relief sought or by the
dominant purpose. The proceedings are to be regarded as criminal when the purpose is primarily punishment
and civil when the purpose is primarily compensatory or remedial.
Still further, the Court held in Santiago v. Anunciacion, Jr. that:
But whether the first or the second, contempt is still a criminal proceeding in which acquittal, for instance, is a
bar to a second prosecution. The distinction is for the purpose only of determining the character of punishment
to be administered.
In the earlier case of The Insurance Commissioner v. Globe Assurance Co., Inc., 30 the Court dismissed the
appeal from the ruling of the lower court denying a petition to punish the respondent therein from contempt for
lack of evidence. The Court said in that case:
It is not the sole reason for dismissing this appeal. In the leading case of In re Mison, Jr. v. Subido, it was
stressed by Justice J.B.L. Reyes as ponente, that the contempt proceeding far from being a civil action is "of a
criminal nature and of summary character in which the court exercises but limited jurisdiction." It was then
explicitly held: "Hence, as in criminal proceedings, an appeal would not lie from the order of dismissal of, or an
exoneration from, a charge of contempt of court." [footnote omitted]
Is the NLRC's dismissal of the contempt charges against the respondents beyond review by this
Court? On this important question, we note that the petitioners, in assailing the CA main decision, claim that the
appellate court committed grave abuse of discretion in not ruling on the dismissal by the NLRC of the contempt
charges. They also charge the NLRC of having gravely abused its discretion and having committed reversible
errors in:
(1)setting aside its earlier resolutions and orders, including the writ of preliminary injunction it issued, with its
dismissal of the petition to cite the respondents in contempt of court;
(2)overturning this Court's resolutions upholding the TRO and the writ of preliminary injunction;
(3)failing to impose administrative fines upon the respondents for violation of the TRO and the writ of
preliminary injunction; and
(4)failing to order the reinstatement of the dismissed petitioners and the payment of their accrued wages and
other benefits.
In view of the grave abuse of discretion allegation in this case, we deem it necessary to look into the NLRC's
dismissal of the contempt charges against the respondents. As the charges were rooted into the respondents'
alleged non-compliance with the NLRC directives contained in the TRO and the writ of preliminary injunction, we
first inquire into what really happened to these directives.
The assailed NLRC resolution of October 31, 2000 gave us the following account on the matter —
21

On the first directive, . . . We find that there was no violation of the said order. A perusal of the records would
show that in compliance with the temporary restraining order (TRO), respondents reinstated back to work the
sales drivers who complained of illegal dismissal (Memorandum of Respondents, page 4).
Petitioners' allegation that there was only payroll reinstatement does not make the respondents guilty of
contempt of court. Even if the drivers were just in the garage doing nothing, the same does not make
respondents guilty of contempt nor does it make them violators of the injunction order. What is important is that
they were reinstated and receiving their salaries.
As for petitioners Danilo Real, Roberto Sedano and Rolando Manalo, they have resigned from their jobs and
were paid their separation pay . . . (Exhibits "6," "6-A," "7," "7-A," "8," "8-A," Respondents' Memorandum dated
August 12, 1996). The issue of whether they were illegally dismissed should be threshed out before the Labor
Arbiter in whose sala the case of unfair labor practice and illegal dismissal were (sic) filed. Records also show
that petitioner Antonio Desquitado during the pendency of the case executed an affidavit of desistance asking
that he be dropped as party complainant in as much as he has already accepted separation benefits totaling to
P63,087.33.
With respect to the second directive ordering respondents to cease and desist from implementing the
memoranda dated July 15, 1991 designed to ground sales personnel who are members of the union,
respondents alleged that they can no longer be restrained or enjoined and that the status quo can no longer be
restored, for implementation of the memorandum was already consummated or was a fait accompli. . . .
All sales vehicles were ordered to be turned over to management and the same were already sold[.] . . . [I]t
would be hard to undo the sales transactions, the same being valid and binding. The memorandum of July 15,
1991 authorized still all sales representatives to continue servicing their customers using public transportation
and a transportation allowance would be issued.
xxx xxx xxx
The third directive of the Commission is to preserve the "status quo ante" between the parties.
Records reveal that WELLA AG of Germany terminated its Licensing Agreement with respondent company
effective December 31, 1991 (Exhibit "11," Respondents' Memorandum).
On January 31, 1992, individual petitioners together with the other employees were terminated . . . . In fact, this
event resulted to the closure of the respondent company. The manufacturing and marketing operations ceased.
This is evidenced by the testimony of Rosalito del Rosario and her affidavit (Exh. "9," memorandum of
Respondents) as well as Employer's Monthly Report on Employees Termination/dismissals/suspension . . .
(Exhibits "12-A" to "12-F," ibid.) as well as the report that there is a permanent shutdown/total closure of all
units of operations in the establishment (Ibid.). A letter was likewise sent to the Department of Labor and
Employment (Exh. "12," Ibid.) in compliance with Article 283 of the Labor Code, serving notice that it will cease
business operations effective January 31, 1992.
The petitioners strongly dispute the above account. They maintain that the NLRC failed to consider the
following:
1.CTMI violated the status quo ante order when it did not restore to their former work assignments the
dismissed sales drivers. They lament that their being "garaged" deprived them of benefits, and they were
subjected to ridicule and psychological abuse. They assail the NLRC for considering the payroll reinstatement of
the drivers as compliance with its stay order.
They also bewail the NLRC's recognition of the resignation of Danilo Real, Roberto Sedano, Rolando Manalo and
Antonio Desquitado as they were just compelled by economic necessity to resign from their employment. The
quitclaims they executed were contrary to public policy and should not bar them from claiming the full measure
of their rights, including their counsel who was unduly deprived of his right to collect attorney's fees.
22

2.It was error for the NLRC to rule that the memorandum, grounding the sales drivers, could no longer be
restrained or enjoined because all sales vehicles were already sold. No substantial evidence was presented by
the respondents to prove their allegation, but even if there was a valid sale of the vehicles, it did not relieve the
respondents of responsibility under the stay order.
3.The alleged termination of the licensing agreement between CTMI and WELLA AG of Germany, which allegedly
resulted in the closure of CTMI's manufacturing and marketing operations, occurred after the NLRC's issuance of
the injunctive reliefs. CTMI failed to present substantial evidence to support its contention that it folded up its
operations when the licensing agreement was terminated. Even assuming that there was a valid closure of
CTMI's business operations, they should have been paid their lost wages, allowances, incentives, sales
commissions, per diems and other employee benefits from August 23, 1991 up to the date of the alleged
termination of CTMI's marketing operations.
Did the NLRC commit grave abuse of discretion in dismissing the contempt charges against the
respondents? An act of a court or tribunal may only be considered as committed in grave abuse of discretion
when it was performed in a capricious or whimsical exercise of judgment which is 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
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.
The petitioners insist that the respondents violated the NLRC directives, especially the status quo ante order, for
their failure to reinstate the dismissed petitioners and to pay them their benefits. In light of the facts of the case
as drawn above, we cannot see how the status quo ante or the employer-employee situation before the
formation of the union and the conduct of the consent election can be maintained. As the NLRC explained, CTMI
closed its manufacturing and marketing operations after the termination of its licensing agreement with WELLA
AG of Germany. In fact, the closure resulted in the termination of CTMI's remaining employees on January 31,
1992, aside from the sales drivers who were earlier dismissed but reinstated in the payroll, in compliance with
the NLRC injunction. The petitioners' termination of employment, as well as all of their money claims, was the
subject of the illegal dismissal and unfair labor practice complaint before the labor arbiter. The latter was
ordered by the NLRC on October 31, 2000 to proceed hearing the case. The NLRC thus subsumed all other
issues into the main illegal dismissal and unfair labor practice case pending with the labor arbiter. On this point,
the NLRC declared:
Note that when the injunction order was issued, WELLA AG of Germany was still under licensing agreement with
respondent company. However, the situation has changed when WELLA AG of Germany terminated its licensing
agreement with the respondent, causing the latter to close its business.
Respondents could no longer be ordered to restore the status quo as far as the individual petitioners are
concerned as these matters regarding the termination of the employees are now pending litigation with the
Arbitration Branch of the Commission. To resolve the incident now regarding the closure of the respondent
company and the matters alleged by petitioners such as the creations of three (3) new corporations . . . as
successor-corporations are matters best left to the Labor Arbiter hearing the merits of the unfair labor practice
and illegal dismissal cases.
We find no grave abuse of discretion in the assailed NLRC ruling. It rightly avoided delving into issues
which would clearly be in excess of its jurisdiction for they are issues involving the merits of the case which are
by law within the original and exclusive jurisdiction of the labor arbiter. To be sure, whether payroll
reinstatement of some of the petitioners is proper; whether the resignation of some of them was compelled by
dire economic necessity; whether the petitioners are entitled to their money claims; and whether quitclaims are
contrary to law or public policy are issues that should be heard by the labor arbiter in the first instance. The
NLRC can inquire into them only on appeal after the merits of the case shall have been adjudicated by the labor
arbiter.

23

The NLRC correctly dismissed the contempt charges against the respondents. The CA likewise committed no
grave abuse of discretion in not disturbing the NLRC resolution.
In light of the above discussion, we find no need to dwell into the other issues the parties raised. SATDHE
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit and AFFIRM the assailed
resolutions of the Court of Appeals.
SO ORDERED.
||| (Robosa v. NLRC, G.R. No. 176085, [February 8, 2012])

Probative value of unsubscribed affidavits
[G.R. No. 169494. March 14, 2007.]
CABALEN MANAGEMENT CO., INC., MA. ESTELA O. NIEVERA, IAN TIONGSON, ADJI TIONGSON,
ESTER O. NIEVERA and ANASTACIA NAVAL, ADRIANO JR. CORPORATION, LEDA A. PANGILINAN,
EVA S. CANDELARIA, ROSE MARIE MORALES, DANILO SUNUBA, LETECIA DAVID, MARLON
BULANADI, MA. THERESA L. GADDI and CONSUELO HALILI REYES, petitioners, vs. JESUS P.
QUIAMBAO, GERALDINE M. PALERMO, RODEL B. PANGILINAN, WILLIAM F. LACSON, ROCHELLE B.
DE LEON, JOCELYN B. DEANG, EDGAR E. DE GUZMAN, VIZIER INOCENCIO, VINCENT EDWARD C.
MAPUA and JESSEBEL G. OBIEN, respondents.
DECISION
CARPIO-MORALES, J p:
Before this Court is a petition for review on certiorari assailing the April 29, 2005 Decision of the Court of
Appeals and Resolution of August 25, 2005 in CA-G.R. SP No. 85159.
The assailed Decision reversed the finding of the National Labor Relations Commission (NLRC) and that of the
Labor Arbiter that, except for respondents Jesus P. Quiambao (Quiambao) and Geraldine M. Palermo (Palermo),
the other respondents were validly dismissed from employment for their various infractions of the Code of
Conduct of petitioner Cabalen Management Co., Inc. (the company). The assailed Resolution, on the other hand,
denied petitioners' motion for reconsideration.
Prior to their dismissal, respondents Quiambao, Palermo, Rochelle B. De Leon and Jocelyn B. Deang were
working as dining supervisor, cashier, receptionist, and kitchen supervisor, respectively, while respondents
Jessebel G. Obien, Edgar E. De Guzman, Rodel B. Pangilinan, William F. Lacson, Vizier Inocencio and Vincent
Edward C. Mapua were waiters at the company's Cabalen restaurant, Quad, Glorietta branch.
On September 4, 2001, respondents received a memorandum placing each one of them on preventive
suspension for 30 days without pay and ordering them to explain within 48 hours reported violations of the
company's Code of Conduct.
In compliance with the memorandum, respondents filed their written explanations, denying or refuting the
charges against them.
On October 4, 2001, respondents, with the exception of Quiambao and Palermo, were served with notices of
dismissal after petitioners adjudged them guilty of the charges.
The dismissal of respondents was based on the statements of two witnesses, Henry dela Vega Balen (Balen) and
Roderick Malana (Malana), their co-employees, that they had connived with one another in pocketing tips which
were intended for the group, serving food or drinks without receipts or with tampered ones, and committing like
forms of stealing, resulting in losses or damages to the company.
24

An audit report dated September 19, 2001 on the company's accountable forms and on incidents of missing bar
order slips (OS), swapping of dining and bar OS, unrecorded bar OS issuance, and excessive cancellation of OS
and official receipts, was also considered as evidence against respondents.
As for Quiambao and Palermo, while they were directed to immediately report to the Human Resources
Department (HRD), they were allegedly not given any assignments.
Respondents thus filed three separate cases against herein petitioners, the company and Adriano Jr.
Corporation, together with the Cabalen restaurant at the Glorietta, for illegal dismissal and illegal suspension,
with claims for 13th month pay, sick and vacation leaves, monthly allowances, weekly tip, monthly signed chit,
unpaid salaries, moral and exemplary damages, attorney's fees, and regularization for respondents Palermo,
Pangilinan, Lacson, Deang and De Guzman. The complaints were later amended to implead herein individual
petitioners as respondents. HADTEC
Labor Arbiter Virginia T. Luyas-Azarraga, finding that the evidence presented by petitioners had sufficiently
proved the charges against respondents Lacson, De Leon, Deang, Pangilinan, De Guzman and Obien, held, by
Decision of November 27, 2002, that they were validly dismissed from the service.
With respect to respondents Quiambao and Palermo, however, the Labor Arbiter ordered petitioners to reinstate
them to their previous positions "under the same terms and conditions prevailing as of September 4, 2001, but
without backwages." The two were accordingly directed to return to work within 48 hours from receipt of the
decision. All other claims, except for the proportionate 13th month pay for 2001, were dismissed for lack of
merit.
The complaints of Inocencio and Mapua, who failed to sign the position paper for the complainants, were
dismissed for lack of interest.
By Resolution of September 30, 2003, the NLRC affirmed the Labor Arbiter's decision. In upholding the Labor
Arbiter's findings and conclusions, the Commission found well-taken the observation that, stripped of herein
respondents' attacks on the persons of herein individual petitioners, respondents had presented no material
allegation or evidence to controvert the charges against them.
Respondents filed a motion for reconsideration of the NLRC resolution, with a supplemental manifestation from
respondent Quiambao that he was not reinstated to his previous position, as ordered by the Labor Arbiter, but
was instead assigned to the company's head office in a "floating status," and that on April 21, 2003, he was
served a Notice of Termination of Service because the company was said to be losing heavily and had to
retrench to avoid closure.
Respondents' motion for reconsideration was denied by the NLRC by Resolution of April 28, 2004 for lack of
merit.
On respondents' petition for certiorari, the Court of Appeals, by Decision of April 29, 2005, reversed and set
aside the NLRC decision and resolution.
The appellate court found the statements of petitioners' witnesses bereft of probative value, there being no clear
showing when, where, to and before whom those statements were made, aside from the fact that they were not
sworn to before a notary public.
As for the audit report of September 19, 2001, the appellate court noted that it failed to state that respondents
were responsible for the reported irregularities; and that the procedures on valid dismissals laid down by the
Labor Code and the company's Code of Conduct were not religiously followed.
Passing on the status of employment of respondents Palermo, Pangilinan, Lacson, Deang and De Guzman who
were hired from August 1997 to January 1999, the appellate court held that having served the company for
more than a year, they should be considered regular employees, their positions as cashier, receptionist, and
waiters being reasonably necessary to the company's usual business.
25

The appellate court held, however, that the award of moral and exemplary damages, attorney's fees and costs
of suit was not in accord with law and jurisprudence in the absence of proof that the dismissal was attended by
fraud or bad faith.
Petitioners were thus ordered to reinstate respondents to their former positions without loss of seniority rights
and other privileges and to pay them their full back wages, allowances, and other benefits computed from the
time their compensation was withheld up to the time of their actual reinstatement.
WHEREFORE, the petition is granted, and the resolutions of the public respondent NLRC dated September 30,
2003 and April 28, 2004 are hereby reversed and set aside. Accordingly, petitioners are ordered reinstated to
their respective former positions without loss of seniority rights and other privileges, and to their full backwages,
inclusive of allowances, and to their other benefits or monetary equivalent computed from the time their
compensation was withheld from them up to the time of their actual reinstatement.
No pronouncement as to the costs.
Their Motion for Reconsideration having been denied by the appellate court, petitioners lodged the present
petition which hinges on the sufficiency of evidence of a valid dismissal.
Amid these conflicting findings, which circumstance is a recognized exception to the general rule that only
questions of law may be entertained in a petition for review on certiorari this Court is constrained to re-examine
the sufficiency of the evidence proffered by petitioners in dismissing respondents.
It is a well-established rule that the employer has the burden of proving a valid dismissal of an employee, for
which two requisites must concur: (a) the dismissal must be for any of the causes expressed in the Labor
Code; and (b) the employee must be accorded due process, basic of which is the opportunity to be heard and
to defend himself.
To establish a just or authorized cause for dismissal, substantial evidence or "such amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion" is required. Further required is that
an employee sought to be dismissed must be served two written notices before the termination of his
employment. The first notice must apprise him of the particular acts or omissions upon which his dismissal is
grounded; the second, to inform him of the employer's decision to terminate his employment. While the failure
of the employer to comply with these notice requirements does not make the dismissal illegal as long as a just or
authorized cause has been proved, it renders the employer liable for payment of damages because of the
violation of the worker's right to statutory due process.
Section 3 of Rule V of the New Rules of Procedure of the NLRC, which governs the proceedings before the
Labor Arbiter, provides:
Section 3. Submission of Position Papers/Memorandum. — Should the parties fail to agree upon an amicable
settlement, either in whole or in part, during the conferences, the Labor Arbiter shall issue an order stating
therein the matters taken up and agreed upon during the conferences and directing the parties to
simultaneously file their respective verified position papers.

These verified position papers 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 . . . (Emphasis and underscoring supplied)
Section 9 of the same Rule states that "proceedings before a Labor Arbiter shall be non-litigious in nature" and
that "subject to the requirements of due process, the technicalities of law and procedure and the rules obtaining
26

in the courts of law shall not strictly apply thereto." It is sufficient that the documents submitted by the parties
have a bearing on the issue at hand and support the positions taken by them.
In light of the afore-quoted provisions, there was no necessity for the statements of Balen and Malana to be
sworn to before a notary public or that the said witnesses be presented in person before the Labor Arbiter. For
the statements to be of probative value, however, they must measure up to basic evidentiary requirements.
In IBM Philippines, Inc. v. NLRC, this Court clarified that the liberality in administrative procedure "does not go
so far as to justify orders without a basis in evidence having rational probative value." And in Uichico v. National
Labor Relations Commission, it held:
. . . It is true that administrative and quasi-judicial bodies like the NLRC are not bound by technical rules of
procedure in the adjudication of cases. However, this procedural rule should not be construed as a
license to disregard certain fundamental evidentiary rules. While the rules of evidence prevailing in
courts of law or equity are not controlling in the proceedings before the NLRC, the evidence presented
before it must at least have a modicum of admissibility for it to be given some probative value. . . . .
(Emphasis and underscoring supplied)
In the instant case, only photocopies of the statements of Balen and Malana form part of the records despite
petitioners' reliance thereon to prove respondents' purported transgressions. Jarcia Machine Shop and Auto
Supply, Inc. v. NLRC held that the unsigned photocopies of daily time records (DTRs), which were presented by
the therein employer to show that its employee was neglectful of his duties, were of "doubtful or dubious
probative value."
Indeed, the DTRs annexed to the present petition would tend to establish private respondent's neglectful
attitude towards his work duties as shown by repeated and habitual absences and tardiness and propensity for
working undertime for the year 1992. But the problem with these DTRs is that they are neither originals nor
certified true copies. They are plain photocopies of the originals, if the latter do exist. More importantly, they are
not even signed by private respondent nor by any of the employer's representatives . . . .
Likewise, although Balen and Malana's statements bore their signatures, they are wanting in material particulars,
the most glaring of which are the dates of execution. Understandably, respondents objected to their admission,
they claiming that the statements were presented only after their cases for illegal dismissal were filed before the
Labor Arbiter.
In Balen's statement, his name was hand printed on the first page thereof on the space provided therefor, but
the spaces intended for the date and the witnesses were left blank.
The purported transcript of Malana's 15-page question-and-answer testimony, on the other hand, while bearing
his hand printed name and signature at the top rightmost margin of the first page and on every page thereafter,
merely indicated the person making the inquiry with the initials "TLG." While the initials may have referred to
Theresa L. Gaddi, manager of the HRD, this point was never clarified by petitioners, hence, it remains in the
realm of speculation and surmises. Neither were the omissions as to date and other particulars rectified. The
appellate court's discrediting of the statements as bereft of rational probative value upon which a decision or
order may properly be based is thus well-taken.
Respecting the audit report, petitioners posit that the therein mentioned documented incidents-bases of faulting
respondents were so numerous to have been incurred in the normal course of business. It added that the
statements of Balen and Malana regarding the alleged wrongdoings of respondents who had possession of the
accountable forms were corroborated by the audit report.
It bears noting that while the audit report covered a 20-month period (January 2000 to August 31, 2001),
respondents had served only partly in the restaurant's Glorietta branch due to the company's practice of rotating
employees every so often. For that matter, respondents Quiambao and Obien were assigned to the same branch
in March and August of 2000, respectively; Deang and Lacson, in October 2000; De Leon in April 2001; and De
27

Guzman in June 2001 only. Respondents' alleged involvement in the reported irregularities moreover appeared
to be incongruent with the company's awarding them of certificates of commendation, recognition or
appreciation for their invaluable service during the same period.
Petitioners' contention that the number of cancelled OS and receipts and the incidents of swapping dining OS
with bar OS were beyond the normal course of business deserves scant attention, petitioners not having
established the average figures in the ordinary course of its business.
All told, neither the statements of Balen and Malana nor the audit report could support a valid ground for
dismissal.
It also does not help petitioners' cause that they failed to follow rudiments of due process and even the rules laid
down in their own Code of Conduct. Section 2 of Rule XIV of the Omnibus Rules Implementing the Labor
Code specifically provides, as follows:
Section 2. Standards of due process; requirements of notice. — In all cases of termination of employment, the
following standards of due process shall be substantially observed:
1. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said
employee reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of counsel, if the
employee so desires, is given opportunity to respond to the charge, present his evidence, or rebut the evidence
presented against him; and
(c) A written notice of termination served on the employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.
xxx xxx xxx (Underscoring supplied)
The foregoing provision has been interpreted to mean that the written notice to the employees who stand to
lose their employment must specify the particular acts or omissions constituting the grounds for their
dismissal. The rule ensures that the employees are able to answer the charges and to defend themselves from
imputed wrongdoings before their dismissals are ordered.
A review of the charges in the Notice to Explain and Suspension of September 4, 2001 shows that most, if not
all, were couched in general terms. Thus, respondents Quiambao and Obien were charged with "negligence in
the performance of duties resulting to losses or damages amounting to more than P5,000.00" and "involvement
in stealing in any form." On the other hand, Palermo, Lacson and De Leon were charged with "issuing/serving
food or drinks without corresponding receipts or [with] tampered receipts" and "stealing in any form," while
Pangilinan and De Guzman were charged with "pocketing tips intended for the group" and "stealing in any
form." The charges against Deang, meanwhile, consisted of "withholding information on administrative or legal
cases" and "stealing in any form."
Precisely because of petitioners' failure to sufficiently state the acts or omissions constituting the alleged
transgressions that respondent Obien asked to be clarified of the charges against her. Because of the vagueness
of the charges, it followed that respondents could only issue a general denial.
The Corrective Action Report (CARE) furnished each of the respondents in accordance with the company's Code
of Conduct was not any better. It did not contain the date/s when the alleged infractions were committed, the
person/s who reported the same for investigation, or the signatures of the employees' immediate supervisors.
Petitioners did not even heed their own procedures on disciplinary actions. The only facts extant in the records
are that respondents were issued above-said CARE Forms asking them to explain their alleged infractions within
48 hours; and they subsequently received notices of dismissal after they submitted their written explanations.
28

There is, however, nothing to show that before their dismissal, respondents were informed of their immediate
supervisors' decision to terminate their services, or that they were thereafter invited to an administrative
investigation before the HRD manager or officer who is tasked to conduct the investigation in the presence of
the employees' immediate supervisor/s and the witnesses, if necessary, as provided under Section IV of the
company's Code of Conduct.
No record of any administrative investigation proceeding, which under the company's rules, was to be "minuted,"
had also been presented. Hence, only petitioners' allegation that the statements of the witnesses were taken as
part of the administrative investigation is before this Court. Allegations without proof do not deserve
consideration.
Finally, on the dismissal of Quiambao allegedly on the ground of business losses, it was incumbent upon
petitioners to prove it by substantial evidence. It did not, however. In fact, Quiambao presented documents to
disprove the validity of his retrenchment on that ground. For petitioners' failure to discharge its burden then, this
Court is constrained to hold that respondent Quiambao's dismissal was not valid.
WHEREFORE, the Petition is DENIED. The challenged Decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
||| (Cabalen Management Co., Inc. v. Quiambao, G.R. No. 169494, [March 14, 2007], 547 PHIL 244-260)

Compliance with period to appeal mandatory
[G.R. No. 168988. June 19, 2007.]
FERNANDO G. MANAYA, petitioner, vs. ALABANG COUNTRY CLUB, INCORPORATED, respondent.
DECISION
CHICO-NAZARIO, J p:
This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure filed by Fernando G.
Manaya (petitioner) assailing: (1) the Decision of the Court of Appeals in CA-G.R. SP No. 75417, dated 9 May
2005, granting the Petition of Alabang Country Club, Inc. (respondent) and setting aside the Resolutions dated
30 August 2002 and 30 October 2002 of the National Labor Relations Commission (NLRC); and (2) the
Resolution of the Court of Appeals dated 21 July 2005 denying petitioner's Motion for Reconsideration of its
earlier Decision.
The assailed decision of the Court of Appeals reversed the Resolution of the NLRC dismissing the appeal of the
respondent for failure to perfect its appeal within the statutory period. Instead, the Court of Appeals ordered the
NLRC to give due course to the appeal of the respondent.
The antecedent facts are:
Petitioner alleged that on 21 August 1989, he was initially hired by the respondent as a maintenance
helper receiving a salary of P198.00 per day. He was later designated as company electrician. He continued to
work for the respondent until 22 August 1998 when the latter, through its Engineering and Maintenance
Department Manager, Engr. Ronnie B. de la Cruz, informed him that his services were no longer required by the
company. Petitioner alleged that he was forcibly and illegally dismissed without cause and without due process
on 22 August 1998. Hence, he filed a Complaint before the Labor Arbiter. He claimed that he had not
committed any infraction of company policies or rules and that he was not paid his service incentive leave pay,
holiday pay and 13th month pay. He further asserted that with his more or less nine years of service with the
respondent, he had become a regular employee. He, therefore, demanded his reinstatement without loss of
seniority rights with full backwages and all monetary benefits due him.
29

In its Answer, respondent denied that petitioner was its employee. It countered by saying that petitioner was
employed by First Staffing Network Corporation (FSNC), with which respondent had an existing Memorandum of
Agreement dated 21 August 1989. Thus, by virtue of a legitimate job contracting, petitioner, as an employee of
FSNC, came to work with respondent, first, as a maintenance helper, and subsequently as an electrician.
Respondent prayed for the dismissal of the complaint insisting that petitioner had no cause of action against it.
In a Decision, dated 20 November 2000, the Labor Arbiter held:
WHEREFORE, premises considered, complainant Fernando G. Manaya is hereby found to be a regular employee
of respondent Alabang Country Club, Inc., as aforediscussed. His dismissal from the service having been effected
without just and valid cause and without the due observance of due process is hereby declared illegal.
Consequently, respondent Alabang Country Club, Inc. is hereby ordered to reinstate complainant to his former
position without loss of seniority rights and other benefits appurtenant thereto with full backwages in the partial
amount of P160,724.48 as computed by Ms. Ma. Concepcion Manliclic and duly noted by Ms. Ma. Elena L.
Estadilla, OIC-CEU, NCR-South Sector which computation has been made part of the records.
Furthermore, respondent Alabang Country Club, Inc. and First Staffing Network Corporation are hereby ordered
to pay complainant, jointly and severally the following amounts by way of the following:
1. Service Incentive Leave 2,961.75
2. 13th Month Pay 15,401.10, and
3. Attorney's fees of ten (10%) percent of the total
monetary award herein adjudged due him, within ten (10) days from receipt hereof.
Respondent filed an Appeal with the NLRC which dismissed the same. In a Resolution dated 30 August 2002, the
NLRC held:
PREMISES CONSIDERED, instant appeal from the Decision of November 20, 2000 is hereby DISMISSED for
failure to perfect appeal within the statutory period of appeal. The Decision is now final and executory.
The NLRC found that respondent's counsel of record Atty. Angelina A. Mailon of Monsod, Valencia and Associates
received a copy of the Labor Arbiter's Decision on or before 11 December 2000 as shown by the postal stamp or
registry return card. Said counsel did not file a withdrawal of appearance. Instead, a Memorandum of
Appeal dated 26 December 2000 was filed by the respondent's new counsel, Atty. Arizala of Tierra and
Associates Law Office. Reckoned from 11 December 2000, the date of receipt of the Decision by respondent's
previous counsel, the filing of the Memorandum of Appeal by its new counsel on 26 December 2000 was clearly
made beyond the reglementary period. The NLRC held that the failure to perfect an appeal within the statutory
period is not only mandatory but jurisdictional. The appeal having been belatedly filed, the Decision of the Labor
Arbiter had become final and executory.
Respondent filed a Motion for Reconsideration, which the NLRC denied in a Resolution dated 30 October
2002. The NLRC held that the decision of the Labor Arbiter has become final and executory on 28 November
2002; thus, Entry of Judgment, dated 8 January 2003 was issued.
Respondent filed a Petition for Certiorari under Rule 65 of the Rules of Court before the Court of Appeals. In a
Decision dated 9 May 2005, the Court of Appeals granted the petition and ordered the NLRC to give due course
to respondent's appeal of the Labor Arbiter's Decision. Petitioner filed a Motion for Reconsideration which was
denied by the Court of Appeals in a Resolution dated 21 July 2005.
Not to be dissuaded, petitioner filed the instant petition before this Court.
The issue for resolution:

30

WHETHER OR NOT THE COURT OF APPEALS COMMITTED AN ERROR WHEN IT ORDERED THE NLRC TO GIVE
DUE COURSE TO THE APPEAL OF RESPONDENT ALABANG COUNTRY CLUB, INCORPORATED EVEN IF THE SAID
APPEAL WAS FILED BEYOND THE REGLEMENTARY PERIOD OF TEN (10) DAYS FOR PERFECTING AN APPEAL.
Essentially, the issue raised by the respondent before the NLRC in assailing the decision of the Labor Arbiter
pertains to the finding of the Labor Arbiter that petitioner was a regular employee of the respondent.
In granting the petition, the Court of Appeals relied mainly on the case of Aguam v. Court of Appeals, where
this Court held that litigation must be decided on the merits and not on technicalities. The appellate court further
justified the grant of respondent's petition by saying that the negligence of its counsel should not bind the
respondent.
The Court of Appeals gave credence to respondent's claim that its lawyer abandoned the case; hence, they were
not effectively represented by a competent counsel. It further held that the respondent, upon its receipt of the
Decision of the Labor Arbiter on 15 December 2000, filed its appeal on 26 December 2000 through a new
lawyer. The appeal filed by respondent through its new lawyer on 26 December 2000 was well within the
reglementary period, 25 December 2000 being a holiday.
It is axiomatic that when a client is represented by counsel, notice to counsel is notice to client. In the absence
of a notice of withdrawal or substitution of counsel, the Court will rightly assume that the counsel of record
continues to represent his client and receipt of notice by the former is the reckoning point of the reglementary
period. As heretofore adverted, the original counsel did not file any notice of withdrawal. Neither was there any
intimation by respondent at that time that it was terminating the services of its counsel.
For negligence not to be binding on the client, the same must constitute gross negligence as to amount to a
deprivation of property without due process. This does not exist in the case at bar. Notice sent to counsel of
record is binding upon the client and the neglect or failure of counsel to inform him of an adverse judgment
resulting in the loss of his right to appeal is not a ground for setting aside a judgment, valid and regular on its
face.
Even more, it is respondent's duty as a client to be in touch with his counsel so as to be constantly posted about
the case. It is mandated to inquire from its counsel about the status and progress of the case from time to time
and cannot expect that all it has to do is sit back, relax and await the outcome of the case.
On this score, we hold that the notice to respondent's counsel, Atty. Angelina A. Mailon on 11 December 2000 is
the controlling date of the receipt of the decision.
We now come to the issue of whether or not the Court of Appeals properly gave due course to the petition of
the respondent before it.
Of relevance is Section 1, Rule VI of the 2005 Revised Rules of the NLRC —
Section 1. PERIODS OF APPEAL. — Decisions, resolutions or orders of the Labor Arbiter shall be final and
executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt
thereof; and in case of decisions, resolutions or orders of the Regional Director of the Department of Labor and
Employment pursuant to Article 129 of the Labor Code, within five (5) calendar days from receipt thereof. If the
10th or 5th day, as the case may be, falls on a Saturday, Sunday or holiday, the last day to perfect the appeal
shall be the first working day following such Saturday, Sunday or holiday.
No motion or request for extension of the period within which to perfect an appeal shall be allowed.
Remarkably, in highly exceptional instances, we have allowed the relaxing of the rules on the application of the
reglementary periods of appeal. Thus:

31

In Ramos v. Bagasao, 96 SCRA 395, we excused the delay of four days in the filing of a notice of appeal because
the questioned decision of the trial court was served upon appellant Ramos at a time when her counsel of record
was already dead. Her new counsel could only file the appeal four days after the prescribed reglementary period
was over. In Republic v. Court of Appeals, 83 SCRA 453, we allowed the perfection of an appeal by the Republic
despite the delay of six days to prevent a gross miscarriage of justice since the Republic stood to lose hundreds
of hectares of land already titled in its name and had since then been devoted for educational purposes.
In Olacao v. National Labor Relations Commission, 177 SCRA 38, 41, we accepted a tardy appeal considering
that the subject matter in issue had theretofore been judicially settled, with finality, in another case. The
dismissal of the appeal would have had the effect of the appellant being ordered twice to make the same
reparation to the appellee.
We pronounced in those cases that technicality should not be allowed to stand in the way of equitably and
completely resolving the rights and obligations of the parties.
In all these, the Court allowed liberal interpretation given the extraordinary circumstances that justify a deviation
from an otherwise stringent rule.
Clearly, emphasized in these cases is that the policy of liberal interpretation is qualified by the requirement that
there must be exceptional circumstances to allow the relaxation of the rules.
Absent exceptional circumstances, we adhere to the rule that certain procedural precepts must remain inviolable,
like those setting the periods for perfecting an appeal or filing a petition for review, for it is doctrinally
entrenched that the right to appeal is a statutory right and one who seeks to avail oneself of that right must
comply with the statute or rules. The rules, particularly the requirements for perfecting an appeal within the
reglementary period specified in the law, must be strictly followed as they are considered indispensable
interdictions against needless delays and for orderly discharge of judicial business. Furthermore, the perfection
of an appeal in the manner and within the period permitted by law is not only mandatory but also jurisdictional
and the failure to perfect the appeal renders the judgment of the court final and executory. Just as a 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/her case.
In this particular case, we adhere to the strict interpretation of the rule for the following reasons:
Firstly, in this case, entry of judgment had already been made which rendered the Decision of the Labor Arbiter
as final and executory.
Secondly, it is a basic and irrefragable rule that in carrying out and in interpreting the provisions of the Labor
Code and its implementing regulations, the workingman's welfare should be the primordial and paramount
consideration. The interpretation herein made gives meaning and substance to the liberal and compassionate
spirit of the law enunciated in Article 4 of the Labor Code that "all doubts in the implementation and
interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be
resolved in favor of labor."
In the case of Bunagan v. Sentinel we declared that:
[T]hat the perfection of an appeal within the statutory or reglementary period is not only mandatory, but
jurisdictional, and failure to do so renders the questioned decision final and executory and deprives the appellate
court of jurisdiction to alter the final judgment, much less to entertain the appeal. The underlying purpose of this
principle is to prevent needless delay, a circumstance which would allow the employer to wear out the efforts
and meager resources of the worker to the point that the latter is constrained to settle for less than what is due
him. This Court has declared that although the NLRC is not bound by the technical rules of procedure and is
allowed to be liberal in the interpretation of the rules in deciding labor cases, such liberality should not be
applied where it would render futile the very purpose for which the principle of liberality is adopted. The liberal
interpretation stems from the mandate that the workingman's welfare should be the primordial
and paramount consideration. We see no reason in this case to waive the rules on the perfection of appeal.
32

The Court is aware that the NLRC is not bound by the technical rules of procedure and is allowed to be liberal in
the interpretation of rules in deciding labor cases.However, such liberality should not be applied in the
instant case as it would render futile the very purpose for which the principle of liberality is
adopted.The liberal interpretation in favor of labor stems from the mandate that the workingman's welfare
should be the primordial and paramount consideration. . . . . (Emphases supplied.)
Indeed, there is no room for liberality in the instant case "as it would render futile the very purpose for which
the principle of liberality is adopted." As so rightfully enunciated, "the liberal interpretation in favor of labor
stems from the mandate that the workingman's welfare should be the primordial and paramount consideration."
This Court has repeatedly ruled that delay in the settlement of labor cases cannot be countenanced. Not only
does it involve the survival of an employee and his loved ones who are dependent on him for food, shelter,
clothing, medicine and education; it also wears down the meager resources of the workers to the point that, not
infrequently, they either give up or compromise for less than what is due them.
Without doubt, to allow the appeal of the respondent as what the Court of Appeals had done and remand the
case to the NLRC would only result in delay to the detriment of the petitioner. In Narag v. National Labor
Relations Commission, citing Vir-Jen Shipping and Marine Services, Inc. v. National Labor Relations
Commission, we held that delay in most instances gives the employers more opportunity not only to prepare
even ingenious defenses, what with well-paid talented lawyers they can afford, but even to wear out the efforts
and meager resources of the workers, to the point that not infrequently the latter either give up or compromise
for less than what is due them.
Nothing is more settled in our jurisprudence than the rule that when the conflicting interest of loan and capital
are weighed on the scales of social justice, the heavier influence of the latter must be counter-balanced by the
sympathy and compassion the law must accord the under-privileged worker.
Thirdly, respondent has not shown sufficient justification to reverse the findings of the Labor Arbiter as affirmed
by the NLRC.
Pertinent provision of the Labor Code provides:
ART. 223. APPEAL. — Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed
to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards,
or orders. 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 an corruption;
(c) If made purely on question of law; and
(d) If serious errors in the finding of facts are raised which would cause grave or irreparable damage or injury to
the appellant.
Under the above provision, to obtain a reversal of the decision of the Labor Arbiter, the respondent must be able
to show in his appeal that any one of the above instances exists.
Respondent failed to show the existence of any of the above. A more than perfunctory reading of the Decision of
the Labor Arbiter shows that the same is supported by the evidence on record.
Respondent narrates that it had a contract of services, first, with Supreme Construction (Supreme). Supreme
assigned petitioner to work with the respondent starting as a painter and moving on to perform electrical jobs.
Respondent terminated its contract with Supreme and entered into another contract of services with another
job-contracting agency, First Staffing Network Corporation. Petitioner continued to work for the respondent
which claimed that the former was supplied by FSNC to it as part of its contract to supply the manpower
requirements of the respondent. Petitioner is not the employee of the respondent. He was directly hired first by
33

Supreme then later by FSNC and deployed to work with the respondent based on the contract of services
between respondent and these job-contracting agencies. All these considered, respondent insists that petitioner
is therefore not its employee.
We do not agree to this submission of the respondent. The Labor Arbiter concluded otherwise and this finds
support from the evidence, thus:
[R]espondent was not able to convincingly disprove complainant's claims that at the outset, he was directly hired
by it as a maintenance helper on 21 August 1989. Although said respondent alleges that complainant was hired
by its job contractor, Supreme Construction, it failed to submit in evidence the Contract of Service it had entered
into in order to establish the entry of complainant as deployed by said company for his duties at Alabang
Country Club, Inc. pursuant to the said Agreement. It can therefore be readily presumed that said respondent
did not produce the said document because the production of the same will readily prove complainant's assertion
of having been hired long before said contractor Supreme Construction entered into the picture. We have noted
complainant's admission of having been later coerced to sign up with said Supreme Construction by respondent
Alabang Country Club, Inc. which he did as he was told in his fear of losing his job.
As shown by respondent Alabang Country Club, Inc.'s own evidence, it later terminated its contract of service or
Memorandum of Agreement with Supreme Construction and entered into a new contract of service with
respondent First Staffing Network Corporation effective on 16 June 1994. However by said respondent's own
allegation, even with the absence of complainant's supposed direct employer Supreme Construction, he still
remained in its employ until he signed up with respondent First Staffing Network Corporation on 11 February
1996. This indeed runs counter to the normal course of human experience such that when a contractor losses
(sic) his contract of service he packs up along with all his employees, but in this case, complainant was not
terminated from the service notwithstanding the expiration/termination of the contract of service of his alleged
direct employer. Complainant remained working with respondent Alabang Country Club, Inc. despite the
severance of the contractual relations between itself and Supreme Construction.
The initial Memorandum of Agreement entered into by respondents Alabang Country Club, Inc. and First Staffing
Network Corporation was dated, 16 June 1994, and was apparently renewed thereafter providing under Article
III — On Compensation thereof, the following, viz:
"3.01 For and in consideration of the performance by FIRST STAFFING of its obligations under this
AGREEMENT, the CLIENT agrees to pay the former based on the schedule of billing rates which shall be
specified in the Personnel Requisition Form signed by the CLIENT. The schedule of billing rates is as follows, to
wit:
"BILLING RATES/HOUR PLUS 10% VALUE ADDED TAX
"Covered Pos.
ABC
Waiters Accounting Supervisor
Janitors Data Encoders
Bag Boy Gen. Clerks
Stewards Secretary
Cook Helpers Receptionist
Messengers Secretary
Cashier"
"xxx xxx xxx."
34

Nowhere, does complainant's position of electrician appear as covered in the said contract. Finally, suffice it for
Us to stress that the said contract covers almost all of respondent's Alabang Country Club, Inc.'s workforce
including those whose jobs or activities are directly related to said respondents' business, emphasizing in no
uncertain terms that respondent First Staffing Network Corporation was not a truly bonafide job contractor, as it
did not contract out specific service but merely supplied work personnel, a clear indication, that it was engaged
in a "job-only" contracting which is prohibited by law.
Besides, the said respondent First Staffing Network Corporation failed to prove that it is a bonafide job
contractor by showing that it had an adequate capital or investment in tools, equipments and machineries and
premises for that matter, and so did respondent Alabang Country Club, Inc. fail to establish the same. For that
matter, respondent First Staffing Network Corporation had waived its right to present any evidence in its favor in
this case.
Obviously, herein respondent Alabang Country Club, Inc. actually resorted to contracting out all the positions for
its workforce in violation of law in its desire to circumvent said employees' rights as regular employees under the
law.
The existence of an employer-employee relationship between petitioner and respondent is fortified by the fact
that during his stint with the respondent, petitioner was given the opportunity to attend a seminar/training on
refrigeration and air conditioning from 16 January 1995 to 18 February 1995. A certificate of participation signed
by three of respondent's officials was issued to the petitioner. STaHIC
Equally significant is Article 106 of the Labor Code, as amended, which provides that legitimate job contracting is
permitted, but labor-only contracting is prohibited. The said provision reads:
Art. 106. CONTRACTOR OR SUBCONTRACTOR. — Whenever an employer enters into a contract with another
person for the performance of the former's work, the employees of the contractor and of the latter's
subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this
Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to
the extent of the work performed under the contract, in the same manner and extent that he is liable to
employees directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to
protect the rights of workers established under the Code. In so prohibiting or restricting, he may make
appropriate distinctions between labor-only contracting and job contracting as well as differentiations within
these types of contracting and determine who among the parties involved shall be considered the employer for
purposes of this Code, to prevent any violation or circumvention of any provision of this Code.
There is "labor-only" contracting where the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work premises, among others, and the
workers recruited and placed by such person are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of
the employer who shall be responsible to the workers in the same manner and extent as if the latter were
directly employed by him.
Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No.
18, distinguishes between legitimate and labor-only contracting:
Section 3. Trilateral Relationship in Contracting Arrangements. — In legitimate contracting, there exists a
trilateral relationship under which there is a contract for a specific job, work or service between the principal and
the contractor or subcontractor, and a contract of employment between the contractor and subcontractor and its
workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out
a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to
35

independently undertake the performance of the job, work or service, and the contractual workers engaged by
the contractor or subcontractor to accomplish the job, work or service.
Section 5. Prohibition against labor-only contracting. — Labor-only contracting is hereby declared prohibited. For
this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely
recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following
elements are present:
i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work
or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor
are performing activities which are directly related to the main business of the principal, or
ii) The contractor does not exercise the right to control over the performance of the work of the contractual
employee.
The foregoing provisions shall be without prejudice to the application of Article 248(c) of the Labor Code, as
amended.
"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of
corporations, tools, equipments, implements, machineries and work premises, actually and directly used by the
contractor or subcontractor in the performance or completion of the job, work or service contracted out.
The "right to control" shall refer to the right reserved to the person for whom the services of the contractual
workers are performed, to determine not only the end to be achieved, but also the manner and means to be
used in reaching that end.
The test to determine the existence of independent contractorship is whether one claiming to be an independent
contractor has contracted to do the work according to his on methods and without being subject to the control
of the employer, except only as to the results of the work.
In legitimate labor contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to
ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with
the job contractor, only for the payment of the employees' wages whenever the contractor fails to pay the same.
Other than that, the principal employer is not responsible for any claim made by the employees.
Despite respondent's disavowal of the existence of the employer-employee relationship between it and petitioner
and its insistence that petitioner is an employee first, of Supreme and subsequently, of FSNC, the totality of the
facts and surrounding circumstances of the case convey otherwise.
On this point, the law is clear-cut. In labor-only contracting, the statute creates an employer-employee
relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered
merely an agent of the principal employer and the latter is responsible to the employees of the labor-only
contractor as if such employees had been directly employed by the principal employer.
The Labor Code and its implementing rules empower the Labor Arbiter to be the trier of facts in labor cases.
Much reliance is placed on findings of facts of the Arbiter having had the opportunity to talk to and discuss with
the parties and their witnesses the factual matters of the case during the conciliation phase. We, thus, give full
credence to the findings of facts of the labor arbiter.
WHEREFORE, premises considered, the Petition is GRANTED. The Decision of the Court of Appeals dated 9 May
2005 and its Resolution dated 21 July 2005 is REVERSED. The Decision of the Labor Arbiter dated 20 November
2000 is REINSTATED. Let the records of the above-entitled case be remanded to the Labor Arbiter for immediate
execution of the Decision. No costs.

SO ORDERED.
36

||| (Manaya v. Alabang Country Club, Inc., G.R. No. 168988, [June 19, 2007], 552 PHIL 226-244)

Need for motion for reconsideration/Failure to file appeal bond
[G.R. No. 175460. April 14, 2008.]
METRO TRANSIT ORGANIZATION, INC., and JOSE L. CORTEZ, JR., petitioners, vs. PIGLAS NFWUKMU, SAMMY MALUNES, ROMULO QUIGAO, RODULFO CAMERINO, BRENDO MAKILING, MAXIMO
VITANGCOL, PETER DIA, ELMER BOBADILLA, NOEL ESGASANE, ISIDRO CORTEZ, CRISPIN
YAPCHIONGCO, MARLON E. SANTOS, WILFREDO DE RAMOS, ARTEMIO SALIG, AGRIFINO
GOROSPE, RUEL MAGBALANA, JOEL MARANO, MELCHOR ALARCON, ROMEO TAGUID, EMERSON
LUMABI, ATILANO JOB, DENNIS T. CRUZ, ARNOLD DIMALANTA, CARLITO MANZANILLA,
GUILLERMO DUMAN, CRISANTO S. MAGNAYE, RONALDO ESTRELLA, EDMUNDO QUEMADA, MARITO
N. HEBREO, EDGARDO C. RAMOS, VICTOR G. BABIERA, EDMUNDO B. GONZALEZ, ROSELL
VILLANUEVA, FLORIFE BLAS, JAIME ABULENCIA, RODOLFO GAMBOA, VALENTIN BORBON, ALAN
ATURBA, TEOFANES TESIOMA, PEDRO TESIOMA, CESAR BATTUNG, EDWIN ENRIQUEZ, RODOLFO
PILAFIL, ARIEL BUSTAMANTE, CRISENDO CASAS, RONALD LOVEDOREAL, VICENTE RAMIREZ,
GERARDO DE GUZMAN, ROBINSON VINZON, ELPIDIO P. VARGAS, LC DELA CRUZ, ARIEL
DIMAWALA, JOEY A. LOBERIANO, REYNALDO S. DEL ROSARIO, PAUL V. LEGASPI, EDUARDO C.
SANTOS, JOHN R. NUNEZ, JUSTINO B. ASAYTANO, JR., RONALD G. DECOSTO, JOENEL G. BALIGUAT,
RUTCHIE R. RELIMBO, BENJAMIN A. ABIDIN, ALLAN CORTEZ, ALEJANDRO M. DIAZ, ANTONIO
BALANGUE, RICARDO G. DALUNSONG, ERWIN S. BARRERA, ALLAN M. MARANG, PONCIANO M.
ZAMORA, APOLINARIO M. BOLGEN, ARNOLD B. ESTORES, RUBEN BERNAL, ROLANDO B. CANLAS,
RODOLFO C. HERESE, ANTONIO VILLAMOR, JR., ARTHUR B. HERMITANIO, HERNANI M.
LIBANTING, ALBERTO T. DELA CRUZ, JEREMIAH V. MAHINAY, HELEN P. DIOLANDA, PAMPILO R.
BALASBAS, EDUARDO G. MANOSCA, NATALIA PAYONGAYONG, JOHN M. BISCOCHO, DESIDERIO S.
MOSQUEDA, GIOVANNI V. MUESCAN, M. MAUR A. MENDELEVAR, ORLANDO MALAYBA, ROLANDO
DE GUZMAN, EDGAR V. VICELLAJE, JOEL G. EVANGELISTA, REYNALDO C. VERANO, CYRILL MAYOR,
JOEY J. SABANAL, JONNY L. IGNACIO, JESUS C. FAJARDO, LEOPOLDO CAZENAS, ANASTACIO
JANAVAN, VIRGILO C. CRUZ, EDGARDO ESPINOSA, ROMEO MIRAFUENTE, EDWIN R. JUAT, RENATO
TAPALLA, EDWARD F. MARIANO, JESSIE A. DUQUE, MANUEL M. FLOGIO, RODRIGO SARASUA,
EDWARD M. DIAZ, TEOFILO RIZ MOCORRO, JR., CESAR CUENCO, JR., ARIEL MAGNO, NEPTALI
PASADAS, MAURICIO DELA CRUZ, WILHEMINE POLINTAN, DANIEL F. IJIRAN, DELIA O. CUPCUPIN,
BERNARDINO G. MATIAS, DANILO B. MARIANO, JOSELITO G. CONCIO, RAMON CAQUIAT, RICARDO
B. ANO, JR., LAWRENCE SACDALAN, MICHAEL GUINTO, RAYMUNDO LITAN, JR., EUCLIDA
GAURANO, GENEROSO RAPOSA, RICARDO SANTOS, ROLANDO PEREZ, EXEJESON EVA RUAZOL,
EDUARDO ROQUE, RONALDO GELLE, RHODELIO G. CRUZ, RONNIE M. GONZALES, ELIZALDE
JANAPIN, EDWIN BORJA, RENIERO L. GAKO, REYNALDO T. IGNACIO, JOSE A. CENIDONIA,
GLECIRIO M. SAYAT, ROGELIO LUMABAN, LARRY ORATE, SANTIAGO CLARIN, ANTONIO LEGASPI,
MARILYN BRAVO, EDUARDO AGUILA, DANA KINGKING, TERESITA VELASQUEZ, AURELIO
PAGTAKHAN, ALBERTO BRAVO, DONALD REYES, REINERIO RIPAY, ALFONSO TRINIDAD, JR.,
CESAR CANETE, SILVESTRE ALVANO, JOSEPH RODRIGUEZ, HAROLD FLORES, MICAHEL ROMBLON,
RAMON AMEGLEO, PASCUAL PARAGAS, VICTOR SANCHEZ, ESTHELA ATIENZA, ANTONY DE LUNA,
AGNES DELA CRUZ, CLARYMAR ESTOQUE, FELIX ARRIOLA, CARLOS SAMONTE, MEDWIN MESINA,
REGGIE FELIXMENIA, RICARDO EVANGELISTA, EDISON JOSE DORDAS, LORNA SALON, LELIBETH
CASINO, GREGORIO SALVEDIA, AQUILINO EBEN, RESTITUTO FELIPE, NELFRED DELETINA,
FERNANDO MALLARI, RAMIR GORDO, CARLOS BANDILLA, ERNESTOR SERENA, MATEO HAO,
RONILO DE VERA, ALBERTO ASIS, JR., JAIME BARCOMA, WILLIAM VILLANUEVA, ARMANDO
NODADO, ENRIQUE ESPANOL, JR., FRANCISCO FLORES, ELMER CRUZ, DANILO YU, ENRIQUE
FLORES, JAYSON LIWAG, ROMEO PALAGANAS, EDUARDO BERBA, MELCHOR REGALADO, REDEN
NOLASCO, MARIO S. DELA CRUZ, ARNOLD MENDOZA, DANTE MENDOZA, LARRY TAN, LARRY
37

HERNANDEZ, GODOFREDO BEUNO, MANOLO SANTOS, RICARDO PATRIARCA, ALBERTO RAMOS,
ARNULFO DE LARA, WILFREDO BANDIALA, LOVIN DE LIMA, GEORGE DELA CUEVA, NELSO LABAYO,
EDITHA DELA ROSA, ELIZABETH REYES, EDMUNDO LIONGSON, JR., DANILO RIVERA, SR.,
BENJAMIN CANDOLE, CATALINO MELEGRITO, respondents.
DECISION
CHICO-NAZARIO, J p:
Assailed in the instant Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure is the
Resolution dated 24 August 2006 of the Court of Appeals in CA-G.R. SP. No. 95665, as well as its
Resolution dated 14 November 2006 dismissing petitioners' Motion for Reconsideration thereof.
Petitioner Metro Transit Organization, Inc. (MTO) is a government-owned and controlled corporation which
entered into a Management and Operations Agreement (MOA) with the Light Rail Transit Authority (LRTA) for
the operation of the Light Rail Transit (LRT) Baclaran-Monumento Line. Petitioner Jose L. Cortez, Jr. was sued in
his official capacity as then Undersecretary of the Department of Transportation and Communications and
Chairman of the Board of Directors of petitioner MTO.
For purposes of collective bargaining agreement (CBA), petitioner MTO's rank and file employees formed the
Pinag-isang Lakas ng Manggagawa sa Metro, Inc.-National Federation of Labor (PIGLAS). Meanwhile, its
managerial and supervisory employees created their own union bearing the name Supervisory Employees
Association of Metro (SEAM).
Petitioners MTO and PIGLAS entered into a CBA covering the period of 13 February 1995 to 13 February 2000.
SEAM similarly negotiated with petitioner MTO under a separate CBA. Allegedly disgruntled with PIGLAS, some
rank and file employees formed another union under the umbrella of the Philippine Transport Group Workers
Organization-Trade Union Congress of the Philippines (PTGWO-TUCP), which negotiated with management for
certification as the new bargaining agent. The aforesaid intra-union dispute was settled through a certification
election which PIGLAS won. Thereafter, PIGLAS renegotiated the CBA demanding higher benefits.
On 25 July 2000, due to a bargaining deadlock, PIGLAS filed a Notice of Strike before the National Conciliation
and Mediation Board (NCMB). On the same date, PIGLAS staged a strike. Consequently, Hon. Bienvenido E.
Laguesma, then Secretary of the Department of Labor and Employment (DOLE), issued an Order of Assumption
of Jurisdiction/Return to Work, dated 25 July 2000, directing the striking employees to immediately return to
work, and petitioner MTO to take them back under the same terms and conditions of employment prevailing
prior to the strike. The Order of Assumption of Jurisdiction/Return to Work was published in newspapers of
general circulation. The striking employees refused to receive a copy of said Order; hence, copies thereof were
posted in the stations and terminals of the LRT.
The striking PIGLAS members refused to accede to the Return to Work Order. Following their continued noncompliance, on 28 July 2000, the LRTA formally informed petitioner MTO that it had issued a Board Resolution
which: (1) allowed the expiration after 31 July 2000 of LRTA's MOA with petitioner MTO; and (2) directed the
LRTA to take over the operations and maintenance of the LRT Line. By virtue of said Resolution, petitioner MTO
sent termination notices to its employees, including herein respondents.
Resultantly, respondents filed with the Labor Arbiter Complaints against petitioners and the LRTA for the
following: (1) illegal dismissal; (2) unfair labor practice for union busting; (3) moral and exemplary damages;
and (4) attorney's fees.
On 13 September 2004, the Labor Arbiter rendered judgment in favor of respondents. The decretal portion of
the Labor Arbiter's Decision, states:
WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of the complainants as
illegal and ordering respondents Metro Transit Organization, Inc. and Light Rail Transit Authority to jointly and
38

severally pay complainants their separation pay and backwages in the amounts indicated opposite their
respective names as shown in Annexes "A" to "A-5" of this decision or in the total amount of P208,235,682.72.
Respondents are further ordered to pay the sum equivalent to ten (10%) percent of the judgment award as and
by way of attorney's fees or in the amount of P20,823,568.27.
The claim of complainant Ronald Lovedoreal is ordered dismissed without prejudice.
All other claims are ordered dismissed for lack of merit.
Petitioners appealed to the National Labor Relations Commission (NLRC). In a Resolution dated 19 May 2006,
the NLRC dismissed petitioners' appeal for non-perfection since it failed to post the required bond. The NLRC
ratiocinated:
Section 6, Rule VI of the Rules of Procedure of the National Labor Relations Commission, as amended by
Resolution No. 01-02, Series of 2002 provides, to wit:

"SECTION 6 BOND. In case the decision of the Labor Arbiter or the Regional Director involves a monetary award,
an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The appeal bond
shall either be in cash or surety in an amount equivalent to the monetary award, exclusive of damages and
attorney's fees."
In this case [petitioners] filed a property bond, and applying a liberal interpretation of the above Rule and
finding support in the Supreme Court pronouncement in the case of UERM-Memorial Medical Center, et al. vs.
NLRC, et al., G.R. No. 110419, March 3, 1997, we conditionally accepted the property bond subject to the
submission of the requirements specified in the Order. Moreover, [petitioners] were directed to comply with the
requirements within ten (10) days from receipt of the Order with a warning that failure to comply will result in
the dismissal of the appeal for non-perfection thereof.
It appears that to date, which is more than a month from receipt of the Order, [petitioners] failed to comply with
the conditions required in the posting of the property bond, this Commission is therefore constrained to dismiss
the appeal for non-perfection thereof.
The NLRC thus disposed:
WHEREFORE, premises considered, an order is hereby issued DISMISSING the appeal of [petitioners] for nonperfection thereof and the Decision dated 13 September 2004 has become final.

The Motion for Reconsideration filed by complainants-appellees and the motion to suspend proceedings filed by
[petitioners] are both DENIED for lack of merit.
No further motion of similar nature shall be entertained.
Without filing a Motion for Reconsideration of the afore-quoted NLRC Resolution, petitioners filed a Petition
for Certiorari with the Court of Appeals assailing the same.
On 24 August 2006, the Court of Appeals issued a Resolution dismissing the Petition. It ruled:
The petitioners have filed this petition for certiorari against the resolution of the NLRC dated May 19, 2006
dismissing the appeal for non-perfection. They have not, however, filed a motion for reconsideration of the
ruling prior to filing the petition. This renders the petition fatally defective. The motion for reconsideration has
been held to be a condition sine qua non for certiorari, the rationale being that the lower court should be given
the opportunity to correct its error before recourse to the higher court is made. [Yau] vs. Manila Banking Corp.
384 SCRA 340. The [acknowledged] exceptions to the rule find no application here. The order of dismissal is
issued by the NLRC in the exercise of its discretionary authority to fix the requirements of the property bond for
appeal, and the finding that the petitioners failed to perfect the appeal for non-compliance with these conditions
39

is both a factual and legal issue. We have a perfect textbook example of an order that is amenable to a motion
for reconsideration.
Petitioners moved for the reconsideration of the appellate court's dismissal of its Petition. The Court of Appeals,
however, in a Resolution dated 14 November 2006 found no cogent reason to disturb its original conclusions.
Hence, petitioners come to this Court, challenging the dismissal by the Court of Appeals of its Petition.
It must be primarily established that petitioners contravened the procedural rule for the extraordinary remedy
of certiorari. The rule is, for the writ to issue, it must be shown that there is no appeal, nor any plain, speedy
and adequate remedy in the ordinary course of law.
The settled rule is that a motion for reconsideration is a condition sine qua non for the filing of a petition
for certiorari. Its purpose is to grant an opportunity for the court to correct any actual or perceived error
attributed to it by the re-examination of the legal and factual circumstances of the case. The rationale of the
rule rests upon the presumption that the court or administrative body which issued the assailed order or
resolution may amend the same, if given the chance to correct its mistake or error.
We have held that the "plain", "speedy", and "adequate remedy" referred to in Section 1, Rule 65 of the Rules of
Court is a motion for reconsideration of the questioned Order or Resolution. As we consistently held in
numerous cases, a motion for reconsideration is indispensable for it affords the NLRC an opportunity to rectify
errors or mistakes it might have committed before resort to the courts can be had.
In the case at bar, petitioners directly went to the Court of Appeals on certiorari without filing a motion for
reconsideration with the NLRC. The motion for reconsideration would have aptly furnished a plain, speedy, and
adequate remedy. As a rule, the Court of Appeals, in the exercise of its original jurisdiction, will not take
cognizance of a petition for certiorari under Rule 65, unless the lower court has been given the opportunity to
correct the error imputed to it. The Court of Appeals correctly ruled that petitioners' failure to file a motion for
reconsideration against the assailed Resolution of the NLRC rendered its petition for certiorari before the
appellate court as fatally defective.
We agree in the Court of Appeals' finding that petitioners' case does not fall under any of the recognized
exceptions to the filing of a motion for reconsideration, to wit: (1) when the issue raised is purely of law; (2)
when public interest is involved; (3) in case of urgency; or when the questions raised are the same as those
that have already been squarely argued and exhaustively passed upon by the lower court. As the Court of
Appeals reasoned, the issue before the NLRC is both factual and legal at the same time, involving as it does the
requirements of the property bond for the perfection of the appeal, as well as the finding that petitioners failed
to perfect the same. Evidently, the burden is on petitioners seeking exception to the rule to show sufficient
justification for dispensing with the requirement. Certiorari cannot be resorted to as a shield from the adverse
consequences of petitioners' own omission of the filing of the required motion for reconsideration.
Nonetheless, even if we are to disregard the petitioners' procedural faux pas with the Court of Appeals, and
proceed to review the propriety of the 19 May 2006 NLRC Resolution, we still arrive at the conclusion that the
NLRC did not err in denying petitioners' appeal for its failure to file a bond in accordance with the Rules of
Procedure of the NLRC.
In cases involving a monetary award, an employer seeking to appeal the decision of the Labor Arbiter to the
NLRC is unconditionally required by Article 223 of the Labor Code to post a cash or surety bond equivalent to
the amount of the monetary award adjudged. It should be stressed that the intention of lawmakers to make the
bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision
that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The word
"only" makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond by the employer
to be the exclusive means by which an employer's appeal may be perfected. Moreover, it bears stressing that
the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but
jurisdictional, and failure to conform to the rules will render the judgment sought to be reviewed final and
40

unappealable. It cannot be overemphasized that the NLRC Rules, akin to the Rules of Court, promulgated by
authority of law, have the force and effect of law.
As borne by the records, petitioners filed a property bond which was conditionally accepted by the NLRC subject
to the following conditions specified in its 24 February 2006 Order:
The conditional acceptance of petitioner's property bond was subject to the submission of the following: 1)
Certified copy of Board Resolution or a Certificate from the Corporate Secretary of Light Rail Transit Authority
stating that the Corporation President is authorized by a Board Resolution to submit title as guarantee of
judgment award; 2) Certified Copy of the Titles issued by the Registry of Deeds of Pasay City; 3) Certified Copy
of the current tax declarations of Titles; 4) Tax clearance from the City Treasurer of Pasay City; 5) Appraisal
report of an accredited appraisal company attesting to the fair market value of property within ten (10) days
from receipt of this Order. Failure to comply therewith will result in the dismissal of the appeal for non-perfection
thereof.
In the same Order, the NLRC warned that failure of the petitioners to comply with the conditions would result in
the dismissal of the appeal for non-perfection thereof. Petitioners were directed to comply with its given
conditions within 10 days from receipt of the Order with a caveat that their failure will result in the dismissal of
the appeal. Subsequently, in its 19 May 2006 Resolution, the NLRC finally made a factual finding that petitioners
failed to comply with the conditions attached to their posting of the property bond. Thus, the NLRC dismissed
petitioners' appeal for non-perfection thereof.
Essentially, the failure of petitioners to comply with the conditions for the posting of the property bond is
tantamount to a failure to post the bond as required by law. What is even more salient is the fact that the NLRC
had stressed that petitioners had, for more than a month from receipt of its 24 February 2006 Order, to comply
with the conditions set forth therein for the posting of the property bond. It cannot be gainsaid that the NLRC
had given petitioners a period of 10 days from receipt of the Order with a warning that non-compliance would
result in the dismissal of their appeal for failure to perfect the same. Petitioners therefore disregarded the
rudiments of the law in the perfection of their appeal. We are without recourse but to take petitioners' failure
against their interest.
WHEREFORE, the Petition is DENIED. The Resolutions dated 24 August 2006 and 14 November 2006 of the
Court of Appeals in CA-G.R. SP. No. 95665 are AFFIRMED. Costs against petitioners.
SO ORDERED.
||| (Metro Transit Organization, Inc. v. PIGLAS NFWU-KMU, G.R. No. 175460, [April 14, 2008], 574 PHIL 481-

495)

[G.R. Nos. 178034 & 178117 & G.R. Nos. 186984-85. October 17, 2013.]
ANDREW JAMES MCBURNIE, petitioner, vs. EULALIO GANZON, EGI-MANAGERS, INC. and E.
GANZON, INC., respondents.
RESOLUTION
REYES, J p:
For resolution are the —
(1)third motion for reconsideration filed by Eulalio Ganzon (Ganzon), EGI-Managers, Inc. (EGI) and E. Ganzon,
Inc., (respondents) on March 27, 2012, seeking a reconsideration of the Court's Decision dated September 18,
2009 that ordered the dismissal of their appeal to the National Labor Relations Commission (NLRC) for failure to
post additional appeal bond in the amount of P54,083,910.00; and
41

(2)motion for reconsideration filed by petitioner Andrew James McBurnie (McBurnie) on September 26, 2012,
assailing the Court en banc's Resolution dated September 4, 2012 that (1) accepted the case from the Court's
Third Division and (2) enjoined the implementation of the Labor Arbiter's (LA) decision finding him to be illegally
dismissed by the respondents.
Antecedent Facts
The Decision dated September 18, 2009 provides the following antecedent facts and proceedings —
On October 4, 2002, McBurnie, an Australian national, instituted a complaint for illegal dismissal and other
monetary claims against the respondents. McBurnie claimed that on May 11, 1999, he signed a five-year
employment agreement with the company EGI as an Executive Vice-President who shall oversee the
management of the company's hotels and resorts within the Philippines. He performed work for the company
until sometime in November 1999, when he figured in an accident that compelled him to go back to Australia
while recuperating from his injuries. While in Australia, he was informed by respondent Ganzon that his services
were no longer needed because their intended project would no longer push through.
The respondents opposed the complaint, contending that their agreement with McBurnie was to jointly invest in
and establish a company for the management of hotels. They did not intend to create an employer-employee
relationship, and the execution of the employment contract that was being invoked by McBurnie was solely for
the purpose of allowing McBurnie to obtain an alien work permit in the Philippines. At the time McBurnie left for
Australia for his medical treatment, he had not yet obtained a work permit. TIESCA
In a Decision dated September 30, 2004, the LA declared McBurnie as having been illegally dismissed from
employment, and thus entitled to receive from the respondents the following amounts: (a) US$985,162.00 as
salary and benefits for the unexpired term of their employment contract, (b) P2,000,000.00 as moral and
exemplary damages, and (c) attorney's fees equivalent to 10% of the total monetary award.
Feeling aggrieved, the respondents appealed the LA's Decision to the NLRC. On November 5, 2004, they filed
their Memorandum of Appeal and Motion to Reduce Bond, and posted an appeal bond in the amount of
P100,000.00. The respondents contended in their Motion to Reduce Bond, inter alia, that the monetary awards
of the LA were null and excessive, allegedly with the intention of rendering them incapable of posting the
necessary appeal bond. They claimed that an award of "more than P60 Million Pesos to a single foreigner who
had no work permit and who left the country for good one month after the purported commencement of his
employment" was a patent nullity. Furthermore, they claimed that because of their business losses that may be
attributed to an economic crisis, they lacked the capacity to pay the bond of almost P60 Million, or even the
millions of pesos in premium required for such bond.
On March 31, 2005, the NLRC denied the motion to reduce bond, explaining that "in cases involving monetary
award, an employer seeking to appeal the [LA's] decision to the Commission is unconditionally required by Art.
223, Labor Code to post bond in the amount equivalent to the monetary award . . . ." Thus, the NLRC required
from the respondents the posting of an additional bond in the amount of P54,083,910.00.
When their motion for reconsideration was denied, the respondents decided to elevate the matter to the Court
of Appeals (CA) via the Petition for Certiorari and Prohibition (With Extremely Urgent Prayer for the Issuance of a
Preliminary Injunction and/or Temporary Restraining Order) docketed as CA-G.R. SP No. 90845.
In the meantime, in view of the respondents' failure to post the required additional bond, the NLRC dismissed
their appeal in a Resolution dated March 8, 2006. The respondents' motion for reconsideration was denied on
June 30, 2006. This prompted the respondents to file with the CA the Petition for Certiorari (With Urgent Prayers
for the Immediate Issuance of a Temporary Restraining Order and a Writ of Preliminary Injunction) docketed
as CA-G.R. SP No. 95916, which was later consolidated with CA-G.R. SP No. 90845.
CA-G.R. SP Nos. 90845 and 95916
42

On February 16, 2007, the CA issued a Resolution granting the respondents' application for a writ of preliminary
injunction. It directed the NLRC, McBurnie, and all persons acting for and under their authority to refrain from
causing the execution and enforcement of the LA's decision in favor of McBurnie, conditioned upon the
respondents' posting of a bond in the amount of P10,000,000.00. McBurnie sought reconsideration of the
issuance of the writ of preliminary injunction, but this was denied by the CA in its Resolution dated May 29,
2007.
McBurnie then filed with the Court a Petition for Review on Certiorari docketed as G.R. Nos. 178034 and
178117, assailing the CA Resolutions that granted the respondents' application for the injunctive writ. On July
4, 2007, the Court denied the petition on the ground of McBurnie's failure to comply with the 2004 Rules on
Notarial Practice and to sufficiently show that the CA committed any reversible error. A motion for
reconsideration was denied with finality in a Resolution dated October 8, 2007.
Unyielding, McBurnie filed a Motion for Leave (1) To File Supplemental Motion for Reconsideration and (2) To
Admit the Attached Supplemental Motion for Reconsideration, which was treated by the Court as a second
motion for reconsideration, a prohibited pleading under Section 2, Rule 56 of the Rules of Court. Thus, the
motion for leave was denied by the Court in a Resolution dated November 26, 2007. The Court's Resolution
dated July 4, 2007 then became final and executory on November 13, 2007; accordingly, entry of judgment was
made in G.R. Nos. 178034 and 178117.
In the meantime, the CA ruled on the merits of CA-G.R. SP No. 90845 and CA-G.R. SP No. 95916 and
rendered its Decision dated October 27, 2008, allowing the respondents' motion to reduce appeal bond and
directing the NLRC to give due course to their appeal. The dispositive portion of the CA Decision reads:
WHEREFORE, in view of the foregoing, the petition for certiorari and prohibition docketed as CA G.R. SP No.
90845 and the petition for certiorari docketed as CA G.R. SP No. 95916 are GRANTED. Petitioners['] Motion to
Reduce Appeal Bond is GRANTED. Petitioners are hereby DIRECTED to post appeal bond in the amount of
P10,000,000.00. The NLRC is hereby DIRECTED to give due course to petitioners' appeal in CA G.R. SP No.
95916 which is ordered remanded to the NLRC for further proceedings.
SO ORDERED.
On the issue of the NLRC's denial of the respondents' motion to reduce appeal bond, the CA ruled that the NLRC
committed grave abuse of discretion in immediately denying the motion without fixing an appeal bond in an
amount that was reasonable, as it denied the respondents of their right to appeal from the decision of the
LA. The CA explained that "(w)hile Art. 223 of the Labor Code requiring bond equivalent to the monetary award
is explicit, Section 6, Rule VI of the NLRC Rules of Procedure, as amended, recognized as exception a motion to
reduce bond upon meritorious grounds and upon posting of a bond in a reasonable amount in relation to the
monetary award."
On the issue of the NLRC's dismissal of the appeal on the ground of the respondents' failure to post the
additional appeal bond, the CA also found grave abuse of discretion on the part of the NLRC, explaining that an
appeal bond in the amount of P54,083,910.00 was prohibitive and excessive. Moreover, the appellate court cited
the pendency of the petition for certiorari over the denial of the motion to reduce bond, which should have
prevented the NLRC from immediately dismissing the respondents' appeal.
Undeterred, McBurnie filed a motion for reconsideration. At the same time, the respondents moved that the
appeal be resolved on the merits by the CA. On March 3, 2009, the CA issued a Resolution denying both
motions. McBurnie then filed with the Court the Petition for Review on Certiorari docketed as G.R. Nos.
186984-85.EIaDHS
In the meantime, the NLRC, acting on the CA's order of remand, accepted the appeal from the LA's decision, and
in its Decision dated November 17, 2009, reversed and set aside the Decision of the LA, and entered a new one
dismissing McBurnie's complaint. It explained that based on records, McBurnie was never an employee of any of
the respondents, but a potential investor in a project that included said respondents, barring a claim of
43

dismissal, much less, an illegal dismissal. Granting that there was a contract of employment executed by the
parties, McBurnie failed to obtain a work permit which would have allowed him to work for any of the
respondents. In the absence of such permit, the employment agreement was void and thus, could not be the
source of any right or obligation.
Court Decision dated September 18, 2009
On September 18, 2009, the Third Division of this Court rendered its Decision which reversed the CA Decision
dated October 27, 2008 and Resolution dated March 3, 2009. The dispositive portion reads:
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP Nos. 90845 and
95916 dated October 27, 2008 granting respondents' Motion to Reduce Appeal Bond and ordering the National
Labor Relations Commission to give due course to respondents' appeal, and its March 3, 2009 Resolution
denying petitioner's motion for reconsideration, are REVERSED and SET ASIDE. The March 8, 2006 and June
30, 2006 Resolutions of the National Labor Relations Commission in NLRC NCR CA NO. 042913-05 dismissing
respondents' appeal for failure to perfect an appeal and denying their motion for reconsideration, respectively,
areREINSTATED and AFFIRMED.
SO ORDERED.
The Court explained that the respondents' failure to post a bond equivalent in amount to the LA's monetary
award was fatal to the appeal. Although an appeal bond may be reduced upon motion by an employer, the
following conditions must first be satisfied: (1) the motion to reduce bond shall be based on meritorious
grounds; and (2) a reasonable amount in relation to the monetary award is posted by the appellant. Unless the
NLRC grants the motion to reduce the cash bond within the 10-day reglementary period to perfect an appeal
from a judgment of the LA, the employer is mandated to post the cash or surety bond securing the full amount
within the said 10-day period. The respondents' initial appeal bond of P100,000.00 was grossly inadequate
compared to the LA's monetary award.
The respondents' first motion for reconsideration was denied by the Court for lack of merit via a
Resolution dated December 14, 2009.
Meanwhile, on the basis of the Court's Decision, McBurnie filed with the NLRC a motion for reconsideration with
motion to recall and expunge from the records the NLRC Decision dated November 17, 2009. The motion was
granted by the NLRC in its Decision dated January 14, 2010.
Undaunted by the denial of their first motion for reconsideration of the Decision dated September 18, 2009, the
respondents filed with the Court a Motion for Leave to Submit Attached Second Motion for Reconsideration and
Second Motion for Reconsideration, which motion for leave was granted in a Resolution dated March 15, 2010.
McBurnie was allowed to submit his comment on the second motion, and the respondents, their reply to the
comment. On January 25, 2012, however, the Court issued a Resolution denying the second motion "for lack of
merit," "considering that a second motion for reconsideration is a prohibited pleading . . . ."
The Court's Decision dated September 18, 2009 became final and executory on March 14, 2012. Thus, entry of
judgment was made in due course, as follows:
ENTRY OF JUDGMENT
This is to certify that on September 18, 2009 a decision rendered in the above-entitled cases was filed in this
Office, the dispositive part of which reads as follows:
xxx xxx xxx
and that the same has, on March 14, 2012 become final and executory and is hereby recorded in the Book of
Entries of Judgments.
44

The Entry of Judgment indicated that the same was made for the Court's Decision rendered in G.R. Nos.
186984-85.
On March 27, 2012, the respondents filed a Motion for Leave to File Attached Third Motion for Reconsideration,
with an attached Motion for Reconsideration (on the Honorable Court's 25 January 2012 Resolution) with Motion
to Refer These Cases to the Honorable Court En Banc. The third motion for reconsideration is founded on the
following grounds:
I.
THE PREVIOUS 15 MARCH 2010 RESOLUTION OF THE HONORABLE COURT ACTUALLY GRANTED
RESPONDENTS' "MOTION FOR LEAVE TO SUBMIT A SECOND MOTION FOR RECONSIDERATION."
HENCE, RESPONDENTS RESPECTFULLY CONTEND THAT THE SUBSEQUENT 25 JANUARY 2012 RESOLUTION
CANNOT DENY THE "SECOND MOTION FOR RECONSIDERATION" ON THE GROUND THAT IT IS A PROHIBITED
PLEADING.
MOREOVER, IT IS RESPECTFULLY CONTENDED THAT THERE ARE VERY PECULIAR CIRCUMSTANCES AND
NUMEROUS IMPORTANT ISSUES IN THESE CASES THAT CLEARLY JUSTIFY GIVING DUE COURSE TO
RESPONDENTS' "SECOND MOTION FOR RECONSIDERATION," WHICH ARE:
II.
THE 10 MILLION PESOS BOND WHICH WAS POSTED IN COMPLIANCE WITH THE OCTOBER 27, 2008 DECISION
OF THE COURT OF APPEALS IS A SUBSTANTIAL AND SPECIAL MERITORIOUS CIRCUMSTANCE TO MERIT
RECONSIDERATION OF THIS APPEAL.
III.
THE HONORABLE COURT HAS HELD IN NUMEROUS LABOR CASES THAT WITH RESPECT TO ARTICLE 223 OF
THE LABOR CODE, THE REQUIREMENTS OF THE LAW SHOULD BE GIVEN A LIBERAL INTERPRETATION,
ESPECIALLY IF THERE ARE SPECIAL MERITORIOUS CIRCUMSTANCES AND ISSUES.
IV.
THE [LA'S] JUDGMENT WAS PATENTLY VOID SINCE IT AWARDS MORE THAN [P]60 MILLION PESOS TO A
SINGLE FOREIGNER WHO HAD NO WORK PERMIT, AND NO WORKING VISA.
V.
PETITIONER MCBURNIE DID NOT IMPLEAD THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) IN HIS
APPEAL HEREIN, MAKING THE APPEAL INEFFECTIVE AGAINST THE NLRC. AaSHED
VI.
NLRC HAS DISMISSED THE COMPLAINT OF PETITIONER MCBURNIE IN ITS NOVEMBER 17, 2009 DECISION.
VII.
THE HONORABLE COURT'S 18 SEPTEMBER 2009 DECISION WAS TAINTED WITH VERY SERIOUS
IRREGULARITIES.
VIII.
G.R. NOS. 178034 AND 178117 HAVE BEEN INADVERTENTLY INCLUDED IN THIS CASE.
IX.
THE HONORABLE COURT DID NOT DULY RULE UPON THE OTHER VERY MERITORIOUS ARGUMENTS OF THE
RESPONDENTS WHICH ARE AS FOLLOWS:
45

(A)PETITIONER NEVER ATTENDED ANY OF ALL 14 HEARINGS BEFORE THE [LA] (WHEN 2 MISSED HEARINGS
MEAN DISMISSAL)[.]
(B)PETITIONER REFERRED TO HIMSELF AS A "VICTIM" OF LEISURE EXPERTS, INC., BUT NOT OF ANY OF THE
RESPONDENTS[.]
(C)PETITIONER'S POSITIVE LETTER TO RESPONDENT MR. EULALIO GANZON CLEARLY SHOWS THAT HE WAS
NOT ILLEGALLY DISMISSED NOR EVEN DISMISSED BY ANY OF THE RESPONDENTS AND PETITIONER EVEN
PROMISED TO PAY HIS DEBTS FOR ADVANCES MADE BY RESPONDENT[S].
(D)PETITIONER WAS NEVER EMPLOYED BY ANY OF THE RESPONDENTS. PETITIONER PRESENTED WORK FOR
CORONADO BEACH RESORT WHICH IS [NEITHER] OWNED NOR CONNECTED WITH ANY OF THE
RESPONDENTS.
(E)THE [LA] CONCLUDED THAT PETITIONER WAS DISMISSED EVEN IF THERE WAS ABSOLUTELY NO
EVIDENCE AT ALL PRESENTED THAT PETITIONER WAS DISMISSED BY THE RESPONDENTS[.]
(F)PETITIONER LEFT THE PHILIPPINES FOR AUSTRALIA JUST 2 MONTHS AFTER THE START OF THE ALLEGED
EMPLOYMENT AGREEMENT, AND HAS STILL NOT RETURNED TO THE PHILIPPINES AS CONFIRMED BY THE
BUREAU OF IMMIGRATION.
(G)PETITIONER COULD NOT HAVE SIGNED AND PERSONALLY APPEARED BEFORE THE NLRC ADMINISTERING
OFFICER AS INDICATED IN THE COMPLAINT SHEET SINCE HE LEFT THE COUNTRY 3 YEARS BEFORE THE
COMPLAINT WAS FILED AND HE NEVER CAME BACK. On September 4, 2012, the Court en banc issued a
Resolution accepting the case from the Third Division. It also issued a temporary restraining order (TRO)
enjoining the implementation of the LA's Decision dated September 30, 2004. This prompted McBurnie's filing of
a Motion for Reconsideration, where he invoked the fact that the Court's Decision dated September 18, 2009
had become final and executory, with an entry of judgment already made by the Court.
Our Ruling
In light of pertinent law and jurisprudence, and upon taking a second hard look of the parties' arguments and
the records of the case, the Court has ascertained that a reconsideration of this Court's Decision dated
September 18, 2009 and Resolutions dated December 14, 2009 and January 25, 2012, along with the lifting of
the entry of judgment in G.R. Nos. 186984-85, is in order.
The Court's acceptance of the
third motion for reconsideration
At the outset, the Court emphasizes that second and subsequent motions for reconsideration are, as a general
rule, prohibited. Section 2, Rule 52 of the Rules of Courtprovides that "[n]o second motion for reconsideration of
a judgment or final resolution by the same party shall be entertained." The rule rests on the basic tenet of
immutability of judgments. "At some point, a decision becomes final and executory and, consequently, all
litigations must come to an end."
The general rule, however, against second and subsequent motions for reconsideration admits of settled
exceptions. For one, the present Internal Rules of the Supreme Court, particularly Section 3, Rule 15 thereof,
provides:
Sec. 3.Second motion for reconsideration. — The Court shall not entertain a second motion for
reconsideration, and any exception to this rule can only be granted in the higher interest of justice by
the Court en banc upon a vote of at least two-thirds of its actual membership. There is reconsideration "in the
higher interest of justice" when the assailed decision is not only legally erroneous, but is likewise
patently unjust and potentially capable of causing unwarranted and irremediable injury or damage
to the parties. A second motion for reconsideration can only be entertained before the ruling sought to be
reconsidered becomes final by operation of law or by the Court's declaration.
46

xxx xxx xxx (Emphasis ours)
In a line of cases, the Court has then entertained and granted second motions for reconsideration "in the higher
interest of substantial justice," as allowed under the Internal Rules when the assailed decision is "legally
erroneous," "patently unjust" and "potentially capable of causing unwarranted and irremediable injury or
damage to the parties." In Tirazona v. Philippine EDS Techno-Service, Inc. (PET, Inc.), we also explained that a
second motion for reconsideration may be allowed in instances of "extraordinarily persuasive reasons and only
after an express leave shall have been obtained." In Apo Fruits Corporation v. Land Bank of the Philippines, we
allowed a second motion for reconsideration as the issue involved therein was a matter of public interest, as it
pertained to the proper application of a basic constitutionally-guaranteed right in the government's
implementation of its agrarian reform program. In San Miguel Corporation v. NLRC, the Court set aside the
decisions of the LA and the NLRC that favored claimants-security guards upon the Court's review of San Miguel
Corporation's second motion for reconsideration. In Vir-Jen Shipping and Marine Services, Inc. v. NLRC, et
al., the Court en banc reversed on a third motion for reconsideration the ruling of the Court's Division on therein
private respondents' claim for wages and monetary benefits.
It is also recognized that in some instances, the prudent action towards a just resolution of a case is for the
Court to suspend rules of procedure, for "the power of this Court to suspend its own rules or to except a
particular case from its operations whenever the purposes of justice require it, cannot be questioned." In De
Guzman v. Sandiganbayan, the Court, thus, explained:
[T]he rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice. Their
strict and rigid application, which would result in technicalities that tend to frustrate rather than promote
substantial justice, must always be avoided. Even the Rules of Court envision this liberality. This power to
suspend or even disregard the rules can be so pervasive and encompassing so as to alter even that which this
Court itself has already declared to be final, as we are now compelled to do in this case. . . . .
xxx xxx xxx
The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of justice but not
to bind and chain the hand that dispenses it, for otherwise, courts will be mere slaves to or robots of technical
rules, shorn of judicial discretion. That is precisely why courts in rendering real justice have always been, as they
in fact ought to be, conscientiously guided by the norm that when on the balance, technicalities take a backseat
against substantive rights, and not the other way around. Truly then, technicalities, in the appropriate language
of Justice Makalintal, "should give way to the realities of the situation." . . . . (Citations omitted)
Consistent with the foregoing precepts, the Court has then reconsidered even decisions that have attained
finality, finding it more appropriate to lift entries of judgments already made in these cases. In Navarro v.
Executive Secretary, we reiterated the pronouncement in De Guzman that the power to suspend or even
disregard rules of procedure can be so pervasive and compelling as to alter even that which this Court itself has
already declared final. The Court then recalled inNavarro an entry of judgment after it had determined the
validity and constitutionality of Republic Act No. 9355, explaining that:
Verily, the Court had, on several occasions, sanctioned the recall of entries of judgment in light of attendant
extraordinary circumstances. The power to suspend or even disregard rules of procedure can be so pervasive
and compelling as to alter even that which this Court itself had already declared final. In this case, the
compelling concern is not only to afford the movants-intervenors the right to be heard since they would be
adversely affected by the judgment in this case despite not being original parties thereto, but also to arrive at
the correct interpretation of the provisions of the [Local Government Code (LGC)] with respect to the creation of
local government units. . . . . (Citations omitted)
In Muñoz v. CA, the Court resolved to recall an entry of judgment to prevent a miscarriage of justice. This
justification was likewise applied in Tan Tiac Chiong v. Hon. Cosico, wherein the Court held that:
47

The recall of entries of judgments, albeit rare, is not a novelty. In Muñoz v. CA, where the case was elevated to
this Court and a first and second motion for reconsideration had been denied with finality, the Court, in the
interest of substantial justice, recalled the Entry of Judgment as well as the letter of transmittal of the records to
the Court of Appeals. (Citation omitted)
In Barnes v. Judge Padilla, we ruled:
[A] final and executory judgment can no longer be attacked by any of the parties or be modified, directly or
indirectly, even by the highest court of the land.
However, this Court has relaxed this rule in order to serve substantial justice considering (a) matters of life,
liberty, honor or property, (b) the existence of special or compelling circumstances, (c) the merits of the case,
(d) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the
rules, (e) a lack of any showing that the review sought is merely frivolous and dilatory, and (f) the other party
will not be unjustly prejudiced thereby. (Citations omitted)
As we shall explain, the instant case also qualifies as an exception to, first, the proscription against second and
subsequent motions for reconsideration, and second,the rule on immutability of judgments; a reconsideration of
the Decision dated September 18, 2009, along with the Resolutions dated December 14, 2009 and January 25,
2012, is justified by the higher interest of substantial justice.
To begin with, the Court agrees with the respondents that the Court's prior resolve to grant, and not just
merely note, in a Resolution dated March 15, 2010 the respondents' motion for leave to submit their second
motion for reconsideration already warranted a resolution and discussion of the motion for reconsideration on its
merits. Instead of doing this, however, the Court issued on January 25, 2012 a Resolution denying the motion
to reconsider for lack of merit, merely citing that it was a "prohibited pleading under Section 2, Rule 52 in
relation to Section 4, Rule 56 of the 1997 Rules of Civil Procedure, as amended." In League of Cities of the
Philippines (LCP) v. Commission on Elections, we reiterated a ruling that when a motion for leave to file and
admit a second motion for reconsideration is granted by the Court, the Court therefore allows the filing of the
second motion for reconsideration. In such a case, the second motion for reconsideration is no longer a
prohibited pleading. Similarly in this case, there was then no reason for the Court to still consider the
respondents' second motion for reconsideration as a prohibited pleading, and deny it plainly on such ground.
The Court intends to remedy such error through this resolution.
More importantly, the Court finds it appropriate to accept the pending motion for reconsideration and resolve it
on the merits in order to rectify its prior disposition of the main issues in the petition. Upon review, the Court is
constrained to rule differently on the petitions. We have determined the grave error in affirming the NLRC's
rulings, promoting results that are patently unjust for the respondents, as we consider the facts of the case,
pertinent law, jurisprudence, and the degree of the injury and damage to the respondents that will inevitably
result from the implementation of the Court's Decision dated September 18, 2009.
The rule on appeal bonds
We emphasize that the crucial issue in this case concerns the sufficiency of the appeal bond that was posted by
the respondents. The present rule on the matter is Section 6, Rule VI of the 2011 NLRC Rules of Procedure,
which was substantially the same provision in effect at the time of the respondents' appeal to the NLRC, and
which reads:
RULE VI
APPEALS
Sec. 6.BOND. — In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an
appeal by the employer may be perfected only upon the posting of a cash or surety bond. The appeal bond shall
either be in cash or surety in an amount equivalent to the monetary award, exclusive of damages and attorney's
fees.
48

xxx xxx xxx
No motion to reduce bond shall be entertained except on meritorious grounds and upon the
posting of a bond in a reasonable amount in relation to the monetary award.
The filing of the motion to reduce bond without compliance with the requisites in the preceding paragraph shall
not stop the running of the period to perfect an appeal. (Emphasis supplied)
While the CA, in this case, allowed an appeal bond in the reduced amount of P10,000,000.00 and then ordered
the case's remand to the NLRC, this Court's Decision dated September 18, 2009 provides otherwise, as it reads
in part:
The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from
the decision of the Labor Arbiter. The lawmakers clearly intended to make the bond a mandatory requisite for
the perfection of an appeal by the employer as inferred from the provision that an appeal by the employer may
be perfected "only upon the posting of a cash or surety bond." The word "only" makes it clear that the posting
of a cash or surety bond by the employer is the essential and exclusive means by which an employer's appeal
may be perfected. . . . .
Moreover, the filing of the bond is not only mandatory but a jurisdictional requirement as well, that must be
complied with in order to confer jurisdiction upon the NLRC. Non-compliance therewith renders the decision of
the Labor Arbiter final and executory. This requirement is intended to assure the workers that if they prevail in
the case, they will receive the money judgment in their favor upon the dismissal of the employer's appeal. It is
intended to discourage employers from using an appeal to delay or evade their obligation to satisfy their
employees' just and lawful claims.
xxx xxx xxx
Thus, it behooves the Court to give utmost regard to the legislative and administrative intent to strictly require
the employer to post a cash or surety bond securing thefull amount of the monetary award within the 10[-]day
reglementary period. Nothing in the Labor Code or the NLRC Rules of Procedure authorizes the
posting of a bond that is less than the monetary award in the judgment, or would deem such
insufficient posting as sufficient to perfect the appeal.
While the bond may be reduced upon motion by the employer, this is subject to the conditions that (1) the
motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable amount in relation
to the monetary award is posted by the appellant, otherwise the filing of the motion to reduce bond shall not
stop the running of the period to perfect an appeal. The qualification effectively requires that unless the NLRC
grants the reduction of the cash bond within the 10[-lday reglementary period, the employer is still expected
to post the cash or surety bond securing the full amount within the said 10[-]day period. If the NLRC
does eventually grant the motion for reduction after the reglementary period has elapsed, the correct relief
would be to reduce the cash or surety bond already posted by the employer within the 10-day
period. (Emphasis supplied; underscoring ours)
To begin with, the Court rectifies its prior pronouncement — the unqualified statement that even an appellant
who seeks a reduction of an appeal bond before the NLRC is expected to post a cash or surety bond securing
the full amount of the judgment award within the 10-day reglementary period to perfect the appeal.
The suspension of the period to
perfect the appeal upon the filing
of a motion to reduce bond
To clarify, the prevailing jurisprudence on the matter provides that the filing of a motion to reduce bond, coupled
with compliance with the two conditions emphasized in Garcia v. KJ Commercial for the grant of such motion,
namely, (1) a meritorious ground, and (2) posting of a bond in a reasonable amount, shall suffice to suspend
49

the running of the period to perfect an appeal from the labor arbiter's decision to the NLRC. To
require the full amount of the bond within the 10-day reglementary period would only render nugatory the legal
provisions which allow an appellant to seek a reduction of the bond. Thus, we explained in Garcia:
The filing of a motion to reduce bond and compliance with the two conditions stop the running of
the period to perfect an appeal. . . .
xxx xxx xxx
The NLRC has full discretion to grant or deny the motion to reduce bond, and it may rule on the motion beyond
the 10-day period within which to perfect an appeal. Obviously, at the time of the filing of the motion to reduce
bond and posting of a bond in a reasonable amount, there is no assurance whether the appellant's motion is
indeed based on "meritorious ground" and whether the bond he or she posted is of a "reasonable amount."
Thus, the appellant always runs the risk of failing to perfect an appeal.
. . . In order to give full effect to the provisions on motion to reduce bond, the appellant must be
allowed to wait for the ruling of the NLRC on the motion even beyond the 10-day period to perfect
an appeal. If the NLRC grants the motion and rules that there is indeed meritorious ground and that the
amount of the bond posted is reasonable, then the appeal is perfected. If the NLRC denies the motion, the
appellant may still file a motion for reconsideration as provided under Section 15, Rule VII of the Rules. If the
NLRC grants the motion for reconsideration and rules that there is indeed meritorious ground and that the
amount of the bond posted is reasonable, then the appeal is perfected. If the NLRC denies the motion, then the
decision of the labor arbiter becomes final and executory.
xxx xxx xxx
In any case, the rule that the filing of a motion to reduce bond shall not stop the running of the
period to perfect an appeal is not absolute. The Court may relax the rule. In Intertranz Container Lines,
Inc. v. Bautista, the Court held:
"Jurisprudence tells us that in labor cases, an appeal from a decision involving a monetary award may be
perfected only upon the posting of cash or surety bond. The Court, however, has relaxed this requirement under
certain exceptional circumstances in order to resolve controversies on their merits. These circumstances include:
(1) fundamental consideration of substantial justice; (2) prevention of miscarriage of justice or of unjust
enrichment; and (3) special circumstances of the case combined with its legal merits, and the amount and the
issue involved." (Citations omitted and emphasis ours)
A serious error of the NLRC was its outright denial of the motion to reduce the bond, without even considering
the respondents' arguments and totally unmindful of the rules and jurisprudence that allow the bond's reduction.
Instead of resolving the motion to reduce the bond on its merits, the NLRC insisted on an amount that was
equivalent to the monetary award, merely explaining:
We are constrained to deny respondents['] motion for reduction. As held by the Supreme Court in a recent case,
in cases involving monetary award, an employer seeking to appeal the Labor Arbiter's decision to the
Commission is unconditionally required by Art. 223, Labor Code to post bond in the amount
equivalent to the monetary award (Calabash Garments vs. NLRC, G.R. No. 110827, August 8, 1996). . .
. (Emphasis ours)
When the respondents sought to reconsider, the NLRC still refused to fully decide on the motion. It refused to at
least make a preliminary determination of the merits of the appeal, as it held:
We are constrained to dismiss respondents' Motion for Reconsideration. Respondents' contention that the appeal
bond is excessive and based on a decision which is a patent nullity involve[s] the merits of the case. . . .
Prevailing rules and jurisprudence
allow the reduction of appeal bonds.
50

By such haste of the NLRC in peremptorily denying the respondents' motion without considering the
respondents' arguments, it effectively denied the respondents of their opportunity to seek a reduction of the
bond even when the same is allowed under the rules and settled jurisprudence. It was equivalent to the NLRC's
refusal to exercise its discretion, as it refused to determine and rule on a showing of meritorious grounds and
the reasonableness of the bond tendered under the circumstances. Time and again, the Court has cautioned the
NLRC to give Article 223 of the Labor Code, particularly the provisions requiring bonds in appeals involving
monetary awards, a liberal interpretation in line with the desired objective of resolving controversies on the
merits. The NLRC's failure to take action on the motion to reduce the bond in the manner prescribed by law and
jurisprudence then cannot be countenanced. Although an appeal by parties from decisions that are adverse to
their interests is neither a natural right nor a part of due process, it is an essential part of our judicial system.
Courts should proceed with caution so as not to deprive a party of the right to appeal, but rather, ensure that
every party has the amplest opportunity for the proper and just disposition of their cause, free from the
constraints of technicalities. Considering the mandate of labor tribunals, the principle equally applies to them.
Given the circumstances of the case, the Court's affirmance in the Decision dated September 18, 2009 of the
NLRC's strict application of the rule on appeal bonds then demands a re-examination. Again, the emerging trend
in our jurisprudence is to afford every party-litigant the amplest opportunity for the proper and just
determination of his cause, free from the constraints of technicalities. Section 2, Rule I of the NLRC Rules of
Procedure also provides the policy that "[the] Rules shall be liberally construed to carry out the objectives of
the Constitution, the Labor Code of the Philippines and other relevant legislations, and to assist the parties in
obtaining just, expeditious and inexpensive resolution and settlement of labor disputes."
In accordance with the foregoing, although the general rule provides that an appeal in labor cases from a
decision involving a monetary award may be perfected only upon the posting of a cash or surety bond, the Court
has relaxed this requirement under certain exceptional circumstances in order to resolve controversies on their
merits. These circumstances include: (1) the fundamental consideration of substantial justice; (2) the prevention
of miscarriage of justice or of unjust enrichment; and (3) special circumstances of the case combined with its
legal merits, and the amount and the issue involved. Guidelines that are applicable in the reduction of appeal
bonds were also explained in Nicol v. Footjoy Industrial Corporation. The bond requirement in appeals involving
monetary awards has been and may be relaxed in meritorious cases, including instances in which (1) there was
substantial compliance with the Rules, (2) surrounding facts and circumstances constitute meritorious grounds to
reduce the bond, (3) a liberal interpretation of the requirement of an appeal bond would serve the desired
objective of resolving controversies on the merits, or (4) the appellants, at the very least, exhibited their
willingness and/or good faith by posting a partial bond during the reglementary period.
In Blancaflor v. NLRC, the Court also emphasized that while Article 223 of the Labor Code, as amended
by Republic Act No. 6715, which requires a cash or surety bond in an amount equivalent to the monetary award
in the judgment appealed from may be considered a jurisdictional requirement for the perfection of an appeal,
nevertheless, adhering to the principle that substantial justice is better served by allowing the appeal on the
merits to be threshed out by the NLRC, the foregoing requirement of the law should be given a liberal
interpretation.
As the Court, nonetheless, remains firm on the importance of appeal bonds in appeals from monetary awards of
LAs, we stress that the NLRC, pursuant to Section 6, Rule VI of the NLRC Rules of Procedure, shall only accept
motions to reduce bond that are coupled with the posting of a bond in a reasonable amount. Time and again,
we have explained that the bond requirement imposed upon appellants in labor cases is intended to ensure the
satisfaction of awards that are made in favor of appellees, in the event that their claims are eventually sustained
by the courts. On the part of the appellants, its posting may also signify their good faith and willingness to
recognize the final outcome of their appeal.
At the time of a motion to reduce appeal bond's filing, the question of what constitutes "a reasonable amount of
bond" that must accompany the motion may be subject to differing interpretations of litigants. The judgment of
51

the NLRC which has the discretion under the law to determine such amount cannot as yet be invoked by litigants
until after their motions to reduce appeal bond are accepted.
Given these limitations, it is not uncommon for a party to unduly forfeit his opportunity to seek a reduction of
the required bond and thus, to appeal, when the NLRC eventually disagrees with the party's assessment. These
have also resulted in the filing of numerous petitions against the NLRC, citing an alleged grave abuse of
discretion on the part of the labor tribunal for its finding on the sufficiency or insufficiency of posted appeal
bonds.
It is in this light that the Court finds it necessary to set a parameter for the litigants' and the NLRC's guidance on
the amount of bond that shall hereafter be filed with a motion for a bond's reduction. To ensure that the
provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give parties the chance to seek a reduction
of the appeal bond are effectively carried out, without however defeating the benefits of the bond requirement
in favor of a winning litigant, all motions to reduce bond that are to be filed with the NLRC shall be accompanied
by the posting of a cash or surety bond equivalent to 10% of the monetary award that is subject of the
appeal, which shall provisionally be deemed the reasonable amount of the bond in the meantime that an
appellant's motion is pending resolution by the Commission. In conformity with the NLRC Rules, the monetary
award, for the purpose of computing the necessary appeal bond, shall exclude damages and attorney's
fees. Only after the posting of a bond in the required percentage shall an appellant's period to perfect an appeal
under the NLRC Rules be deemed suspended.
The foregoing shall not be misconstrued to unduly hinder the NLRC's exercise of its discretion, given that the
percentage of bond that is set by this guideline shall bemerely provisional. The NLRC retains its authority and
duty to resolve the motion and determine the final amount of bond that shall be posted by the appellant, still in
accordance with the standards of "meritorious grounds" and "reasonable amount". Should the NLRC, after
considering the motion's merit, determine that a greater amount or the full amount of the bond needs to be
posted by the appellant, then the party shall comply accordingly. The appellant shall be given a period of 10
days from notice of the NLRC order within which to perfect the appeal by posting the required appeal bond.
Meritorious ground as a condition
for the reduction of the appeal bond
In all cases, the reduction of the appeal bond shall be justified by meritorious grounds and accompanied by the
posting of the required appeal bond in a reasonable amount.
The requirement on the existence of a "meritorious ground" delves on the worth of the parties' arguments,
taking into account their respective rights and the circumstances that attend the case. The condition was
emphasized in University Plans Incorporated v. Solano, wherein the Court held that while the NLRC's Revised
Rules of Procedure "allows the [NLRC] to reduce the amount of the bond, the exercise of the authority is not a
matter of right on the part of the movant, but lies within the sound discretion of the NLRC upon a showing of
meritorious grounds." By jurisprudence, the merit referred to may pertain to an appellant's 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 appellant's contentions.
In this case, the NLRC then should have considered the respondents' arguments in the memorandum on appeal
that was filed with the motion to reduce the requisite appeal bond. Although a consideration of said arguments
at that point would have been merely preliminary and should not in any way bind the eventual outcome of the
appeal, it was apparent that the respondents' defenses came with an indication of merit that deserved a full
review of the decision of the LA. The CA, by its Resolution dated February 16, 2007, even found justified the
issuance of a preliminary injunction to enjoin the immediate execution of the LA's decision, and this Court, a
temporary restraining order on September 4, 2012.
52

Significantly, following the CA's remand of the case to the NLRC, the latter even rendered a Decision that
contained findings that are inconsistent with McBurnie's claims. The NLRC reversed and set aside the decision of
the LA, and entered a new one dismissing McBurnie's complaint. It explained that McBurnie was not an
employee of the respondents; thus, they could not have dismissed him from employment. The purported
employment contract of the respondents with the petitioner was qualified by the conditions set forth in a letter
dated May 11, 1999, which reads:
May 11, 1999
MR. ANDREW MCBURNIE
Re: Employment Contract
Dear Andrew,
It is understood that this Contract is made subject to the understanding that it is effective only when the project
financing for our Baguio Hotel project pushed through.
The agreement with EGI Managers, Inc. is made now to support your need to facilitate your work permit with
the Department of Labor in view of the expiration of your contract with Pan Pacific.
Regards,
Sgd. Eulalio Ganzon (p. 203, Records)
For the NLRC, the employment agreement could not have given rise to an employer-employee relationship by
reason of legal impossibility. The two conditions that form part of their agreement, namely, the successful
completion of the project financing for the hotel project in Baguio City and McBurnie's acquisition of an Alien
Employment Permit, remained unsatisfied. The NLRC concluded that McBurnie was instead a potential investor in
a project that included Ganzon, but the said project failed to pursue due to lack of funds. Any work performed
by McBurnie in relation to the project was merely preliminary to the business venture and part of his "due
diligence" study before pursuing the project, "done at his own instance, not in furtherance of the employment
contract but for his own investment purposes." Lastly, the alleged employment of the petitioner would have
been void for being contrary to law, since it is undisputed that McBurnie did not have any work permit. The
NLRC declared:
Absent an employment permit, any employment relationship that [McBurnie] contemplated with the
[respondents] was void for being contrary to law. A void or inexistent contract, in turn, has no force and effect
from the beginning as if it had never [been] entered into. Thus, without an Alien Employment Permit, the
"Employment Agreement" is void and could not be the source of a right or obligation. In support thereof, the
DOLE issued a certification that [McBurnie] has neither applied nor [been] issued [an] Alien Employment Permit
(p. 204, Records).
McBurnie moved to reconsider, citing the Court's Decision of September 18, 2009 that reversed and set aside the
CA's Decision authorizing the remand. Although the NLRC granted the motion on the said ground via a
Decision that set aside the NLRC's Decision dated November 17, 2009, the findings of the NLRC in the
November 17, 2009 decision merit consideration, especially since the findings made therein are supported by the
case records.
In addition to the apparent merit of the respondents' appeal, the Court finds the reduction of the appeal bond
justified by the substantial amount of the LA's monetary award. Given its considerable amount, we find reason in
the respondents' claim that to require an appeal bond in such amount could only deprive them of the right to
appeal, even force them out of business and affect the livelihood of their employees. In Rosewood Processing,
Inc. v. NLRC, we emphasized: "Where a decision may be made to rest on informed judgment rather than rigid
rules, the equities of the case must be accorded their due weight because labor determinations should not
be 'secundum rationem but also secundum caritatem.'"
53

What constitutes a reasonable
amount in the determination of
the final amount of appeal bond
As regards the requirement on the posting of a bond in a "reasonable amount," the Court holds that the final
determination thereof by the NLRC shall be based primarily on the merits of the motion and the main appeal.
Although the NLRC Rules of Procedure, particularly Section 6 of Rule VI thereof, provides that the bond to be
posted shall be "in a reasonable amount in relation to the monetary award," the merit of the motion shall always
take precedence in the determination. Settled is the rule that procedural rules were conceived, and should thus
be applied in a manner that would only aid the attainment of justice. If a stringent application of the rules would
hinder rather than serve the demands of substantial justice, the former must yield to the latter.
Thus, in Nicol where the appellant posted a bond of P10,000,000.00 upon an appeal from the LA's award of
P51,956,314.00, the Court, instead of ruling right away on the reasonableness of the bond's amount solely on
the basis of the judgment award, found it appropriate to remand the case to the NLRC, which should first
determine the merits of the motion. In University Plans, the Court also reversed the outright dismissal of an
appeal where the bond posted in a judgment award of more than P30,000,000.00 was P30,000.00. The Court
then directed the NLRC to first determine the merit, or lack of merit, of the motion to reduce the bond, after the
appellant therein claimed that it was under receivership and thus, could not dispose of its assets within a short
notice. Clearly, the rule on the posting of an appeal bond should not be allowed to defeat the substantive rights
of the parties.
Notably, in the present case, following the CA's rendition of its Decision which allowed a reduced appeal bond,
the respondents have posted a bond in the amount of P10,000,000.00. In Rosewood, the Court deemed the
posting of a surety bond of P50,000.00, coupled with a motion to reduce the appeal bond, as substantial
compliance with the legal requirements for an appeal from a P789,154.39 monetary award "considering the clear
merits which appear, res ipsa loquitor, in the appeal from the [LA's] Decision, and the petitioner's substantial
compliance with rules governing appeals." The foregoing jurisprudence strongly indicate that in determining the
reasonable amount of appeal bonds, the Court primarily considers the merits of the motions and appeals.
Given the circumstances in this case and the merits of the respondents' arguments before the NLRC, the Court
holds that the respondents had posted a bond in a "reasonable amount", and had thus complied with the
requirements for the perfection of an appeal from the LA's decision. The CA was correct in ruling that:
In the case of Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees Association, President Rodolfo

Jimenez[,] and members[,] Reynaldo Fajardo, et al. vs. NLRC, Nueva Ecija I Electric Cooperative, Inc. (NEECO I)
and Patricio de la Peña (G.R. No. 116066, January 24, 2000), the Supreme Court recognized that: "the NLRC, in
its Resolution No. 11-01-91 dated November 7, 1991 deleted the phrase "exclusive of moral and exemplary
damages as well as attorney's fees in the determination of the amount of bond, and provided a safeguard
against the imposition of excessive bonds by providing that "(T)he Commission may in meritorious cases and
upon motion of the appellant, reduce the amount of the bond."
In the case of Cosico[,] Jr. vs. NLRC[,] 272 SCRA 583, it was held:
"The unreasonable and excessive amount of bond would be oppressive and unjust and would have the effect of
depriving a party of his right to appeal."
xxx xxx xxx
In dismissing outright the motion to reduce bond filed by petitioners, NLRC abused its discretion. It should have
fixed an appeal bond in a reasonable amount. Said dismissal deprived petitioners of their right to appeal the
Labor Arbiter's decision.
xxx xxx xxx
54

NLRC Rules allow reduction of appeal bond on meritorious grounds (Sec. 6, Rule VI, NLRC Rules of Procedure).
This Court finds the appeal bond in the amount of [P]54,083,910.00 prohibitive and excessive, which constitutes
a meritorious ground to allow a motion for reduction thereof.
The foregoing declaration of the Court requiring a bond in a reasonable amount, taking into account the merits
of the motion and the appeal, is consistent with the oft-repeated principle that letter-perfect rules must yield to
the broader interest of substantial justice.
The effect of a denial of the appeal
to the NLRC
In finding merit in the respondents' motion for reconsideration, we also take into account the unwarranted
results that will arise from an implementation of the Court's Decision dated September 18, 2009. We emphasize,
moreover, that although a remand and an order upon the NLRC to give due course to the appeal would have
been the usual course after a finding that the conditions for the reduction of an appeal bond were duly satisfied
by the respondents, given such results, the Court finds it necessary to modify the CA's order of remand, and
instead rule on the dismissal of the complaint against the respondents.
Without the reversal of the Court's Decision and the dismissal of the complaint against the respondents,
McBurnie would be allowed to claim benefits under our labor laws despite his failure to comply with a settled
requirement for foreign nationals.
Considering that McBurnie, an Australian, alleged illegal dismissal and sought to claim under our labor laws, it
was necessary for him to establish, first and foremost, that he was qualified and duly authorized to obtain
employment within our jurisdiction. A requirement for foreigners who intend to work within the country is an
employment permit, as provided under Article 40, Title II of the Labor Code which reads:
Art. 40.Employment permit for non-resident aliens. — Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign employer who desires to engage an alien for employment in
the Philippines shall obtain an employment permit from the Department of Labor.
In WPP Marketing Communications, Inc. v. Galera, we held that a foreign national's failure to seek an
employment permit prior to employment poses a serious problem in seeking relief from the Court. Thus,
although the respondent therein appeared to have been illegally dismissed from employment, we explained:
This is Galera's dilemma: Galera worked in the Philippines without proper work permit but now wants to claim
employee's benefits under Philippine labor laws.
xxx xxx xxx
The law and the rules are consistent in stating that the employment permit must be acquired prior to
employment. The Labor Code states: "Any alien seeking admission to the Philippines for employment purposes
and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall
obtain an employment permit from the Department of Labor." Section 4, Rule XIV, Book I of the Implementing
Rules and Regulations provides:

"Employment permit required for entry. — No alien seeking employment, whether as a resident or non-resident,
may enter the Philippines without first securing an employment permit from the Ministry. If an alien enters the
country under a non-working visa and wishes to be employed thereafter, he may be allowed to be employed
upon presentation of a duly approved employment permit."
Galera cannot come to this Court with unclean hands. To grant Galera's prayer is to sanction the violation of the
Philippine labor laws requiring aliens to secure work permits before their employment. We hold that the status
quo must prevail in the present case and we leave the parties where they are. This ruling, however, does not bar
Galera from seeking relief from other jurisdictions. (Citations omitted and underscoring ours)
55

Clearly, this circumstance on the failure of McBurnie to obtain an employment permit, by itself, necessitates the
dismissal of his labor complaint.
Furthermore, as has been previously discussed, the NLRC has ruled in its Decision dated November 17, 2009 on
the issue of illegal dismissal. It declared that McBurnie was never an employee of any of the respondents. It
explained:
All these facts and circumstances prove that [McBurnie] was never an employee of Eulalio Ganzon
or the [respondent] companies, but a potential investor in a project with a group including Eulalio
Ganzon and Martinez but said project did not take off because of lack of funds.
[McBurnie] further claims that in conformity with the provision of the employment contract pertaining to the
obligation of the [respondents] to provide housing, [respondents] assigned him Condo Unit # 812 of the Makati
Cinema Square Condominium owned by the [respondents]. He was also allowed to use a Hyundai car. If it were
true that the contract of employment was for working visa purposes only, why did the [respondents] perform
their obligations to him?
There is no question that [respondents] assigned him Condo Unit # 812 of the MCS, but this was not free of
charge. If it were true that it is part of the compensation package as employee, then [McBurnie] would not be
obligated to pay anything, but clearly, he admitted in his letter that he had to pay all the expenses incurred in
the apartment.
Assuming for the sake of argument that the employment contract is valid between them, record shows that
[McBurnie] worked from September 1, 1999 until he met an accident on the last week of October. During the
period of employment, [the respondents] must have paid his salaries in the sum of US$26,000.00, more or less.
However, [McBurnie] failed to present a single evidence that [the respondents] paid his salaries like payslip,
check or cash vouchers duly signed by him or any document showing proof of receipt of his compensation from
[the respondents] or activity in furtherance of the employment contract.
Granting again that there was a valid contract of employment, it is undisputed that on November 1, 1999,
[McBurnie] left for Australia and never came back. . . . . (Emphasis supplied)
Although the NLRC's Decision dated November 17, 2009 was set aside in a Decision dated January 14, 2010, the
Court's resolve to now reconsider its Decision dated September 18, 2009 and to affirm the CA's Decision and
Resolution in the respondents' favor effectively restores the NLRC's basis for rendering the Decision dated
November 17, 2009.
More importantly, the NLRC's findings on the contractual relations between McBurnie and the respondents are
supported by the records.

First, before a case for illegal dismissal can prosper, an employer-employee relationship must first be
established. Although an employment agreement forms part of the case records, respondent Ganzon signed it
with the notation "per my note." The respondents have sufficiently explained that the note refers to the
letter dated May 11, 1999 which embodied certain conditions for the employment's effectivity. As we have
previously explained, however, the said conditions, particularly on the successful completion of the project
financing for the hotel project in Baguio City and McBurnie's acquisition of an Alien Employment Permit, failed to
materialize. Such defense of the respondents, which was duly considered by the NLRC in its Decision dated
November 17, 2009, was not sufficiently rebutted by McBurnie.

Second, McBurnie failed to present any employment permit which would have authorized him to obtain
employment in the Philippines. This circumstance negates McBurnie's claim that he had been performing work
for the respondents by virtue of an employer-employee relationship. The absence of the employment permit
instead bolsters the claim that the supposed employment of McBurnie was merely simulated, or did not ensue
due to the non-fulfillment of the conditions that were set forth in the letter of May 11, 1999.
56

Third, besides the employment agreement, McBurnie failed to present other competent evidence to prove his
claim of an employer-employee relationship. Given the parties' conflicting claims on their true intention in
executing the agreement, it was necessary to resort to the established criteria for the determination of an
employer-employee relationship, namely: (1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. The rule of thumb
remains: the onus probandi falls on the claimant to establish or substantiate the claim by the requisite quantum
of evidence. Whoever claims entitlement to the benefits provided by law should establish his or her right
thereto. McBurnie failed in this regard. As previously observed by the NLRC, McBurnie even failed to show
through any document such as payslips or vouchers that his salaries during the time that he allegedly worked for
the respondents were paid by the company. In the absence of an employer-employee relationship between
McBurnie and the respondents, McBurnie could not successfully claim that he was dismissed, much less illegally
dismissed, by the latter. Even granting that there was such an employer-employee relationship, the records are
barren of any document showing that its termination was by the respondents' dismissal of McBurnie.
Given these circumstances, it would be a circuitous exercise for the Court to remand the case to the NLRC, more
so in the absence of any showing that the NLRC should now rule differently on the case's merits. In Medline
Management, Inc. v. Roslinda, the Court ruled that when there is enough basis on which the Court may render
a proper evaluation of the merits of the case, the Court may dispense with the time-consuming procedure of
remanding a case to a labor tribunal in order "to prevent delays in the disposition of the case," "to serve the
ends of justice" and when a remand "would serve no purpose save to further delay its disposition contrary to the
spirit of fair play." In Real v. Sangu Philippines, Inc., we again ruled:
With the foregoing, it is clear that the CA erred in affirming the decision of the NLRC which dismissed petitioner's
complaint for lack of jurisdiction. In cases such as this, the Court normally remands the case to the NLRC and
directs it to properly dispose of the case on the merits. "However, when there is enough basis on which a proper
evaluation of the merits of petitioner's case may be had, the Court may dispense with the time-consuming
procedure of remand in order to prevent further delays in the disposition of the case." "It is already an accepted
rule of procedure for us to strive to settle the entire controversy in a single proceeding, leaving no root or branch
to bear the seeds of litigation. If, based on the records, the pleadings, and other evidence, the dispute can be
resolved by us, we will do so to serve the ends of justice instead of remanding the case to the lower court for
further proceedings." . . . . (Citations omitted)
It bears mentioning that although the Court resolves to grant the respondents' motion for reconsideration, the
other grounds raised in the motion, especially as they pertain to insinuations on irregularities in the Court,
deserve no merit for being founded on baseless conclusions. Furthermore, the Court finds it unnecessary to
discuss the other grounds that are raised in the motion, considering the grounds that already justify the
dismissal of McBurnie's complaint.
All these considered, the Court also affirms its Resolution dated September 4, 2012; accordingly, McBurnie's
motion for reconsideration thereof is denied.
WHEREFORE, in light of the foregoing, the Court rules as follows:
(a)The motion for reconsideration filed on September 26, 2012 by petitioner Andrew James McBurnie
is DENIED;
(b)The motion for reconsideration filed on March 27, 2012 by respondents Eulalio Ganzon, EGI-Managers, Inc.
and E. Ganzon, Inc. is GRANTED.
(c)The Entry of Judgment issued in G.R. Nos. 186984-85 is LIFTED. This Court's Decision dated September 18,
2009 and Resolutions dated December 14, 2009 and January 25, 2012 are SET ASIDE. The Court of Appeals
Decision dated October 27, 2008 and Resolution dated March 3, 2009 in CA-G.R. SP No. 90845 and CA-G.R. SP
No. 95916 are AFFIRMED WITH MODIFICATION. In lieu of a remand of the case to the National Labor
57

Relations Commission, the complaint for illegal dismissal filed by petitioner Andrew James McBurnie against
respondents Eulalio Ganzon, EGI-Managers, Inc. and E. Ganzon, Inc. is DISMISSED.
Furthermore, on the matter of the filing and acceptance of motions to reduce appeal bond, as provided in
Section 6, Rule VI of the 2011 NLRC Rules of Procedure, the Court hereby RESOLVES that henceforth, the
following guidelines shall be observed:
(a)The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to the following
conditions: (1) there is meritorious ground; and (2) a bond in a reasonable amount is posted;
(b)For purposes of compliance with condition no. (2), a motion shall be accompanied by the posting of
a provisional cash or surety bond equivalent to ten percent (10%) of the monetary award subject of
the appeal, exclusive of damages and attorney's fees;
(c)Compliance with the foregoing conditions shall suffice to suspend the running of the 10-day reglementary
period to perfect an appeal from the labor arbiter's decision to the NLRC;
(d)The NLRC retains its authority and duty to resolve the motion to reduce bond and determine the final amount
of bond that shall be posted by the appellant, still in accordance with the standards of "meritorious grounds" and
"reasonable amount"; and
(e)In the event that the NLRC denies the motion to reduce bond, or requires a bond that exceeds the amount of
the provisional bond, the appellant shall be given a fresh period of ten (10) days from notice of the NLRC order
within which to perfect the appeal by posting the required appeal bond.
SO ORDERED.
||| (McBurnie v. Ganzon, G.R. Nos. 178034 & 178117 & G.R. Nos. 186984-85, [October 17, 2013])

58

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