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667 Phil. 623
FIRST DIVISION
[ G.R. No. 170416, June 22, 2011 ]
UNIVERSITY PLANS INCORPORATED, PETITIONER, VS. BELINDA P. SOLANO, TERRY A. LAMUG, GLENDA S. BELGA, MELBA S. ALVAREZ, WELMA R. NAMATA, MARIETTA D. BACHO AND MANOLO L. CENIDO, RESPONDENTS.
D E C I S I O N
DEL CASTILLO, J.:
The National Labor Relations Commission (NLRC) is not precluded from conducting a preliminary determination of the merit or lack of merit of a motion to reduce bond. [1]
This Petition for Review on Certiorari assails the Decision [2] dated October 27, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 77397 which denied the Petition for Certiorari filed before it. Likewise assailed is the CA Resolution [3] dated November 10, 2005 denying the Motion for Reconsideration thereto.
Factual Antecedents
Respondents Belinda P. Solano (Solano), Terry A. Lamug (Lamug), Glenda S. Belga (Belga), Melba S. Alvarez (Alvarez), Welma R. Namata (Namata), Marietta D. Bacho (Bacho) and Manolo L. Cenido (Cenido) filed before the Labor Arbiter complaints for illegal dismissal, illegal deductions, overriding commissions, unfair labor practice, moral and exemplary damages, and actual damages against petitioner University Plans Incorporated.
Ruling of the Labor Arbiter
In a Decision [4] dated July 31, 2000, the Labor Arbiter found petitioner guilty of illegal dismissal and ordered respondents' reinstatement as well as the payment of their full backwages, proportionate 13th month pay, moral/exemplary damages, and attorney's fees, viz:
Ruling of the National Labor Relations Commission
Petitioner filed before the NLRC its Memorandum on Appeal [6] as well as a Motion to Reduce Bond. [7] Simultaneous with the filing of said pleadings, it posted a cash bond in the amount of P30,000.00.
In its Motion to Reduce Bond, petitioner alleged that it was under receivership and that it cannot dispose of its assets at such a short notice. Because of this, it could not post the required bond. Nevertheless, it has P30,000.00 available for immediate disposition and thus prayed that said amount be deemed sufficient to satisfy the required bond for the perfection of its appeal.
In an Order [8] dated April 25, 2001, the NLRC denied petitioner's Motion to Reduce Bond and directed it to post an additional appeal bond in the amount of P3,013,599.50 within an unextendible period of 10 days from notice, otherwise the appeal shall be dismissed for non-perfection. In resolving the motion, the NLRC held that the amount of the appeal bond is fixed by law pursuant to Article 223 of the Labor Code which provides in part that:
Petitioner filed a Motion for Reconsideration [9] insisting that the NLRC has the discretion to reduce the appeal bond upon motion of appellant and on meritorious grounds. It argued that the fact that it was under receivership and could not dispose of any or all of its assets without prior court approval are meritorious grounds justifying the reduction of the appeal bond.
The NLRC, however, denied petitioner's motion for reconsideration in a Resolution [10] dated March 21, 2003. It ruled that while it has the discretion to reduce the appeal bond, it is nevertheless not persuaded that petitioner was incapable of posting the required bond. It noted that petitioner failed to submit any financial statement or provide details anent its alleged receivership or its sources of income. Citing Rubber World (Phils.) Inc. v. National Labor Relations Commission [11] where the Security and Exchange Commission (SEC) issued an Order of Suspension of Payments, the NLRC noted that this was not obtaining in the present case. And since the appeal was not perfected due to petitioner's failure to post the required bond, the NLRC dismissed the same.
Unsatisfied, petitioner went to the CA through a Petition for Certiorari. [12]
Ruling of the Court of Appeals
In a Decision [13] dated October 27, 2004, the CA held that the NLRC in meritorious cases and upon motion by the appellant may reduce the amount of the bond. However, in order for the NLRC to exercise this discretion, it is imperative for the petitioner to show veritable proof that it is entitled to the same. Since petitioner failed to provide the NLRC with sufficient basis to determine its incapacity to post the required appeal bond, the CA opined that the NLRC's denial of petitioner's Motion to Reduce Bond was justified. Hence, it denied the petition.
As petitioner's Motion for Reconsideration [14] was likewise denied in a
Resolution [15] dated November 10, 2005, petitioner is now before this Court through the present Petition for Review on Certiorari. [16]
Issues
Petitioner advances the following grounds:
The Parties' Arguments
Petitioner stresses that it is under receivership pursuant to Presidential Decree No. 902-A. As such, all pending actions for claims are automatically stayed to enable the management committee or the rehabilitation receiver to effectively exercise its powers free from any judicial or extrajudicial interference. And since such suspension is automatic, there is no need for it to submit an Order of Suspension of Payments from the SEC, contrary to the ruling of the NLRC. The Cease and Desist Order [18] dated August 23, 1999 and the May 23, 2000 Order [19] placing petitioner under receivership both issued by the SEC would have sufficed.
Also, since its assets could not be disposed of nor could a case be filed against its receiver without prior leave of court pursuant to Section 6, Rule 59 of the Rules of Court, [20] petitioner argues it was difficult for it to raise the required amount of the bond. Petitioner insists that the NLRC should have considered these circumstances when it resolved its Motion to Reduce Bond and likewise by the CA when it affirmed the NLRC's denial of said motion. Besides, this Court, in several cases, has relaxed the requirement of posting an appeal bond as a condition for perfecting an appeal under Article 223 of the Labor Code in line with the desired objective of resolving the controversies on the merits.
Petitioner likewise faults the CA when it did not dispose of the case on the merits. It then insists that there is no employer-employee relationship between it and respondents Solano, Belga, Namata, Lamug and Alvarez; that respondent Bacho was validly retrenched; that respondent Cenido was dismissed for cause; and consequently, that they are all not entitled to reinstatement, backwages, moral and exemplary damages, and attorney's fees. It also asserts that its officers should not have been held jointly and severally liable to respondents.
For their part, respondents aver that the CA correctly affirmed the NLRC's denial of petitioner's Motion to Reduce Bond. Aside from the very clear provisions of Article 223 of the Labor Code and of Section 6, Rule VI of the NLRC Rules of Procedure on the matter, the discretion to reduce the appeal bond rests upon the NLRC and only in justifiable and meritorious cases. And since petitioner failed to justify its claim to a reduction of the appeal bond, the NLRC properly denied its motion.
Respondents likewise assert that petitioner has already lost its right to appeal considering that same was not perfected when it failed to put up the required appeal bond within the time prescribed by the NLRC. Because of this, the Labor Arbiter's Decision became final and executory and, hence, the NLRC did not err in not touching upon the merits of the appeal.
Meanwhile, in the Memorandum [21] filed by respondent Solano, she informs this Court that upon verification from the SEC, petitioner was placed under liquidation as early as 2002. This can further be deduced from the September 1, 2003 Order [22] of the SEC designating Atty. Francis Carlo D. Taparan as its liquidator and from the February 13, 2007 letter [23] of SEC Secretary C.A. Gerard M. Lukban, which quoted excerpts from the minutes of the April 13, 2005 SEC Meeting designating him as petitioner's new liquidator. In view of these, respondents argue that petitioner's claim of receivership has already lost significance and therefore has become moot and academic.
Our Ruling
There is merit in the petition.
Posting of bond is indispensable to the
perfection of an appeal in cases involving
monetary awards from the Decision of
the Labor Arbiter.
Article 223 of the Labor Code provides in part:
While pertinent portions of Sections 4 and 6, Rule VI of the Revised Rules of Procedure of the NLRC read:
The abovementioned provisions highlight the importance of posting a cash or surety bond in the perfection of an appeal to the NLRC from the Labor Arbiter's judgment involving a monetary award. Thus, in Ramirez v. Court of Appeals, [24] this Court held, viz:
When the amount of bond may be reduced.
Notably, however, under Section 6, Rule VI of the NLRC's Revised Rules of Procedure, the bond may be reduced albeit only on meritorious grounds and upon posting of a partial bond in a reasonable amount in relation to the monetary award. Suffice it to state that while said Rules "allows the Commission 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." [26]
In Nicol v. Footjoy Industrial Corporation, [27] the Court reviewed the jurisprudence [28] respecting the bond requirement for perfecting appeal and summarized the guidelines under which the NLRC must exercise its discretion in considering an appellant's motion for reduction of bond, viz:
The NLRC is not precluded from conducting a preliminary determination of the merit or lack of merit of a motion to reduce bond.
In Nicol, the Labor Arbiter ordered the employer to pay the employees monetary award in the total amount of P51,956,314.00. When the employer appealed to the NLRC, it claimed that it was in dire financial condition and thus moved to reduce the bond to P10 million, for which it posted a surety bond. The NLRC however denied the motion and required the employer to file an additional bond of P41,956,314.00. Failing to do so, the NLRC dismissed the employer's appeal for non-perfection thereof.
On appeal, the CA held that the NLRC should have determined the merit of employer's grounds for the reduction of its appeal bond through the reception of evidence instead of requiring it to put up a bond in the equivalent amount of the award without regard to its reasons and arguments, and without determining for itself what amount would be reasonable under the circumstances. Hence, it directed the NLRC to consider the employer's motion to reduce bond after receiving evidence thereon, and upon a timely posting of the required reasonable supersedeas bond, to give due course to the appeal and to determine the merits of the case.
When the case reached this Court, we affirmed the CA's ruling that the NLRC gravely abused its discretion in denying the motion to reduce bond peremptorily without considering the evidence presented. We further ruled, viz::
The NLRC erred in not considering the merit or
lack of merit of petitioner's Motion to Reduce Bond.
Petitioner attached to its Motion to Reduce Bond the SEC Orders dated August 23, 1999 and May 23, 2000. The Order of August 23, 1999 is a Cease and Desist Order which, among others, prohibited the officers and agents of petitioner from withdrawing from its trust funds or from making any disposition thereof and, ordered the freeze of all its assets and properties. On the other hand, the May 23, 2000 Order reads in part that:
From the said SEC Orders, it is unmistakable that petitioner was under receivership. And from the tenor and contents of said Orders, it is possible that petitioner has no liquid asset which it could use to post the required amount of bond. Also, it is quite understandable that because of petitioner's financial state, it cannot raise the amount of more than P3 million within a period of 10 days from receipt of the Labor Arbiter's judgment.
However, the NLRC ignored petitioner's allegations and instead remained adamant that since the amount of bond is fixed by law, petitioner must post an additional bond of more than P3 million. This, to us, is an utter disregard of the provision of the Labor Code and of the NLRC Revised Rules of Procedure allowing the reduction of bond in meritorious cases. While the NLRC tried to correct this error in its March 21, 2003 Resolution [32] by further explaining that it was not persuaded by petitioner's alleged incapability of posting the required amount of bond for failure to submit financial statement, list of sources of income and other details with respect to the alleged receivership, we still find the hasty denial of the motion to reduce bond not proper.
Notwithstanding petitioner's failure to submit its financial statement and list of sources of income and to give more details relative to its receivership, it was nevertheless able to show through the abovementioned SEC Orders that it was indeed under a state of receivership. This should have been sufficient reason for the NLRC to not outrightly deny petitioner's motion. As to the lacking documents and details on the receivership, it is true that they are needed by the NLRC in determining petitioner's capacity to post the required amount of bond. However, their absence should not lead to the outright denial of the motion since as earlier discussed, the NLRC is not precluded from conducting a preliminary determination on the merit or lack of merit of a motion to reduce bond. Here, considering the clear showing of petitioner's state of receivership, the NLRC should have conducted such preliminary determination and therein require the submission of said documents and other necessary evidence before proceeding to resolve the subject motion. After all, the present case falls under those cases where the bond requirement on appeal may be relaxed considering that (1) there was substantial compliance with the Rules; [33] (2) the surrounding facts and circumstances constitute meritorious grounds to reduce the bond; and (3) the petitioner, at the very least, exhibited its willingness and/or good faith by posting a partial bond during the reglementary period. Also, such a procedure would be in keeping with the Labor Code's mandate to `use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.' [34] We thus find error on the part of the NLRC when it denied petitioner's Motion to Reduce Bond and likewise on the part of the CA when it affirmed said denial.
In view of the foregoing, a remand of this case to the NLRC for the conduct of preliminary determination of the merit or lack of merit of petitioner's Motion to Reduce Bond is proper. In so doing, the NLRC is also reminded to consider respondent Solano's allegation that petitioner is now under liquidation and to receive evidence thereon so that it may judiciously resolve the Motion to Reduce Bond. As regards the issues relating to the substantial merits of the case, we shall leave the same to the NLRC. This is because should the NLRC eventually find the Motion to Reduce Bond meritorious, it shall give due course to the appeal upon the timely posting of a reasonable amount of supersedeas bond it deems appropriate under the circumstances, and shall then proceed to determine the merits of the case.
WHEREFORE, the petition is GRANTED. The assailed Decision dated October 27, 2004 and Resolution dated November 10, 2005 of the Court of Appeals in CA-G.R. SP No. 77397 are REVERSED and SET ASIDE. This case is ordered remanded to the National Labor Relations Commission for the conduct of preliminary determination of the merit or lack of merit of petitioner's Motion to Reduce Bond. Should the National Labor Relations Commission find the Motion to Reduce Bond meritorious, it is directed to give due course to the appeal upon timely filing of a reasonable supersedeas bond in an amount it deems appropriate under the circumstances, and to hear and resolve the case with dispatch.
SO ORDERED.
Corona, C.J., (Chairperson), Leonardo-De Castro, Perez, and Mendoza, JJ., concur.
* Also spelled as "Almarez" in some parts of the records.
** Per Special Order No. 1022 dated June 10, 2011.
[1] Nicol v. Footjoy Industrial Corporation, G.R. No. 159372, July 27, 2007, 528 SCRA 300, 312-313.
[2] CA rollo, pp. 214-221; penned by Associate Justice Danilo B. Pine and concurred in by Associate Justices Rodrigo V. Cosico and Vicente S.E. Veloso.
[3] Id. at 240-241.
[4] Id. at 124-141.
[5] Id. at 140-141.
[6] Id. at 142-155.
[7] Id. at 156-157.
[8] Id. at 41-44.
[9] Id. at 45-49.
[10] Id. at 51-55.
[11] 391 Phil. 318 (2000).
[12] Id. at 4-36.
[13] Id. at 214-221.
[14] Id. at 225-237.
[15] Id. at 240-241.
[16] Rollo, pp. 9-39.
[17] Id. at 19-20.
[18] CA rollo, pp. 158-159; In this Cease and Desist Order, petitioner, its officers and agents were prohibited from further selling, soliciting or offering any kind of pre-need plans to the public; from collecting premiums/installments due from planholders; from withdrawing from its trust funds or any kind of disposition thereof. All of petitioner's assets and properties, regardless of nature and location were likewise ordered frozen. This Order was issued after petitioner failed to comply with the SEC directive to complete its trust fund deficiencies and to submit its actual valuation report and audited financial statements, among others.
[19] Id. at 161-162; This Order placed petitioner under the management and control of a receiver, enumerated the power and responsibilities of the latter, and appointed Atty. Edgar Tarriela as such receiver.
[20] Sec. 6. General powers of receiver. - Subject to the control of the court in which the action or proceeding is pending, a receiver shall have the power to bring and defend, in such capacity, actions in his own name; to take and keep possession of the property in controversy; to receive rents; to collect debts due to himself as receiver or to the fund, property, estate, person, or corporation of which he is the receiver, to compound for and compromise the same; to make transfers; to pay outstanding debts; to divide the money and other property that shall remain among the persons legally entitled to receive the same; and generally to do such acts respecting the property as the court may authorize. However, funds in the hands of a receiver may be invested only by order of the court upon the written consent of all the parties to the action.
[21] Rollo, pp. 275-287.
[22] Id. at 288, 290.
[23] Id. at 291.
[24] G.R. No. 182626, December 4, 2009, 607 SCRA 752, 761-762.
[25] Id.
[26] Id. at 765.
[27] Supra note 1.
[28] Star Angel Handicraft v. National Labor Relations Commission, G.R. No. 108914, September 20, 1994, 236 SCRA 580; Rural Bank of Coron (Palawan), Inc. v. Cortes, G.R. No. 164888, December 6, 2006, 510 SCRA 443; Postigo v. Philippine Tuberculosis Society, Inc., G.R. No. 155146, January 24, 2006, 479 SCRA 628; Rosewood Processing, Inc. v. National Labor Relations Commission, 352 Phil. 1013 (1998); Blancaflor v. National Labor Relations Commission, G.R. No. 101013, February 2, 1993, 218 SCRA 366; Rada v. National Labor Relations Commission, G.R. No. 96078, January 9, 1992, 205 SCRA 69; YBL (Your Bus Line) v. National Labor Relations Commission, G.R. No. 93381, September 28, 1990, 190 SCRA 160; Nationwide Security and Allied Services, Inc. v. National Labor Relations Commission, 341 Phil. 393 (1997); Ong v. Court of Appeals, G.R. No. 152494, September 22, 2004, 438 SCRA 668; Calabash Garments, Inc. v. National Labor Relations Commission, 329 Phil. 226 (1996); Biogenerics Marketing and Research Corporation v. National Labor Relations Commission, 372 Phil. 653 (1999); Ciudad Fernandina Food Corporation (CFFC) Employees Union-Associated Labor Unions v. Court of Appeals, G.R. No. 166594, July 20, 2006, 495 SCRA 807.
[29] Nicol v. Footjoy Industrial Corporation, supra note 1 at 318.
[30] Id. at 312.
[31] CA rollo, p. 161.
[32] In this Resolution, the NLRC denied petitioner's Motion for Reconsideration of the Order denying the Motion to Reduce Bond, and dismissed the appeal for non-perfection thereof.
[33] Petitioner filed a Memorandum on Appeal, paid the appeal fee, and posted a partial bond of P30,000.00 within the reglementary period; See the Memorandum on Appeal and the marginal notations thereon, rollo, pp. 112-124.
[34] Nicol v. Footjoy Industrial Corporation, supra note 1 at 312.
This Petition for Review on Certiorari assails the Decision [2] dated October 27, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 77397 which denied the Petition for Certiorari filed before it. Likewise assailed is the CA Resolution [3] dated November 10, 2005 denying the Motion for Reconsideration thereto.
Factual Antecedents
Respondents Belinda P. Solano (Solano), Terry A. Lamug (Lamug), Glenda S. Belga (Belga), Melba S. Alvarez (Alvarez), Welma R. Namata (Namata), Marietta D. Bacho (Bacho) and Manolo L. Cenido (Cenido) filed before the Labor Arbiter complaints for illegal dismissal, illegal deductions, overriding commissions, unfair labor practice, moral and exemplary damages, and actual damages against petitioner University Plans Incorporated.
Ruling of the Labor Arbiter
In a Decision [4] dated July 31, 2000, the Labor Arbiter found petitioner guilty of illegal dismissal and ordered respondents' reinstatement as well as the payment of their full backwages, proportionate 13th month pay, moral/exemplary damages, and attorney's fees, viz:
WHEREFORE, premises considered, the respondents University Plans, Inc., Ernesto D. Tuazon, Joel D. Paguio, Maribel Sto. Domingo and Renato P. Dragon are hereby ordered to reinstate the seven complainants to their former positions without loss of seniority rights and other appurtenant benefits and to pay said complainants jointly and severally the amounts computed as follows:
Respondents are likewise ordered to pay attorney's fees equivalent to ten (10%) percent of the judgment award.
All other claims are hereby dismissed for lack of merit.
SO ORDERED. [5]
Ruling of the National Labor Relations Commission
Petitioner filed before the NLRC its Memorandum on Appeal [6] as well as a Motion to Reduce Bond. [7] Simultaneous with the filing of said pleadings, it posted a cash bond in the amount of P30,000.00.
In its Motion to Reduce Bond, petitioner alleged that it was under receivership and that it cannot dispose of its assets at such a short notice. Because of this, it could not post the required bond. Nevertheless, it has P30,000.00 available for immediate disposition and thus prayed that said amount be deemed sufficient to satisfy the required bond for the perfection of its appeal.
In an Order [8] dated April 25, 2001, the NLRC denied petitioner's Motion to Reduce Bond and directed it to post an additional appeal bond in the amount of P3,013,599.50 within an unextendible period of 10 days from notice, otherwise the appeal shall be dismissed for non-perfection. In resolving the motion, the NLRC held that the amount of the appeal bond is fixed by law pursuant to Article 223 of the Labor Code which provides in part that:
Article 223. Appeal . - x x x
In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (Emphasis ours.)
x x x x
Petitioner filed a Motion for Reconsideration [9] insisting that the NLRC has the discretion to reduce the appeal bond upon motion of appellant and on meritorious grounds. It argued that the fact that it was under receivership and could not dispose of any or all of its assets without prior court approval are meritorious grounds justifying the reduction of the appeal bond.
The NLRC, however, denied petitioner's motion for reconsideration in a Resolution [10] dated March 21, 2003. It ruled that while it has the discretion to reduce the appeal bond, it is nevertheless not persuaded that petitioner was incapable of posting the required bond. It noted that petitioner failed to submit any financial statement or provide details anent its alleged receivership or its sources of income. Citing Rubber World (Phils.) Inc. v. National Labor Relations Commission [11] where the Security and Exchange Commission (SEC) issued an Order of Suspension of Payments, the NLRC noted that this was not obtaining in the present case. And since the appeal was not perfected due to petitioner's failure to post the required bond, the NLRC dismissed the same.
Unsatisfied, petitioner went to the CA through a Petition for Certiorari. [12]
Ruling of the Court of Appeals
In a Decision [13] dated October 27, 2004, the CA held that the NLRC in meritorious cases and upon motion by the appellant may reduce the amount of the bond. However, in order for the NLRC to exercise this discretion, it is imperative for the petitioner to show veritable proof that it is entitled to the same. Since petitioner failed to provide the NLRC with sufficient basis to determine its incapacity to post the required appeal bond, the CA opined that the NLRC's denial of petitioner's Motion to Reduce Bond was justified. Hence, it denied the petition.
As petitioner's Motion for Reconsideration [14] was likewise denied in a
Resolution [15] dated November 10, 2005, petitioner is now before this Court through the present Petition for Review on Certiorari. [16]
Petitioner advances the following grounds:
I.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR WHEN IT DID NOT CONSIDER THE FACT THAT PETITIONER UNIVERSITY PLANS, INC. IS UNDER RECEIVERSHIP.II.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR WHEN IT FAILED TO CONSIDER AND DISPOSE OF THE MERITS OF THE CASE.
- THERE WAS ABSENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN RESPONDENTS SOLANO, BELGA, NAMATA, LAMUG AND ALVAREZ AND UPI.
- RESPONDENT BACHO WAS VALIDLY RETRENCHED.
- RESPONDENT CENIDO WAS DISMISSED FOR CAUSE.
III.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR, WHEN IT FAILED TO APPRECIATE THE FACT [THAT] MESSRS. ERNESTO D. TUAZON AND JOEL D. PAGUIO, MS. MARIBEL STO. DOMINGO AND MR. RENATO DRAGON, WERE IMPROPERLY IMPLEADED AND CONSEQUENTLY, THE LABOR ARBITER DID NOT ACQUIRE JURISDICTION OVER THEM.IV.
CONSEQUENTLY, IT IS SIMPLY GRAVE ABUSE OF DISCRETION, NOT TO MENTION GROSS AND PALPABLE ERROR FOR THE HONORABLE COURT OF APPEALS TO HAVE UPHELD THE LABOR ARBITER'S ORDER OF REINSTATEMENT OF RESPONDENTS AND TO PAY THEM BACKWAGES, MORAL AND EXEMPLARY DAMAGES AND 10% ATTORNEY'S FEES. [17]
The Parties' Arguments
Petitioner stresses that it is under receivership pursuant to Presidential Decree No. 902-A. As such, all pending actions for claims are automatically stayed to enable the management committee or the rehabilitation receiver to effectively exercise its powers free from any judicial or extrajudicial interference. And since such suspension is automatic, there is no need for it to submit an Order of Suspension of Payments from the SEC, contrary to the ruling of the NLRC. The Cease and Desist Order [18] dated August 23, 1999 and the May 23, 2000 Order [19] placing petitioner under receivership both issued by the SEC would have sufficed.
Also, since its assets could not be disposed of nor could a case be filed against its receiver without prior leave of court pursuant to Section 6, Rule 59 of the Rules of Court, [20] petitioner argues it was difficult for it to raise the required amount of the bond. Petitioner insists that the NLRC should have considered these circumstances when it resolved its Motion to Reduce Bond and likewise by the CA when it affirmed the NLRC's denial of said motion. Besides, this Court, in several cases, has relaxed the requirement of posting an appeal bond as a condition for perfecting an appeal under Article 223 of the Labor Code in line with the desired objective of resolving the controversies on the merits.
Petitioner likewise faults the CA when it did not dispose of the case on the merits. It then insists that there is no employer-employee relationship between it and respondents Solano, Belga, Namata, Lamug and Alvarez; that respondent Bacho was validly retrenched; that respondent Cenido was dismissed for cause; and consequently, that they are all not entitled to reinstatement, backwages, moral and exemplary damages, and attorney's fees. It also asserts that its officers should not have been held jointly and severally liable to respondents.
For their part, respondents aver that the CA correctly affirmed the NLRC's denial of petitioner's Motion to Reduce Bond. Aside from the very clear provisions of Article 223 of the Labor Code and of Section 6, Rule VI of the NLRC Rules of Procedure on the matter, the discretion to reduce the appeal bond rests upon the NLRC and only in justifiable and meritorious cases. And since petitioner failed to justify its claim to a reduction of the appeal bond, the NLRC properly denied its motion.
Respondents likewise assert that petitioner has already lost its right to appeal considering that same was not perfected when it failed to put up the required appeal bond within the time prescribed by the NLRC. Because of this, the Labor Arbiter's Decision became final and executory and, hence, the NLRC did not err in not touching upon the merits of the appeal.
Meanwhile, in the Memorandum [21] filed by respondent Solano, she informs this Court that upon verification from the SEC, petitioner was placed under liquidation as early as 2002. This can further be deduced from the September 1, 2003 Order [22] of the SEC designating Atty. Francis Carlo D. Taparan as its liquidator and from the February 13, 2007 letter [23] of SEC Secretary C.A. Gerard M. Lukban, which quoted excerpts from the minutes of the April 13, 2005 SEC Meeting designating him as petitioner's new liquidator. In view of these, respondents argue that petitioner's claim of receivership has already lost significance and therefore has become moot and academic.
There is merit in the petition.
Posting of bond is indispensable to the
perfection of an appeal in cases involving
monetary awards from the Decision of
the Labor Arbiter.
Article 223 of the Labor Code provides in part:
Article 223. Appeal. - Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. x x x
x x x x
In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (Emphasis supplied.)
x x x x.
While pertinent portions of Sections 4 and 6, Rule VI of the Revised Rules of Procedure of the NLRC read:
SECTION 4. REQUISITES FOR PERFECTION OF APPEAL - a) The appeal shall be: 1) filed within the reglementary period provided in Section 1 of this Rule; 2) verified by the appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, as amended; 3) in the form of a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof, the relief prayed for, and with a statement of the date the appellant received the appealed decision, resolution or order; 4) in three (3) legibly typewritten or printed copies; and 5) accompanied by i) proof of payment of the required appeal fee; ii) posting of a cash or surety bond as provided in Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv) proof of service upon the other parties.
x x x x
SECTION 6. BOND. - In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon the posting of a bond, which shall either be in the form of cash deposit or surety bond equivalent in amount to the monetary award, exclusive of damages and attorney's fees.
x x x x
No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting of a bond in a reasonable amount in relation to the monetary award. x x x (Emphasis supplied.)
The abovementioned provisions highlight the importance of posting a cash or surety bond in the perfection of an appeal to the NLRC from the Labor Arbiter's judgment involving a monetary award. Thus, in Ramirez v. Court of Appeals, [24] this Court held, viz:
Under the Rules, appeals involving monetary awards are perfected only upon compliance with the following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of the memorandum of appeal; and (3) payment of the required cash or surety bond.
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 intention of the lawmakers to make the bond a mandatory requisite for the perfection of an appeal by the employer is clearly expressed in the provision that an appeal by the employer may be perfected `only upon the posting of a cash or surety bond.' The word `only' in Article 223 of the Labor Code makes it unmistakably plain that the lawmakers intended the posting of a cash or surety bond by the employer to be the essential and exclusive means by which an employer's appeal may be perfected. The word `may' refers to the perfection of an appeal as optional on the part of the defeated party, but not to the compulsory posting of an appeal bond, if he desires to appeal. The meaning and the intention of the legislature in enacting a statute must be determined from the language employed; and where there is no ambiguity in the words used, then there is no room for construction. [25] (Emphasis supplied; citations omitted.)
When the amount of bond may be reduced.
Notably, however, under Section 6, Rule VI of the NLRC's Revised Rules of Procedure, the bond may be reduced albeit only on meritorious grounds and upon posting of a partial bond in a reasonable amount in relation to the monetary award. Suffice it to state that while said Rules "allows the Commission 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." [26]
In Nicol v. Footjoy Industrial Corporation, [27] the Court reviewed the jurisprudence [28] respecting the bond requirement for perfecting appeal and summarized the guidelines under which the NLRC must exercise its discretion in considering an appellant's motion for reduction of bond, viz:
[T]he bond requirement on appeals involving monetary awards has been and may be relaxed in meritorious cases. These cases include instances in which (1) there was substantial compliance with the Rules, (2) surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits, or (4) the appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period.
Conversely the reduction of the bond is not warranted when no meritorious ground is shown to justify the same; the appellant absolutely failed to comply with the requirement of posting a bond, even if partial; or when the circumstances show the employer's unwillingness to ensure the satisfaction of its workers' valid claims. [29]
The NLRC is not precluded from conducting a preliminary determination of the merit or lack of merit of a motion to reduce bond.
In Nicol, the Labor Arbiter ordered the employer to pay the employees monetary award in the total amount of P51,956,314.00. When the employer appealed to the NLRC, it claimed that it was in dire financial condition and thus moved to reduce the bond to P10 million, for which it posted a surety bond. The NLRC however denied the motion and required the employer to file an additional bond of P41,956,314.00. Failing to do so, the NLRC dismissed the employer's appeal for non-perfection thereof.
On appeal, the CA held that the NLRC should have determined the merit of employer's grounds for the reduction of its appeal bond through the reception of evidence instead of requiring it to put up a bond in the equivalent amount of the award without regard to its reasons and arguments, and without determining for itself what amount would be reasonable under the circumstances. Hence, it directed the NLRC to consider the employer's motion to reduce bond after receiving evidence thereon, and upon a timely posting of the required reasonable supersedeas bond, to give due course to the appeal and to determine the merits of the case.
When the case reached this Court, we affirmed the CA's ruling that the NLRC gravely abused its discretion in denying the motion to reduce bond peremptorily without considering the evidence presented. We further ruled, viz::
[T]he NLRC was not precluded from making a preliminary determination of their [the employer] financial capability to post the required bond, without necessarily passing upon the merits. Since the intention is merely to give the NLRC an idea of the justification for the reduced bond, the evidence for the purpose would necessarily be less than the evidence required for a ruling on the merits.
Indeed, it only bears stressing that the NLRC is not precluded from receiving evidence on appeal as technical rules of evidence are not binding in labor cases. On the contrary, the Labor Code explicitly mandates it to `use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process. [30]
The NLRC erred in not considering the merit or
lack of merit of petitioner's Motion to Reduce Bond.
Petitioner attached to its Motion to Reduce Bond the SEC Orders dated August 23, 1999 and May 23, 2000. The Order of August 23, 1999 is a Cease and Desist Order which, among others, prohibited the officers and agents of petitioner from withdrawing from its trust funds or from making any disposition thereof and, ordered the freeze of all its assets and properties. On the other hand, the May 23, 2000 Order reads in part that:
In view of the voluntary request for receivership of the University Plans, Inc. (UPI), after being found to have a Trust Fund and Capital Deficiency, unable to pay the same despite its commitment to pay, and pursuant to Presidential Decree No. 902-A, as amended, University Plans, Inc. is therefore, placed under the management and control of a RECEIVER x x x [31] (Emphasis supplied.)
From the said SEC Orders, it is unmistakable that petitioner was under receivership. And from the tenor and contents of said Orders, it is possible that petitioner has no liquid asset which it could use to post the required amount of bond. Also, it is quite understandable that because of petitioner's financial state, it cannot raise the amount of more than P3 million within a period of 10 days from receipt of the Labor Arbiter's judgment.
However, the NLRC ignored petitioner's allegations and instead remained adamant that since the amount of bond is fixed by law, petitioner must post an additional bond of more than P3 million. This, to us, is an utter disregard of the provision of the Labor Code and of the NLRC Revised Rules of Procedure allowing the reduction of bond in meritorious cases. While the NLRC tried to correct this error in its March 21, 2003 Resolution [32] by further explaining that it was not persuaded by petitioner's alleged incapability of posting the required amount of bond for failure to submit financial statement, list of sources of income and other details with respect to the alleged receivership, we still find the hasty denial of the motion to reduce bond not proper.
Notwithstanding petitioner's failure to submit its financial statement and list of sources of income and to give more details relative to its receivership, it was nevertheless able to show through the abovementioned SEC Orders that it was indeed under a state of receivership. This should have been sufficient reason for the NLRC to not outrightly deny petitioner's motion. As to the lacking documents and details on the receivership, it is true that they are needed by the NLRC in determining petitioner's capacity to post the required amount of bond. However, their absence should not lead to the outright denial of the motion since as earlier discussed, the NLRC is not precluded from conducting a preliminary determination on the merit or lack of merit of a motion to reduce bond. Here, considering the clear showing of petitioner's state of receivership, the NLRC should have conducted such preliminary determination and therein require the submission of said documents and other necessary evidence before proceeding to resolve the subject motion. After all, the present case falls under those cases where the bond requirement on appeal may be relaxed considering that (1) there was substantial compliance with the Rules; [33] (2) the surrounding facts and circumstances constitute meritorious grounds to reduce the bond; and (3) the petitioner, at the very least, exhibited its willingness and/or good faith by posting a partial bond during the reglementary period. Also, such a procedure would be in keeping with the Labor Code's mandate to `use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.' [34] We thus find error on the part of the NLRC when it denied petitioner's Motion to Reduce Bond and likewise on the part of the CA when it affirmed said denial.
In view of the foregoing, a remand of this case to the NLRC for the conduct of preliminary determination of the merit or lack of merit of petitioner's Motion to Reduce Bond is proper. In so doing, the NLRC is also reminded to consider respondent Solano's allegation that petitioner is now under liquidation and to receive evidence thereon so that it may judiciously resolve the Motion to Reduce Bond. As regards the issues relating to the substantial merits of the case, we shall leave the same to the NLRC. This is because should the NLRC eventually find the Motion to Reduce Bond meritorious, it shall give due course to the appeal upon the timely posting of a reasonable amount of supersedeas bond it deems appropriate under the circumstances, and shall then proceed to determine the merits of the case.
WHEREFORE, the petition is GRANTED. The assailed Decision dated October 27, 2004 and Resolution dated November 10, 2005 of the Court of Appeals in CA-G.R. SP No. 77397 are REVERSED and SET ASIDE. This case is ordered remanded to the National Labor Relations Commission for the conduct of preliminary determination of the merit or lack of merit of petitioner's Motion to Reduce Bond. Should the National Labor Relations Commission find the Motion to Reduce Bond meritorious, it is directed to give due course to the appeal upon timely filing of a reasonable supersedeas bond in an amount it deems appropriate under the circumstances, and to hear and resolve the case with dispatch.
SO ORDERED.
Corona, C.J., (Chairperson), Leonardo-De Castro, Perez, and Mendoza, JJ., concur.
* Also spelled as "Almarez" in some parts of the records.
** Per Special Order No. 1022 dated June 10, 2011.
[1] Nicol v. Footjoy Industrial Corporation, G.R. No. 159372, July 27, 2007, 528 SCRA 300, 312-313.
[2] CA rollo, pp. 214-221; penned by Associate Justice Danilo B. Pine and concurred in by Associate Justices Rodrigo V. Cosico and Vicente S.E. Veloso.
[3] Id. at 240-241.
[4] Id. at 124-141.
[5] Id. at 140-141.
[6] Id. at 142-155.
[7] Id. at 156-157.
[8] Id. at 41-44.
[9] Id. at 45-49.
[10] Id. at 51-55.
[11] 391 Phil. 318 (2000).
[12] Id. at 4-36.
[13] Id. at 214-221.
[14] Id. at 225-237.
[15] Id. at 240-241.
[16] Rollo, pp. 9-39.
[17] Id. at 19-20.
[18] CA rollo, pp. 158-159; In this Cease and Desist Order, petitioner, its officers and agents were prohibited from further selling, soliciting or offering any kind of pre-need plans to the public; from collecting premiums/installments due from planholders; from withdrawing from its trust funds or any kind of disposition thereof. All of petitioner's assets and properties, regardless of nature and location were likewise ordered frozen. This Order was issued after petitioner failed to comply with the SEC directive to complete its trust fund deficiencies and to submit its actual valuation report and audited financial statements, among others.
[19] Id. at 161-162; This Order placed petitioner under the management and control of a receiver, enumerated the power and responsibilities of the latter, and appointed Atty. Edgar Tarriela as such receiver.
[20] Sec. 6. General powers of receiver. - Subject to the control of the court in which the action or proceeding is pending, a receiver shall have the power to bring and defend, in such capacity, actions in his own name; to take and keep possession of the property in controversy; to receive rents; to collect debts due to himself as receiver or to the fund, property, estate, person, or corporation of which he is the receiver, to compound for and compromise the same; to make transfers; to pay outstanding debts; to divide the money and other property that shall remain among the persons legally entitled to receive the same; and generally to do such acts respecting the property as the court may authorize. However, funds in the hands of a receiver may be invested only by order of the court upon the written consent of all the parties to the action.
[21] Rollo, pp. 275-287.
[22] Id. at 288, 290.
[23] Id. at 291.
[24] G.R. No. 182626, December 4, 2009, 607 SCRA 752, 761-762.
[25] Id.
[26] Id. at 765.
[27] Supra note 1.
[28] Star Angel Handicraft v. National Labor Relations Commission, G.R. No. 108914, September 20, 1994, 236 SCRA 580; Rural Bank of Coron (Palawan), Inc. v. Cortes, G.R. No. 164888, December 6, 2006, 510 SCRA 443; Postigo v. Philippine Tuberculosis Society, Inc., G.R. No. 155146, January 24, 2006, 479 SCRA 628; Rosewood Processing, Inc. v. National Labor Relations Commission, 352 Phil. 1013 (1998); Blancaflor v. National Labor Relations Commission, G.R. No. 101013, February 2, 1993, 218 SCRA 366; Rada v. National Labor Relations Commission, G.R. No. 96078, January 9, 1992, 205 SCRA 69; YBL (Your Bus Line) v. National Labor Relations Commission, G.R. No. 93381, September 28, 1990, 190 SCRA 160; Nationwide Security and Allied Services, Inc. v. National Labor Relations Commission, 341 Phil. 393 (1997); Ong v. Court of Appeals, G.R. No. 152494, September 22, 2004, 438 SCRA 668; Calabash Garments, Inc. v. National Labor Relations Commission, 329 Phil. 226 (1996); Biogenerics Marketing and Research Corporation v. National Labor Relations Commission, 372 Phil. 653 (1999); Ciudad Fernandina Food Corporation (CFFC) Employees Union-Associated Labor Unions v. Court of Appeals, G.R. No. 166594, July 20, 2006, 495 SCRA 807.
[29] Nicol v. Footjoy Industrial Corporation, supra note 1 at 318.
[30] Id. at 312.
[31] CA rollo, p. 161.
[32] In this Resolution, the NLRC denied petitioner's Motion for Reconsideration of the Order denying the Motion to Reduce Bond, and dismissed the appeal for non-perfection thereof.
[33] Petitioner filed a Memorandum on Appeal, paid the appeal fee, and posted a partial bond of P30,000.00 within the reglementary period; See the Memorandum on Appeal and the marginal notations thereon, rollo, pp. 112-124.
[34] Nicol v. Footjoy Industrial Corporation, supra note 1 at 312.