G.R. No. 152494             September 22, 2004

MARIANO ONG, doing business under the name and style MILESTONE METAL MANUFACTURING,petitioner, vs.THE COURT OF APPEALS, CONRADO DABAC, BERNABE TAYACTAC, MANUEL ABEJUELLA, LOLITO ABELONG, RONNIE HERRERO, APOLLO PAMIAS, JAIME ONGUTAN, NOEL ATENDIDO, CARLOS TABBAL, JOEL ATENDIDO, BIENVENIDO EBBER, RENATO ABEJUELLA, LEONILO ATENDIDO, JR., LODULADO FAA and JAIME LOZADA, respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

This is a petition for review on certiorari assailing the decision1 of the Court of Appeals in CA-G.R. SP No. 62129, dated October 10, 2001, which dismissed the petition for certiorari for lack of merit, as well as the resolution,2dated March 7, 2002, denying the motion for reconsideration.

Petitioner is the sole proprietor of Milestone Metal Manufacturing (Milestone), which manufactures, among others, wearing apparels, belts, and umbrellas.3 Sometime in May 1998, the business suffered very low sales and productivity because of the economic crisis in the country. Hence, it adopted a rotation scheme by reducing the workdays of its employees to three days a week or less for an indefinite period.4

On separate dates, the 15 respondents filed before the National Labor Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages, non-payment of overtime pay, holiday pay, service incentive leave pay, 13th month pay, damages, and attorney’s fees against petitioner. These were consolidated and assigned to Labor Arbiter Manuel Manasala.

Petitioner claimed that 9 of the 15 respondents were not employees of Milestone but of Protone Industrial Corporation which, however, stopped its operation due to business losses. Further, he claims that respondents Manuel Abuela, Lolita Abelong, Ronnie Herrero, Carlos Tabbal, Conrado Dabac, and Lodualdo Faa were not dismissed from employment; rather, they refused to work after the rotation scheme was adopted. Anent their monetary claims, petitioner presented documents showing that he paid respondents’ minimum wage, 13th month pay, holiday pay, and contributions to the SSS, Medicare, and Pag-Ibig Funds.5

On November 25, 1999, the Labor Arbiter rendered a decision awarding to the respondents the aggregate amount of P1,111,200.40 representing their wage differential, holiday pay, service incentive leave pay and 13th month pay, plus 10% thereof as attorney’s fees. Further, petitioner was

ordered to pay the respondents separation pay equivalent to ½ month salary for every year of service due to the indefiniteness of the rotation scheme and strained relations caused by the filing of the complaints.6

Petitioner filed with the NLRC a notice of appeal with a memorandum of appeal and paid the docket fees therefor. However, instead of posting the required cash or surety bond, he filed a motion to reduce the appeal bond. The NLRC, in a resolution dated April 28, 2000, denied the motion to reduce bond and dismissed the appeal for failure to post cash or surety bond within the reglementary period.7 Petitioner’s motion for reconsideration was likewise denied.8

Petitioner filed a petition for certiorari with the Court of Appeals alleging that the NLRC acted with grave abuse of discretion in dismissing the appeal for non-perfection of appeal although a motion to reduce appeal bond was seasonably filed. However, the petition was dismissed and thereafter the motion for reconsideration was likewise dismissed for lack of merit.9

Hence, this petition for review on the following assignment of errors:

I.

PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN AFFIRMING THE DECISION OF THE NLRC DISMISSING THE APPEAL OF PETITIONERS (sic) FOR NON-PERFECTION WHEN A MOTION TO REDUCE APPEAL BOND WAS SEASONABLY FILED WHICH IS ALLOWED BY THE RULES OF PROCEDURE OF THE NLRC.

II.

PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN AFFIRMING THE DISMISSAL BY NLRC OF PETITIONER’S APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR ARBITER AWARDING SEPARATION PAY TO PRIVATE RESPONDENTS DESPITE THE FINDING THAT THERE WAS NO ILLEGAL DISMISSAL MADE BY MILESTONE.

III.

PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR IN AFFIRMING THE NLRC’S DISMISSAL OF PETITIONER’S APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR ARBITER THAT PETITIONER MILESTONE HAS VIOLATED THE MINIMUM WAGE LAW AND

THAT PRIVATE RESPONDENTS WERE UNDERPAID.

IV.

PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR IN AFFIRMING THE NLRC’S DISMISSAL OF PETITIONER’S APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR ARBITER THAT PETITIONER MILESTONE HAS NOT PAID PRIVATE RESPONDENTS THEIR SERVICE INCENTIVE LEAVE PAY, 13th MONTH PAY, AND HOLIDAY PAY.

V.

PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR IN AFFIRMING THE NLRC’S DISMISSAL OF PETITIONER’S APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR ARBITER THAT THE EVIDENCE SUBMITTED BY PRIVATE RESPONDENTS IN SUPPORT OF THEIR CLAIMS ARE NOT SELF-SERVING, IRRELEVANT AND IMMATERIAL TO THE FACTS AND LAW IN ISSUE IN THIS CASE.10

The petition lacks merit.

Time and again it has been held that the right to appeal is not a natural right or a part of due process, it is merely a statutory privilege, and may be exercised only in the manner and in accordance with the provisions of law. The party who seeks to avail of the same must comply with the requirements of the rules. Failing to do so, the right to appeal is lost.11

Article 223 of the Labor Code, as amended, sets forth the rules on appeal from the Labor Arbiter’s monetary award:

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

x x x           x x x           x x x

In case of a judgment involving a monetary award, an appeal by the employer may be perfected onlyupon 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)

The pertinent provisions of Rule VI of the New Rules of Procedure of the NLRC,12 which were in effect when petitioner filed his appeal, provide:

Section 1. Periods of Appeal. – Decisions, awards or orders of the Labor Arbiter and the POEA Administrator shall be 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 of the Labor Arbiter x x x.

x x x           x x x           x x x

Section 3. Requisites for Perfection of Appeal. – (a) The appeal shall be filed within the reglementary period as provided in Section 1 of this Rule; shall be under oath with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 5 of this Rule; shall be accompanied by a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a statement of the date when the appellant received the appealed decision, order or award and proof of service on the other party of such appeal.

A mere notice of appeal without complying with the other requisite aforestated shall not stop the running of the period for perfecting an appeal.

x x x           x x x           x x x

Section 6. Bond. – In case the decision of the Labor Arbiter, the Regional Director or his duly authorized Hearing Officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond, which shall be in effect until final disposition of the case, issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award, exclusive of damages and attorney’s fees.

The employer, his counsel, as well as the bonding company, shall submit a joint declaration under oath attesting that the surety bond posted is genuine.

The Commission may, in justifiable cases and upon Motion of the Appellant, reduce the amount of the bond. The filing of the motion to reduce bond shall not stop the running of the period to perfect appeal. (Emphasis ours)

In the case at bar, petitioner received the decision of the Labor Arbiter on January 6, 2000. He filed his notice of appeal with memorandum of appeal and paid the corresponding appeal fees on January 17, 2000, the last day of filing the appeal. However, in lieu of the required cash or surety bond, he filed a motion to reduce bond alleging that the amount of P1,427,802,04 as bond is "unjustified and prohibitive" and prayed that the same be reduced to a

"reasonable level." The NLRC denied the motion and consequently dismissed the appeal for non-perfection. Petitioner now contends that he was deprived of the chance to post bond because the NLRC took 102 days to decide his motion.

Petitioner’s argument is unavailing.

While, Section 6, Rule VI of the NLRC’s New Rules of Procedure 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 showing of meritorious grounds.13 Petitioner’s motion reads:

1. The appeal bond which respondents-appellants will post in this case is P1,427,802.04. They are precisely questioning this amount as being unjustified and prohibitive under the premises.

2. The amount of this appeal bond must be reduced to a reasonable level by this Honorable Office.

WHEREFORE, in view thereof, it is respectfully prayed of this Honorable Office that the appeal bond of P1,427,802.04 be reduced.14

After careful scrutiny of the motion to reduce appeal bond, we agree with the Court of Appeals that the NLRC did not act with grave abuse of discretion when it denied petitioner’s motion for the same failed to either elucidate why the amount of the bond was "unjustified and prohibitive" or to indicate what would be a "reasonable level."15

In Calabash Garments, Inc. v. NLRC,16 it was held that "a substantial monetary award, even if it runs into millions, does not necessarily give the employer-appellant a "meritorious case" and does not automatically warrant a reduction of the appeal bond."

Even granting arguendo that petitioner has meritorious grounds to reduce the appeal bond, the result would have been the same since he failed to post cash or surety bond within the prescribed period.

The above-cited provisions explicitly provide that an appeal from the Labor Arbiter to the NLRC must be perfected within ten calendar days from receipt of such decisions, awards or orders of the Labor Arbiter. In a judgment involving a monetary award, the appeal shall be perfected only upon (1) proof of payment of the required appeal fee; (2) posting of a cash or surety bond issued by a reputable bonding company; and (3) filing of a memorandum of appeal. A mere notice of appeal without complying with the other requisites mentioned shall not stop the running of the period for perfection of appeal.17 The posting of cash or surety bond is not only mandatory but jurisdictional as well, and non-compliance therewith is fatal and has the effect of rendering the judgment final and executory.18This requirement is intended to

discourage employers from using the appeal to delay, or even evade, their obligation to satisfy their employee’s just and lawful claims.19

The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The word "only" makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer’s appeal may be perfected.20

The fact that the NLRC took 102 days to resolve the motion will not help petitioner’s case. The NLRC Rules clearly provide that "the filing of the motion to reduce bond shall not stop the running of the period to perfect appeal."Petitioner should have seasonably filed the appeal bond within the ten-day reglementary period following the receipt of the order, resolution or decision of the NLRC to forestall the finality of such order, resolution or decision. In the alternative, he should have paid only a moderate and reasonable sum for the premium, as was held inBiogenerics Marketing and Research Corporation v. NLRC,21 to wit:

x x x The mandatory filing of a bond for the perfection of an appeal is evident from the aforequoted provision that the appeal may be perfected only upon the posting of cash or surety bond. It is not an excuse that the over P2 million award is too much for a small business enterprise, like the petitioner company, to shoulder.The law does not require its outright payment, but only the posting of a bond to ensure that the award will be eventually paid should the appeal fail. What petitioners have to pay is a moderate and reasonable sum for the premium for such bond. (Emphasis ours)

While the bond requirement on appeals involving monetary awards has been relaxed in certain cases, this can only be done where there was substantial compliance of the Rules or where the appellants, at the very least, exhibited willingness to pay by posting a partial bond.22 Petitioner’s reliance on the case of Rosewood Processing, Inc. v. NLRC23 is misplaced. Petitioner in the said case substantially complied with the rules by posting a partial surety bond of fifty thousand pesos issued by Prudential Guarantee and Assurance, Inc. while his motion to reduce appeal bond was pending before the NLRC.

In the case at bar, petitioner did not post a full or partial appeal bond within the prescribed period, thus, no appeal was perfected from the decision of the Labor Arbiter. For this reason, the decision sought to be appealed to the NLRC had become final and executory and therefore immutable. Clearly, then, the NLRC has no authority to entertain the appeal, much less to reverse the decision of the Labor Arbiter. Any amendment or alteration made which substantially affects the final and executory judgment is null and void for lack of

jurisdiction, including the entire proceeding held for that purpose.24

WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed decision of the Court of Appeals in CA-G.R. SP No. 62129, dated October 10, 2001, dismissing the petition for certiorari for lack of merit, isAFFIRMED.

No pronouncement as to costs.

G.R. No. 130866 September 16, 1998

ST. MARTIN FUNERAL HOME, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION and BIENVENIDO ARICAYOS, respondents.

 

REGALADO, J.:

The present petition for certiorari stemmed from a complaint for illegal dismissal filed by herein private respondent before the National Labor Relations Commission (NLRC), Regional Arbitration Branch No. III, in San Fernando, Pampanga. Private respondent alleges that he started working as Operations Manager of petitioner St. Martin Funeral Home on February 6, 1995. However, there was no contract of employment executed between him and petitioner nor was his name included in the semi-monthly payroll. On January 22, 1996, he was dismissed from his employment for allegedly misappropriating P38,000.00 which was intended for payment by petitioner of its value added tax (VAT) to the Bureau of Internal Revenue (BIR). 1

Petitioner on the other hand claims that private respondent was not its employee but only the uncle of Amelita Malabed, the owner of petitioner St. Martin's Funeral Home. Sometime in 1995, private respondent, who was formerly working as an overseas contract worker, asked for financial assistance from the mother of Amelita. Since then, as an indication of gratitude, private respondent voluntarily helped the mother of Amelita in overseeing the business.

In January 1996, the mother of Amelita passed away, so the latter then took over the management of the business. She then discovered that there were arrears in the payment of taxes and other government fees, although the records purported to show that the same were already paid. Amelita then made some changes in the business operation and private respondent and his wife were no longer allowed to participate in the management thereof. As a consequence, the latter filed a complaint charging that petitioner had illegally terminated his employment. 2

Based on the position papers of the parties, the labor arbiter rendered a decision in favor of petitioner on October 25, 1996 declaring that no employer-employee relationship existed between the parties and, therefore, his office had no jurisdiction over the case. 3

Not satisfied with the said decision, private respondent appealed to the NLRC contending that the labor arbiter erred (1) in not giving credence to the evidence submitted by him; (2) in holding that he worked as a "volunteer" and not as an employee of St. Martin Funeral Home from February 6, 1995 to January 23,

1996, or a period of about one year; and (3) in ruling that there was no employer-employee relationship between him and petitioner. 4

On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and remanding the case to the labor arbiter for immediate appropriate proceedings. 5 Petitioner then filed a motion for reconsideration which was denied by the NLRC in its resolution dated August 18, 1997 for lack of merit, 6 hence the present petition alleging that the NLRC committed grave abuse of discretion. 7

Before proceeding further into the merits of the case at bar, the Court feels that it is now exigent and opportune to reexamine the functional validity and systemic practicability of the mode of judicial review it has long adopted and still follows with respect to decisions of the NLRC. The increasing number of labor disputes that find their way to this Court and the legislative changes introduced over the years into the provisions of Presidential Decree (P.D.) No. 442 (The Labor Code of the Philippines and Batas Pambansa Blg. (B.P. No.) 129 (The Judiciary Reorganization Act of 1980) now stridently call for and warrant a reassessment of that procedural aspect.

We prefatorily delve into the legal history of the NLRC. It was first established in the Department of Labor by P.D. No. 21 on October 14, 1972, and its decisions were expressly declared to be appealable to the Secretary of Labor and, ultimately, to the President of the Philippines.

On May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines, the same to take effect six months after its promulgation. 8 Created and regulated therein is the present NLRC which was attached to the Department of Labor and Employment for program and policy coordination only. 9 Initially, Article 302 (now, Article 223) thereof also granted an aggrieved party the remedy of appeal from the decision of the NLRC to the Secretary of Labor, but P.D. No. 1391 subsequently amended said provision and abolished such appeals. No appellate review has since then been provided for.

Thus, to repeat, under the present state of the law, there is no provision for appeals from the decision of the NLRC. 10 The present Section 223, as last amended by Section 12 of R.A. No. 6715, instead merely provides that the Commission shall decide all cases within twenty days from receipt of the answer of the appellee, and that such decision shall be final and executory after ten calendar days from receipt thereof by the parties.

When the issue was raised in an early case on the argument that this Court has no jurisdiction to review the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal provision for appellate review thereof, the Court nevertheless rejected that thesis. It held that there is an underlying power of the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by statute; that the purpose of judicial review is to keep the administrative agency within its jurisdiction and protect the substantial rights of the parties; and that it is that part of the checks and balances which

restricts the separation of powers and forestalls arbitrary and unjust adjudications. 11

Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of the aggrieved party is to timely file a motion for reconsideration as a precondition for any further or subsequent remedy, 12 and then seasonably avail of the special civil action of certiorari under Rule 65, 13 for which said Rule has now fixed the reglementary period of sixty days from notice of the decision. Curiously, although the 10-day period for finality of the decision of the NLRC may already have lapsed as contemplated in Section 223 of the Labor Code, it has been held that this Court may still take cognizance of the petition for certiorari on jurisdictional and due process considerations if filed within the reglementary period under Rule 65.14

Turning now to the matter of judicial review of NLRC decisions, B.P. No. 129 originally provided as follows:

Sec. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards, or commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Intermediate Appellate Court shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings.

These provisions shall not apply to decisions and interlocutory orders issued under the Labor Code of the Philippines and by the Central Board of Assessment Appeals. 15

Subsequently, and as it presently reads, this provision was amended by R.A. No. 7902 effective March 18, 1995, to wit:

Sec. 9. Jurisdiction. — The Court of Appeals shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Social Security Commission, the Employees Compensation Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. Trials or hearings in the Court of Appeals must be continuous and must be completed within, three (3) months, unless extended by the Chief Justice.

It will readily be observed that, aside from the change in the name of the lower appellate court, 16 the following amendments of the original provisions of Section 9 of B.P. No. 129 were effected by R.A. No. 7902, viz.:

1. The last paragraph which excluded its application to the Labor Code of the Philippines and the Central Board of Assessment Appeals was deleted and replaced by a new paragraph granting the Court of Appeals limited powers to conduct trials and hearings in cases within its jurisdiction.

2. The reference to the Labor Code in that last paragraph was transposed to paragraph (3) of the section, such that the original exclusionary clause therein now provides "except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948." (Emphasis supplied).

3. Contrarily, however, specifically added to and included among the quasi-judicial agencies over which the Court of Appeals shall have exclusive appellate jurisdiction are the Securities and Exchange Commission, the Social Security Commission, the Employees Compensation Commission and the Civil Service Commission.

This, then, brings us to a somewhat perplexing impassè, both in point of purpose and terminology. As earlier explained, our mode of judicial review over decisions of the NLRC has for some time now been understood to be by a petition for certiorari under Rule 65 of the Rules of Court. This is, of course, a special original action limited to the resolution of jurisdictional issues, that is, lack or excess of jurisdiction and, in almost all cases that have been brought to us, grave abuse of discretion amounting to lack of jurisdiction.

It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now grants exclusive appellate jurisdiction to the Court of Appeals over all final adjudications of the Regional Trial Courts and the quasi-judicial agencies generally or specifically referred to therein except, among others, "those falling within the appellate jurisdiction of the Supreme Court in accordance with . . . the Labor Code of the Philippines under Presidential Decree No. 442, as amended, . . . ." This would necessarily contradict what has been ruled and said all along that appeal does not lie from decisions of the NLRC. 17 Yet, under such excepting clause literally construed, the appeal from the NLRC cannot be brought to the Court of Appeals, but to this Court by necessary implication.

The same exceptive clause further confuses the situation by declaring that the Court of Appeals has no appellate jurisdiction over decisions falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of B.P. No. 129, and those specified cases in Section 17 of the Judiciary Act of 1948. These cases can, of course, be properly excluded from the exclusive appellate jurisdiction of the Court of Appeals. However, because of the aforementioned amendment by transposition, also supposedly excluded are cases falling within the appellate jurisdiction of the Supreme Court in accordance with the Labor Code. This is illogical and impracticable, and Congress could not have intended that procedural gaffe, since there are no cases in the Labor Code the decisions, resolutions, orders or awards wherein are within the appellate jurisdiction of the Supreme Court or of any other court for that matter.

A review of the legislative records on the antecedents of R.A. No. 7902 persuades us that there may have been an oversight in the course of the deliberations on the said Act or an imprecision in the terminology used therein. In fine, Congress did intend to provide for judicial review of the adjudications of the NLRC in labor cases by the Supreme Court, but there was an inaccuracy in the term used for the intended mode of review. This conclusion which we have reluctantly but prudently arrived at has been drawn from the considerations extant in the records of Congress, more particularly on Senate Bill No. 1495 and the Reference Committee Report on S. No. 1495/H. No. 10452. 18

In sponsoring Senate Bill No. 1495, Senator Raul S. Roco delivered his sponsorship speech 19 from which we reproduce the following excerpts:

The Judiciary Reorganization Act, Mr. President, Batas Pambansa Blg. 129, reorganized the Court of Appeals and at the same time expanded its jurisdiction and powers. Among others, its appellate jurisdiction was expanded to cover not only final judgment of Regional Trial Courts, but also all final judgment(s), decisions, resolutions, orders or awards of quasi-judicial agencies, instrumentalities, boards and commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of BP Blg. 129 and of subparagraph 1 of the third paragraph and subparagraph 4 of Section 17 of the Judiciary Act of 1948.

Mr. President, the purpose of the law is to ease the workload of the Supreme Court by the transfer of some of its burden of review of factual issues to the Court of Appeals. However, whatever benefits that can be derived from the expansion of the appellate jurisdiction of the Court of Appeals was cut short by the last paragraph of Section 9 of Batas Pambansa Blg. 129 which excludes from its coverage the "decisions and interlocutory orders issued under the Labor Code of the Philippines and by the Central Board of Assessment Appeals.

Among the highest number of cases that are brought up to the Supreme Court are labor cases. Hence, Senate Bill No. 1495 seeks to eliminate the exceptions enumerated in Section 9 and, additionally, extends the coverage of appellate review of the Court of Appeals in the decision(s) of the Securities and Exchange Commission, the Social Security Commission, and the Employees Compensation Commission to reduce the

number of cases elevated to the Supreme Court. (Emphases and corrections ours)

xxx xxx xxx

Senate Bill No. 1495 authored by our distinguished Colleague from Laguna provides the ideal situation of drastically reducing the workload of the Supreme Court without depriving the litigants of the privilege of review by an appellate tribunal.

In closing, allow me to quote the observations of former Chief Justice Teehankee in 1986 in the Annual Report of the Supreme Court:

. . . Amendatory legislation is suggested so as to relieve the Supreme Court of the burden of reviewing these cases which present no important issues involved beyond the particular fact and the parties involved, so that the Supreme Court may wholly devote its time to cases of public interest in the discharge of its mandated task as the guardian of the Constitution and the guarantor of the people's basic rights and additional task expressly vested on it now "to determine whether or not there has been a grave abuse of discretion amounting to lack of jurisdiction on the part of any branch or instrumentality of the Government.

We used to have 500,000 cases pending all over the land, Mr. President. It has been cut down to 300,000 cases some five years ago. I understand we are now back to 400,000 cases. Unless we distribute the work of the appellate courts, we shall continue to mount and add to the number of cases pending.

In view of the foregoing, Mr. President, and by virtue of all the reasons we have submitted, the Committee on Justice and Human Rights requests the support and collegial approval of our Chamber.

xxx xxx xxx

Surprisingly, however, in a subsequent session, the following Committee Amendment was introduced by the said sponsor and the following proceedings transpired: 20

Senator Roco. On page 2, line 5, after the line "Supreme Court in accordance with the Constitution," add the phrase "THE LABOR CODE OF THE PHILIPPINES UNDER P.D. 442, AS AMENDED." So that it becomes clear, Mr. President, that issues arising from the Labor Code will still be appealable to the Supreme Court.

The President. Is there any objection? (Silence) Hearing none, the amendment is approved.

Senator Roco. On the same page, we move that lines 25 to 30 be deleted. This was also discussed with our Colleagues in the House of Representatives and as we understand it, as approved in the House, this was also deleted, Mr. President.

The President. Is there any objection? (Silence) Hearing none, the amendment is approved.

Senator Roco. There are no further Committee amendments, Mr. President.

Senator Romulo. Mr. President, I move that we close the period of Committee amendments.

The President. Is there any objection? (Silence) Hearing none, the amendment is approved. (Emphasis supplied).

xxx xxx xxx

Thereafter, since there were no individual amendments, Senate Bill No. 1495 was passed on second reading and being a certified bill, its unanimous approval on third reading followed. 21 The Conference Committee Report on Senate Bill No. 1495 and House Bill No. 10452, having theretofore been approved by the House of Representatives, the same was likewise approved by the Senate on February 20, 1995, 22 inclusive of the dubious formulation on appeals to the Supreme Court earlier discussed.

The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the Supreme Court were eliminated, the legislative intendment was that the special civil action of certiorari was and still is the proper vehicle for judicial review of decisions of the NLRC. The use of the word "appeal" in relation thereto and in the instances we have noted could have been a lapsus plumae because appeals by certiorari and the original action for certiorari are both

modes of judicial review addressed to the appellate courts. The important distinction between them, however, and with which the Court is particularly concerned here is that the special civil action ofcertiorari is within the concurrent original jurisdiction of this Court and the Court of Appeals; 23 whereas to indulge in the assumption that appeals by certiorari to the Supreme Court are allowed would not subserve, but would subvert, the intention of Congress as expressed in the sponsorship speech on Senate Bill No. 1495.

Incidentally, it was noted by the sponsor therein that some quarters were of the opinion that recourse from the NLRC to the Court of Appeals as an initial step in the process of judicial review would be circuitous and would prolong the proceedings. On the contrary, as he commendably and realistically emphasized, that procedure would be advantageous to the aggrieved party on this reasoning:

On the other hand, Mr. President, to allow these cases to be appealed to the Court of Appeals would give litigants the advantage to have all the evidence on record be reexamined and reweighed after which the findings of facts and conclusions of said bodies are correspondingly affirmed, modified or reversed.

Under such guarantee, the Supreme Court can then apply strictly the axiom that factual findings of the Court of Appeals are final and may not be reversed on appeal to the Supreme Court. A perusal of the records will reveal appeals which are factual in nature and may, therefore, be dismissed outright by minute resolutions. 24

While we do not wish to intrude into the Congressional sphere on the matter of the wisdom of a law, on this score we add the further observations that there is a growing number of labor cases being elevated to this Court which, not being a trier of fact, has at times been constrained to remand the case to the NLRC for resolution of unclear or ambiguous factual findings; that the Court of Appeals is procedurally equipped for that purpose, aside from the increased number of its component divisions; and that there is undeniably an imperative need for expeditious action on labor cases as a major aspect of constitutional protection to labor.

Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65. Consequently, all such petitions should hence forth be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief desired.

Apropos to this directive that resort to the higher courts should be made in accordance with their hierarchical order,

this pronouncement in Santiago vs. Vasquez, et al. 25 should be taken into account:

One final observation. We discern in the proceedings in this case a propensity on the part of petitioner, and, for that matter, the same may be said of a number of litigants who initiate recourses before us, to disregard the hierarchy of courts in our judicial system by seeking relief directly from this Court despite the fact that the same is available in the lower courts in the exercise of their original or concurrent jurisdiction, or is even mandated by law to be sought therein. This practice must be stopped, not only because of the imposition upon the precious time of this Court but also because of the inevitable and resultant delay, intended or otherwise, in the adjudication of the case which often has to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues since this Court is not a trier of facts. We, therefore, reiterate the judicial policy that this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise of our primary jurisdiction.

WHEREFORE, under the foregoing premises, the instant petition for certiorari is hereby REMANDED, and all pertinent records thereof ordered to be FORWARDED, to the Court of Appeals for appropriate action and disposition consistent with the views and ruling herein set forth, without pronouncement as to costs.

SO ORDERED.

G.R. No. 152550               June 8, 2005

BORJA ESTATE AND/OR THE HEIRS OF MANUEL AND PAULA BORJA and ATTY. MILA LAUIGAN IN HER CAPACITY AS THE ESTATE ADMINISTRATOR, petitioners, vs.SPOUSES ROTILLO BALLAD and ROSITA BALLAD, respondents.

D E C I S I O N

TINGA, J.:

In this petition for review1 under Rule 45 of the Rules of Court, petitioners Borja Estate and/or the Heirs of Manuel and Paula Borja and Atty. Mila Lauigan, in her capacity as the estate administrator (the Borjas) assail theResolution2 of the Court of Appeals Thirteenth Division denying their motion for reconsideration and the D E C I S I O N3 of the same division in CA-G.R. SP No. 60700, the dispositive portion of which states:

WHEREFORE, foregoing considered, the assailed Resolutions dated April 14, 2000 and May 31, 2000 are herebyAFFIRMED in toto. The present petition is hereby DISMISSED for lack of merit.

SO ORDERED.4

The above ruling of the Court of Appeals affirmed the Resolution5 of the National Labor Relations Commission (NLRC), the decretal portion of which reads:

WHEREFORE, premises considered, respondents’ Motion for Reduction of Bond is hereby DISMISSED for lack of merit.

The instant Appeal is hereby DISMISSED for failure to post a cash or surety bond within the reglementary period.

SO ORDERED.6

The Borjas’s motion for reconsideration of the above-quoted NLRC Resolution was likewise dismissed in anotherResolution.7

As the Borjas’s appeal was not given due course, the Labor Arbiter’s D E C I S I O N8 was in effect affirmed, the dispositive portion of which states:

WHEREFORE, with all the foregoing considerations, judgment is hereby rendered declaring the Spouses Rotillo and Rosita Ballad as illegally and unjustly dismissed in a whimsical and capricious manner which is oppressive to labor and respondents are jointly and severally ordered to reinstate complainants to their position as overseers without

loss of seniority rights with full backwages, allowances and other benefits, computed as of the promulgation of this decision, as follows:

1. P25,245.00 - Backwages, June to October 30, 1999

x 2 (P166 x 365 over 12 x 5 months)

P50,490.00Backwages for both complainants

2. P 5,0490.00 – 13th month pay x 3 years

P15,147.00

x 2

P30,294.00 - 13th month pay for both complainants

3. P100,000.00 - Moral damages, for both complainants

4. P50,000.00 – Exemplary damages, for both complainants

P230,784.00

5. P272,646.00 - Separation pay, in case reinstatement is no longer feasible(P5049 x 27 years x 2 for both complainants)

6. Money equivalent of 12 cavans of shelled corn per harvest, transportations expenses, allowances and other benefits being enjoyed as overseers from the time these were withheld from them until actual payment, to be computed in the pre-execution hearing.

7. Plus one percent interest per month and ten percent attorney’s fees. All other claims are hereby dismissed.

SO ORDERED.9

The case arose out of the complaint filed by private respondents Spouses Rotillo and Rosita Ballad (Ballad spouses) against the Borjas for illegal dismissal, non payment of 13th month pay, separation pay, incentive pay, holiday and premiums pay plus differential pay, and moral and exemplary damages with the Regional Arbitration Branch No. II of the NLRC in Tuguegarao, Cagayan, on 8 June 1999.10

The Ballad spouses had been employed as overseers of the Borja Estate by its owners, the spouses Manuel Borja and Paula Borja, since 1972. Their appointment as such was later made in writing per the certification of appointment issued by Paula Borja.11

The Borja Estate comprises around two hundred (200) hectares of agricultural lands located in the towns of Iguig,

Amulung, Enrile, Solana and Baggao, Cagayan Province. It includes two apartment buildings consisting of eleven doors for rent, both located at Caritan, Tuguegarao, Cagayan.12

As overseers, the Ballad spouses’ duties included the collection of owner’s share of the harvest from the tenants and the delivery of such share to the estate administrator, as well as to account for it. They also collected monthly rentals from the lessees of the apartment and tendered the same to the administrator. They were tasked to oversee the lands and buildings entrusted to them and were instructed to report any untoward incident or incidents affecting said properties to the administrator. They were allegedly required to work all day and night each week including Saturdays, Sundays and holidays.13

For their compensation, the Ballad spouses received a monthly salary of P1,000.00 for both of them, or P500.00 each. They were provided residential quarters plus food and traveling allowances equivalent to twelve (12) cavans of shelled corn every crop harvest.14 In the year 1980, said salary was increased to P2,500.00 for each of them by Paula Borja when she came from abroad. Until the time before their dismissal, the Ballad spouses received the same amount.15

The Ballad spouses further alleged that they were appointed as the attorney-in-fact of the owners to represent the latter in courts and/or government offices in cases affecting the titling of the Borjas’ unregistered lands, and to institute and prosecute recovery of possession thereof, as well as in ejectment cases.16

They narrated that when the spouses Manuel and Paula Borja went to the United States of America, their children Lumen, Leonora and Amelia succeeded to the ownership and management of the Borja Estate. On 16 October 1986, the Ballad spouses claimed that Amelia or Mely, then residing in Rochester, New York, wrote then administrator Mrs. Lim informing her that the heirs had extended the services of the Ballad spouses and ordered Mrs. Lim to pay the hospitalization expenses of Rotillo Ballad which accrued to Ten Thousand Pesos (P10,000.00). It is also alleged that Mely had instructed Mrs. Lim to cause the registration of the Ballad spouses as Social Security System (SSS) members so that in case any of the latter gets sick, SSS will shoulder their medical expenses and not the Borjas.17

On 10 November 1996, according to the Ballad spouses, when Francisco Borja, brother of the late Manuel Borja, was appointed the new administrator, he issued immediately a memorandum to all the tenants and lessees of the Borja Estate to transact directly with him and to pay their monthly rentals to him or to his overseers, the Ballad spouses.18

Upon his appointment, Francisco Borja allegedly promised to give the Ballad spouses their food and traveling allowances aforestated but not the twelve (12) cavans per harvest which he reduced to two (2) cavans per harvest. Francisco Borja also stopped giving the Ballad spouses their allowances. For twenty-seven (27) years that the Ballad spouses were in the

employ of the Borjas they were purportedly not paid holiday pay, overtime pay, incentive leave pay, premiums and restday pay, 13th month pay, aside from the underpayment of their basic salary.19

In June 1999, the Ballad spouses alleged that Francisco Borja unceremoniously dismissed them and caused this dismissal to be broadcast over the radio, which caused the former to suffer shock and physical and mental injuries such as social humiliation, besmirched reputation, wounded feelings, moral anxiety, health deterioration and sleepless nights.20

Thus, the filing of a case against petitioners before the Labor Arbiter. The Borjas interposed the defense that respondents had no cause of action against them because the latter were not their employees. The Borjas insisted that the Ballad spouses were allowed to reside within the premises of the Borja Estate only as a gesture of gratitude for Rosita Ballad’s assistance in the registration of a parcel of land; and that they were merely utilized to do some errands from time to time. As to the money claims, the Borjas claimed the defense of prescription.21

As aforestated, the Labor Arbiter ruled that the Ballad spouses had been illegally dismissed, after concluding that they had been employees of the Borjas.22

Aggrieved by the decision, the Borjas filed their appeal on 26 November 1999 before the NLRC together with aMotion for Reduction of Bond.23

In a Resolution dated 14 April 2000, the NLRC dismissed the petitioners’ Motion for Reduction of Bond.Petitioners’ appeal was likewise dismissed in the same Resolution for failure to post a cash or surety bond within the reglementary period.24 Petitioners’ Motion for Reconsideration was also denied for lack of merit in anotherResolution.25

Petitioners elevated the case to the Court of Appeals by way of a special civil action of certiorari. On 31 October 2001, the Court of Appeals affirmed the Resolutions of the NLRC holding that the filing of a cash or surety bond issine qua non to the perfection of appeal from the labor monetary’s award.

The Court of Appeals noted that the Borjas received a copy of the Labor Arbiter’s D E C I S I O N26 on 18 November 1999. They thereafter filed their Notice of Appeal and Appeal on 26 November 1999. On even date, they also filed a Motion for Reduction of Bond. However, no proof was shown that the Borjas were able to post the required bond during the same period of time to appeal.27

The Court of Appeals observed that petitioners were able to post a bond only on 17 December 1999 in the amount of Forty Thousand Pesos (P40,000.00) when the same should have been done during the same period of appeal. As this was not done and as no justifiable reason was given for the late

filing, the Court of Appeals ruled that the decision of the Labor Arbiter had become final and executory.28

The Court of Appeals likewise relied on the Labor Arbiter’s finding that the Ballad spouses were employees of the petitioners.29

Hence, the instant petition.

In this petition, petitioners in essence assert that the Court of Appeals erred in agreeing with the NLRC that the posting of a cash or surety bond during the period of time to file an appeal is mandatory and the failure to do so would have the effect of rendering the appealed decision final and executory. Petitioners further insist that they never hired the Ballad spouses as employees.30

In a Resolution31 dated 24 April 2002, the Court initially resolved to deny the petition for failure of the petitioners to show any reversible error in the decisions and resolution of the Labor Arbiter, the NLRC and the Court of Appeals.

However, the Court in a Resolution32 dated 11 November 2002 decided to reinstate the petition after considering petitioners’ arguments contained in their Motion for Reconsideration,33 in which the Borjas stressed that the only issue sought to be resolved by their Petition is the correct interpretation of the rule requiring the posting of a bond for the perfection of an appeal. They implored the Court to contrive a definitive ruling on the matter which in their estimation has sowed confusion among practitioners as well as to those exercising quasi-judicial and judicial functions.34

There is no merit in the petition.

The appeal bond is required under Article 223 of the Labor Code which provides:

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

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.

. . . .

Rule VI of the New Rules of Procedure of the NLRC implements this Article with its Sections 1, 3, 5, 6 and 7 providing pertinently as follows:

Section. 1. Periods of Appeal.- Decisions, awards, or orders of the Labor Arbiter and the POEA Administrator shall be 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 of the Labor Arbiter or of the Administrator, and in case of a decision of the Regional Director or his duly authorized Hearing Officer within five (5) calendar days from receipt of such decisions, awards or orders . . .

Section 3. Requisites for Perfection of Appeal.–(a) The appeal shall be filed within the reglementary period as provided in Sec. 1 of this Rule; shall be under oath with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Sec. 5 of this Rule; shall be accompanied by memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a statement of the date when the appellant received the appealed decision, order or award and proof of service on the other party of such appeal.

A mere notice of appeal without complying with the other requisite aforestated shall not stop the running of the period for perfecting an appeal.

Section 5. Appeal Fee.— The appellant shall pay an appeal fee of One hundred (P100.00) pesos to the Regional Arbitration Branch, Regional Office, or to the Philippine Overseas Employment Administration and the official receipt of such payment shall be attached to the records of the case.

Section 6. Bond.— In case the decision of the Labor Arbiter, the Regional Director or his duly authorized Hearing Officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond, which shall be in effect until final disposition of the case, issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award, exclusive of damages and attorney’s fees.

. . . .

The Commission may, in justifiable cases and upon Motion of the Appellant, reduce the amount of the bond. The filing of the motion to reduce bond shall not stop the running of the period to perfect appeal.

Section 7. No extension of Period.- No motion or request for extension of the period within which to perfect an appeal shall be allowed.

Thus, it is clear from the foregoing that the appeal from any decision, award or order of the Labor Arbiter to the NLRC shall be made within ten (10) calendar days from receipt of such decision, award or order, and must be under oath, with proof of payment of the required appeal fee accompanied by a memorandum of appeal. In case the decision of the Labor Arbiter involves a monetary award, the appeal is deemed perfected only upon the posting of a cash or surety bond also within ten (10) calendar days from receipt of such decision in an amount equivalent to the monetary award.35

1avvphi1

The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal 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 considered completed.36The law however does not require its outright payment, but only the posting of a bond to ensure that the award will be eventually paid should the appeal fail. What petitioners have to pay is a moderate and reasonable sum for the premium of such bond.37

The word "may", on the other hand refers to the perfection of an appeal as optional on the part of the defeated party, but not to the posting of an appeal bond, if he desires to appeal.38

Evidently, the posting of a cash or surety bond is mandatory. And the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional.39 To extend the period of the appeal is to delay the case, a circumstance which would give the employer the chance to wear out the efforts and meager resources of the worker to the point that the latter is constrained to give up for less than what is due him.40 As ratiocinated in the case of Viron Garments Mftg. v. NLRC:41

The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employer’s appeal. It was intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees’ just and lawful claims.42

In the case at bar, while the petitioners’ Appeal Memorandum and Motion for Reduction of Bond, which was annexed thereto, were both filed on time,43 the appeal was not perfected by reason of the late filing and deficiency of the amount of the bond for the monetary award with no explanation offered for such delay and inadequacy.

As there was no appeal bond filed together with the Appeal Memorandum within the ten (10)-day period provided by law for the perfection of appeal, it follows that no appeal from the decision of the Labor Arbiter had been perfected.44 Accordingly, the Decision of the Labor Arbiter became final and executory upon the expiration of the reglementary period.

While it is true that this Court has relaxed the application of the rules on appeal in labor cases, it has only done so where the failure to comply with the requirements for perfection of appeal was justified or where there was substantial compliance with the rules. Hence, the Supreme Court has allowed tardy appeals in judicious cases,e.g., where the presence of any justifying circumstance recognized by law, such as fraud, accident, mistake or excusable negligence, properly vested the judge with discretion to approve or admit

an appeal filed out of time; where on equitable grounds, a belated appeal was allowed as the questioned decision was served directly upon petitioner instead of her counsel of record who at the time was already dead;45 where the counsel relied on the footnote of the notice of the decision of the labor arbiter that the aggrieved party may appeal . . . within ten (10) working days; in order to prevent a miscarriage of justice or unjust enrichment such as where the tardy appeal is from a decision granting separation pay which was already granted in an earlier final decision; or where there are special circumstances in the case combined with its legal merits or the amount and the issue involved.46

Here, no justifiable reason was put forth by the petitioners for the non-filing of the required bond, or the late filing of the defective bond for that matter as in fact the bond they filed late on 17 December 1999 in the amount of Forty Thousand Pesos (P40,000.00) was not even equivalent to the reduced amount of bond they prayed for in their Motion for Reduction of Bond.47 The Court then is not prepared to hold that the petitioners’ Motion for Reduction of Bond was substantial compliance with the Labor Code for failure to demonstrate willingness to abide by their prayer in said Motion.

In addition, no exceptional circumstances obtain in the case at bar which would warrant the relaxation of the bond requirement as a condition for perfecting the appeal.

It bears stressing that the bond is sine qua non to the perfection of appeal from the labor arbiter’s monetary award. The requirements for perfecting an appeal must be strictly followed as they are considered indispensable interdictions against needless delays and for orderly discharge of judicial business. The failure of the petitioners to comply with the requirements for perfection of appeal had the effect of rendering the decision of the labor arbiter final and executory and placing it beyond the power of the NLRC to review or reverse it.1avvphi1 As a losing party has the right to file an appeal within the prescribed period, so also the winning party has the correlative right to enjoy the finality of the resolution of his/her case.48

WHEREFORE, in view of the foregoing considerations, the petition is DENIED for lack of merit. Costs against petitioners.

SO ORDERED.

G.R. No. 126322            January 16, 2002

YUPANGCO COTTON MILLS, INC., petitioner, vs.COURT OF APPEALS, HON. URBANO C. VICTORIO, SR., Presiding Judge, RTC Branch 50, Manila, RODRIGO SY MENDOZA, SAMAHANG MANGGAGAWA NG ARTEX (SAMAR-ANGLO) represented by its Local President RUSTICO CORTEZ, and WESTERN GUARANTY CORPORATION, respondents.

PARDO, J.:

The Case

The case is a petition for review on certiorari of the decision of the Court of Appeals1 dismissing the petition ruling that petitioner was guilty of forum shopping and that the proper remedy was appeal in due course, not certiorari or mandamus.

In its decision, the Court of Appeals sustained the trial court's ruling that the remedies granted under Section 17, Rule 39 of the Rules of Court are not available to the petitioner because the Manual of Instructions for Sheriffs of the NLRC does not include the remedy of an independent action by the owner to establish his right to his property.

The Facts

The facts, as found by the Court of Appeals, are as follows:

"From the records before us and by petitioner's own allegations and admission, it has taken the following actions in connection with its claim that a sheriff of the National Labor Relations Commission "erroneously and unlawfully levied" upon certain properties which it claims as its own.

"1. It filed a notice of third-party claim with the Labor Arbiter on May 4, 1995.

"2. It filed an Affidavit of Adverse Claim with the National Labor Relations Commission (NLRC) on July 4, 1995, which was dismissed on August 30, 1995, by the labor Arbiter.

"3. It filed a petition for certiorari and prohibition with the Regional Trial Court of Manila, Branch 49, docketed as Civil Case No. 95-75628 on October 6, 1995. The Regional Trial Court dismissed the case on October 11, 1995 for lack of merit.

"4. It appealed to the NLRC the order of the Labor Arbiter dated August 13, 1995 which dismissed the appeal for lack of merit on December 8, 1995.

"5. It filed an original petition for mandatory injunction with the NLRC on November 16, 1995. This was docketed as Case No. NLRC-NCR-IC. 0000602-95. This case is still pending with that Commission.

"6. It filed a complaint in the Regional Trial Court in Manila which was docketed as Civil Case No. 95-76395. The dismissal of this case by public respondent triggered the filing of the instant petition.

"In all of the foregoing actions, petitioner raised a common issue, which is that it is the owner of the properties located in the compound and buildings of Artex Development Corporation, which were erroneously levied upon by the sheriff of the NLRC as a consequence of the decision rendered by the said Commission in a labor case docketed as NLRC-NCR Case No. 00-05-02960-90."2

On March 29, 1996, the Court of Appeals promulgated a decision3 dismissing the petition on the ground of forum shopping and that petitioner's remedy was to seek relief from this Court.

On April 18, 1996, petitioner filed with the Court of Appeals a motion for reconsideration of the decision.4Petitioner argued that the filing of a complaint for accion reinvindicatoria with the Regional Trial Court was proper because it is a remedy specifically granted to an owner (whose properties were subjected to a writ of execution to enforce a decision rendered in a labor dispute in which it was not a party) by Section 17 (now 16), Rule 39, Revised Rules of Court and by the doctrines laid down in Sy v. Discaya,5 Santos v. Bayhon6 and Manliguez v. Court of Appeals.7

In addition, petitioner argued that the reliefs sought and the issues involved in the complaint for recovery of property and damages filed with the Regional Trial Court of Manila, presided over by respondent judge, were entirely distinct and separate from the reliefs sought and the issues involved in the proceedings before the Labor Arbiter and the NLRC. Besides, petitioner pointed out that neither the NLRC nor the Labor Arbiter is empowered to adjudicate matters involving ownership of properties.

On August 27, 1996, the Court of Appeals denied petitioner's motion for reconsideration.8

Hence, this appeal.9

The Issues

The issues raised are (1) whether the Court of Appeals erred in ruling that petitioner was guilty of forum shopping, and (2) whether the Court of Appeals erred in dismissing the petitioner's accion reinvindicatoria on the ground of lack of jurisdiction of the trial court.

The Court's Ruling

On the first issue raised, we rule that there was no forum shopping:

In Golangco v. Court of Appeals,10 we held:

"What is truly important to consider in determining whether forum shopping exists or not is the vexation caused the courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule on the same on related caused and/or grant the same or substantially the same reliefs, in the process creating possibility of conflicting decisions being rendered by the different for a upon the same issues.

"xxx           xxx           xxx

"There is no forum-shopping where two different orders were questioned, two distinct causes of action and issues were raised, and two objectives were sought." (Underscoring ours)

In the case at bar, there was no identity of parties, rights and causes of action and reliefs sought.

The case before the NLRC where Labor Arbiter Reyes issued a labor dispute between Artex and Samar-Anglo. Petitioner was not a party to the case. The only issue petitioner raised before the NLRC was whether or not the writ of execution issued by the labor arbiter could be satisfied against the property of petitioner, not a party to the labor case.

On the other hand, the accion reinvindicatoria filed by petitioner in the trial court was to recover the property illegally levied upon and sold at auction. Hence, the causes of action in these cases were different.

The rule is that "for forum-shopping to exist both actions must involve the same transactions, the same circumstances. The actions must also raise identical causes of action, subject matter and issues.11

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

"Forum-shopping or the act of a party against whom an adverse judgment has been rendered in one forum, of seeking another (and possible) opinion in another forum (other than by appeal or the special civil action of certiorari), or the institution of two (2) or more actions or proceedings grounded on the same cause on the supposition that one or the other would make a favorable disposition."

On the second issue, a third party whose property has been levied upon by a sheriff to enforce a decision against a judgment debtor is afforded with several alternative remedies to protect its interests. The third party may avail himself of alternative remedies cumulatively, and one will not preclude the third party from availing himself of the other alternative remedies in the event he failed in the remedy first availed of.

Thus, a third party may avail himself of the following alternative remedies:

a) File a third party claim with the sheriff of the Labor Arbiter, and

b) If the third party claim is denied, the third party may appeal the denial to the NLRC.13

Even if a third party claim was denied, a third party may still file a proper action with a competent court to recover ownership of the property illegally seized by the sheriff. This finds support in Section 17 (now 16), Rule 39, Revised Rules of Court, to wit:

"SEC. 17 (now 16). Proceedings where property claimed by third person. - If property claimed by any other person than the judgment debtor or his agent, and such person makes an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title, and serve the same upon the officer making the levy, and a copy thereof upon the judgment creditor, the officer shall not be bound to keep the property, unless such judgment creditor or his agent, on demand of the officer, indemnify the officer against such claim by a bond in a sum not greater than the value of the property levied on. In case of disagreement as to such value, the same shall be determined by the court issuing the writ of execution. 1âwphi1.nêt

"The officer is not liable for damages, for the taking or keeping of the property, to any third-party claimant unless a claim is made by the latter and unless an action for damages is brought by him against the officer within one hundred twenty (120) days from the date of the filing of the bond. But nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property by any proper action.

"When the party in whose favor the writ of execution runs, is the Republic of the Philippines, or any officer duly representing it, the filing of such bond shall not be required, and in case the sheriff or levying officer is sued for damages as a result of the levy, he shall be represented by the Solicitor General and if held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of such funds as may be appropriated for the purpose." (Underscoring ours)

In Sy v. Discaya,14 we ruled that:

"The right of a third-party claimant to file an independent action to vindicate his claim of ownership over the properties seized is reserved by Section 17 (now 16), Rule 39 of the Rules of Court, x x x :

"xxx           xxx           xxx

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

"Independent of the above-stated recourse, a third-party claimant may also avail of the remedy known as "terceria', provided in Section 17 (now 16), Rule 39, by serving on the officer making the levy an affidavit of his title and a copy thereof upon the judgment creditor. The officer shall not be bound to keep the property, unless such judgment creditor or his agent, on demand of the officer, indemnifies the officer against such claim by a bond in a sum not greater than the value of the property levied on. An action for damages may be brought against the sheriff within one hundred twenty (120) days from the filing of the bond.

"The aforesaid remedies are nevertheless without prejudice to 'any proper action' that a third-party claimant may deem suitable to vindicate 'his claim to the property.' Such a 'proper action' is, obviously, entirely distinct from that explicitly prescribed in Section 17 of Rule 39, which is an action for

damages brought by a third-party claimant against the officer within one hundred twenty (120) days from the date of the filing of the bond for the taking or keeping of the property subject of the 'terceria'.

"Quite obviously, too, this 'proper action' would have for its object the recovery of ownership or possession of the property seized by the sheriff, as well as damages resulting from the allegedly wrongful seizure and detention thereof despite the third-party claim; and it may be brought against the sheriff and such other parties as may be alleged to have colluded with him in the supposedly wrongful execution proceedings, such as the judgment creditor himself. Such 'proper action', as above pointed out, is and should be an entirely separate and distinct action from that in which execution has issued, if instituted by a stranger to the latter suit.

"The remedies above mentioned are cumulative and may be resorted to by a third-party claimant independent of or separately from and without need of availing of the others. If a third-party claimant opted to file a proper action to vindicate his claim of ownership, he must institute an action, distinct and separate from that in which the judgment is being enforced, with the court of competent jurisdiction even before or without need of filing a claim in the court which issued the writ, the latter not being a condition sine qua non for the former. In such proper action, the validity and sufficiency of the title of the third-party claimant will be resolved and a writ of preliminary injunction against the sheriff may be issued." (Emphasis and underscoring ours)

In light of the above, the filing of a third party claim with the Labor Arbiter and the NLRC did not preclude the petitioner from filing a subsequent action for recovery of property and damages with the Regional Trial Court. And, the institution of such complaint will not make petitioner guilty of forum shopping.15

In Santos v. Bayhon,16 wherein Labor Arbiter Ceferina Diosana rendered a decision in NLRC NCR Case No. 1-313-85 in favor of Kamapi, the NLRC affirmed the decision. Thereafter, Kamapi obtained a writ of execution against the properties of Poly-Plastic Products or Anthony Ching. However, respondent Priscilla Carrera filed a third-party claim alleging that Anthony Ching had sold the property to her. Nevertheless, upon posting by the judgment creditor of an indemnity bond, the NLRC Sheriff proceeded with the public auction sale. Consequently, respondent Carrera filed with Regional Trial Court, Manila an action to recover the levied property and obtained a temporary restraining order against Labor Arbiter Diosana and the NLRC Sheriff from issuing a certificate of sale over the levied property. Eventually, Labor Arbiter Santos issued an order allowing the execution to proceed against the property of Poly-Plastic Products. Also, Labor Arbiter Santos and the NLRC Sheriff filed a motion to dismiss the civil case instituted by

respondent Carrera on the ground that the Regional Trial Court did not have jurisdiction over the labor case. The trial court issued an order enjoining the enforcement of the writ of execution over the properties claimed by respondent Carrera pending the determination of the validity of the sale made in her favor by the judgment debtor Poly-Plastic Products and Anthony Ching.

In dismissing the petition for certiorari filed by Labor Arbiter Santos, we ruled that:

"x x x. The power of the NLRC to execute its judgments extends only to properties unquestionably belonging to the judgment debtor (Special Servicing Corp. v. Centro La Paz, 121 SCRA 748).

"The general rule that no court has the power to interfere by injunction with the judgments or decrees of another court with concurrent or coordinate jurisdiction possessing equal power to grant injunctive relief, applies only when no third-party claimant is involved (Traders Royal Bank v. Intermediate Appellate Court, 133 SCRA 141 [1984]). When a third-party, or a stranger to the action, asserts a claim over the property levied upon, the claimant may vindicate his claim by an independent action in the proper civil court which may stop the execution of the judgment on property not belonging to the judgment debtor." (Underscoring ours)

in Consolidated Bank and Trust Corp. v. Court of Appeals, 193 SCRA 158 [1991], we ruled that:

"The well-settled doctrine is that a 'proper levy' is indispensable to a valid sale on execution. A sale unless preceded by a valid levy is void. Therefore, since there was no sufficient levy on the execution in question, the private respondent did not take any title to the properties sold thereunder x x x.

"A person other than the judgment debtor who claims ownership or right over the levied properties is not precluded, however, from taking other legal remedies." (Underscoring ours)

Jurisprudence is likewise replete with rulings that since the third-party claimant is not one of the parties to the action, he could not, strictly speaking, appeal from the order denying his claim, but should file a separate reinvindicatory action against the execution creditor or the purchaser of the property after the sale at public auction, or a complaint for damages against the bond filed by the judgment creditor in favor of the sheriff.17

And in Lorenzana v. Cayetano,18 we ruled that:

"The rights of a third-party claimant should not be decided in the action where the third-party claim has

been presented, but in a separate action to be instituted by the third person. The appeal that should be interposed if the term 'appeal' may properly be employed, is a separate reinvidincatory action against the execution creditor or the purchaser of the property after the sale at public auction, or complaint for damages to be charged against the bond filed by the judgment creditor in favor of the sheriff. Such reinvindicatory action is reserved to the third-party claimant."

A separate civil action for recovery of ownership of the property would not constitute interference with the powers or processes of the Arbiter and the NLRC which rendered the judgment to enforce and execute upon the levied properties. The property levied upon being that of a stranger is not subject to levy. Thus, a separate action for recovery, upon a claim and prima-facie showing of ownership by the petitioner, cannot be considered as interference.

The Fallo

WHEREFORE, the Court REVERSES the decision of the Court of Appeals and the resolution denying reconsideration.19 In lieu thereof, the Court renders judgment ANNULLING the sale on execution of the subject property conducted by NLRC Sheriff Anam Timbayan in favor of respondent SAMAR-ANGLO and the subsequent sale of the same to Rodrigo Sy Mendoza. The Court declares the petitioner to be the rightful owner of the property involved and remands the case to the trial court to determine the liability of respondents SAMAR-ANGLO, Rodrigo Sy Mendoza, and WESTERN GUARANTY CORPORATION to pay actual damages that petitioner claimed.

Costs against respondents, except the Court of Appeals

SUDOL case page 128 of azucena