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DILY

DANY
NACPIL, petitioner, vs.
CORPORATION, respondent.

INTERNATIONAL

BROADCASTING

DECISION

complainant be not reinstated within ten (10) days from receipt of this decision, he shall
be entitled to additional backwages until actually reinstated.
2. Likewise, to pay complainant the following:

KAPUNAN, J.:

a) P 2 Million as and for moral damages;

This is a petition for review on certiorari under Rule 45, assailing the Decision of the Court of
Appeals dated November 23, 1999 in CA-G.R. SP No. 52755[1] and the Resolution dated August 31, 2000
denying petitioner Dily Dany Nacpil's motion for reconsideration. The Court of Appeals reversed the
decisions promulgated by the Labor Arbiter and the National Labor Relations Commission (NLRC), which
consistently ruled in favor of petitioner.

b) P500,000.00 as and for exemplary damages; plus and (sic)

Petitioner states that he was Assistant General Manager for Finance/Administration and Comptroller
of private respondent Intercontinental Broadcasting Corporation (IBC) from 1996 until April 1997.
According to petitioner, when Emiliano Templo was appointed to replace IBC President Tomas Gomez III
sometime in March 1997, the former told the Board of Directors that as soon as he assumes the IBC
presidency, he would terminate the services of petitioner. Apparently, Templo blamed petitioner, along with
a certain Mr. Basilio and Mr. Gomez, for the prior mismanagement of IBC. Upon his assumption of the IBC
presidency, Templo allegedly harassed, insulted, humiliated and pressured petitioner into resigning until the
latter was forced to retire. However, Templo refused to pay him his retirement benefits, allegedly because
he had not yet secured the clearances from the Presidential Commission on Good Government and the
Commission on Audit. Furthermore, Templo allegedly refused to recognize petitioners employment,
claiming that petitioner was not the Assistant General Manager/Comptroller of IBC but merely usurped the
powers of the Comptroller. Hence, in 1997, petitioner filed with the Labor Arbiter a complaint for illegal
dismissal and non-payment of benefits.
Instead of filing its position paper, IBC filed a motion to dismiss alleging that the Labor Arbiter had
no jurisdiction over the case. IBC contended that petitioner was a corporate officer who was duly elected by
the Board of Directors of IBC; hence, the case qualifies as an intra-corporate dispute falling within the
jurisdiction of the Securities and Exchange Commission (SEC). However, the motion was denied by the
Labor Arbiter in an Order dated April 22, 1998.[2]

c) Ten (10%) percent thereof as and for attorneys fees.


SO ORDERED.[3]
IBC appealed to the NLRC, but the same was dismissed in a Resolution dated March 2, 1999, for its
failure to file the required appeal bond in accordance with Article 223 of the Labor Code. [4] IBC then filed a
motion for reconsideration that was likewise denied in a Resolution dated April 26, 1999.[5]
IBC then filed with the Court of Appeals a petition for certiorari under Rule 65, which petition was
granted by the appellate court in its Decision dated November 23, 1999. The dispositive portion of said
decision states:
WHEREFORE, premises considered, the petition for Certiorari is GRANTED. The assailed decisions of the
Labor Arbiter and the NLRC are REVERSED and SET ASIDE and the complaint is DISMISSED without
prejudice.
SO ORDERED.[6]
Petitioner then filed a motion for reconsideration, which was denied by the appellate court in a
Resolution dated August 31, 2000.
Hence, this petition.

On August 21, 1998, the Labor Arbiter rendered a Decision stating that petitioner had been illegally
dismissed. The dispositive portion thereof reads:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of the complainant and
against all the respondents, jointly and severally, ordering the latter:
1. To reinstate complainant to his former position without diminution of salary or loss of
seniority rights, and with full backwages computed from the time of his illegal dismissal
on May 16, 1997 up to the time of his actual reinstatement which is tentatively computed
as of the date of this decision on August 21, 1998 in the amount of P1,231,750.00 (i.e.,
P75,000.00 a month x 15.16 months = P1,137,000.00 plus 13 th month pay equivalent to
1/12 of P 1,137,000.00 = P94,750.00 or the total amount of P 1,231,750.00). Should

Petitioner Nacpil submits that:


I.
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER WAS APPOINTED
BY RESPONDENTS BOARD OF DIRECTORS AS COMPTROLLER. THIS FINDING IS
CONTRARY TO THE COMMON, CONSISTENT POSITION AND ADMISSION OF
BOTH PARTIES. FURTHER, RESPONDENTS BY-LAWS DOES NOT INCLUDE
COMPTROLLER AS ONE OF ITS CORPORATE OFFICERS.
II.

THE COURT OF APPEALS WENT BEYOND THE ISSUE OF THE CASE WHEN IT
SUBSTITUTED THE NATIONAL LABOR RELATIONS COMMISSIONS DECISION TO
APPLY THE APPEAL BOND REQUIREMENT STRICTLY IN THE INSTANT CASE. THE
ONLY ISSUE FOR ITS DETERMINATION IS WHETHER NLRC COMMITTED GRAVE
ABUSE OF DISCRETION IN DOING THE SAME.[7]
The issue to be resolved is whether the Labor Arbiter had jurisdiction over the case for illegal
dismissal and non-payment of benefits filed by petitioner. The Court finds that the Labor Arbiter had no
jurisdiction over the same.
Under Presidential Decree No. 902-A (the Revised Securities Act), the law in force when the
complaint for illegal dismissal was instituted by petitioner in 1997, the following cases fall under
the exclusive of the SEC:
a) Devices or schemes employed by or any acts of the board of directors, business associates, its officers or
partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public
and/or of the stockholders, partners, members of associations or organizations registered with the
Commission;
b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders,
members or associates; between any or all of them and the corporation, partnership or association of which
they are stockholders, members or associates, respectively; and between such corporation, partnership or
association and the State insofar as it concerns their individual franchise or right to exist as such entity;
c) Controversies in the election or appointment of directors, trustees, officers, or managers of such
corporations, partnerships or associations;
d) Petitions of corporations, partnerships, or associations to be declared in the state of suspension of
payments in cases where the corporation, partnership or association possesses property to cover all of its
debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the
corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the
Management Committee created pursuant to this decree. (Emphasis supplied.)
The Court has consistently held that there are two elements to be considered in determining whether
the SEC has jurisdiction over the controversy, to wit: (1) the status or relationship of the parties; and (2) the
nature of the question that is the subject of their controversy.[8]
Petitioner argues that he is not a corporate officer of the IBC but an employee thereof since he had
not been elected nor appointed as Comptroller and Assistant Manager by the IBCs Board of Directors. He
points out that he had actually been appointed as such on January 11, 1995 by the IBCs General Manager,
Ceferino Basilio. In support of his argument, petitioner underscores the fact that the IBCs By-Laws does not
even include the position of comptroller in its roster of corporate officers. [9] He therefore contends that his
dismissal is a controversy falling within the jurisdiction of the labor courts.[10]
Petitioners argument is untenable. Even assuming that he was in fact appointed by the General
Manager, such appointment was subsequently approved by the Board of Directors of the IBC. [11] That the
position of Comptroller is not expressly mentioned among the officers of the IBC in the By-Laws is of no

moment, because the IBCs Board of Directors is empowered under Section 25 of the Corporation
Code[12] and under the corporations By-Laws to appoint such other officers as it may deem necessary. The
By-Laws of the IBC categorically provides:
XII. OFFICERS
The officers of the corporation shall consist of a President, a Vice-President, a Secretary-Treasurer, a
General Manager, and such other officers as the Board of Directors may from time to time does fit to
provide for. Said officers shall be elected by majority vote of the Board of Directors and shall have
such powers and duties as shall hereinafter provide (Emphasis supplied).[13]
The Court has held that in most cases the by-laws may and usually do provide for such other officers,
and that where a corporate office is not specifically indicated in the roster of corporate offices in the bylaws of a corporation, the board of directors may also be empowered under the by-laws to create additional
officers as may be necessary.[15]
[14]

An office has been defined as a creation of the charter of a corporation, while an officer as a person
elected by the directors or stockholders. On the other hand, an employee occupies no office and is generally
employed not by action of the directors and stockholders but by the managing officer of the corporation
who also determines the compensation to be paid to such employee.[16]
As petitioners appointment as comptroller required the approval and formal action of the IBCs Board
of Directors to become valid,[17] it is clear therefore holds that petitioner is a corporate officer whose
dismissal may be the subject of a controversy cognizable by the SEC under Section 5(c) of P.D. 902-A
which includes controversies involving both election and appointment of corporate directors, trustees,
officers, and managers.[18] Had petitioner been an ordinary employee, such board action would not have
been required.
Thus, the Court of Appeals correctly held that:
Since complainants appointment was approved unanimously by the Board of Directors of the corporation,
he is therefore considered a corporate officer and his claim of illegal dismissal is a controversy that falls
under the jurisdiction of the SEC as contemplated by Section 5 of P.D. 902-A. The rule is that dismissal or
non-appointment of a corporate officer is clearly an intra-corporate matter and jurisdiction over the case
properly belongs to the SEC, not to the NLRC.[19]
As to petitioners argument that the nature of his functions is recommendatory thereby making him a
mere managerial officer, the Court has previously held that the relationship of a person to a corporation,
whether as officer or agent or employee is not determined by the nature of the services performed, but
instead by the incidents of the relationship as they actually exist. [20]
It is likewise of no consequence that petitioner's complaint for illegal dismissal includes money
claims, for such claims are actually part of the perquisites of his position in, and therefore linked with his
relations with, the corporation. The inclusion of such money claims does not convert the issue into a simple
labor problem. Clearly, the issues raised by petitioner against the IBC are matters that come within the area
of corporate affairs and management, and constitute a corporate controversy in contemplation of the
Corporation Code.[21]

Petitioner further argues that the IBC failed to perfect its appeal from the Labor Arbiters Decision for
its non-payment of the appeal bond as required under Article 223 of the Labor Code, since compliance with
the requirement of posting of a cash or surety bond in an amount equivalent to the monetary award in the
judgment appealed from has been held to be both mandatory and jurisdictional. [22] Hence, the Decision of
the Labor Arbiter had long become final and executory and thus, the Court of Appeals acted with grave
abuse of discretion amounting to lack or excess of jurisdiction in giving due course to the IBCs petition for
certiorari, and in deciding the case on the merits.
The IBCs failure to post an appeal bond within the period mandated under Article 223 of the Labor
Code has been rendered immaterial by the fact that the Labor Arbiter did not have jurisdiction over the case
since as stated earlier, the same is in the nature of an intra-corporate controversy. The Court has consistently
held that where there is a finding that any decision was rendered without jurisdiction, the action shall be
dismissed. Such defense can be interposed at any time, during appeal or even after final judgment. [23] It is a
well-settled rule that jurisdiction is conferred only by the Constitution or by law. It cannot be fixed by the
will of the parties; it cannot be acquired through, enlarged or diminished by, any act or omission of the
parties.[24]

1.

Due to the hotels dire financial status, the hotel has decided to implement/offer
a one-time non-recurring special separation program (SSP) that all employees
can avail of for the limited period of 10 th May to 24th May 1999 only.
Management, however, shall have the sole option to approve/disapprove the
application of any employee.

2.

If the number of employees who apply for the Special Separation Program do
not meet the minimum number required by the company, management will be
constrained to involuntary terminate the services of employees due to financial
losses. Those employees who would be terminated after this program would
only receive the legal benefits mandated by law.

A.

Guidelines
1. Covered Employees - This program is open only to all regular employees of
the hotel.
- Pioneer employees will be given a
special consideration.
2. Separation Pay - The hotel will pay affected employees in accordance with
the following benefit schedule per year
of service (computed as 12 months) on a
pro-rata basis tax exempt.

Considering the foregoing, the Court holds that no error was committed by the Court of Appeals in
dismissing the case filed before the Labor Arbiter, without prejudice to the filing of an appropriate action in
the proper court.

a. Basic: One-half (1/2) month basic salary for [every] year of service or
one (1) month salary, whichever is higher.

It must be noted that under Section 5.2 of the Securities Regulation Code (Republic Act No. 8799)
which was signed into law by then President Joseph Ejercito Estrada on July 19, 2000, the SECs
jurisdiction over all cases enumerated in Section 5 of P.D. 902-A has been transferred to the Regional Trial
Courts.[25]
WHEREFORE, the petition is hereby DISMISSED and the Decision of the Court of Appeals in
CA-G.R. SP No. 52755 is AFFIRMED.

b. Additional: (1) One year of service or less .. P1,000.00


(2) Two years of service ... P3,000.00
(3) Three years of service . P6,000.00
(4) Four years of service P10,000.00
3.

Other Entitlements
a.

Vacation Leaves. Employees with earned vacation leaves whose


applications for separation are accepted under this program, shall be
allowed to go on terminal leave to use up their leave credits. While
they are on leave, they shall be entitled to correspondingly share in
the Service Charges. For employees whose applications for
separation are accepted but whose services are needed up to their
last day of employment, their earned leaves shall be commuted/paid
in cash.

b.

Thirteenth (13th) Month Pay. All employees approved to avail of


the SSP will be entitled to a pro-rata payment of the 13 th month pay
(i.e., from 1st January 31st May 1999)

SO ORDERED.

RONALDO B. CASIMIRO, vs Stern Real Estate


CALLEJO, SR., J.:
This is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court,
assailing the Decision[1] of the Court of Appeals (CA) in CA-G.R. SP. No. 64536, as well as the
Resolution[2] dated February 16, 2004 denying the motion for reconsideration thereof.
Respondent Stern Real Estate & Development Corporation is a corporation duly organized and
existing under Philippine laws, engaged in the business of purchasing, selling and operating buildings and
other real properties for profit. One such property it owns is the Hotel Rembrandt located at No. 26 Tomas
Morato Avenue, corner Scout Bayoran Street, Quezon City, with Grace Kristine Meehan as General
Manager, and Eric Singson as its Director.[3] The hotel has been fully operational since 1996.

4.

The basis of computation of the separation pay is the monthly basic salary as of
Wednesday, 26th May.

5.

The release of the special separation package will be around 2 weeks from the
submission of the necessary clearances.

On May 6, 1999, Meehan issued the following Memorandum[4] announcing a Special Separation
Program (SSP) for all interested employees:

6.

All applications accepted under this Program shall be effective 31st May 1999.

7.

An employee who avails of the Special Separation Program is not entitled to


any other benefits by reason of his separation. The employee waives the right to

any other benefits normally associated with his/her employment at Hotel


Rembrandt.
8.

Employees with physical limitations due to recurring illness or advanced age


and who can no longer perform their jobs effectively shall be given priority
[u]pon the certification of a physician designated by the hotel, if the concerned
employees physical infirmities/limitations that [sic] may adversely affect the
employees job performance.

9.

The hotel reserves the sole right and discretion to decide on the case of an
employee.

backwages minus what have been received by them as separation benefits, reckoned
from the date of their actual dismissal [or] retrenchment until reinstated actually or in
payroll, plus attorneys fees equivalent to ten (10%) percent of the award. For this
purpose, the Examination and Computation Unit of this Arbitration branch is hereby
directed to make the necessary computation of the complainants backwages which
computation is hereby adopted and to form an integral part of this decision as Annex
A.
The other claims including damages are hereby dismissed for lack of

10. The number of employees to be separated will depend on:

merit.[12]
In compliance with the Labor Arbiters directive, the Examination and Computation Unit of the
NLRC issued a computation of complainants entitlement, awarding in their favor a total of P1,988,908.91.
[13]

a.

The ability of the company to fund this one time, non-recurring


special separation program.

b.

The companys explicit approval of each application on a case-tocase basis.

11. This special separation program is a one-time, non-recurring program. It should


not set any precedent nor be invoked in the future.[5]
On May 24, 1999, the hotel management accepted 49 applications for its SSP.
On May 28, 1999, management filed an Establishment Termination Report [6] before the
Department of Labor and Employment. Said report covered 29 employees whose termination was to take
effect on June 28, 1999. Financial losses was the main reason cited, and the other being company
reorganization/downsizing. From June 15 to 21, 1999, letters were sent to the employees concerned
informing them that they were considered dismissed from employment one month after receipt of such
notice.[7]
Petitioners were among the retrenched employees. [8] They later filed a complaint for illegal
dismissal in the guise of retrenchment and underpayment/non-payment of overtime pay, premium
compensation for holiday and rest day with prayer for moral and exemplary damages and attorneys fees
before the National Labor Relations Commission (NLRC). The complaint was docketed as NLRC NCR
Case No. 00-08-08351-99.
According to the complainants, while the hotel management claimed that they were retrenched
due to serious financial losses, it failed to satisfy the requirements of the Labor Code in terminating their
employment: no notice was given to the Department of Labor of such intended retrenchment and no
evidence was submitted to prove that the hotel had been suffering financial losses. Moreover, respondents
had not only advertised their need for personnel vacated by complainants; [9] they had already started hiring
replacements. The complainants were convinced that their retrenchment was only a ploy to ease them out of
their respective jobs.[10]
On March 6, 2000, Labor Arbiter Donato G. Quinto, Jr. ruled in favor of the retrenched
employees. According to the Labor Arbiter, a thorough examination of the financial statements submitted
by respondents would readily show that the expenses in 1998 were bloated as compared to the previous
year, clearly made to justify the retrenchment of the complainants. [11] Moreover, the hotel had advertised job
vacancies for extra banquet waiters and waitresses, and likewise failed to rebut the charge that the last in,
first out rule was not observed in dismissing the employees. The Labor Arbiter also declared that while the
complainants executed quitclaims and accepted their separation pay, they were not estopped from
challenging the validity of their dismissal. The dispositive portion of the decision reads:
WHEREFORE, premises above considered, a decision is hereby issued
declaring the retrenchment of the complainants devoid of factual and legal basis,
hence respondent firm[,] Grace Kristen [sic] Meehan and Eric Singson is [sic] hereby
ordered to reinstate complainants to their former or equivalent position with full

Respondents appealed the decision to the NLRC, arguing that the Labor Arbiter committed
grave abuse of discretion in disregarding the audited financial statements, and choosing to believe the
erroneous computation of the complainants without even checking the veracity of their allegations. [14] Aside
from the audited financial statements for 1997 [15] and 1998,[16] and the Audit Report[17] of Banaria, Banaria
and Company, dated April 14, 1999, respondents also attached receipts and vouchers to show that the hotel
had really incurred losses.
Complainants, for their part, filed their Comments with Motion to Dismiss Appeal, [18] alleging
that respondents did not furnish them with a copy of the Memorandum of Appeal and the Motion to
Reduce Supersedeas Bond, which violated their right to due process. They also pointed out that the cash
deposit of P50,000.00 made by respondents was a measly amount, and as such, it was as if no appeal bond
was paid and no appeal had been perfected.
In its Decision[19] dated January 15, 2001, the NLRC reversed the ruling of the Labor Arbiter and
dismissed the complaints for lack of merit. It held that through the duly-audited financial statements
submitted to it, the respondent hotel was able to show that it suffered losses in 1996, 1997 and 1998
amounting to P19,272,539.37, P18,512,683.00 and P13,669,695.00, respectively. The NLRC further ruled
that the Labor Arbiter erred in disregarding these statements and giving full credence to complainants
contention that the hotels expenses were bloated. It pointed out that respondents presented receipts on
appeal to show that the repair and maintenance, light and water expenses, and telephone and
communication expenses were not fabricated. Citing The New Valley Times Press v. National Labor
Relations Commission,[20] it averred that evidence presented on appeal may be considered by it, and pointed
out that the complainants did not rebut the evidence despite due notice.
The NLRC further ruled that, contrary to the allegation of the complainants, the first-in-last-out
policy was observed by respondents, since evidence of the complainants efficiency and performance for the
past years were presented to show that this criteria was considered. The labor tribunal pointed out that this
evidence was not rebutted by the complainants. It further ruled that complainants failed to show that they
were forced to sign quitclaims when they received their respective separation pay. Citing Veloso v.
Department of Labor and Employment,[21] it declared that dire necessity is not an acceptable reason to set
aside quitclaims otherwise valid.
Aggrieved, the retrenched employees filed before the CA a Petition for Certiorari under Rule 65
of the Revised Rules of Court. On July 20, 2001, the CA issued a Resolution [22] directing petitioners to
amend their petition by dropping seven[23] of them who failed to sign the verification and certification of
non-forum shopping. On October 19, 2001, petitioners Reantaso, Elisa Lat, Lalap, Lachica, Mallillin, Rojo,
Sebastian, Solomon, Tambaoan III, Trozado, and Edwin Lat filed their Amended Petition. [24]Petitioner
Cabardo filed her Amended Petition on November 7, 2001.[25]
On July 31, 2003, the CA affirmed the ruling of the NLRC and dismissed the petition for lack of
merit.[26] On the issue of the filing of the cash bond, it ruled that respondents action constituted substantial
compliance with the rules. It stated that the Labor Arbiters decision did not specify the exact amount of the

monetary award due the petitioners, prompting respondents to file a P50,000.00 cash bond and motion for
the
reduction
of
the supersedeas bond.
Once
the
computation
of
the
monetary
award
was
received
on July
14,
2000,
they
immediately
sought
the
cancellation of the cash bond, and moved that it be substituted with a surety bond equivalent to the
monetary award. The CA further ruled that petitioners failed to show that respondents were in bad faith or
that they intended to delay payment. It observed that when the Labor Arbiter issued the writ of execution,
respondents instructed petitioners to immediately report to the hotel on July 26, 2000. The appellate court
also disagreed with petitioners contention that they were deprived of due process when additional
documents were submitted before the NLRC. Under the New Rules of Procedure of the NLRC, the
submission of new evidence is not prohibited, not being prejudicial to the other party who could still submit
counter-evidence.
Citing NDC-Guthrie Plantations, Inc. v. National Labor Relations Commission,[27] the CA
declared that respondents were able to comply with all the requirements for a valid retrenchment under
Article
283
of
the
Labor Code.
Aggrieved, petitioners now come to this Court, assailing the ruling of the CA on the following
grounds:
5.1. THAT THE HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF
JURISDICTION WHEN IT RULED THAT THE APPEAL OF THE
RESPONDENTS WITH THE NATIONAL LABOR RELATIONS COMMISSION
WAS PERFECTED DESPITE THE FACT THAT THE APPEAL OR SURETY
BOND OF P1,988,908.91 WAS POSTED SEVENTY (70) DAYS LATE FROM
RECEIPT OF THE DECISION OF THE LABOR ARBITER.
5.2. THAT THE HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF
JURISDICTION WHEN IT RULED THAT THE PETITIONERS WERE NOT
PREJUDICED WHEN THE NLRC ADMITTED THE APPEAL MEMORANDUM
AS WELL AS THE ADDITIONAL EVIDENCE OF THE RESPONDENTS EVEN
WITHOUT FURNISHING FIRST THE PETITIONERS COPIES THEREOF MORE
SPECIFICALLY THE APPEAL MEMORANDUM.
5.3. THAT THE HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF
JURISDICTION WHEN IT RULED THAT THERE WAS A VALID
RETRENCHMENT TO WARRANT THE DISMISSAL OF THE PETITIONERS.
5.4. THAT THE HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF
JURISDICTION WHEN IT RULED THAT THE PETITIONERS EXECUTED A
VALID QUITCLAIM.
5.5. THAT THE HONORABLE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF
JURISDICTION WHEN IT ADMITTED AND ENTERTAINED THE COMMENT
OF THE RESPONDENTS DESPITE ITS ORDER THAT CONSIDERED SAID
RESPONDENTS TO HAVE WAIVED THE RIGHT TO FILE THEIR COMMENT
AND SAID ORDER WAS NOT RECONSIDERED AND SET ASIDE THUS
LEGALLY STILL IN FULL FORCE AND EFFECT.[28]
Petitioners insist that a decision in labor cases involving a monetary award may be perfected
only upon the posting of a cash or surety bond, as mandated by Republic Act No. 6715, as well as Section

6, Rule VI of the New Rules of Procedure of the NLRC. They aver that the reason behind the rule is to give
the workers an assurance that they will be paid in the event that they win the case. They claim that there
was no reason why respondents could not afford to deposit the sum of P1,988.908.01. While the late filing
of thesupersedeas bond has been relaxed in a number of cases, there is no cogent reason to apply a liberal
interpretation in the instant case. The word only in the provision, according to petitioners, makes it perfectly
clear that the lawmakers intended the posting of a cash or surety bond as the exclusive means by which an
employers appeal may be perfected. They insist that the appeal bond of P50,000.00 is shockingly low and
grossly inadequate, as it constitutes only 2.5% of the monetary award.
Petitioners also aver that, contrary to respondents claim in the appellate court, they (respondents)
were furnished a copy of the Labor Arbiters decision, as well as the computation of the monetary award. In
fact,
it
was
respondents
who
did
not
provide
them
a
copy
of
their
Memorandum of Appeal, contrary to Rule IV, Section 3 of the New Rules of Procedure of the NLRC. On
this score alone, the appeal before the NLRC should have been dismissed. Petitioners aver that they were
prevented from filing the appropriate pleadings on account of such intentional act. They insist that
additional evidence on appeal cannot be filed on personal whims and caprices, and that there are rules to be
observed in order that the rights of the other party will not be prejudiced and trampled upon. They conclude
that petitioners intentional failure to furnish them a copy of such appeal memorandum deprived them of
their right to be heard - ultimately, their right to due process.
On the merits of the case, petitioners stress that respondents were not motivated by honest
intentions in effecting their dismissal. They remind the Court that while the law recognizes the employers
right to protect its interest, such right should be exercised in a manner which does not infringe on the
employees constitutional right to security of tenure. They insist that respondents presented sanitized
financial statements to justify the legality of their retrenchment. They reiterate that they were not furnished
copies of said statements, hence, their failure to submit evidence to controvert the same. Under the
circumstances, respondents should have presented respondent hotels income tax returns for the preceding
years since audited financial statements are not entirely reliable and can be easily fabricated.
On the appellate courts finding that the quitclaims they executed were valid, petitioners insist
that they were forced to do so since their employer was determined to carry out their dismissal. Since most
of them were their respective families sole breadwinners, there was no other recourse but for them to sign
such waivers out of dire necessity.
Respondents, for their part, allege that no new matter or issue was raised in the instant petition, a
mere rehash of petitioners arguments before the appellate court, and that such arguments had already been
passed upon by the appellate court.
The issues involved in this case are procedural and substantial in nature. On the procedural
aspect, petitioners question the filing of the cash bond, which, according to them, was a measly amount as
compared to the award of the Labor Arbiter. They likewise question the fact that the CA considered the
evidence submitted by respondents on appeal before the NLRC, and they contend that this is a violation of
their right to due process. On the other hand, the main and substantial issue to be resolved by the Court is
whether petitioners were validly retrenched, and, corollarily, whether respondents presented adequate proof
of financial losses, and whether the quitclaims executed by petitioners are valid and binding.
At the outset, the Court stresses that the substantial issues for resolution are factual in nature,
and generally, factual findings of the NLRC are accorded respect. However, there is compelling reason to
deviate from this salutary principle where, as in this case, such findings of facts of the NLRC are in conflict
with that of the Labor Arbiter. Accordingly, this Court must of necessity review the records to determine
which findings should be preferred as more conformable to the evidentiary facts.[29]
A careful perusal of the records show that respondents filed their Memorandum of Appeal
on May 17, 2000 before the NLRC, together with the P50,000.00 cash bond. They also filed a Motion for
Reduction of Supersedeas Bond. Thereafter, respondents new counsel filed a Manifestation with Motion to
Substitute (Cash Bond with SupersedeasBond), alleging that a copy of the monetary award had not been
attached to the copy of the Labor Arbiters decision which was furnished them. The NLRC approved the

substitution in a Resolution[30] dated December 28, 2000. In light of the fact that in his decision, the Labor
Arbiter directed the Examination and Computation Unit of the NLRC to compute the backwages of the
retrenched employees, it would not have been possible for respondents to obtain a copy of such
computation. As such, the initial filing of the P50,000.00 cash bond was justified under the circumstances.

advancement of its interest and not to defeat or circumvent the employees right to
security of tenure; and (5) that the employer used fair and reasonable criteria in
ascertaining who would be dismissed and who would be retained among the
employees, such as status, efficiency, seniority, physical fitness, age, and financial
hardship for certain workers.[46]

The second paragraph of Article 223 of the Labor Code states that when a judgment involving
monetary award is appealed by the employer, the appeal 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. This is to assure the workers that if they finally prevail
in the case, the monetary award will be given to them upon dismissal of the employers appeal, and is meant
to discourage employers from using the appeal to delay or evade payment of their obligations to the
employees.[31] However, as provided for in Section 6, Rule VI of the New Rules of Procedure of the NLRC,
such amount of the bond may be reduced in meritorious cases, upon motion of the appellant. The exercise
of this 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.[32] Indeed, an unreasonable and excessive amount of bond
would be oppressive and unjust, and would have the effect of depriving a party of his right to appeal. [33]

In this case, respondents presented audited financial statements and receipts to prove that the
hotel had been incurring business losses. As found by the appellate court:

The Court likewise holds that the NLRC did not err in admitting the receipts and other evidence
attached to the Memorandum of Appeal of respondents. In Tanjuan v. Philippine Postal Savings Bank, Inc.,
[34]
where this Court was confronted with the similar question, i.e., whether proof of business losses may be
admitted on appeal before the NLRC, we declared that the NLRC is not precluded from receiving evidence
on appeal because technical rules of procedure are not binding in labor cases, which rule applies to both
employer and employee.[35] Moreover, the fact that evidence was not presented before the Labor Arbiter will
not justify its outright rejection, particularly since such evidence is absolutely necessary to resolve the issue
of
whether
retrenched
employees
were
validly
terminated. [36] No
less than the Labor Code directs labor officials to use all reasonable means to ascertain the facts speedily
and objectively, with little regard to technicalities or formalities, [37]while Section 10, Rule VII of the New
Rules of Procedure of the NLRC provides that technical rules are not binding. [38] Indeed, the application of
technical rules of procedure may be relaxed in labor cases to serve the demand of substantial justice. [39]
Contrary to petitioners claim, they were not denied due process. The essence of due process in
administrative proceedings is simply an opportunity to explain ones side or an opportunity to present
evidence in support of ones defense. [40] In this case, petitioners submitted their respective pleadings to
controvert the allegations of respondents.
Article 283[41] of the Labor Code of the Philippines authorizes retrenchment as one of the valid
causes to dismiss employees as a measure to avoid or minimize business losses. [42] Retrenchment is the
termination of employment initiated by the employer through no fault of the employees and without
prejudice to the latter, resorted to by management during periods of business recession, industrial
depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials,
conversion of the plant for a new production program or the introduction of new methods or more efficient
machinery, or of automation. [43] Simply put, it is a reduction in manpower, a measure utilized by an
employer to minimize losses incurred in the operation of its business. It is a management prerogative
consistently recognized and affirmed by this Court.[44] In Danzas Intercontinental, Inc. v. Daguman, [45] we
enumerated the requirements for a valid retrenchment which the employer must prove by clear and
convincing evidence:
x x x (1) that retrenchment is reasonably necessary and likely to prevent
business losses which, if already incurred, are not merely de minimis, but substantial,
serious, actual and real, or if only expected, are reasonably imminent as perceived
objectively and in good faith by the employer; (2) that the employer served written
notice both to the employees and to the Department of Labor and Employment at
least one month prior to the intended date of retrenchment; (3) that the employer pays
the retrenched employees separation pay equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher; (4) that the
employer exercises its prerogative to retrench employees in good faith for the

In the case at bar, the respondent hotel undertook a Special Separation


Program (SSP) which all employees can avail of for the limited period of May 10 to
24, 1999, due to the dire financial status it was experiencing. Forty-nine (49)
employees were accepted for this separation program. The private respondents then
decided that a retrenchment program was further needed in order to stem the losses.
The private respondents then informed the DOLE through an Establishment
Termination Report filed on May 28, 1999, that they were retrenching twenty-nine
(29)
employees
effective
June
28,
1999,
among
whom
included the herein petitioners. The private respondents likewise informed these
twenty-nine (29) employees that their services would be terminated thirty (30) days
after the receipt of the written notification. After one month from receipt of the letters
of termination, the twenty-nine (29) employees were given their separation pay and
the corresponding quitclaims were signed.
xxxx
The private respondents in the instant case presented balance sheets for
the years 1997, 1998 and 1999 as audited by independent auditors, which showed
that respondent Stern experienced net losses for several years, as follows:
1996 = P19,272,539.77
1997 = P18,512,683.11
1998 = P13,669, 095.80
1999 = P14,626,684.36
Hence, for a period of four (4) years, respondent Stern accumulated losses
amounting to around P66,000,000.00, with no sign of abating in the future. The
petitioners failed to back up their allegation that the expenses presented in the
financial statements were bloated. Nor did the petitioners explain why independent
public accountants Clemente Uson & Co. and Banaria, Banaria and Company would
knowingly allow false figures to be included in the balance sheets. Consequently, we
are more inclined to affirm the finding of the public respondent that the expenses
presented by the private respondents were not fabricated.[47]
Contrary to the allegation of petitioners, income tax returns are self-serving documents because
they are generally filled up by the taxpayer himself, and are still to be examined by the Bureau of Internal
Revenue for their correctness.[48]
The Court notes that petitioners failed to dispute the validity of the financial statements and
receipts submitted by respondents, or that any false entries were made therein. They also failed to prove,
much less impute, any ill motive on the part of the independent auditors who prepared the financial
statements which respondents submitted.
The Court also finds that the quitclaims executed by the individual petitioners in this case are
valid and binding. Indeed, quitclaims executed by employees are commonly frowned upon as being

contrary to public policy, and where there is clear proof that the waiver was wangled from an unsuspecting
or gullible person, or where the terms of settlement are unconscionable on their faces, the law will step in to
annul the questionable transactions. [49] However, when such quitclaim was made voluntarily and there is no
evidence that the employer was guilty of fraud or intimidation in obtaining such waiver, as in this case, the
validity of the quitclaim must be upheld. As the Court held in Magsalin v. National Organization of
Working Men:[50]
x x x While quitclaims executed by employees are commonly frowned
upon as being contrary to public policy and are ineffective to bar claims for the full
measure of their legal rights, there are, however, legitimate waivers that represent a
voluntary and reasonable settlement of laborers claims which should be so respected
by the Court as the law between the parties. Where the person making the waiver has
done so voluntarily, with a full understanding thereof, and the consideration for the
quitclaim is credible and reasonable, the transaction must be recognized as being a
valid and binding undertaking. Dire necessity is not an acceptable ground for
annulling the release, when it is not shown that the employee has been forced to
execute it (emphasis supplied).[51]
Verily, it is neither the function of the law nor its intent to supplant the prerogative of
management in running its business, such as, to compel the latter to operate at a continuing loss simply
because it has to maintain its workers in employment. Such an act would be tantamount to the taking of
property without due process of law.[52]
CONSIDERING THE FOREGOING, the instant petition is DENIED for lack of merit. The
Decision of the Court of Appeals in CA- CA-G.R. SP. No. 64536 is AFFIRMED.
SO ORDERED.
G.R. No. 91298 June 22, 1990
CORAZON PERIQUET, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and THE PHIL. NATIONAL CONSTRUCTION
CORPORATION (Formerly Construction Development Corp. of the Phils.), respondents.
Tabaquero, Albano & Associates for petitioner.
The Government Corporate Counsel for private respondent.

"framed," she filed a complaint for illegal dismissal and was sustained by the labor arbiter, who ordered her
reinstatement within ten days "without loss of seniority rights and other privileges and with fun back wages
to be computed from the date of her actual dismissal up to date of her actual reinstatement." 1 On appeal,
this order was affirmed in toto by public respondent NLRC on August 29, 1980. 2
On March 11, 1989, almost nine years later, the petitioner filed a motion for the issuance of a writ of
execution of the decision. The motion was granted by the executive labor arbiter in an order dated June 26,
1989, which required payment to the petitioner of the sum of P205,207.42 "by way of implementing the
balance of the judgment amount" due from the private respondent. 3 Pursuant thereto, the said amount was
garnished by the NLRC sheriff on July 12, 1989. 4 On September 11, 1989, however, the NLRC sustained
the appeal of the CDCP and set aside the order dated June 20, 1989, the corresponding writ of execution of
June 26, 1989, and the notice of garnishment. 5
In its decision, the public respondent held that the motion for execution was time-barred, having been filed
beyond the five-year period prescribed by both the Rules of Court and the Labor Code. It also rejected the
petitioner's claim that she had not been reinstated on time and ruled as valid the two quitclaims she had
signed waiving her right to reinstatement and acknowledging settlement in full of her back wages and other
benefits. The petitioner contends that this decision is tainted with grave abuse of discretion and asks for its
reversal. We shall affirm instead.
Sec. 6, Rule 39 of the Revised Rules of Court, provides:
SEC. 6. Execution by motion or by independent action. A judgment may be
executed on motion within five (5) years from the date of its entry or from the date it
becomes final and executory. After the lapse of such time, and before it is barred by
the statute of limitations, a judgment may be enforced by action.
A similar provision is found in Art. 224 of the Labor Code, as amended by RA 6715, viz.
ART. 224. Execution of decision, orders, awards. (a) The Secretary of Labor and
Employment or any Regional Director, the Commission or any Labor Arbiter or
Med-Arbiter, or the Voluntary Arbitrator may, motu propio, or on motion of any
interested party, issue a writ of execution on a judgment within five (5) years from
the date it becomes final and executory, requiring a sheriff or a duly deputized officer
to execute or enforce a final decision, order or award. ...
The petitioner argues that the above rules are not absolute and cites the exception snowed in Lancita v.
Magbanua, 6 where the Court held:

CRUZ, J.:
It is said that a woman has the privilege of changing her mind but this is usually allowed only in affairs of
the heart where the rules are permissibly inconstant. In the case before us, Corazon Periquet, the herein
petitioner, exercised this privilege in connection with her work, where the rules are not as fickle.
The petitioner was dismissed as toll collector by the Construction Development Corporation of the
Philippines, private respondent herein, for willful breach of trust and unauthorized possession of
accountable toll tickets allegedly found in her purse during a surprise inspection. Claiming she had been

Where judgments are for money only and wholly unpaid, and execution has been
previously withheld in the interest of the judgment debtor, which is in financial
difficulties, the court has no discretion to deny motions for leave to issue execution
more than five years after the judgments are entered. (Application of Molnar,
Belinsky, et al. v. Long Is. Amusement Corp., I N.Y.S, 2d 866)
In computing the time limited for suing out of an execution, although there is
authority to the contrary, the general rule is that there should not be included the time

when execution is stayed, either by agreement of the parties for a definite time, by
injunction, by the taking of an appeal or writ of error so as to operate as a
supersedeas, by the death of a party, or otherwise. Any interruption or delay
occasioned by the debtor will extend the time within which the writ may be issued
without scire facias.
xxx xxx xxx
There has been no indication that respondents herein had ever slept on their rights to
have the judgment executed by mere motions, within the reglementary period. The
statute of limitation has not been devised against those who wish to act but cannot do
so, for causes beyond their central.
Periquet insists it was the private respondent that delayed and prevented the execution of the judgment in
her favor, but that is not the way we see it. The record shows it was she who dilly-dallied.
The original decision called for her reinstatement within ten days from receipt thereof following its
affirmance by the NLRC on August 29, 1980, but there is no evidence that she demanded her reinstatement
or that she complained when her demand was rejected. What appears is that she entered into a compromise
agreement with CDCP where she waived her right to reinstatement and received from the CDCP the sum of
P14,000.00 representing her back wages from the date of her dismissal to the date of the agreement. 7
Dismissing the compromise agreement, the petitioner now claims she was actually reinstated only on March
16, 1987, and so should be granted back pay for the period beginning November 28, 1978, date of her
dismissal, until the date of her reinstatement. She conveniently omits to mention several significant
developments that transpired during and after this period that seriously cast doubt on her candor and bona
fides.
After accepting the sum of P14,000.00 from the private respondent and waiving her right to reinstatement
in the compromise agreement, the petitioner secured employment as kitchen dispatcher at the Tito Rey
Restaurant, where she worked from October 1982 to March 1987. According to the certification issued by
that business, 8 she received a monthly compensation of P1,904.00, which was higher than her salary in the
CDCP.
For reasons not disclosed by the record, she applied for re-employment with the CDCP and was on March
16,1987, given the position of xerox machine operator with a basic salary of P1,030.00 plus P461.33 in
allowances, for a total of P1,491.33 monthly. 9
On June 27, 1988; she wrote the new management of the CDCP and asked that the rights granted her by the
decision dated August 29, 1980, be recognized because the waiver she had signed was invalid. 10
On September 19, 1988, the Corporate Legal Counsel of the private respondent (now Philippine National
Construction Corporation) recommended the payment to the petitioner of the sum of P9,544.00,
representing the balance of her back pay for three years at P654. 00 per month (minus the P14,000.00
earlier paid). 11

On November 10, 1988, the petitioner accepted this additional amount and signed another Quitclaim and
Release reading as follows:
KNOW ALL MEN BY THESE PRESENTS:
THAT, I CORAZON PERIQUET, of legal age, married and resident of No. 87 Annapolis St., Quezon City,
hereby acknowledged receipt of the sum of PESOS: NINE THOUSAND FIVE HUNDRED FORTY FOUR
PESOS ONLY (P9,544.00) Philippine currency, representing the unpaid balance of the back wages due me
under the judgment award in NLRC Case No. AB-2-864-79 entitled "Corazon Periquet vs. PNCCTOLLWAYS" and I further manifest that this payment is in full satisfaction of all my claims/demands in the
aforesaid case. Likewise, I hereby manifest that I had voluntarily waived reinstatement to my former
position as TOLL TELLER and in lieu thereof, I sought and am satisfied with my present position as
XEROX MACHINE OPERATOR in the Central Office.
Finally, I hereby certify that delay in my reinstatement, after finality of the Decision dated 10 May 1979
was due to my own fault and that PNCC is not liable thereto.
I hereby RELEASE AND DISCHARGE the said corporation and its officers from money and all claims by
way of unpaid wages, separation pay, differential pay, company, statutory and other benefits or otherwise as
may be due me in connection with the above-entitled case. I hereby state further that I have no more claims
or right of action of whatever nature, whether past, present, future or contingent against said corporation
and its officers, relative to NLRC Case No. AB-2-864-79.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of November 1988 at Mandaluyong,
Metro Manila. (Emphasis supplied.) 12
The petitioner was apparently satisfied with the settlement, for in the memorandum she sent the PNCC
Corporate Legal Counsel on November 24, 1988, 13 she said in part:
Sir, this is indeed my chance to express my gratitude to you and all others who have
helped me and my family enjoy the fruits of my years of stay with PNCC by way of
granting an additional amount of P9,544.00 among others ...
As per your recommendation contained therein in said memo, I am now occupying
the position of xerox machine operator and is (sic) presently receiving a monthly
salary of P2,014.00.
Reacting to her inquiry about her entitlement to longevity pay, yearly company increases and other statutory
benefits, the private respondent adjusted her monthly salary from P2,014.00 to P3,588.00 monthly.
Then the lull. Then the bombshell.
On March 11, 1989, she filed the motion for execution that is now the subject of this petition.
It is difficult to understand the attitude of the petitioner, who has blown hot and cold, as if she does not
know her own mind. First she signed a waiver and then she rejected it; then she signed another waiver

which she also rejected, again on the ground that she had been deceived. In her first waiver, she
acknowledged full settlement of the judgment in her favor, and then in the second waiver, after accepting
additional payment, she again acknowledged fun settlement of the same judgment. But now she is singing a
different tune.
In her petition she is now disowning both acknowledgments and claiming that the earlier payments both of
which she had accepted as sufficient, are insufficient. They were valid before but they are not valid now.
She also claimed she was harassed and cheated by the past management of the CDCP and sought the help
of the new management of the PNCC under its "dynamic leadership." But now she is denouncing the new
management-for also tricking her into signing the second quitclaim.
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered
into and represents a reasonable settlement, it is binding on the parties and may not later be disowned
simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from
an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law
will step in to annul the questionable transaction. But where it is shown that the person making the waiver
did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized as a valid and binding undertaking. As in this
case.
The question may be asked: Why did the petitioner sign the compromise agreement of September 16, 1980,
and waive all her rights under the judgment in consideration of the cash settlement she received? It must be
remembered that on that date the decision could still have been elevated on certiorari before this Court and
there was still the possibility of its reversal. The petitioner obviously decided that a bird in hand was worth
two on the wing and so opted for the compromise agreement. The amount she was then waiving, it is worth

noting, had not yet come up to the exorbitant sum of P205,207.42 that she was later to demand after the
lapse of eight years.
The back pay due the petitioner need not detain us. We have held in countless cases that this should be
limited to three years from the date of the illegal dismissal, during which period (but not beyond) the
dismissed employee is deemed unemployed without the necessity of proof. 14 Hence, the petitioner's
contention that she should be paid from 1978 to 1987 must be rejected, and even without regard to the fact
(that would otherwise have been counted against her) that she was actually employed during most of that
period.
Finally, the petitioner's invocation of Article 223 of the Labor Code to question the failure of the private
respondent to file a supersedeas bond is not well-taken. As the Solicitor General correctly points out, the
bond is required only when there is an appeal from the decision with a monetary award, not an order
enforcing the decision, as in the case at bar.
As officers of the court, counsel are under obligation to advise their clients against making untenable and
inconsistent claims like the ones raised in this petition that have only needlessly taken up the valuable time
of this Court, the Solicitor General, the Government Corporate Counsel, and the respondents. Lawyers are
not merely hired employees who must unquestioningly do the bidding of the client, however unreasonable
this may be when tested by their own expert appreciation of the pertinent facts and the applicable law and
jurisprudence. Counsel must counsel.
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.