G.R. No. 180147, January 14, 2015 - SARA LEE PHILIPPINES, INC., Petitioner, v. EMILINDA D. MACATLANG, ET AL.,1 Respondents.; G.R. NO. 180148 - ARIS PHILIPPINES, INC., Petitioner, v. EMILINDA D. MACATLANG, ET AL., Respondents.; G.R. NO. 180149 - SARA LEE CORPORATION, Petitioner, v. EMILINDA D. MACATLANG, ET AL., Respondents.; G.R. NO. 180150 - CESAR C. CRUZ, Petitioner, v. EMILINDA D. MACATLANG, ET AL., Respondents.; G.R. NO. 180319 - FASHION ACCESSORIES PHILS., INC., Petitioner, v. EMILINDA D. MACATLANG, ET AL., Respondents.; G.R. NO. 180685 - EMILINDA D. MACATLANG, ET AL., Petitioners, v. NLRC, ARIS PHILIPPINES, INC., FASHION ACCESSORIES PHILS., INC., SARA LEE CORPORATION, SARA LEE PHILIPPINES, INC., COLLIN BEAL AND ATTY. CESAR C. CRUZ, Respondents.

SPECIAL SECOND DIVISION

G.R. No. 180147, January 14, 2015

SARA LEE PHILIPPINES, INC., Petitioner, v. EMILINDA D. MACATLANG, ET AL.,1Respondents. 

[G.R. NO. 180148]

ARIS PHILIPPINES, INC., Petitioner, v. EMILINDA D. MACATLANG, ET AL., Respondents.

[G.R. NO. 180149]

SARA LEE CORPORATION, Petitioner, v. EMILINDA D. MACATLANG, ET AL., Respondents.

[G.R. NO. 180150]

CESAR C. CRUZ, Petitioner, v. EMILINDA D. MACATLANG, ET AL., Respondents.

[G.R. NO. 180319]

FASHION ACCESSORIES PHILS., INC., Petitioner, v. EMILINDA D. MACATLANG, ET AL.,Respondents.

[G.R. NO. 180685]

EMILINDA D. MACATLANG, ET AL., Petitioners, v. NLRC, ARIS PHILIPPINES, INC., FASHION ACCESSORIES PHILS., INC., SARA LEE CORPORATION, SARA LEE PHILIPPINES, INC.,

COLLIN BEAL AND ATTY. CESAR C. CRUZ, Respondents.

R E S O L U T I O N

PEREZ, J.:

This treats of the 1) Motion for Reconsideration with Urgent Petition for the Court’s Approval of the Pending “Motion for Leave of Court to File and Admit Herein Statement and Confession of Judgment – to Buy Peace and/or Secure against any Possible Contingent Liability by Sara Lee Corporation” filed by Sara Lee Philippines Inc. (SLPI), Aris Philippines Inc. (Aris), Sara Lee Corporation (SLC) and Cesar C. Cruz, 2) Motion for Reconsideration filed by Fashion Accessories Phils. Inc. (FAPI), and 3) Manifestation of Conformity to the Motion for Leave of Court to File and Admit Confession of Judgment – to Buy Peace and/or to Secure against any Possible Contingent Liability by Petitioner SLC.

In the Decision dated 4 June 2014, this Court directed SLPI, Aris, SLC, Cesar Cruz, and FAPI, collectively known as the Corporations, to post P725 Million, in cash or surety bond, within 10 days from the receipt of the Decision.  The Court further nullified the Resolution of the National Labor Relations Commission (NLRC) dated 19 December 2006 for being premature.

The Motion for Reconsideration is anchored on the following grounds: chanRoblesvirtualLawlibrary

A. The Court failed to consider the “Motion for Leave of Court to file and Admit Herein Statement and Confession of Judgment to Buy Peace and/or to Secure Against any Possible Contingent Liability by Petitioner Sara Lee Corporation” (hereafter the “compromise agreement”) filed by petitioner Sara Lee Corporation on June 23, 2014 before receipt of the Decision of June 04, 2014 on July 31, 2014 with the conformity of the respondents in their “Manifestation and Conformity to the Petitioners’ Motion for Leave to File and Admit Statement of Confession of Judgment” dated July 04, 2014 which could have terminated the present cases and avoid delays with its remand for further proceedings below.

B.  The Court did not duly rule on the violations of the rights of due process of Petitioner SLPI as shown by the following:chanRoblesvirtualLawlibrary

1. The Labor Arbiter has never acquired jurisdiction over Petitioner SLPI which was never impleaded as a party respondent and was never validly served with summons which fact was specifically mentioned in NLRC’s Resolution of December 19, 2006; and

2. There is no employer-employee relationships between Petitioner SLPI and the respondents.C.  The Court did not duly rule on the violations of the rights of due process of Petitioner SLC because of the following:chanRoblesvirtualLawlibrary

1.  The Labor Arbiter has never acquired jurisdiction over Petitioner SLC which was never impleaded as a party respondent and was never validly served with summons which fact was specifically raised by the Court as an issue in page 12 of the Decision of June 04, 2014 but remained unresolved; and

2.  There is no employer-employee relationship between Petitioner SLC and the respondents.D. The Court did not duly rule on the violations of the rights of due process of Petitioner Cesar C. Cruz as shown by the following:chanRoblesvirtualLawlibrary

1.  The Labor Arbiter has never acquired jurisdiction over Petitioner Cesar C. Cruz who was never impleaded as a party respondent and was never validly served with summons; and

2.  There is no employer-employee relationship between petitioner Cesar C. Cruz and the respondents.cralawred

E. There was no legal impediment for the NLRC to issue its Resolution of December 19, 2006 vacating the Labor Arbiter’s Decision and remanding the case to the Labor Arbiter for further proceeding as no Temporary Restraining Order (TRO) or Writ of Preliminary Injunction was issued by the Court of Appeals and the rule on judicial courtesy remains the exception rather than the rule.

F. The Court did not duly rule on the applicability of the final and executory Decision of Fullido, et al., v. Aris Philippines, Inc. and Cesar C. Cruz (G.R. No. 185948) with respect to the present consolidated cases considering the identical facts and issues involved plus the fact that the Court in Fullido sustained the findings and decisions of three (3) other tribunals, i.e., the Court of Appeals, the NLRC and the Labor Arbiter.

G. The Court failed to consider the prescription of the complaints for money claims filed by the respondents against the Petitioners under Article 291 of the Labor Code due to the lapse of three (3) years and four (4) months when Petitioners were impleaded as respondents only through the amendment of complaints by the complainants, the respondents’ herein.

H. The Court also did not consider that the Complaints filed by the respondents are barred by res judicata because of the final and executory decision rendered by the Voluntary Arbitrator on the identical facts and issues in the case filed by the labor union representing the respondents against Petitioner API.

I. Contrary to the Decision of June 04, 2014, the Abelardo petition (CA GR SP No. 95919, Pacita S. Abelardo v. NLRC, Aris, Philippines, Inc.) was filed earlier than the Macatlang petition (CA GR SP No. 96363) as shown by the lower docket number, thus, the Macatlang petition should be the one dismissed for forum shopping.

J. In fixing the bond to PhP725 Million which is 25% of the monetary award, the Court failed to

consider the En Banc Decision in McBurnie v. Ganzon, 707 SCRA 646, 693 (2013) which required only the posting of a bond equivalent to ten percent (10%) of the monetary award.2

We briefly revisit the factual milieu of this case.

Aris permanently ceased operations on 9 October 1995 displacing 5,984 rank-and-file employees.  On 26 October 1995, FAPI was incorporated prompting former Aris employees to file a case for illegal dismissal on the allegations that FAPI was a continuing business of Aris.  SLC, SLP and Cesar Cruz were impleaded as defendants being major stockholders of FAPI and officers of Aris, respectively.

On 30 October 2004, the Labor Arbiter found the dismissal of 5,984 Aris employees illegal and awarded them monetary benefits amounting to P3,453,664,710.86.  The judgment award is composed of separation pay of one month for every year of service, backwages, moral and exemplary damages and attorney’s fees.

The Corporations filed a Notice of Appeal with Motion to Reduce Appeal Bond.  They posted a P4.5 Million bond.  The NLRC granted the reduction of the appeal bond and ordered the Corporations to post an additional P4.5 Million bond.

The 5,984 former Aris employees, represented by Emilinda Macatlang (Macatlang petition), filed a petition for review before the Court of Appeals insisting that the appeal was not perfected due to failure of the Corporations to post the correct amount of the bond which is equivalent to the judgment award.

While the case was pending before the appellate court, the NLRC prematurely issued an order setting aside the decision of the Labor Arbiter for being procedurally infirmed.

The Court of Appeals, on 26 March 2007, ordered the Corporations to post an additional appeal bond of P1 Billion.

In our Decision dated 4 June 2014, we modified the Court of Appeals’ Decision, to wit: chanRoblesvirtualLawlibrary

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. SP No. 96363 dated 26 March 2007 is MODIFIED.  The Corporations are directed to post P725 Million, in cash or surety bond, within TEN (10) days from the receipt of this DECISION.  The Resolution of the NLRC dated 19 December 2006 is VACATED for being premature and the NLRC is DIRECTED to act with dispatch to resolve the merits of the case upon perfection of the appeal.3

We also resolved the procedural issue of forum-shopping by holding that the 411 petitioners of the Pacita Abelardo petition (Abelardo petition) are not representative of the interest of all petitioners in Macatlang petition.  The number is barely sufficient to comprise the majority of petitioners in Macatlang petition and it would be the height of injustice to dismiss the Macatlang petition which evidently enjoys the support of an overwhelming majority due to the mistake committed by petitioners in the Abelardo petition.

The Motion for Reconsideration has no merit.

The Corporations score this Court for failing to consider the ruling in McBurnie v. Ganzon4 which purportedly required only the posting of a bond equivalent to 10% of the monetary award.

The Corporations gravely misappreciated the ruling in McBurnie.  The 10% requirement pertains to the reasonable amount which the NLRC would accept as the minimum of the bond that should accompany the motion to reduce bond in order to suspend the period to perfect an appeal under the NLRC rules.  The 10% is based on the judgment award and should in no case be construed as the minimum amount of bond to be posted in order to perfect appeal.  There is no room for a different interpretation whenMcBurnie made it clear that the percentage of bond set is provisional, thus:chanRoblesvirtualLawlibrary

The foregoing shall not be misconstrued to unduly hinder the NLRC’s exercise of its discretion, given that the percentage of bond that is set by this guideline shall be merely provisional. The NLRC retains its authority and duty to resolve the motion and determine the final amount of bond that shall be posted by the appellant, still in accordance with the standards of "meritorious grounds" and "reasonable amount." Should the NLRC, after considering the motion’s merit, determine that a greater amount or the full amount of the bond needs to be posted by the appellant, then the party

shall comply accordingly. The appellant shall be given a period of 10 days from notice of the NLRC order within which to perfect the appeal by posting the required appeal bond.

The Corporations argue that there was no legal impediment for the NRLC to issue its 19 December 2006 Resolution vacating the Labor Arbiter’s Decision as no TRO or injunction was issued by the Court of Appeals.  The Corporations assert that the rule on judicial courtesy remains the exception rather than the rule.

We do not agree. In the recent case of Trajano v. Uniwide Sales Warehouse Club,5 this Court gave a brief discourse on judicial courtesy, which concept was first introduced in Eternal Gardens Memorial Park Corp. v. Court of Appeals,6 to wit:chanRoblesvirtualLawlibrary

x x x [t]he principle of judicial courtesy to justify the suspension of the proceedings before the lower court even without an injunctive writ or order from the higher court. In that case, we pronounced that “[d]ue respect for the Supreme Court and practical and ethical considerations should have prompted the appellate court to wait for the final determination of the petition [for certiorari] before taking cognizance of the case and trying to render moot exactly what was before this [C]ourt.” We subsequently reiterated the concept of judicial courtesy in Joy Mart Consolidated Corp. v. Court of Appeals.

We, however, have qualified and limited the application of judicial courtesy in Go v. Abrogar and Republic v. Sandiganbayan. In these cases, we expressly delimited the application of judicial courtesy to maintain the efficacy of Section 7, Rule 65 of the Rules of Court, and held that the principle of judicial courtesy applies only “if there is a strong probability that the issues before the higher court would be rendered moot and moribund as a result of the continuation of the proceedings in the lower court.” Through these cases, we clarified that the principle of judicial courtesy remains to be the exception rather than the rule.7

The Corporations’ argument is specious.  Judicial courtesy indeed applies if there is a strong probability that the issues before the higher court would be rendered moot as a result of the continuation of the proceedings in the lower court.  This is the exception contemplated in the aforesaid ruling and it obtains in this case.  The 19 December 2006 ruling of the NLRC would moot the appeal filed before the higher courts because the issue involves the appeal bond which is an indispensable requirement to the perfection of the appeal before the NLRC.  Unless this issue is resolved, the NLRC should be precluded from ruling on the merits on the case.  This is the essence of judicial courtesy.

The other grounds raised by the Corporations in this Motion for Reconsideration such as the denial of due process due to invalid service of summons on SLPI, SLC and Cesar Cruz; prescription, res judicata, and the applicability of the Fulido case8 with the instant case were all raised and resolved by the Labor Arbiter in favor of former Aris employees in its Decision dated 30 October 2004.  That same decision was appealed by the Corporations before the NLRC.  The perfection of said appeal through the posting of a partial bond was put into question and that is precisely the main issue brought before the appellate court and before us.

By urging this Court to make a definitive ruling on these issues petitioners would have us rule on the merits, which at this point this Court cannot do as the labor proceedings remain incomplete. If at all, the stage that has been passed is the proceedings before the Labor Arbiter.  And, without the NLRC stage, the Labor Arbiter’s decision is final and executory.  It is obvious that petitioners do not want either of the two options now open to them: a) allow the finality of the adverse judgment in the amount of P3,453,664,710.86, or b) file the P750 Million bond for the review by the NLRC of the P3,453,664,710.86 decision of the Labor Arbiter.  They would want their liability finally reduced to just half of the amount of the required appeal bond, or P350 million.  The injustice to the employees is patent.

Now we proceed to tackle the Motion filed by the parties to Admit Confession of Judgment.

The Corporations entered into a compromise with some of the former Aris employees which they designate as Confession of Judgment.  The Corporations reason that a resort to judgment by confession is the acceptable alternative to a compromise agreement because of the impossibility to obtain the consent to a compromise of all the 5,984 complainants.

A confession of judgment is an acknowledgment that a debt is justly due and cuts off all defenses and right of appeal.  It is used as a shortcut to a judgment in a case where the defendant concedes liability.  It is seen as the written authority of the debtor and a direction for entry of judgment

against the debtor.9chanroblesvirtuallawlibrary

The Corporations cite the case of Republic of the Philippines v. Bisaya Land Transportation Co.10 to outline the distinction between a compromise agreement/judgment on consent and a confession of judgment/judgment by confession, thus: chanRoblesvirtualLawlibrary

x x x a motion for judgment on consent is not to be equated with a judgment by confession. The former is one the provisions and terms of which are settled and a agreed upon by the parties to the action, and which is entered in the record by the consent and sanction of the court, Hence, there must be an unqualified agreement among the parties to be bound by the judgment on consent before said judgment may be entered. The court does not have the power to supply terms, provisions, or essential details not previously agreed to by the parties x x x. On the other hand, a judgment by confession is not a plea but an affirmative and voluntary act of the defendant himself.  Here, the court exercises a certain amount of supervision over the entry of judgment, as well as equitable jurisdiction over their subsequent status.11

In the same breadth, the Corporations also acknowledge that a compromise agreement and a judgment by confession stand upon the same footing in that both may not be executed by counsel without knowledge and authority of the client.   If we were to rely on the Corporations’ submission that all 5,984 complainants’ SPAs could not be obtained, then the Confession of Judgment is void.

Even if we dismiss the Corporations’ choice of designation as pure semantics and consider the agreement they entered into with the complainants as a form of a compromise agreement, we still could not approve the same.

We elucidate.

A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.  It is an agreement between two or more persons, who, for preventing or putting an end to a lawsuit, adjust their difficulties by mutual consent in the manner which they agree on, and which everyone of them prefers to the hope of gaining, balanced by the danger of losing.12

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A compromise must not be contrary to law, morals, good customs and public policy; and must have been freely and intelligently executed by and between the parties.13

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Article 227 of the Labor Code of the Philippines authorizes compromise agreements voluntarily agreed upon by the parties, in conformity with the basic policy of the State “to promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes.”14  The provision reads:chanRoblesvirtualLawlibrary

ART. 227 Compromise Agreements. – Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of noncompliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion.

A compromise agreement is valid as long as the consideration is reasonable and the employee signed the waiver voluntarily, with a full understanding of what he was entering into.15

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The compromise agreement which the Corporations deem as Confession of Judgment is reproduced in full below:chanRoblesvirtualLawlibrary

CONFESSION OF JUDGMENT

The undersigned counsel, by virtue of the special authority granted by HILLSHIRE earlier attached as Annex “B” and made an integral part hereof seeks the approval of this Honorable Court of this Judgment by Confession under the following terms and conditions, to wit: chanRoblesvirtualLawlibrary

1. HILLSHIRE will pay to the 5,984 respondents (complainants) the total amount of THREE HUNDRED FORTY TWO MILLION TWO HUNDRED EIGHTY-FOUR THOUSAND AND EIGHT HUNDRED PESOS (PhP342,284,800.00)  or at FIFTY SEVEN THOUSAND TWO HUNDRED PESOS (PhP57,200.00) for each

respondent (complainant) inclusive of the attorney’s fees of EIGHT THOUSAND FIVE HUNDRED EIGHTY PESOS (PhP8,580.00) which each respondent (complainant) will actually pay to their counsel of record as the total consideration for the dismissal with prejudice of all the pending cases before this Honorable Court and all the cases pending before the National Labor Relations Commission against all the petitioners.

2. The above agreed amount of THREE HUNDRED FORTY TWO MILLION TWO HUNDRED EIGHTY-FOUR THOUSAND AND EIGHT HUNDRED PESOS (PhP342,284,800.00) shall be distributed as follows:chanRoblesvirtualLawlibrary

2.1 FORTY EIGHT THOUSAND SIX [HUNDRED] TWENTY PESOS (PhP48,620.00) to each respondent (complainant), and

2.2  EIGHT THOUSAND FIVE HUNDRED EIGHTY PESOS (PhP8,580.00) to the lawyer of each respondent (complainant) by virtue of the Special Power of Attorney given by each respondent (complainant) to lead Emilinda D. Macatlang who gave SPA to Atty. Alex Tan.3. HILLSHIRE will deposit the amount of THREE HUNDRED FORTY TWO MILLION TWO HUNDRED EIGHTY-FOUR THOUSAND AND EIGHT HUNDRED PESOS (PhP342,284,800.00) with a local bank duly licensed by the Bangko Sentral ng Pilipinas (BSP) within sixty (60) days from the date of the issuance of a Certificate of Finality and/or Entry of Judgment of the Decision of this Honorable Court on this Confession of Judgment.

4. The amount of FORTY EIGHT THOUSAND SIX HUNDRED TWENTY PESOS (PhP48,620.00) shall be paid directly to each respondent (complainant) and the corresponding attorney’s fees of EIGHT THOUSAND FIVE HUNDRED EIGHTY PESOS (PhP8,580.00) shall be paid to their lawyers (duly authorized by an SPA) by the bank through a manager’s check.

5. The total deposit of THREE HUNDRED FORTY TWO MILLION TWO HUNDRED EIGHTY FOUR THOUSAND EIGHT HUNDRED PESOS (PhP342,284,800.00) must be claimed by the respondents (complainants) from the depository bank within two (2) years from the date of the Certificate of Finality or Entry of Judgment issued by this Honorable Court.

6. Any balance of the deposited amount which remains unclaimed by the respondents (complainants) within the two (2) year period referred to above shall automatically revert and be returned to and may be withdrawn by HILLSHIRE and/or its attorney-in-fact, without the necessity of any prior Order or permission from this Honorable Court.

7. Thereafter, upon expiration of the two (2) year period referred to above, HILLSHIRE’s obligation to make any payment to the respondents (Complainants) shall ipso facto cease, expire and terminate and the judgment by confession shall be considered satisfied, fulfilled and terminated.

8. The bank to which the amount of the confessed judgment (PhP342,284,800.00) is deposited shall be authorized by HILLSHIRE  through the undersigned attorney to pay to individual respondents (complainants) listed in the original Decision dated October 30, 2004 of the Labor Arbiter and/or their lawyers the above agreed amounts subject to the following conditions: chanRoblesvirtualLawlibrary

8.1 Complainants shall personally claim the payment to them from the bank upon presentation of any recognized government ID’s such as Driver’s License, Senior Citizen’s Card, Voter’s ID, SSS ID, Unified Multipurpose Identification Card, Postal ID, Passport, or Certification Under Oath by the Barangay Chairman as to the identity of the respondent (complainant), or

8.2 By the duly authorized representative of respondent (complainant) evidenced by a duly notarized Special Power of Attorney in case the respondent (complainant) cannot personally claim his/her payment due to sickness or physical disability.9. The lead complainant, Ms. Emilinda D. Macatlang, and Atty. Alex Tan shall take adequate steps to inform all the respondents (complainants) by personal notice or media announcement of this confession of judgment upon receipt of the Decision of this Honorable Court.

10. All fully paid respondents (complainants) shall execute a Waiver, Release and Quitclaim.

11. Upon the approval of this Confession of Judgment by this Honorable Court, all cases pending before this Honorable Court and the NLRC shall automatically be considered dismissed, terminated and of no force and effect.

Petitioners invite the attention of this Honorable Court that the above monetary consideration for both the respondents (complainants) and their counsel under the above terms and conditions have been agreed upon with Atty. Alex Tan before the filing of this confession of judgment.

To reiterate, this confession of judgment is made by HILLSHIRE for the purpose of buying peace and/or to secure to the said petitioner and the other Petitioners against any possible contingent liability which may accrue to them as a consequence of their having been made Respondents in the Complaints filed by the Complainants before the NLRC. 16

A review of the compromise agreement shows a gross disparity between the amount offered by the Corporations compared to the judgment award.  The judgment award is P3,453,664,710.86 or each employee is slated to receive P577,149.85.  On the other hand, the P342,284,800.00 compromise is to be distributed among 5,984 employees which would translate to only P57,200.00 per employee.  From this amount, P8,580.00 as attorney’s fees will be deducted, leaving each employee with a measly P48,620.00.  In fact, the compromised amount roughly comprises only 10% of the judgment award.

In our Decision, the appeal bond was set at P725 Million after taking into consideration the interests of all parties.  To reiterate, the underlying purpose of the appeal bond is to ensure that the employer has properties on which he or she can execute upon in the event of a final, providential award. Thus, non-payment or woefully insufficient payment of the appeal bond by the employer frustrates these ends.17  As a matter of fact, the appeal bond is valid and effective from the date of posting until the case is terminated or the award is satisfied.18  Our Decision highlights the importance of an appeal bond such that said amount should be the base amount for negotiation between the parties.  As it is, the P342,284,800.00 compromise is still measly compared to the P725 Million bond we set in this case, as it only accounts to approximately 50% of the reduced appeal bond.

In Arellano v. Powertech Corporation,19 we voided the P150,000.00 compromise for the P2.5 Million judgment on appeal to the NLRC. We note that the compromise is a mere 6% of the contingent sum that may be received by petitioners and the minuscule amount is certainly questionable because it does not represent a true and fair amount which a reasonable agent may bargain for his principal.20

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In Mindoro Lumber and Hardware v. Bacay,21 we found that the private respondents’ individual claims, ranging from P6,744.20 to P242,626.90, are grossly disproportionate to what each of them actually received under the Sama-samang Salaysay sa Pag-uurong ng Sakdal. The amount of the settlement is indubitably unconscionable; hence, ineffective to bar the workers from claiming the full measure of their legal rights.22

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The complainants filed a motion for reconsideration asking this Court to modify its Decision on the ground that the parties have entered into a compromise agreement.  The complainants justified their acquiescence to the compromise on the possibility that it will take another decade before the case may be resolved and attained finality.  We beg to disagree.

In our Decision, we have already directed the NLRC to act with dispatch in resolving the merits of the case upon receipt of the cash or surety bond in the amount of P725 Million within 10 days from receipt of the Decision.  If indeed the parties want an immediate and expeditious resolution of the case, then the NLRC should be unhindered with technicalities to dispose of the case.

Accepting an outrageously low amount of consideration as compromise defeats the complainants’ legitimate claim.

In Unicane Workers Union-CLUP v. NLRC,23 we held the P100,000.00 amount in the quitclaim is unconscionable because the complainants had been awarded by the labor arbiter more than P2 million.  It should have been aware that had petitioners pursued their case, they would have been assured of getting said amount, since, absent a perfected appeal, complainants were already entitled to said amount by virtue of a final judgment.  We proceeded to state that:chanRoblesvirtualLawlibrary

Not all quitclaims are per se invalid as against public policy. But, where there is clear proof that the waiver was wrangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, then the law will step in to annul the questionable transaction.24

In fine, we will not hesitate to strike down a compromise agreement which is unconscionable and against public policy.

WHEREFORE, the Court DENIES petitioners' Motion for Reconsideration and Motion for Leave of Court to File and Admit Herein Statement and Confession of Judgment; and the respondents’ Partial Motion for Reconsideration for their lack of merit.  The directive in the Decision dated 4 June 2014 to

the National Labor Relations Commission to act with dispatch to resolve the merits of the case upon perfection of the appeal is hereby REITERATED.

SO ORDERED.

Carpio, (Chairperson), Velasco, Jr.,* Del Castillo, and Perlas-Bernabe, JJ., concur.cralawlawlibrary

G.R. No. 197556, March 25, 2015 - WATERFRONT CEBU CITY CASINO HOTEL, INC. AND MARCO PROTACIO, Petitioners, v. ILDEBRANDO LEDESMA, Respondent.

THIRD DIVISION

G.R. No. 197556, March 25, 2015

WATERFRONT CEBU CITY CASINO HOTEL, INC. AND MARCO PROTACIO, Petitioners, v.ILDEBRANDO LEDESMA, Respondent.

D E C I S I O N

VILLARAMA, JR., J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, seeking to set aside the Decision1  dated March 17, 2011 and Resolution2 dated June 21, 2011 of the Court of Appeals (CA) in CA-G.R. CEB SP No. 05071.  The CA reversed the Decision3 dated November 27, 2009 and Resolution4 dated February 22, 2010 of the National Labor Relations Commission (NLRC) and reinstated the Decision5 dated April 29, 2009 of the Labor Arbiter (LA).  The LA declared that respondent Ildebrando Ledesma was illegally dismissed from his employment by petitioner Waterfront Cebu City Casino Hotel, Inc. (Waterfront).

The factual antecedents follow:

Respondent was employed as a House Detective at Waterfront located at Salinas Drive, Cebu City.

On the basis of the complaints filed before Waterfront by Christe6 Mandal, a supplier of a concessionaire of Waterfront, and Rosanna Lofranco, who was seeking a job at the same hotel, Ledesma was dismissed from employment.7 From the affidavits8  and testimonies9 of Christe Mandal and Rosanna Lofranco during the administrative hearings conducted by Waterfront, the latter found, among others, that Ledesma kissed and mashed the breasts of Christe Mandal inside the hotel’s elevator, and exhibited his penis and asked Rosanna Lofranco to masturbate him at the conference room of the hotel.

On August 12, 2008, Ledesma filed a complaint10 for illegal dismissal which was docketed as NLRC RAB-VII Case No. 08-1887-08.  The LA found that the allegations leveled against Ledesma are mere concoctions, and concluded that Ledesma was illegally dismissed.  The dispositive portion of the April 29, 2009 Decision of the LA, reads:

WHEREFORE, in view of the foregoing, a decision is hereby rendered declaring the suspension as well as the dismissal of herein complainant illegal.  Consequently, respondent Waterfront Cebu City Hotel is ordered to reinstate complainant Ildebrando Ledesma to his former position without loss of

seniority right and with full backwages reckoned from the date of the suspension up to actual reinstatement.

Herein respondent is likewise ordered to pay complainant Ledesma service incentive leave pay in the amount of THREE THOUSAND NINE HUNDRED TEN PESOS AND FIFTY CENTAVOS (P3,910.50) plus ten percent (10%) of the total monetary award as attorney’s fees.

All other claims are DISMISSED for lack of merit.

SO ORDERED.11

On appeal to the NLRC, the latter reversed the ruling of the LA and held that Ledesma’s acts of sexual overtures to Christe Mandal and Rosanna Lofranco constituted grave misconduct justifying his dismissal from employment.  The fallo of the November 27, 2009 Decision of the NLRC reads:

WHEREFORE, premises considered, the appealed Decision is hereby REVERSED and SET ASIDE.  Another one is entered declaring the dismissal of complainant as valid.

SO ORDERED.12

The NLRC denied Ledesma’s motion for reconsideration in a Resolution dated February 22, 2010. A copy of the said Resolution was received by Atty. Gines Abellana (Atty. Abellana), Ledesma’s counsel of record, on March 15, 2010.13

On May 17, 2010,14 or sixty-three (63) days after Atty. Abellana received a copy of the NLRC’s Resolution denying the motion for reconsideration, said counsel filed before the CA a petition for certiorari under Rule 65 of the Rules of Court.

In its Comment,15 Waterfront prayed for the outright dismissal of the petition on the ground that it was belatedly filed.

On August 5, 2010, Ledesma, now assisted by a new counsel, filed a motion for leave to file amended petition,16 and sought the admission of his Amended Petition for Certiorari.17  In the amended petition, Ledesma contended that his receipt on March 24, 2010 (and not the receipt on March 15, 2010 by Atty. Abellana), is the reckoning date of the 60-day reglementary period within which to file the petition.  Hence, Ledesma claims that the petition was timely filed on May 17, 2010.18

By its Resolution19 dated August 27, 2010, the CA granted leave of court to Ledesma and admitted his amended petition for certiorari.  The CA, thereafter, rendered a Decision dated March 17, 2011, reversing the Decision of the NLRC and reinstating the ruling of the LA.  The fallo of the assailed CA Decision reads:

IN LIGHT OF ALL THE FOREGOING, this petition is GRANTED.  The 27 November 2009 NLRC Decision and 22 February 2010 Resolution in NLRC Case No. VAC-09-000912-2009 is REVERSED and SET ASIDE and the 29 April 2009 Decision of the Labor Arbiter is hereby REINSTATED.

No pronouncement as to costs.

SO ORDERED.20

The CA denied the motion for reconsideration filed by Waterfront in a Resolution dated June 21, 2011.  Thus, the present petition for review on certiorari where Waterfront raised the main issue of whether the petition for certiorari was timely filed with the CA.21

In his Comment,22 Ledesma sought the dismissal of the instant petition of Waterfront on the basis of the following formal infirmities: (1) the presentation of Gaye Maureen Cenabre, the representative of Waterfront, of a Community Tax Certificate before the Notary Public to prove her identity, violated A.M. No. 02-8-13-SC, and rendered the jurat in the verification and certification on non-forum shopping of the petition as defective; and (2) no certified true copy of the August 10, 2011 Board Resolution quoted in the Secretary’s Certificate was attached to the petition.

The Court finds Waterfront’s petition to be meritorious.

The procedural infirmities23 pointed out by Ledesma are not adequate to cause the dismissal of the present petition. Gaye Maureen Cenabre presented to the Notary Public a Community Tax Certificate numbered 27401128 to prove her identity instead of a current identification document issued by an official agency bearing her photograph and signature as required by A.M. No. 02-8-13-SC. This rendered the jurat in the verification/certification of non-forum shopping of Waterfront as defective.  Nonetheless, any flaw in the verification, being only a formal, not a jurisdictional requirement, is not a fatal defect.24  In like manner, there is no need to attach the certified true copy of the Board Resolution quoted in the Secretary’s Certificate attached to the petition.  Only the judgment, order or resolution assailed in the petition are the attachments required under Section 4,25 Rule 45 of the Rules of Court to be duplicate originals or certified true copies.

On the main issue, the unjustified failure of Ledesma to file his petition for certiorari before the CA within the 60-day period is a ground for the outright dismissal of said petition.

Section 4, Rule 65 of the Rules of Court, as amended by A.M. No. 07-7-12-SC, reads:

SEC. 4. When and where to file the petition. – The petition shall be filed not later than sixty (60) days from notice of the judgment, order or resolution.  In case a motion for reconsideration or new trial is timely filed, whether such motion is required or not, the petition shall be filed not later than sixty (60) days counted from the notice of the denial of the motion.

If the petition relates to an act or an omission of a municipal trial court or of a corporation, a board, an officer or a person, it shall be filed with the Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court.  It may also be filed with the Court of Appeals or with the Sandiganbayan, whether or not the same is in aid of the court’s appellate jurisdiction.  If the petition involves an act or an omission of a quasi-judicial agency, unless otherwise provided by law or these rules, the petition shall be filed with and be cognizable only by the Court of Appeals.

In election cases involving an act or an omission of a municipal or a regional trial court, the petition shall be filed exclusively with the Commission on Elections, in aid of its appellate jurisdiction.

In Laguna Metts Corporation v. Court of Appeals,26 we categorically ruled that the present rule now mandatorily requires compliance with the reglementary period.  The period can no longer be extended as previously allowed before the amendment, thus:

As a rule, an amendment by the deletion of certain words or phrases indicates an intention to change its meaning. It is presumed that the deletion would not have been made if there had been no intention to effect a change in the meaning of the law or rule. The amended law or rule should accordingly be given a construction different from that previous to its amendment.

If the Court intended to retain the authority of the proper courts to grant extensions under Section 4 of Rule 65, the paragraph providing for such authority would have been preserved. The removal of the said paragraph under the amendment by A.M. No.  07-7-12-SC of Section 4, Rule 65 simply meant that there can no longer be any extension of the 60-day period within which to file a petition for certiorari.

The rationale for the amendments under A.M. No. 07-7-12-SC is essentially to prevent the use (or abuse) of the petition for certiorari under Rule 65 to delay a case or even defeat the ends of justice. Deleting the paragraph allowing extensions to file petition on compelling grounds did away with the filing of such motions. As the Rule now stands, petitions for certiorari must be filed strictly within 60 days from notice of judgment or from the order denying a motion for reconsideration.27 (Additional emphasis and underscoring supplied)

In the subsequent case of Domdom v. Third & Fifth Divisions of the Sandiganbayan,28 the absence of a specific prohibition in Section 4 of Rule 65, as amended, for the extension of the 60-day period to file a petition for certiorari was construed as a discretionary authority of the courts to grant an extension.

Republic v. St. Vincent De Paul Colleges, Inc.29 clarified the “conflict” between the rulings in Laguna Metts Corporation30 and Domdom,31  in that the former is the general rule while the latter is the exception, thus:

What seems to be a “conflict” is actually more apparent than real. A reading of the foregoing rulings leads to the simple conclusion that Laguna Metts Corporation involves a strict application of the

general rule that petitions for certiorari must be filed strictly within sixty (60) days from notice of judgment or from the order denying a motion for reconsideration. Domdom, on the other hand, relaxed the rule and allowed an extension of the sixty (60)-day period subject to the Court’s sound discretion.32  (Emphasis in the original)

In relaxing the rules and allowing an extension, Thenamaris Philippines, Inc. v. Court of Appeals33reiterated the necessity for the party invoking liberality to advance a reasonable or meritorious explanation34 for the failure to file the petition for certiorari within the 60-day period.

The petition for certiorari was filed with the CA beyond the 60-day period

Atty. Abellana, Ledesma’s counsel, admittedly received a copy of the NLRC Resolution denying the Motion for Reconsideration on March 15, 2010 while Ledesma received his copy on March 24, 2010.

Ledesma erroneously asserted in his petition for certiorari filed before the CA, that the 60th day is May 15, 2010, counted from March 15, 2010.35 In computing a period, the first day shall be excluded, and the last included;36 hence, the last day to file his petition for certiorari is on May 14, 2010, a Friday.  Ledesma therefore belatedly filed his petition on May 17, 2010.

Realizing his procedural faux pas, Ledesma filed an amended petition where he contended that he timely filed his petition for certiorari on May 17, 2010 counted from his receipt of the NLRC Resolution denying his motion for reconsideration on March 24, 2010.37 This stance is bereft of any legal basis. When a party to a suit appears by counsel, service of every judgment and all orders of the court must be sent to the counsel.  This is so because notice to counsel is an effective notice to the client, while notice to the client and not his counsel is not notice in law.38  Receipt of notice by the counsel of record is the reckoning point of the reglementary period.39

The negligence of Atty. Abellana in the computation of the 60-day period, and reckoning such period from the party’s receipt of the assailed NLRC resolution were similar arguments rejected in Labao v. Flores.40  In the Labao case,41 the respondents maintained that they should not suffer the negligence of their counsel in the late filing of their petition for certiorari, and the 60-day period be reckoned from their own notice of the NLRC’s denial of their motion for reconsideration. In rejecting said arguments we ruled as follows:

The general rule is that a client is bound by the acts, even mistakes, of his counsel in the realm of procedural technique. The exception to this rule is when the negligence of counsel is so gross, reckless and inexcusable that the client is deprived of his day in court.  The failure of a party’s counsel to notify him on time of the adverse judgment, to enable him to appeal therefrom, is negligence that is not excusable. We have repeatedly held that notice sent to counsel of record is binding upon the client, and the neglect or failure of counsel to inform him of an adverse judgment resulting in the loss of his right to appeal is not a ground for setting aside a judgment valid and regular on its face.42  (Emphasis omitted)

With the expiration of the 60-day period to file a petition for certiorari, a review of the Resolution of the NLRC will be beyond the jurisdiction of any court.43  No longer assailable, the NLRC Resolution could not be altered or modified, as previously held in Labao v. Flores:44

The NLRC’s resolution became final ten (10) days after counsel’s receipt, and the respondents’ failure to file the petition within the required (60)-day period rendered it impervious to any attack through a Rule 65 petition for certiorari. Thus, no court can exercise jurisdiction to review the resolution.

Needless to stress, a decision that has acquired finality becomes immutable and unalterable and may no longer be modified in any respect, even if the modification is meant to correct erroneous conclusions of fact or law and whether it will be made by the court that rendered it or by the highest court of the land. All the issues between the parties are deemed resolved and laid to rest once a judgment becomes final and executory; execution of the decision proceeds as a matter of right as vested rights are acquired by the winning party. Just as a losing party has the right to appeal within the prescribed period, the winning party has the correlative right to enjoy the finality of the decision on the case. After all, a denial of a petition for being time-barred is tantamount to a decision on the merits.  Otherwise, there will be no end to litigation, and this will set to naught the main role of courts of justice to assist in the enforcement of the rule of law and the maintenance of peace and order by settling justiciable controversies with finality.

Ledesma did not attempt to justify the belated filing of his petition forcertiorari  

The relaxation of procedural rules may be allowed only when there are exceptional circumstances to justify the same.45  There should be an effort on the part of the party invoking liberality to advance a reasonable or meritorious explanation for his/her failure to comply with the rules.46  Moreover, those who seek exemption from the application of a procedural rule have the burden of proving the existence of exceptionally meritorious reason warranting such departure.47  In Philippine National Bank v. Commissioner of Internal Revenue,48 we said:

It is an accepted tenet that rules of procedure must be faithfully followed except only when, for persuasive and weighting reasons, they may be relaxed to relieve a litigant of an injustice commensurate with his failure to comply with the prescribed procedure.Concomitant to a liberal interpretation of the rules of procedure, however, should be an effort on the part of the party invoking liberality to adequately explain his failure to abide by the rules. (Emphasis supplied)

Both in his petition and amended petition, Ledesma never invoked the liberality of the CA nor endeavored to justify the belated filing of his petition.  On the contrary, Ledesma remained firm that his petition was filed with the CA within the reglementary period.49  Absent valid and compelling reasons for the procedural lapse, the desired leniency cannot be accorded to Ledesma.50

In sum, the late filing by Ledesma of his petition for certiorari, and his failure to justify his procedural lapse to merit a lenient application of the rules divested the CA of jurisdiction to entertain the petition.51

Assuming for a moment that the petition for certiorari was timely filed with the CA, said recourse should suffer the same fate of dismissal for lack of merit. Otherwise stated, there is no substantial justice that may be served here in disregarding the procedural flaw committed by Ledesma because the NLRC correctly found him guilty of misconduct or improper behavior in committing lascivious conduct and demanding sexual favors from Christe Mandal and Rosanna Lofranco.

The CA ruled in favor of Ledesma since it believed his version that the complainants merely invented the accusations against him because Waterfront failed to present as evidence the CCTV footages of the alleged lascivious conduct of Ledesma inside the elevator and the conference room.  But this argument was not even raised by Ledesma himself and it was only the CA which utilized this as a justification to bolster its findings that Ledesma did not commit any infraction.  This being a labor case, the evidence required is only substantial evidence which was adequately established here by the positive and credible testimonies of the complainants.

Notably, Ledesma never refuted, at the administrative investigation level at Waterfront, and even at the proceedings before the LA, NLRC, and the CA, the allegations leveled against him by Rosanna Lofranco that, after deluding her to perform a massage on him, Ledesma exhibited to her his penis and requested that he be masturbated while inside the conference room of the hotel.  If not for the position of Ledesma as a House Detective, he will not have access to the conference room nor will he know that the premises is not monitored through a closed-circuit television,52 thus giving him the untrammeled opportunity to accomplish his lewd design on the unsuspecting victim.  Such acts of Ledesma constituted misconduct or improper behavior53 which is a just cause for his dismissal.

WHEREFORE, the petition for review on certiorari is GRANTED. The March 17, 2011 Decision and June 21, 2011 Resolution of the Court of Appeals in CA-G.R. CEB SP No. 05071 are REVERSED and SET ASIDE. The November 27, 2009 Decision and February 22, 2010 Resolution of the National Labor Relations Commission which found as valid the dismissal from employment of Ildebrando Ledesma areREINSTATED.

No pronouncement as to costs.

SO ORDERED.

Velasco, Jr., (Chairperson), Peralta, Reyes, and Jardeleza, JJ., concur.

Sy et al., vs. Fairland Knitcraft Co Inc. [GR No. 189658, December 12, 2011]Facts:Fairland is a domestic corporation engaged in garments business, while Susan de Leon (Susan) is the owner/proprietress of Weesan Garments(Weesan). On the other hand, the complaining workers (the workers) are sewers, trimmers, helpers, a guard and a secretary who were hired byWeesan. On December 23, 2002, workers Marialy O. Sy, Vivencia Penullar, Aurora Aguinaldo, Gina Aniano, Gemma dela Peña and Efremia Matias filedwith the Arbitration Branch of the NLRC a Complaint for underpayment and/or non-payment of wages, overtime pay, premium pay for holidays,13th month pay and other monetary benefits against Susan/Weesan. In January 2003, the rest of the aforementioned workers also filed similarcomplaints. Eventually all the cases were consolidated as they involved the same causes of action. On February 5, 2003, Weesan filed before the Department of Labor and Employment-National Capital Region (DOLE-NCR) a report on itstemporary closure for a period of not less than six months. As the workers were not anymore allowed to work on that same day, they filed onFebruary 18, 2003 an Amended Complaint, and on March 13, 2003, another pleading entitled Amended Complaints and Position Paper forComplainants, to include the charge of illegal dismissal and impleaded Fairland and its manager, Debbie Manduabas (Debbie), as additionalrespondents. Issue:1.Whether or not the CA erred in finding that petitioner is a labor-only contractor acting as an agent of respondent fairland2.Can the Labor Arbiter acquire jurisdiction over the person of the respondent without the latter being served with summons?Ruling: 1.Susan/Weesan is a mere labor-only contractor."There is labor-only contracting when the contractor or subcontractor merely recruits, supplies or places workers toperform a job, work or service for a principal. In labor-only contracting, the following elements are present: (a)The person supplying workers to an employer does not have substantial capital or investment in the form of tools,equipment, machineries, work premises, among others; andIDESTH (b)The workers recruited and placed by such person are performing activities which are directly related to the principalbusiness of the employer."Here, there is no question that the workers, majority of whom are sewers, were recruited by Susan/Weesan and that they performed activitieswhich are directly related to Fairland's principal business of garments. What must be determined is whether Susan/Weesan has substantial capitalor investment in the form of tools, equipment, machineries, work premises, among others.

2. "It is basic that the Labor Arbiter cannot acquire jurisdiction over the person of the respondent without the latter being served with summons." However, "if there is no valid service of summons, the court can still acquire jurisdiction over the

person of the defendant by virtue of the latter'svoluntary appearance."It can be recalled that the workers' original complaints for non-payment/underpayment of wages and benefits were only against Susan/Weesan.For these complaints, the Labor Arbiter issued summons to Susan/Weesan which was received by the latter on January 15, 2003. The workersthereafter amended their then already consolidated complaints to include illegal dismissal as an additional cause of action as well as Fairland andDebbie as additional respondents. We have, however, scanned the records but found nothing to indicate that summons with respect to the saidamended complaints was ever served upon Weesan, Susan, or Fairland. True to their claim, Fairland and Debbie were indeed never summoned bythe Labor Arbiter. Viewed in its entirety, we thus declare that Fairland is the principal of the labor-only contractor, Weesan. Fairland, therefore, as the principal employer, is solidarily liable with Susan/Weesan, the labor-only contractor, for the rightful claims of theemployees. Under this set-up, Susan/Weesan, as the "labor-only" contractor, is deemed an agent of the principal, Fairland, and the law makes theprincipal responsible to the employees of the "labor-only" contractor as if the principal itself directly hired or employed the employees.