Acda vs. Minister of Labor

Perfection of an appeal within the statutory or reglementary period, including payment of the appeal fee, is mandatory and jurisdictional; failure to perfect renders the decision appealed from final and executory and deprives the appellate body of jurisdiction to alter it. The ruling also affirms that loss of confidence as a ground for dismissal requires a basis and cannot be invoked arbitrarily against a probationary employee, whose services may be terminated only for just cause or authorized cause or for failure to qualify under reasonable standards prescribed by the employer.

Cesar Acda was employed by Pan Oriental Match Co., Inc. in a sales supervisory capacity under a probationary appointment. The dispute implicated the Labor Code's provisions on probationary employment and security of tenure, as well as the rules governing perfection of appeals from Labor Arbiter decisions to the National Labor Relations Commission and the Minister of Labor.

Cesar Acda received an appointment dated 26 September 1976 as Sales Supervisor Trainee of Pan Oriental Match Co., Inc. Because the company urgently needed to fill the position, he was made to work starting 1 September 1976, before the appointment's effectivity date. The appointment provided that the employment would be temporary for one month and that, if the company found his performance satisfactory during that period, he would be extended a probationary appointment. Effective the close of the working day of 31 January 1977, while still within his probationary employment, Pan Oriental Match Co., Inc. dismissed Acda on the alleged grounds of "loss of confidence and for want in capabilities as Regional Sales Supervisor."

On 28 February 1977, Acda filed a complaint with the Ministry of Labor against the company, contesting his termination as illegal. He alleged that the company denied him due process because he was not informed beforehand of his shortcomings and the matters should have been explained to him so that he could rectify or defend the mistakes he committed; that the excuse of loss of confidence had no basis absent any standard of performance upon which he was rated; and that his dismissal was a plot to circumvent the law on security of tenure. The company argued that, as a managerial employee, Acda's appointment was anchored on the trust and confidence reposed in him and that when this ceased to exist, he could be terminated, especially within the probationary period of his employment.

On 23 August 1977, the Labor Arbiter rendered a decision in favor of Acda, declaring the charges against him, aside from being flimsy, to be without factual and legal bases because he had explained point by point his reasons or answer against the charges. The Labor Arbiter found that the dismissal was triggered by "the outburst of Mr. Perez' petty jealousy," as shown by the following circumstances: when Acda was granted a car, Perez restricted its use by issuing a memorandum that it would not be used outside the greater Manila area and would not be brought home at night, but the memo was set aside by the company president in view of Acda's work activities; and the company president bypassed Perez in favor of Acda when the latter prepared a project analysis for the company's 5-year sales projection, after which Acda was directed by the company president to make proper representations with bank officials, which was normally the task of Robert Perez, the Vice-President for Marketing. The Labor Arbiter also considered the letter dated 3 January 1977 of the company president extending congratulations to Acda for "excellent job performance."

On appeal by the company, the National Labor Relations Commission affirmed the Labor Arbiter's decision in its resolution dated 19 January 1978. The NLRC noted that the appeal was filed in only seven copies instead of ten as required by its Rules and that no appeal fee appeared to have been paid, meaning the appeal had not been perfected. Despite these facts, the NLRC read the record and found no error committed by the Labor Arbiter. It found that Acda had convincingly refuted the charges invoked as grounds for his dismissal and had shown by facts and figures that he performed well in his job, which caused the company president, shortly before his dismissal, to congratulate him "for a job well done" and to expect "spectacular" performance in his area of operation in 1977.

Not satisfied, the company appealed to the Minister of Labor. In an Order dated 11 May 1979, the Deputy Minister, by authority of the Minister of Labor, reversed the NLRC resolution in substance, holding that by the probationary nature of Acda's appointment, it was well within the company's prerogative to terminate his services if, in its evaluation, he did not meet the requirements of the position. Acda's motion for reconsideration was denied in the Order of 27 July 1979. He then filed the instant petition for certiorari, questioning the jurisdiction of the Minister of Labor to entertain the company's appeal, praying that the Order of 11 May 1979 be set aside as null and void, and seeking revival of the NLRC resolution sustaining his claim for illegal dismissal and backwages. The Labor Arbiter and the NLRC had found the charges against Acda unsubstantiated and his performance satisfactory.

• Due Process: Petitioner alleged that respondent company denied him due process because he was not informed beforehand of his shortcomings and the matters should have been explained to him so he could rectify or defend the mistakes he committed.
• Loss of Confidence: Petitioner maintained that the excuse of loss of confidence had no basis in the absence of any standard of performance upon which he was rated on the job.
• Security of Tenure: Petitioner claimed that his dismissal was a plot to circumvent the law on security of tenure.
• Jurisdiction of the Minister of Labor: Petitioner questioned the jurisdiction of the Minister of Labor to entertain respondent company's appeal and prayed that the Order of 11 May 1979 be set aside as null and void and that the NLRC resolution sustaining his claim for illegal dismissal and backwages be revived.

• Managerial Employee / Trust and Confidence: Respondent company argued that as a managerial employee, petitioner's appointment was anchored on the trust and confidence reposed in him by the Company and that when this ceased to exist, he may be terminated, more so within the probationary period of his employment.
• Commendation Misled: Respondent company argued that petitioner could not invoke the president's commendation in his favor because the president was misled into issuing the same.
• Non-Binding Technical Rules: The Solicitor General pointed out that technical rules are not binding in labor cases.

• Jurisdiction of the Minister of Labor: Whether the Minister of Labor had jurisdiction to entertain respondent company's appeal notwithstanding the latter's failure to perfect its appeal due to non-payment of the appeal fee and filing of insufficient copies.
• Just Cause / Loss of Confidence: Whether petitioner's dismissal on the grounds of loss of confidence and want of capability was for a just cause, especially given his probationary employment.
• Backwages: Whether petitioner is entitled to backwages, and if so, for what period.

• Jurisdiction of the Minister of Labor: No. The appeal was not perfected because the appeal fee was not paid and the required number of copies was not filed; perfection of appeal is mandatory and jurisdictional, so the Labor Arbiter's decision became final and executory and the Minister had no jurisdiction to alter it.
• Just Cause / Loss of Confidence: No. The charges were unsubstantiated, and loss of confidence requires a basis; probationary employees may be terminated only for just cause or authorized cause or for failure to qualify under reasonable standards.
• Backwages: Yes, but limited to three years without qualification and deduction. The NLRC resolution was reinstated, but the award of backwages was limited in accordance with existing jurisprudence.

• Jurisdiction of the Minister of Labor: The Court applied the well-rooted principle that perfection of an appeal within the statutory or reglementary period is not only mandatory but also jurisdictional, and failure to do so renders the questioned decision final and executory and deprives the appellate court or body of jurisdiction to alter the final judgment, much less to entertain the appeal. The NLRC resolution itself showed that respondent company's appeal did not comply with the requirements for perfecting an appeal: it was filed in only seven copies instead of ten, and no appeal fee was paid. Thus, the appeal was not duly perfected, and the Labor Arbiter's decision became final and executory after the lapse of the reglementary period provided by the Labor Code. The Minister's jurisdiction to entertain the appeal could therefore be questioned. Although technical rules are not binding in labor cases, Article 221 of the Labor Code limits that liberality to the rules of evidence and the use of all reasonable means to ascertain the facts; non-payment of the appeal fee cannot be excused under that provision. The appeal fee is an essential requirement in the perfection of an appeal, without which the decision appealed from becomes final and executory as if no appeal was filed at all. The right to appeal is not a natural right nor part of due process but merely a statutory privilege that may be exercised only in the manner prescribed by law, and respondent company had to conform to the rules of appeal in labor cases.
• Just Cause / Loss of Confidence: The Labor Arbiter's findings, upheld by the NLRC, were clear, substantiated by evidence of record, and free of reversible error; they had also attained finality because of the non-perfection of a proper appeal. The company president's commendation to petitioner shortly before dismissal, congratulating him "for a job well done," made the findings more forceful. The company's argument that the president was misled into issuing the commendation was a mere claim unsupported by sufficient proof. With the charges against petitioner found unsubstantiated, the so-called "loss of confidence" was without basis and could not be successfully invoked as a ground for dismissal, which requires some basis. Loss of confidence was never intended to afford an occasion for abuse by the employer of its prerogative, as it can easily be subject to abuse because of its subjective nature, to dismiss employees in contravention with the protection-of-labor clause of the Constitution. This constitutional guaranty accords even to employees employed on a probationary basis the protection that their services may be terminated only for a just cause or when authorized by existing laws, or when they fail to qualify as a regular employee in accordance with reasonable standards prescribed by the employer.
• Backwages: The NLRC resolution upholding the Labor Arbiter's decision was reinstated, but the award of backwages was limited to three years without qualification and deduction in accordance with existing jurisprudence, with costs against the respondent company.

• Perfection of Appeal as Mandatory and Jurisdictional — Perfection of an appeal within the statutory or reglementary period is not only mandatory but also jurisdictional. Failure to perfect renders the questioned decision final and executory and deprives the appellate court or body of jurisdiction to alter the final judgment, much less to entertain the appeal. In this case, respondent company failed to perfect its appeal because it did not pay the appeal fee and filed only seven copies instead of the required ten, so the Labor Arbiter's decision became final and the Minister of Labor lacked jurisdiction to reverse it.
• Appeal Fee as an Essential Requirement — The payment of the appeal fee is an essential requirement in the perfection of an appeal, not a mere technicality of law or procedure. Without it, the decision appealed from becomes final and executory as if no appeal was filed at all. The Court held that non-payment of the appeal fee cannot be excused by Article 221 of the Labor Code.
• Right to Appeal as a Statutory Privilege — The right to appeal is not a natural right nor a part of due process but is merely a statutory privilege that may be exercised only in the manner prescribed by law. Respondent company was thus required to conform to the rules of appeal in labor cases.
• Limited Liberal Construction of Procedural Rules in Labor Cases — Although technical rules are not binding in labor cases, Article 221 of the Labor Code restricts that liberality to the application of the rules of evidence and the use of all reasonable means to ascertain the facts. It does not excuse non-compliance with the essential requirement of an appeal fee.
• Loss of Confidence Requires a Basis — Loss of confidence as a ground for dismissal requires some basis and may not be successfully invoked when the charges against the employee are unsubstantiated. Because of its subjective nature, it can easily be abused and was never intended to afford an employer an occasion to dismiss employees in contravention of the protection-of-labor clause of the Constitution.
• Security of Tenure for Probationary Employees — Even employees employed on a probationary basis are protected by the constitutional guaranty that their services may be terminated only for a just cause or when authorized by existing laws, or when they fail to qualify as a regular employee in accordance with reasonable standards prescribed by the employer.
• Three-Year Limitation on Backwages — In illegal dismissal cases, the award of backwages is limited to three years without qualification and deduction in accordance with existing jurisprudence. The Court applied this limitation when reinstating the NLRC resolution.

• "Well-rooted is the principle that perfection of all appeal within the statutory or reglementary period is not only mandatory but also jurisdictional and failure to do so renders the questioned decision final and executory that deprives the appellate court or body of jurisdiction to alter the final judgment, much less to entertain the appeal." — States the ratio decidendi on why the Minister of Labor lacked jurisdiction after respondent company failed to perfect its appeal.
• "The requirement of an appeal fee is by no means a mere technicality of law or procedure. It is an essential requirement in the perfection of an appeal without which the decision appealed from would become final and executory, as if no appeal was filed at all." — Defines the appeal fee as an essential jurisdictional requirement and rejects the argument that labor cases may disregard it as a technicality.
• "With the charges against petitioner found to be unsubstantiated, We are left with no other alternative but to hold that the so-called "loss of confidence" is without basis and may not be successfully invoked as ground for dismissal which requires some basis therefor, such ground never having been intended to afford an occasion for abuse by the employer of its prerogative, as it can easily be subject to abuse because of its subjective nature, to dismiss employees in contravention with the "protection of labor clause of the Constitution." — Articulates the rule that loss of confidence requires a basis and cannot be used arbitrarily to dismiss an employee.
• "It is this Constitutional guaranty that accords even to employees employed on a probationary basis the protection that their services "may be terminated only for a just cause or when authorized by existing laws, or when he fails to qualify as a regular employee in accordance with reasonable standards prescribed by the employer."" — States the security-of-tenure protection extended to probationary employees.

• Vega vs. WCC, 89 SCRA 140 (March 26, 1979) — Cited for the principle that perfection of an appeal within the statutory or reglementary period is mandatory and jurisdictional, and failure to perfect renders the questioned decision final and executory.
• Soliven vs. WCC, 77 SCRA 518 (June 30, 1977) — Cited for the same principle on the mandatory and jurisdictional nature of perfecting an appeal.
• Ramos vs. Republic, 69 SCRA 576 (February 27, 1976) — Cited for the same principle on the mandatory and jurisdictional nature of perfecting an appeal.
• Velasco vs. Court of Appeals, 51 SCRA 439 — Cited for the rule that the right to appeal is not a natural right nor part of due process but a statutory privilege.
• Bello vs. Fernando, 4 SCRA 135 — Cited for the same rule on the statutory nature of the right to appeal.
• Galsim vs. Philippine National Bank, 29 SCRA 293 — Cited for the rule that loss of confidence as a ground for dismissal requires a basis.
• Philippine Education Co., Inc. vs. Union of Philippine Education Employees (NLU), 101 Phil. 1003 — Cited for the same rule that loss of confidence requires a basis and cannot be invoked arbitrarily.

• Article 221, Labor Code, as amended — Provides that the rules of evidence prevailing in courts of law or equity shall not be controlling and that the Commission, its members, and Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case and objectively and without regard to technicalities of law or procedure, all in the interest of due process. The Court held that this provision is limited to the application of the rules of evidence and the use of reasonable means in ascertaining facts, and does not excuse non-payment of the appeal fee.
• Section 1(s), Rule I, Book V, Implementing Rules and Regulations of the Labor Code — Defines "perfection of an appeal" to include the payment of the appeal fee. The Court relied on this definition in holding that respondent company's appeal was not perfected.
• Section 9, Article II, 1973 Constitution — The protection-of-labor clause cited by the Court in holding that loss of confidence, because of its subjective nature, cannot be used to abuse the employer's prerogative to dismiss employees.
• Section 6(c), Rule 1, Book VI, Implementing Rules; Article 282, Labor Code of the Philippines — Provides that even probationary employees' services may be terminated only for a just cause or when authorized by existing laws, or when they fail to qualify as regular employees in accordance with reasonable standards prescribed by the employer. The Court applied this protection to petitioner.

Makasiar (Chairman), Concepcion, Jr., Guerrero, Abad Santos, and Escolin, JJ.

• Justice Aquino — Dissented. He noted that the decision does not show when petitioner raised the issue of non-payment of the appeal fee. In his view, the fact that the NLRC entertained the appeal notwithstanding the alleged non-payment showed that the requirement was not important. He maintained that the Minister of Labor correctly held that, since petitioner's appointment was probationary, the company could terminate his services. He also considered it not just and equitable to award backwages from 1977 when petitioner had done nothing and the company had no confidence in him.