Building Care Corporation / Leopard Security & Investigation Agency and/or Ruperto Protacio vs. Myrna Macaraeg

A judgment becomes final and executory upon the lapse of the appeal period, and the negligence of counsel in failing to perfect a timely appeal binds the client absent gross negligence resulting in deprivation of due process; liberal application of procedural rules is not warranted without extraordinary circumstances.

Petitioners Building Care Corporation, Leopard Security & Investigation Agency, and Ruperto Protacio are engaged in providing security services to clients, and respondent Myrna Macaraeg was employed by them as a security guard. Labor disputes of this kind proceed initially before a Labor Arbiter, whose decision is appealable to the National Labor Relations Commission within the prescribed period; the finality of such decisions and the timeliness of appeals are governed by the Labor Code and the Rules of Court.

Petitioners Building Care Corporation, Leopard Security & Investigation Agency, and Ruperto Protacio are in the business of providing security services to their clients. They hired respondent Myrna Macaraeg as a security guard beginning August 25, 1996, assigning her at Genato Building in Caloocan City. On March 9, 2008, respondent was relieved of her post. She was re-assigned to Bayview Park Hotel from March 9 to 13, 2008, but after that period, she was allegedly no longer given any assignment.

On September 9, 2008, respondent filed a complaint against petitioners for illegal dismissal, underpayment of salaries, non-payment of separation pay, and refund of cash bond. Conciliation and mediation proceedings failed, so the parties were ordered to submit their respective position papers.

Respondent claimed that petitioners failed to give her an assignment for more than nine months, amounting to constructive dismissal, and that this compelled her to file the complaint for illegal dismissal. Petitioners alleged in their position paper that respondent was relieved from her post as requested by the client because of her habitual tardiness, persistent borrowing of money from employees and tenants of the client, and sleeping on the job. Petitioners allegedly directed respondent to explain why she committed such infractions, but respondent failed to heed such order. Respondent was nevertheless temporarily assigned to Bayview Park Hotel from March 9 to 13, 2008, but she also failed to meet said client's standards and her posting thereat was not extended.

Respondent then filed an administrative complaint for illegal dismissal with the PNP-Security Agencies and Guard Supervision Division on June 18, 2008, but she did not attend the conference hearings for said case. Petitioners brought to the conference hearings a new assignment order detailing respondent at the Ateneo de Manila University, but, due to her absence, petitioners failed to personally serve respondent said assignment order. Petitioners then sent respondent a letter ordering her to report to headquarters for work assignment, but respondent did not comply with said order. Instead, respondent filed a complaint for illegal dismissal with the Labor Arbiter.

The Labor Arbiter resolved the illegal dismissal charge against respondent but awarded her P5,000.00 as financial assistance. Respondent's appeal to the NLRC was later dismissed as having been filed out of time, and the Labor Arbiter's Decision was declared final and executory on June 16, 2009. In the proceedings before the Supreme Court, the material procedural facts were that respondent had fully presented and argued her case before the Labor Arbiter and was accorded the opportunity to be heard, but her appeal to the NLRC was not perfected within the prescribed period.

• Procedural Finality and Timeliness: Petitioners sought reversal of the Court of Appeals Decision and Resolution, raising as the main issue whether the Court of Appeals erred in liberally applying the rules of procedure and ruling that respondent's appeal should be allowed and resolved on the merits despite having been filed out of time.
• Just Cause / No Illegal Dismissal: Petitioners alleged in their position paper that respondent was relieved from her post as requested by the client because of habitual tardiness, persistent borrowing of money from employees and tenants of the client, and sleeping on the job; that she failed to explain these infractions; that she was temporarily assigned to Bayview Park Hotel but failed to meet the client's standards; and that she did not comply with the order to report to headquarters for work assignment.

• Constructive Dismissal: Respondent claimed that petitioners failed to give her an assignment for more than nine months, amounting to constructive dismissal, and that this compelled her to file the complaint for illegal dismissal.
• Fault of Former Counsel / Liberality: Respondent maintained that she had not been remiss in following up her case with her former lawyer; the Court of Appeals relied on the belated filing being the fault of her former counsel and on the importance of the illegal dismissal issue to afford her the amplest opportunity for a just determination free from technicalities.

• Liberal Application of Procedural Rules: Whether the Court of Appeals erred in liberally applying the rules of procedure and ruling that respondent's appeal should be allowed and resolved on the merits despite having been filed out of time.
• Finality of the Labor Arbiter's Decision: Whether the Labor Arbiter's Decision became final and executory as to respondent when she failed to file a timely appeal, such that the Court of Appeals could not set it aside.

• Liberal Application of Procedural Rules: No. The Court of Appeals erred. Relaxation of procedural rules is the exception, not the rule, and requires proper cases, justifiable causes, and extraordinary circumstances; the Court of Appeals' reliance on the importance of the issue and the fault of former counsel did not suffice.
• Finality of the Labor Arbiter's Decision: Yes. The Labor Arbiter's Decision became final and executory upon respondent's failure to perfect a timely appeal; perfection of appeal is jurisdictional, and finality cannot be overridden absent gross negligence of counsel causing deprivation of due process.

• Liberal Application of Procedural Rules: The Court emphasized that resort to liberal application or suspension of procedural rules must remain the exception to the well-settled principle that rules must be complied with for the orderly administration of justice. In Marohomsalic vs. Cole, the Court stated that while procedural rules may be relaxed in the interest of justice, they are tools designed to facilitate adjudication and relaxation was never intended to be a license for erring litigants to violate the rules with impunity; liberality can be invoked only in proper cases and under justifiable causes and circumstances. Daikoku Electronics Phils., Inc. vs. Raza further explained that relaxation cannot be made without valid reasons and that the bare invocation of "the interest of substantial justice" is not a magic wand that automatically compels suspension of procedural rules. Here, the Court of Appeals justified liberality by the importance of the issue—whether respondent was illegally dismissed—and by the belief that respondent should be afforded the amplest opportunity for proper and just determination free from technicalities, considering that the belated filing was the fault of respondent's former counsel. Neither respondent nor her former counsel, however, gave any explanation or reason citing extraordinary circumstances for the lawyer's failure to abide by the rules for filing an appeal; respondent merely insisted that she had not been remiss in following up her case with said lawyer. No compelling reason therefore supported the Court of Appeals' liberality.
• Finality of the Labor Arbiter's Decision: The Labor Arbiter's Decision became final and executory as to respondent when she failed to file a timely appeal. The Court cited Heirs of Teofilo Gaudiano vs. Benemerito for the rule that the perfection of an appeal within the period and in the manner prescribed by law is jurisdictional and that non-compliance is fatal and renders the judgment final and executory. The right to appeal is not a natural right or part of due process but merely a statutory privilege that must be exercised in the manner and within the period prescribed by law; failure to comply leads to loss of the right to appeal. Ocampo vs. Court of Appeals (Former Second Division) was cited for the rule that finality is a jurisdictional event that cannot be made to depend on the convenience of the parties, and that a party who fails to question an adverse judgment by not filing the proper remedy within the prescribed period loses the right to do so, with the judgment becoming final and binding. Pasiona, Jr. vs. Court of Appeals reiterated the doctrine of finality of judgment, stressing that judgments should become final at a definite time fixed by law and that the winning party's right to enjoy the finality of the resolution is an essential part of public policy and the orderly administration of justice. When the Labor Arbiter's Decision became final, petitioners attained a vested right to the judgment and could rely on its immutability. Sofio vs. Valenzuela was cited for the rule that the Court will not override the finality and immutability of a judgment based only on the negligence of a party's counsel; to justify an override, the counsel's negligence must not only be gross but must also be shown to have deprived the party of the right to due process. In this case, there was no such deprivation: respondent was able to fully present and argue her case before the Labor Arbiter and was accorded the opportunity to be heard. Her failure to appeal the Labor Arbiter's Decision could not be deemed a deprivation of her right to due process. The negligence and mistakes of counsel bind the client, and the exception for gross negligence resulting in grave injustice was not present.

• Finality and Immutability of Judgment — Once a judgment becomes final by the lapse of the period for appeal without an appeal or motion for reconsideration being filed, it is immutable and may no longer be altered or set aside, even by the court that rendered it. The doctrine rests on public policy and the orderly administration of justice, and it gives the winning party a vested right to rely on the final judgment. In this case, the Labor Arbiter's Decision became final and executory when respondent failed to file a timely appeal, and petitioners acquired a vested right to that judgment.
• Liberal Application of Procedural Rules — Procedural rules may be relaxed only as an exception, in proper cases and under justifiable causes and circumstances; the bare invocation of substantial justice does not automatically justify suspension of the rules, and extraordinary circumstances must be shown. The Court applied this doctrine against the Court of Appeals, finding no valid or compelling reason for the belated appeal.
• Negligence of Counsel Binds the Client — As a general rule, the negligence or mistake of counsel in handling a case binds the client; the exception is when the lawyer's gross negligence results in grave injustice by depriving the client of due process. The Court found no such deprivation because respondent had fully presented and argued her case before the Labor Arbiter and was heard.
• Right to Appeal as a Statutory Privilege — The right to appeal is not a natural right or part of due process; it is a statutory privilege that must be exercised strictly in the manner and within the period prescribed by law. Failure to perfect a timely appeal results in loss of the right to appeal and renders the judgment final and executory.
• Perfection of Appeal is Jurisdictional — The perfection of an appeal within the period and in the manner prescribed by law is jurisdictional; non-compliance is fatal and has the effect of rendering the judgment final and executory. The Court applied this rule to the NLRC appeal filed out of time.

• "While procedural rules may be relaxed in the interest of justice, it is well-settled that these are tools designed to facilitate the adjudication of cases. The relaxation of procedural rules in the interest of justice was never intended to be a license for erring litigants to violate the rules with impunity. Liberality in the interpretation and application of the rules can be invoked only in proper cases and under justifiable causes and circumstances." — This passage, quoted from Marohomsalic vs. Cole, states the controlling limits on liberal application of procedural rules and was the basis for rejecting the Court of Appeals' liberality.
• "The perfection of an appeal within the period and in the manner prescribed by law is jurisdictional and non-compliance with such legal requirements is fatal and has the effect of rendering the judgment final and executory." — This passage, quoted from Heirs of Teofilo Gaudiano vs. Benemerito, defines the jurisdictional nature of appeal perfection and supports the ruling that the Labor Arbiter's Decision became final.
• "The right to appeal is not a natural right or part of due process; it is merely a statutory privilege and may be exercised only in the manner and in accordance with the provisions of law." — This passage, also from Heirs of Teofilo Gaudiano vs. Benemerito, explains why respondent's failure to file a timely appeal resulted in loss of the right to appeal.
• "The Court will not override the finality and immutability of a judgment based only on the negligence of a party’s counsel in timely taking all the proper recourses from the judgment. To justify an override, the counsel’s negligence must not only be gross but must also be shown to have deprived the party the right to due process." — This passage, quoted from Sofio vs. Valenzuela, states the exception to the rule that counsel's negligence binds the client and was applied to find no due process deprivation.

• Marohomsalic vs. Cole, G.R. No. 169918, February 27, 2008, 547 SCRA 98 — Cited for the rule that procedural rules may be relaxed only in proper cases and under justifiable causes and circumstances, and that relaxation is not a license for erring litigants to violate the rules with impunity.
• Daikoku Electronics Phils., Inc. vs. Raza, G.R. No. 181688, June 5, 2009, 588 SCRA 788 — Cited for the rule that relaxation of procedural rules requires valid reasons and that the bare invocation of substantial justice does not automatically compel suspension of the rules.
• Heirs of Teofilo Gaudiano vs. Benemerito, G.R. No. 174247, February 21, 2007, 516 SCRA 416 — Cited for the rules that perfection of an appeal within the prescribed period and manner is jurisdictional, non-compliance is fatal, and the right to appeal is a statutory privilege.
• Ocampo vs. Court of Appeals (Former Second Division), G.R. No. 150334, March 20, 2009, 582 SCRA 43 — Cited for the rule that finality of a decision is a jurisdictional event that cannot depend on the convenience of the parties and that failure to timely appeal results in loss of the right to do so.
• Pasiona, Jr. vs. Court of Appeals, G.R. No. 165471, July 21, 2008, 559 SCRA 137 — Cited for the doctrine of finality of judgment and the principle that the winning party's right to finality is an essential part of public policy and the orderly administration of justice.
• Sofio vs. Valenzuela, G.R. No. 157810, February 15, 2012; 666 SCRA 55 — Cited for the rule that finality and immutability of a judgment will not be overridden based only on counsel's negligence; the negligence must be gross and must have deprived the party of due process.
• Melchor L. Lagua vs. Court of Appeals, G.R. No. 173390, June 27, 2012 — Cited for the rule that the negligence and mistakes of counsel bind the client.
• Panay Railways, Inc. vs. Heva Management and Development Corp., G.R. No. 154061, January 25, 2012; 664 SCRA 1 — Cited for the same rule that the negligence and mistakes of counsel bind the client.

• Rule 45, Rules of Court — The Petition for Review on Certiorari filed by petitioners with the Supreme Court was brought under this Rule; the decision resolves that petition.
• Rule 36, Section 2, Rules of Court — Cited for the rule that a judgment attains finality by the lapse of the period for taking an appeal without such appeal or motion for reconsideration being filed. Applied to hold that the Labor Arbiter's Decision became final when respondent failed to file a timely appeal.
• Article VIII, Section 13, 1987 Constitution — Cited in the Chief Justice's certification that the conclusions in the Decision had been reached in consultation before the case was assigned to the writer of the opinion.

The Decision was penned by Associate Justice Diosdado M. Peralta. The following concurred: Associate Justice Arturo D. Brion (designated Acting Member), Associate Justice Roberto A. Abad, Associate Justice Jose Catral Mendoza, and Associate Justice Marvic Mario Victor F. Leonen.