Luna vs. Allado Construction Co., Inc.

The NLRC may not invoke Article 218(c) of the Labor Code as a basis for reviewing issues not raised on appeal, its own procedural rules expressly limiting its review to the specific issues elevated for review; however, financial assistance may be awarded as a measure of social justice and equitable concession even where the employee is deemed to have resigned, provided there is neither serious misconduct nor a clear finding of abandonment.

Allado Construction Co., Inc. is a juridical entity engaged in the construction business, with Ramon Allado as its president. Rodolfo Luna was a member of the company's construction pool of personnel, rendering services as a warehouseman and timekeeper in every construction project undertaken by respondents. The dispute centers on the circumstances surrounding Luna's separation from service after he refused to sign project employment contracts, and on the propriety of the NLRC's expansion of the issues on appeal beyond what respondents actually raised.

Rodolfo Luna was a member of Allado Construction Co., Inc.'s construction pool of personnel, rendering continuous service as a warehouseman and timekeeper in every construction project undertaken by the company. On November 24, 2001, while at respondents' construction site in Maasim, Sarangani Province, Luna was given a travel order to proceed to respondents' main office in Davao City for reassignment. Upon arrival at the office on November 26, 2001, he was told by personnel manager Marilou Matilano to sign several sets of "Contract of Project Employment." Luna refused to sign the contracts and, as a consequence, was not given a reassignment or any other work.

According to respondents, on November 29, 2001, Luna applied for a leave of absence until December 6, 2001, which was granted. The leave application form, which Luna himself filled out and signed, stated that his reason for going on leave was "to settle [his] personal problem." Upon expiration of his leave, Luna was advised to report to the company's project in Kablacan, Sarangani Province, but he refused to report to his new assignment and instead claimed that he had been illegally dismissed. A handwritten notation reading "Who will replace him?" appeared on the leave application form.

Luna filed a complaint for illegal dismissal before Executive Labor Arbiter Arturo Gamolo, alleging that he had been actually dismissed on November 26, 2001 (as stated in his complaint) or November 27, 2001 (as stated in his position paper) when he refused to sign the blank project employment contracts. The Labor Arbiter found that Luna's refusal to resume employment without valid cause, and his demand instead for separation pay and backwages, was tantamount to resignation. The Labor Arbiter noted that respondent corporation, through its representative during the preliminary conferences, denied the contract of project employment and confirmed the availability of the same employment to Luna without any demotion in rank or diminution of benefits. Accordingly, the Labor Arbiter dismissed the illegal dismissal complaint but awarded ₱18,000.00 as financial assistance.

Only respondents appealed to the NLRC, solely for the purpose of questioning the validity of the financial assistance award. The NLRC, however, reversed the Labor Arbiter's decision in its entirety, declared respondents guilty of illegal dismissal, and ordered separation pay and full backwages. The NLRC based its finding of illegal dismissal on the notation "Who will replace him?" on the leave application form, the alleged failure of respondents to ask Luna to return to work during mandatory conferences, and its conclusion that Luna "was not allowed to work in his former position because he was already replaced." The Court of Appeals thereafter set aside the NLRC's resolutions and reinstated the Labor Arbiter's decision, deleting only the financial assistance award, on the ground that the NLRC gravely abused its discretion in ruling on illegal dismissal when only the financial assistance issue was appealed.

• NLRC Appellate Authority: Petitioner argued that the NLRC has the authority to review issues not brought before it on appeal, relying on Article 218(c) of the Labor Code, which grants the NLRC the power to "correct, amend or waive any error, defect or irregularity whether in substance or in form," and on Article 221, which relaxes the rules of evidence in labor proceedings. Petitioner cited New Pacific Timber & Supply Company, Inc. vs. National Labor Relations Commission to support this position.
• CA Grave Abuse of Discretion: Petitioner maintained that the Court of Appeals gravely abused its discretion in disregarding the NLRC's findings of fact, the principle of social justice, and existing jurisprudence with respect to the award of financial assistance. Petitioner argued that the NLRC correctly resolved doubt in his favor, citing jurisprudence that where doubt exists between the evidence of employer and employee, the scales of justice must tilt in favor of the latter.
• Financial Assistance on Social Justice Grounds: Petitioner argued that, assuming without admitting there was no illegal dismissal, the award of financial assistance was in accordance with existing jurisprudence pursuant to the principle of social justice.
• CA Bias and Partiality: Petitioner contended that the Court of Appeals exhibited bias and partiality when it hastily issued a temporary restraining order to frustrate the implementation of the NLRC decision, particularly because only one member associate justice initially granted the TRO without the concurrence of the two other members of the division.

• Financial Assistance Impropriety: Respondents appealed the Labor Arbiter's decision solely to question the validity of the grant of financial assistance, arguing that financial assistance may not be awarded in cases of voluntary resignation.
• Insubordination or Abandonment: Respondents contended that petitioner was guilty of insubordination or abandonment, praying that the Labor Arbiter direct petitioner to return to work and that, only upon petitioner's failure to comply, he be considered to have abandoned his work.
• Restoration of Labor Arbiter Decision: Respondents sought the reinstatement of the Labor Arbiter's decision with the modification that the award of financial assistance be deleted.

• NLRC Scope of Review on Appeal: Whether the NLRC, in the exercise of its inherent powers, could still review issues not brought during the appeal.
• CA Grave Abuse of Discretion: Whether the Court of Appeals gravely abused its discretion in disregarding (1) the findings of fact of the NLRC, (2) the principle of social justice, and (3) existing jurisprudence with respect to the award of financial assistance.
• CA Bias and Partiality: Whether the Court of Appeals exhibited bias and partiality when it rendered the subject decision and resolution, considering the hasty and improvident issuance of a writ of preliminary injunction to frustrate petitioner in implementing the final and executory judgment of the NLRC.

• NLRC Scope of Review on Appeal: No. The NLRC is limited to reviewing and deciding only the specific issues elevated on appeal, pursuant to Section 4(c), Rule VI of the 2002 Rules of Procedure of the NLRC, and Article 218(c) of the Labor Code cannot be invoked to expand its power of review beyond the issues raised by the appellant.
• CA Grave Abuse of Discretion: Partly. The Court of Appeals correctly found that the NLRC gravely abused its discretion in ruling on illegal dismissal, as there was no substantial evidence supporting petitioner's claim of actual dismissal; however, the CA erred in deleting the award of financial assistance, which was proper as an equitable concession under social justice principles.
• CA Bias and Partiality: No. The issuance of the TRO by the ponente alone was expressly allowed under Section 5, Rule VI of the 2002 Internal Rules of the Court of Appeals in cases of extreme urgency, and the TRO was subsequently concurred in by the other members of the division.

• NLRC Scope of Review on Appeal: Section 4(c), Rule VI of the 2002 Rules of Procedure of the NLRC expressly provides that once an appeal is perfected, the Commission shall limit itself to reviewing and deciding specific issues elevated on appeal. The same provision was retained in the 2005 Revised Rules. While Article 218(c) of the Labor Code grants the NLRC authority to "correct, amend or waive any error, defect or irregularity whether in substance or in form," a careful review of jurisprudence reveals that this provision was invoked to justify the NLRC's waiver of procedural defects — late filing of appeals, insufficiency of supersedeas bonds, defective service of summons — not to expand the scope of substantive review beyond the issues raised. In Del Monte Philippines, Inc. vs. National Labor Relations Commission, which the Court found on all fours with the case at bar, it was held that the NLRC cannot, under the pretext of correcting serious errors, expand its power of review beyond the issues elevated by an appellant. The Labor Code provision, read in its entirety, states that the NLRC's power to correct errors may be exercised only in the determination of a question, matter, or controversy within its jurisdiction. Because respondents limited their appeal to the single legal question of the validity of the financial assistance award, all other matters — including the validity of petitioner's dismissal — became final and executory. The NLRC's consideration of arguments and issues not properly raised by timely appeal constituted grave abuse of discretion amounting to excess of jurisdiction.

• CA Grave Abuse of Discretion: The Court reexamined the factual findings of the Labor Arbiter and the Court of Appeals, on one side, and the NLRC, on the other, because of their divergent appreciations of the facts. The NLRC's conclusion that doubt existed between the evidence of the parties was incorrect, as there was no adequate evidentiary support for petitioner's claim of actual illegal dismissal. Petitioner's own leave application, which he signed, stated his reason as "to settle [his] personal problem," contradicting his claim that he had already been dismissed. The NLRC's reliance on the notation "Who will replace him?" was speculative; the notation could reasonably be interpreted as asking who would substitute petitioner during his leave, and its absence of the words "in the meantime" did not justify construing it as permanent replacement. The notation, in fact, belied petitioner's claim of dismissal, for if he had already been dismissed, there would be no need to file a leave application or find a replacement. The NLRC's further inference that respondents no longer needed petitioner's services because they never asked him to return to work during mandatory conferences was contradicted by the Labor Arbiter's own finding that respondents confirmed the availability of the same employment to petitioner without demotion or diminution of benefits. Petitioner did not appeal the Labor Arbiter's findings and is bound by them. However, on the matter of financial assistance, the Court agreed with petitioner that the award was proper. Citing Eastern Shipping Lines, Inc. vs. Sedan, the Court held that financial assistance may be allowed as a measure of social justice and exceptional circumstances, and as an equitable concession. There was no reason why petitioner, who served respondent corporation for more than eight years without any infraction, should not be extended the reasonable financial assistance of ₱18,000.00. The Labor Arbiter made no finding of insubordination or abandonment, and respondents offered no proof that upon expiration of petitioner's leave they directed him to report to work but he willfully failed to comply. Applying the reasoning in Indophil Acrylic Mfg. Corp. vs. National Labor Relations Commission by analogy, where there is neither dismissal nor abandonment, separation pay or financial assistance may be awarded under appropriate circumstances.

• CA Bias and Partiality: The granting of a TRO by the ponente of the case, even without the concurrence of the other associate justices, is expressly allowed under Section 5, Rule VI of the 2002 Internal Rules of the Court of Appeals, which provides that if only the ponente is present, he shall act alone upon the application, with the action submitted on the next working day to the absent members for ratification, modification, or recall. The urgency was evident: the NLRC Regional Arbitration Branch was already in the process of enforcing the assailed NLRC resolution, as shown by the issuance of a Notice of Hearing for a pre-execution conference. The TRO was issued to prevent respondents' petition from becoming moot and academic. The grant was subsequently concurred in by the other members of the division in their separate resolutions dated June 19, 2006. The issuance was therefore in accordance with the Internal Rules of the Court of Appeals.

• NLRC Limited Scope of Review on Appeal — The NLRC, in cases of perfected appeals, shall limit itself to reviewing and deciding only the specific issues elevated on appeal; all other matters not included in the appeal become final and executory. Article 218(c) of the Labor Code, which grants the NLRC authority to "correct, amend or waive any error, defect or irregularity whether in substance or in form," cannot be invoked to expand the NLRC's power of review beyond the issues raised by the appellant. This power has been applied to waive procedural defects (late filing, insufficient bonds, defective service) but not to justify substantive review of unappealed issues. Applied in this case to hold that the NLRC gravely abused its discretion when it ruled on illegal dismissal despite respondents appealing only the financial assistance award.

• Financial Assistance as Equitable Concession — Financial assistance may be awarded as a measure of social justice and exceptional circumstances, and as an equitable concession, even where the employee is deemed to have resigned, provided the employee is not dismissed for serious misconduct or causes reflecting on moral character. Where there is neither dismissal nor abandonment, separation pay or financial assistance may be awarded under appropriate circumstances to balance the interests of the employer with those of the worker. Applied in this case to reinstate the ₱18,000.00 financial assistance award, given petitioner's more than eight years of unblemished service and the absence of any finding of insubordination or abandonment.

• TRO Issuance by Ponente Alone — Under Section 5, Rule VI of the 2002 Internal Rules of the Court of Appeals, the ponente of a case may act alone upon an application for a temporary restraining order if only he is present and the matter is of extreme urgency, provided the action is submitted on the next working day to the absent members for ratification, modification, or recall. Applied in this case to uphold the validity of the TRO issued by the Chairman of the Twenty-Second Division, which was subsequently concurred in by the other members.

• "The clear import of the aforementioned procedural rule is that the NLRC shall, in cases of perfected appeals, limit itself to reviewing those issues which are raised on appeal. As a consequence thereof, any other issues which were not included in the appeal shall become final and executory." — This passage articulates the ratio decidendi on the first issue, establishing the binding effect of the NLRC's own procedural rules on the scope of appellate review.

• "The Labor Code provision, read in its entirety, states that the NLRC's power to correct errors, whether substantial or formal, may be exercised only in the determination of a question, matter or controversy within its jurisdiction." — This quotation, drawn from the Court's citation of Del Monte Philippines, Inc. vs. National Labor Relations Commission, defines the boundary of Article 218(c) and explains why the NLRC cannot use it to review unappealed issues.

• "There appears to be no reason why petitioner, who has served respondent corporation for more than eight years without committing any infraction, cannot be extended the reasonable financial assistance of ₱18,000.00 as awarded by the Labor Arbiter on equity considerations." — This passage states the Court's equitable rationale for reinstating the financial assistance award, applying the social justice doctrine from Eastern Shipping Lines, Inc. vs. Sedan.

• "This is hardly license for the NLRC to disregard and violate the implementing rules it has itself promulgated." — This statement, quoted from Del Monte Philippines, Inc. vs. National Labor Relations Commission, underscores that the relaxation of technical rules in labor proceedings does not authorize the NLRC to ignore its own rules of procedure.

• Del Monte Philippines, Inc. vs. National Labor Relations Commission, G.R. No. 87371, August 6, 1990, 188 SCRA 370 — Controlling precedent on the first issue. The Court found this case "on all fours" with the case at bar, holding that the NLRC cannot expand its power of review beyond the issues elevated by an appellant and that Article 218(c) cannot justify such expansion. The ruling was reiterated in Torres vs. National Labor Relations Commission and United Placement International vs. National Labor Relations Commission.

• New Pacific Timber & Supply Company, Inc. vs. National Labor Relations Commission, 385 Phil. 93 (2000) — Cited by petitioner but distinguished by the Court. In that case, Article 218(c) was invoked to justify the NLRC's treatment of a petition for relief filed beyond the reglementary period as an appeal — a procedural waiver, not a substantive expansion of review.

• Eastern Shipping Lines, Inc. vs. Sedan, G.R. No. 159354, April 7, 2006, 486 SCRA 565 — Controlling precedent on the financial assistance issue. The Court relied on this case to uphold the award of financial assistance as a measure of social justice and equitable concession, notwithstanding the finding that the employee's refusal to report back to work was tantamount to voluntary resignation.

• Indophil Acrylic Mfg. Corp. vs. National Labor Relations Commission, G.R. No. 96488, September 27, 1993, 226 SCRA 723 — Applied by analogy to support the award of financial assistance where there was neither dismissal nor abandonment, and the employer-employee relationship had been ruptured.

• City Fair Corporation vs. National Labor Relations Commission, 313 Phil. 464 (1995); Judy Philippines, Inc. vs. National Labor Relations Commission, 352 Phil. 593 (1998); Industrial Timber Corporation vs. Ababon, G.R. Nos. 164518 & 164965, January 25, 2006; Pison-Arceo Agricultural and Development Corporation vs. National Labor Relations Commission, G.R. No. 117890, September 18, 1997; Aguanza vs. Asian Terminal, Inc., G.R. No. 163505, August 14, 2009; Independent Sagay-Escalante Planters, Inc. vs. National Labor Relations Commission, G.R. No. 100926, March 13, 1992; Faeldonia vs. Tong Yak Groceries, G.R. No. 182499, October 2, 2009; Mt. Carmel College vs. Resuena, G.R. No. 173076, October 10, 2007 — Cited to illustrate that Article 218(c) was applied in prior jurisprudence only to waive procedural defects (late filings, defective service, insufficient bonds, tardy payment of appeal fees) or to reverse factual conclusions without objection, never to expand substantive review beyond issues raised on appeal.

• Article 218(c), Labor Code — Grants the NLRC the power to "correct, amend or waive any error, defect or irregularity whether in substance or in form" in the exercise of its appellate jurisdiction. The Court held that this provision, read in its entirety, limits the NLRC's corrective power to matters within its jurisdiction and cannot serve as a basis for reviewing issues not raised on appeal.

• Article 221, Labor Code — Provides that rules of evidence prevailing in courts of law or equity shall not be controlling in NLRC proceedings, and that the NLRC shall use all reasonable means to ascertain facts speedily and objectively without regard to technicalities. The Court clarified that this is "hardly license for the NLRC to disregard and violate the implementing rules it has itself promulgated."

• Section 4(c), Rule VI, 2002 Rules of Procedure of the NLRC — Expressly provides that once an appeal is perfected, the Commission shall limit itself to reviewing and deciding specific issues elevated on appeal. The same provision was retained as Section 4(d), Rule VI of the 2005 Revised Rules. Applied to hold that the NLRC violated its own rules when it ruled on illegal dismissal, an issue not raised on appeal.

• Section 5, Rule VI, 2002 Internal Rules of the Court of Appeals — Allows the ponente to act alone upon an application for a TRO if only he is present and the matter is of extreme urgency, with the action to be submitted on the next working day to absent members for ratification, modification, or recall. Applied to uphold the validity of the TRO issued by the Chairman of the Twenty-Second Division.

Chief Justice Renato C. Corona (Chairperson), Associate Justice Presbitero J. Velasco, Jr., Associate Justice Diosdado M. Peralta, and Associate Justice Jose Portugal Perez concurred in the decision. No separate concurring opinions were noted.