Pacios vs. Tahanang Walang Hagdanan

The suspension of execution proceedings under Rule XI, Section 17 of the NLRC Rules of Procedure applies only "insofar as the reversal is concerned," requiring a determination of what part of the execution is affected by the reversal, and does not mandate automatic suspension of execution of the appealed decision. Execution may be authorized even pending appeal where petitioners are poor employees deprived of their only source of livelihood, consistent with the compassionate policy underlying Article 223 of the Labor Code and the constitutional mandate to afford full protection to labor.

Tahanang Walang Hagdanan is a private organization engaged in producing and marketing handicrafts, utilizing employees who are mostly physically disabled, without one or both limbs. Sister Valeriana Baerts, a nun, recruited the petitioners to work for the organization. The petitioners were among the regular employees who were persons with disability of Tahanang Walang Hagdanan for years until their dismissal. The case involves the interplay of NLRC Rules of Procedure provisions governing appeal bonds, perfection of appeals, and execution of judgments in labor cases, set against the constitutional policy of affording full protection to labor.

Tahanang Walang Hagdanan is a private organization engaged in producing and marketing various handicrafts, utilizing employees who are mostly physically disabled, without one or both limbs. Sister Valeriana Baerts, a nun, recruited Bernardo B. Pacios, Marilou T. Abedes, Alexis L. Elinon, Armando V. Abedes, Gina P. Ariate, Vivencia N. Buela, Hermenigildo E. Cansino, Ernesto Davis, Alfredo G. Delmonte, Jr., Roberto F. Esber, Adelaida S. Gabriel, Ines S. Genetiano, Ismael M. Ibo, Jr., Ronie C. Leal, Jaime S. Mejia, Marcelino P. Penoliar, Carlos D. Oledan, Rodelio A. Osinta, Virgilio M. Torres, Antonio A. Viñas, Jennette C. Viñas, Eric P. Andres, and Armando M. De Guzman (collectively, the workers) to work for Tahanang Walang Hagdanan. They were among the regular employees who were persons with disability of Tahanang Walang Hagdanan for years, until they were dismissed on June 11, 2012.

Sometime in 2013, the workers filed an amended complaint for illegal dismissal, underpayment of salary, non-payment of 13th month pay, service incentive leave, separation pay, retirement benefits, with claims for moral damages, exemplary damages, and attorney's fees against Tahanang Walang Hagdanan, Pangarap Sheltered Home for Disabled People, Inc. (Pangarap), Venus Amoncio, and Baerts, docketed as NLRC-NCR Case No. 07-10328-12. On October 24, 2013, the Labor Arbiter rendered a Decision in favor of the workers, ordering Tahanang Walang Hagdanan, Pangarap, Amoncio, and Baerts to pay them P16,629,163.63.

Tahanang Walang Hagdanan, Pangarap, Amoncio, and Baerts appealed the Labor Arbiter's Decision before the National Labor Relations Commission. The appeal was dismissed for non-perfection because the cash bond was insufficient, amounting to only P40,000.00. They filed a Motion for Reconsideration and posted a surety bond amounting to P1,622,916.37. The National Labor Relations Commission denied the motion, finding that the initial P40,000.00 cash bond did not toll the running of the 10-day period to appeal. Thus, they filed a Petition for Certiorari before the Court of Appeals, docketed as CA-G.R. SP No. 136907. In its April 27, 2015 Decision, the Court of Appeals reversed the National Labor Relations Commission's February 25, 2014 Resolution, reinstating the appeal in the interest of substantial justice, finding that the cash bond of P40,000.00 and the supersedeas bond of P1,622,916.37 were sufficient and reasonable to perfect the appeal. This was later affirmed in a minute resolution issued by the Supreme Court in G.R. No. 220666, and an omnibus motion for clarification and reconsideration was subsequently denied.

In the meantime, before the Court of Appeals reinstated the appeal, the Labor Arbiter issued a Writ of Execution on March 30, 2015 to implement the October 24, 2013 Decision awarding P16,629,163.63 to the workers. The cash bond in the amount of P40,000.00 was released to them. Thereafter, they filed a Motion to Release the Supersedeas Bond. However, Tahanang Walang Hagdanan, Pangarap, Amoncio, and Baerts opposed this because of the Court of Appeals April 27, 2015 Decision reinstating their appeal. On May 22, 2015, the Labor Arbiter issued a Resolution suspending the resolution of the workers' Motion to Release the Supersedeas Bond, as well as all subsequent motions seeking its immediate release. On June 2, 2015, the workers filed a petition before the National Labor Relations Commission, assailing the refusal of the Labor Arbiter to order the release of the supersedeas bond. The National Labor Relations Commission, however, did not order the release of the money collected.

Thus, the workers filed a Petition for Mandamus before the Court of Appeals, docketed as CA-G.R. SP No. 142199. The Petition for Mandamus was denied by the Court of Appeals in its July 22, 2016 Decision, citing Rule XI, Section 17 of the 2011 National Labor Relations Commission Rules of Procedure, as amended in its En Banc Resolution No. 011-12, which provides that in case of total or partial reversal of judgment by the Court of Appeals, the execution proceedings shall be suspended insofar as the reversal is concerned notwithstanding the pendency of a motion for reconsideration on such judgment. The Court of Appeals reasoned that because its April 27, 2015 Decision reversed the National Labor Relations Commission February 25, 2014 Resolution, the suspension of the execution proceedings was correct. The workers filed a Motion for Reconsideration dated August 23, 2016, which was denied in the Court of Appeals January 23, 2017 Resolution.

On February 15, 2017, the workers filed a Petition for Review on Certiorari before the Supreme Court. Petitioners asserted that they have been living lives of abject poverty, misery, and great suffering since June 11, 2012, when they were illegally dismissed. They have tried to survive by begging in the streets, in wheelchairs. On rainy days when they could not beg in the streets, they would go for days without food. As a result, three of them have passed away. After the Petition was filed, the National Labor Relations Commission resolved the reinstated appeal on March 31, 2017, modifying the Labor Arbiter's October 24, 2013 Decision by relieving the individual respondents from liability. Tahanang Walang Hagdanan filed a Motion for Reconsideration of the March 31, 2017 Decision, but as of the filing of respondents' Comment, no action had been taken on the Motion for Reconsideration.

• Ministerial Duty to Release Bond: Petitioners claimed that it was the purely ministerial act or duty of the National Labor Relations Commission to order the release of the supersedeas bond to them, citing Rule XI, Section 4 of the NLRC Rules, which provides that a petition for certiorari with the Court of Appeals or the Supreme Court shall not stay the execution of the assailed decision unless a restraining order is issued by said courts.
• Absence of Restraining Order: Petitioners pointed out that the Court of Appeals did not include any restraining order in its April 27, 2015 Decision, thus the execution proceedings of the Labor Arbiter's October 24, 2013 Decision should have continued.
• Conflict Between Rules: Petitioners claimed that there is a conflict between Sections 4 and 17 of Rule XI of the National Labor Relations Commission Rules, and that the Court of Appeals gave undue and preferential application to Section 17. At the very least, the Court of Appeals should have reconciled the two provisions in accordance with the tenet that full protection should be accorded to the labor sector, applying Section 4 over Section 17.
• Subject of Petition: In response to respondents' Comment, petitioners filed a Manifestation stating that the Petition assails the Court of Appeals July 22, 2016 Decision in CA-G.R. SP No. 142199, which involves the issuance of a Writ of Mandamus to compel the National Labor Relations Commission to release the 10% supersedeas bond in the amount of P1,662,916.36, already collected and deposited by the Sheriff with the National Labor Relations Commission cashier on May 13, 2015.

• Dismissal Based on Subsequent Decision: Respondents did not respond to the arguments raised in the Petition but prayed that it nonetheless be dismissed because the subject of the Petition is a March 31, 2017 Decision rendered by the National Labor Relations Commission in NLRC NCR Case No. 07-10328-12, to which respondents filed a Motion for Reconsideration on May 2, 2017.
• Pending Motion for Reconsideration: Respondents attached to their Comment the assailed decision, noting that the National Labor Relations Commission already resolved the reinstated appeal on March 31, 2017, modifying the Labor Arbiter's Decision by relieving the individual respondents from liability, and that Tahanang Walang Hagdanan filed a Motion for Reconsideration, with no action taken as of the filing of their Comment.

• Suspension of Execution: Whether the Court of Appeals erred in affirming the suspension of the execution proceedings in NLRC NCR Case No. 07-10328-12.

• Suspension of Execution: Yes. The Court of Appeals erred in affirming the suspension of execution proceedings. The Court of Appeals failed to note that under Rule XI, Section 17 of the NLRC Rules, execution proceedings should be suspended only "insofar as the reversal is concerned," requiring an extra step of determining what part of the execution is affected by the reversal. The more relevant rule was Rule XI, Section 3, which provides that the perfection of an appeal stays the execution of the Labor Arbiter's decision, and because the Court of Appeals' April 27, 2015 Decision deemed respondents' appeal reinstated, execution was stayed under this provision. However, given the petitioners' dire circumstances and the NLRC's resolution of the reinstated appeal in their favor, execution may be authorized even pending appeal.

• Suspension of Execution: The Court noted that the basis used by the Court of Appeals to affirm the suspension of execution was incomplete. The Court of Appeals pointed out that Rule XI, Section 17 of the NLRC Rules "explicitly mandates the suspension of the execution proceedings in case of total or partial reversal of judgment by the Court of Appeals." However, the Court of Appeals failed to note that under the Rules, the execution proceedings should be suspended only "insofar as the reversal is concerned." This omission leads to an incorrect reading of the rule and suggests that any reversal on appeal leads to the automatic suspension of execution of the appealed decision. When used as basis for suspending execution, the rule requires an extra step, namely, the determination of what part of the execution is affected by the reversal. The more relevant rule in this case is Rule XI, Section 3 of the NLRC Rules, which provides that the perfection of an appeal shall stay the execution of the decision of the Labor Arbiter except execution for reinstatement pending appeal. For clarity, the Court of Appeals should have explained that because its April 27, 2015 Decision deemed respondents' appeal before the NLRC as reinstated, the execution of the Labor Arbiter's October 24, 2013 Decision was stayed under Rule XI, Section 3.

The Court further discussed the Court of Appeals April 27, 2015 Decision in CA-G.R. SP No. 136907, when it reinstated respondents' appeal. The Court noted that it affirmed the reinstatement of the appeal in its November 9, 2015 Minute Resolution in G.R. No. 220666, and then denied an omnibus motion for clarification and reconsideration. It did not reverse the Court of Appeals April 27, 2015 Decision. However, given the plight of petitioners, that the questions of merit have already been decided in their favor, and considering that this case and G.R. No. 220666 primarily involve only matters of procedure, the Court found it appropriate to touch upon the error of the Court of Appeals in CA-G.R. SP No. 136907. The Court of Appeals reinstated respondents' appeal based on the NLRC's alleged grave abuse of discretion in refusing to consider the allegedly meritorious grounds raised in their appeal. However, the Court of Appeals itself reversed the NLRC without specifying the meritorious grounds raised in respondents' appeal that required a determination on the merits so as to constitute an exceptional circumstance which would excuse respondents from failing to post a reasonable amount as appeal bond upon their initial filing of their appeal.

More significant than the omission of the Court of Appeals in CA-G.R. SP No. 136907 was the NLRC's resolution of respondents' reinstated appeal and affirmation of the Labor Arbiter's October 24, 2013 Decision in favor of petitioners. This affirmation should have given petitioners some much-needed relief. However, respondents filed a Motion for Reconsideration, further frustrating and delaying relief which should have been granted to petitioners as early as 2013. This Motion for Reconsideration is the only procedural incident preventing the execution of the Labor Arbiter's October 24, 2013 Decision as it has stalled the complete resolution of the reinstated appeal before the NLRC.

The Court cited Aris (Phil.), Inc. vs. National Labor Relations Commission, which explained the reasons for authorizing execution of decisions reinstating dismissed employees in labor cases pending appeal. The law has laid down a compassionate policy which vivifies and enhances the provisions of the 1987 Constitution on labor and the workingman. The State is mandated to afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all; to guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law, security of tenure, human conditions of work, and a living wage. If in ordinary civil actions execution of judgment pending appeal is authorized for reasons the determination of which is merely left to the discretion of the judge, there is no plausible reason to withhold it in cases of decisions reinstating dismissed or separated employees. In such cases, the poor employees had been deprived of their only source of livelihood, their only means of support for their family—their very lifeblood. The Court found that the principles allowing execution pending appeal invoked in Aris are equally applicable here as petitioners are poor employees, deprived of their only source of livelihood for years and reduced to begging on the streets. In view of their dire straits and since the NLRC has already ruled twice on the case in a way that supports the release of the supersedeas bond, it is proper to continue with execution proceedings in this case despite a pending motion for reconsideration.

• Suspension of Execution "Insofar as the Reversal is Concerned" — Under Rule XI, Section 17 of the NLRC Rules of Procedure, in case of total or partial reversal of judgment by the Court of Appeals, execution proceedings shall be suspended only insofar as the reversal is concerned, notwithstanding the pendency of a motion for reconsideration on such judgment. The Court applied this rule by holding that the Court of Appeals' failure to note the qualifying phrase "insofar as the reversal is concerned" led to an incorrect reading suggesting that any reversal on appeal leads to automatic suspension of execution. The rule requires an extra step: determination of what part of the execution is affected by the reversal.

• Execution Pending Appeal in Labor Cases — Execution may be authorized even pending appeal in labor cases involving reinstatement of dismissed employees. The Court applied the principles from Aris (Phil.), Inc. vs. National Labor Relations Commission, which held that the law has laid down a compassionate policy that vivifies and enhances the constitutional provisions on labor and the workingman. Where poor employees have been deprived of their only source of livelihood, this special circumstance is far better than any other which a judge, in his sound discretion, may determine. With respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its execution pending appeal.

• Liberal Interpretation of Appeal Bond Rules — The NLRC is cautioned to give Article 223 of the Labor Code, particularly the provisions requiring bonds in appeals involving monetary awards, a liberal interpretation in line with the desired objective of resolving controversies on the merits. The NLRC's failure to take action on a motion to reduce the bond in the manner prescribed by law and jurisprudence cannot be countenanced. Although an appeal by parties from decisions adverse to their interests is neither a natural right nor a part of due process, it is an essential part of the judicial system. Courts should proceed with caution so as not to deprive a party of the right to appeal, but rather, ensure that every party has the amplest opportunity for the proper and just disposition of their cause, free from the constraints of technicalities.

• Meritorious Grounds for Bond Reduction — The requirement on the existence of a "meritorious ground" delves on the worth of the parties' arguments, taking into account their respective rights and the circumstances that attend the case. The merit referred to may pertain to an appellant's lack of financial capability to pay the full amount of the bond, the merits of the main appeal such as when there is a valid claim that there was no illegal dismissal to justify the award, the absence of an employer-employee relationship, prescription of claims, and other similarly valid issues raised in the appeal. For the purpose of determining a "meritorious ground," the NLRC is not precluded from receiving evidence, or from making a preliminary determination of the merits of the appellant's contentions.

• "However, the Court of Appeals failed to note that under the Rules, the execution proceedings should be suspended only 'insofar as the reversal is concerned.' This omission leads to an incorrect reading of the rule and suggests that any reversal on appeal leads to the automatic suspension of execution of the appealed decision. When used as basis for suspending execution, the rule requires an extra step, namely, the determination of what part of the execution is affected by the reversal." — This passage articulates the Court's central correction of the Court of Appeals' interpretation of Rule XI, Section 17 of the NLRC Rules, establishing that suspension of execution is not automatic but requires determination of what part of the execution is affected by the reversal.

• "The desperate situations of petitioners, who have faced abject poverty, have become beggars on the street, and three (3) of whom have passed away during the pendency of the case, compel this Court to exercise its power of judicial review for purposes of judicial economy and to examine this case in its totality to do substantial justice. Courts should be mindful not to be too fixated with the technicalities of procedure and in effect be blind to what is owing to the parties." — This passage states the Court's justification for examining the case in its totality and exercising judicial review despite procedural considerations, emphasizing that courts should not be blinded by technicalities to what is owing to the parties.

• "This Court finds that the principles allowing execution pending appeal invoked in Aris are equally applicable here as petitioners are poor employees, deprived of their only source of livelihood for years and reduced to begging on the streets. In view of their dire straits and since the National Labor Relations Commission has already ruled twice on the case in a way that supports the release of the supersedeas bond, it is proper to continue with execution proceedings in this case despite a pending motion for reconsideration." — This passage states the ratio decidendi for granting the petition, applying the Aris principles on execution pending appeal to the petitioners' dire circumstances and the NLRC's repeated rulings in their favor.

• Mcburnie vs. Ganzon, 719 Phil. 680 (2013) — Cited as the guideline-setting case for treating motions to reduce appeal bonds in labor cases. The Court discussed that the rule may be relaxed only upon the existence of exceptional circumstances, the determination of which is a matter fully within the discretion of the NLRC. The Court of Appeals in CA-G.R. SP No. 136907 relied on this case in finding that the NLRC substantially deviated from its mandate by focusing only on the amount of the appeal bond without passing upon the meritorious grounds required.

• Aris (Phil.), Inc. vs. National Labor Relations Commission, 277 Phil. 282 (1991) — Cited as controlling precedent for authorizing execution pending appeal in labor cases involving reinstatement of dismissed employees. The Court applied its principles to the petitioners' situation, finding that the compassionate policy behind execution pending appeal applies equally to poor employees deprived of their only source of livelihood and reduced to begging on the streets.

• University Plans Incorporated vs. Solano — Cited within the Court of Appeals' April 27, 2015 Decision as authority for the proposition that while the NLRC's Revised Rules of Procedure allows the NLRC to reduce the amount of the bond, the exercise of the authority is not a matter of right on the part of the movant, but lies within the sound discretion of the NLRC upon a showing of meritorious grounds.

• Rule XI, Section 17, 2011 NLRC Rules of Procedure (as amended by En Banc Resolution No. 011-12) — Provides that in case of total or partial reversal of judgment by the Court of Appeals, the execution proceedings shall be suspended insofar as the reversal is concerned notwithstanding the pendency of a motion for reconsideration on such judgment. The Court held that the Court of Appeals misapplied this provision by failing to note the qualifying phrase "insofar as the reversal is concerned."

• Rule XI, Section 3, 2011 NLRC Rules of Procedure — Provides that the perfection of an appeal shall stay the execution of the decision of the Labor Arbiter except execution for reinstatement pending appeal. The Court identified this as the more relevant rule, explaining that because the Court of Appeals' April 27, 2015 Decision deemed respondents' appeal reinstated, the execution of the Labor Arbiter's October 24, 2013 Decision was stayed under this provision.

• Rule XI, Section 4, 2011 NLRC Rules of Procedure — Provides that a petition for certiorari with the Court of Appeals or the Supreme Court shall not stay the execution of the assailed decision unless a restraining order is issued by said courts. Petitioners cited this provision in arguing that the execution proceedings should have continued since the Court of Appeals did not include any restraining order in its April 27, 2015 Decision.

• Article 223, Labor Code — The provision requiring bonds in appeals involving monetary awards, which the Court noted should be given a liberal interpretation in line with the desired objective of resolving controversies on the merits.

• 1987 Constitution, Article on Social Justice and Human Rights — The constitutional provisions mandating the State to afford full protection to labor, local and overseas, organized and unorganized, and to promote full employment and equality of employment opportunities for all; to guarantee the rights of all workers to security of tenure, human conditions of work, and a living wage. The Court cited these provisions as the foundation of the compassionate policy behind execution pending appeal in labor cases.

Peralta (Chairperson) and J. Reyes, Jr., JJ., concurred. Gesmundo and Hernando, JJ., were on wellness leave.