Radio Philippines Network, Inc. vs. Yap

Payroll reinstatement is an employer's management prerogative, and an employer that substantially complies in good faith with a reinstatement order cannot be cited for indirect contempt absent a clearly defined order and contumacious disobedience; likewise, a certiorari petition should not be dismissed for failure to attach documents that are merely incidental to the issue before the appellate court.

RPN is a government sequestered corporation, while respondents were its employees and former members of the Radio Philippines Network Employees Union (RPNEU), the bargaining agent of RPN's rank-and-file employees. RPN and RPNEU entered into a Collective Bargaining Agreement (CBA) on November 26, 2004, with a union security clause providing that a member expelled from the union shall also be terminated from the company; the CBA had a five-year term commencing July 1, 2004 and expiring June 30, 2009. A conflict arose between respondents and other RPNEU members, which led to the union's recommendation and demand for their expulsion and termination.

RPN, represented by the Office of the Government Corporate Counsel, is a government sequestered corporation with address at Broadcast City, Capitol Hills Drive, Quezon City. Mia Concio, Leonor Linao, Ida Barrameda, and Lourdes Angeles were RPN's President, General Manager, Assistant General Manager for Finance, and Human Resources Manager, respectively. Respondents Ruth F. Yap, Bannie Edsel B. San Miguel, Ma. Fe G. Dayon, Marisa Lemina, and Minette Baptista were RPN employees and former members of RPNEU, the bargaining agent of the rank-and-file employees. On November 26, 2004, RPN and RPNEU entered into a CBA with a union security clause providing that a member expelled from the union shall also be terminated from the company; the CBA had a term of five years, commencing July 1, 2004 and expiring June 30, 2009.

A conflict arose between respondents and other members of RPNEU. On November 9, 2005, RPNEU's Grievance and Investigation Committee recommended to the union's board of directors the expulsion of respondents from the union. On January 24, 2006, the union wrote to RPN President Concio demanding the termination of respondents' employment. On February 17, 2006, RPN notified respondents that their employment would be terminated effective March 20, 2006. Respondents then filed with the Labor Arbiter a complaint for illegal dismissal and non-payment of benefits.

On September 27, 2006, the Labor Arbiter ordered the reinstatement of respondents with payment of backwages and full benefits and without loss of seniority rights after finding that petitioners failed to establish the legal basis of the termination; the Labor Arbiter also directed the company to pay respondents certain aggregate monetary benefits. On October 27, 2006, petitioners, through counsel, submitted a Manifestation and Compliance dated October 25, 2006, stating that RPN had complied with the reinstatement of respondents by way of payroll reinstatement; a copy was sent to respondents by registered mail on even date. Respondents alleged that there was no compliance and no notice received, and filed a Manifestation and Urgent Motion to Cite for Contempt dated November 3, 2006.

Respondents narrated that on October 27, 2006, they went to RPN to present themselves for actual reinstatement to their former positions. They arrived while a mass was being celebrated at the lobby, at which they were allowed to attend while waiting for RPN General Manager Linao to meet them. Linao informed them that they had been reinstated, but only in the payroll, and that the company would endeavor to pay their salaries regularly despite its precarious financial condition. Four days later, on October 31, 2006 at 11 a.m., respondents returned to RPN to collect their salaries, it being a payday, but they were barred entry upon strict orders of Concio and Linao. They returned in the afternoon but were likewise stopped by eight guards manning the gate. Respondents tried to push their way in, but the guards manhandled them, pulled them by the hair and arms, and pushed them back to the street; some endured having their breasts mashed, their blouses pulled up, and their bags grabbed away. The incident was reported to the police. Later that afternoon, respondents managed to enter the RPN lobby; Barrameda came out but instead of meeting them ordered the guards to take them back outside the gate, where she said they would be paid their salaries. Their removal was forcible and violent, causing physical injuries requiring medical treatment. Respondents claimed that RPNEU President Reynato Sioson assisted the guards in physically evicting them, and concluded from their violent ouster that Concio and Linao played a direct role in their expulsion from RPNEU. They prayed that the Labor Arbiter find Concio and Linao liable for contempt after hearing; that they be reinstated with full benefits, or in case of payroll reinstatement, that they be paid every 15th and 30th of the month as with all regular employees; that their salaries be paid at the Cashier's Office; and that they not be prevented from entering RPN's premises.

On November 14, 2006, respondents filed a Motion for the Issuance of Writ of Execution/Garnishment, alleging that in addition to the violent events of October 31, 2006, they were again forcibly denied entry into RPN to collect their 13th month pay on November 10, 2006. In their joint Opposition, petitioners denied liability for the narrated incidents and insisted that respondents had been duly informed through a letter dated November 10, 2006 of their payroll reinstatement. Petitioners explained that because of the intra-union dispute between respondents and union leaders, they deemed it wise not to allow respondents inside the company premises to prevent untoward incidents, and to release their salaries only at the gate. For this reason, respondents were asked to open an ATM account with the Land Bank, Quezon City Circle Branch, where their salaries would be deposited every 5th and 20th day of the month, rather than on the 15th and 30th along with other employees. On January 19, 2007, respondents moved for the issuance of an alias writ of execution covering their unpaid salaries for January 1-15, 2007, claiming that petitioners did not show up at the agreed place of payment and reiterating their demand to be paid on the 15th and 30th of the month at RPN along with the rest of the employees. In their Opposition dated January 30, 2007, petitioners insisted that they could only pay respondents' salaries on the 5th and 20th of the month, conformably with the company's cash flows. On February 20, 2007, petitioners manifested that respondents could collect their salaries at the Bank of Commerce in Broadcast City Branch, Quezon City. On March 9, 2007, petitioners manifested that respondents' salaries for the second half of February 2007 were ready for pick-up since March 5, 2007. On March 15, 2007, petitioners informed the Labor Arbiter that respondents refused to collect their salaries and stated that, to prove good faith, respondents' salaries would henceforth be deposited at the NLRC-Cashier on the 5th and 20th of every month.

The Labor Arbiter, in an Order dated May 3, 2007, cited petitioners for indirect contempt for committing disobedience to a lawful order. The fallo issued a writ of execution, ordered RPN to reinstate respondents in the payroll and pay their unpaid salaries with deductions for SSS, income tax, union dues, and other statutory deductions, ordered payment of salaries at the company's premises, and found RPN guilty of disobedience to the lawful order of the court, citing it for indirect contempt and ordering payment of P700 for every payroll period. On appeal, the NLRC dismissed the appeal in a Resolution dated May 27, 2008, and on August 15, 2008 denied petitioners' motion for reconsideration. Petitioners then filed with the Court of Appeals a petition for certiorari with prayer for a temporary restraining order and/or writ of preliminary injunction, docketed as CA-G.R. SP No. 105945. The Court of Appeals dismissed the petition on November 14, 2008 for failure to attach copies of pertinent pleadings and documents, and denied reconsideration on March 9, 2009. In later proceedings, the Labor Arbiter in an Order dated January 12, 2010 denied respondents' motion to execute the May 3, 2007 Order, finding no more legal basis because the matter had been mooted by petitioners' compliance through payment of salaries from September 2008 to April 2009, including all benefits in arrears, and concluding that the judgment award had been fully paid. Respondents executed a quitclaim and release on April 22, 2009 covering the period from March to September 2006; salaries for October 2006 to January 2007 were already delivered; salary checks for February to May 15, 2007 were deposited with the NLRC's cashier; and RPN attached biweekly cash vouchers for individual salaries from January to August 2010 showing gross monthly salaries, withholdings, and net salaries for September 2008 to April 2009, with salaries ready for release on the 15th and 30th of the month.

• Technicality and Substantial Compliance: Petitioners argued that the Court of Appeals acted not in accord with law and settled jurisprudence when it dismissed the petition a quo on a mere technicality, considering that petitioners substantially complied and intended to fully comply with the rules concerning the attachment of pertinent documents and pleadings to a petition for certiorari.
• Meritorious Case and No Contempt: Petitioners maintained that they actually fully complied with the Labor Arbiter's decision, hence there was no cause of action to hold them in indirect contempt for alleged non-compliance.
• Management Prerogative and Good Faith Compliance: Petitioners insisted that respondents were immediately reinstated in the payroll in compliance with the Labor Arbiter's order and that their salaries had since been regularly paid without fail; occasional delays were partly due to respondents' recalcitrant demands as to the place and schedule of payment and their refusal to cooperate in opening ATM accounts.
• Staggered Payment Due to Cash Flow: Petitioners argued that salaries had to be staggered on the 5th and 20th of the month due to RPN's erratic cash flows and financial limitations as a sequestered corporation, while the law only requires that fortnightly intervals be observed.

• Procedural Non-Compliance: Respondents countered that the Court of Appeals correctly dismissed the petition because petitioners failed to comply with Section 1, Rule 65 of the Rules of Court, which requires copies of all pleadings and documents relevant and pertinent to the petition; they invoked the third paragraph of Section 3, Rule 46, insisting that such failure is sufficient ground for dismissal.
• Bare Assertions Without Attachments: Respondents cited the Court of Appeals' Resolution dated November 14, 2008, which stated that copies of pertinent and relevant pleadings and documents were not attached, and that without them the allegations in the petition were nothing but bare assertions.

• Procedural Dismissal: Whether the Court of Appeals acted not in accord with law and settled jurisprudence in dismissing the petition for certiorari on a mere technicality for failure to attach certain pleadings, considering petitioners' claimed substantial compliance with the rules.
• Indirect Contempt and Compliance: Whether there was a cause of action to hold petitioners in indirect contempt for alleged non-compliance with the Labor Arbiter's decision, considering petitioners' claimed full compliance.
• Management Prerogative and Payroll Reinstatement: Whether payroll reinstatement and the place and schedule of salary payment are within the employer's management prerogative, and whether petitioners substantially complied in good faith with the terms of payroll reinstatement.

• Procedural Dismissal: No. The Court of Appeals' dismissal on technicality was set aside; failure to attach relevant pleadings may justify dismissal, but the omitted documents were merely incidental to the contempt issue, and the available pleadings sufficed to resolve it.
• Indirect Contempt and Compliance: No. Petitioners were not guilty of indirect contempt; there was no clear and contumacious disobedience, and they substantially complied in good faith with payroll reinstatement.
• Management Prerogative and Payroll Reinstatement: Yes. Payroll reinstatement is an employer's management prerogative under Article 223 of the Labor Code, especially in strained relations; the employer may choose payroll reinstatement and set reasonable payment arrangements absent bad faith or abuse.

• Procedural Dismissal: Section 3 of Rule 46 authorizes dismissal for failure to attach relevant, not merely incidental, pleadings, and this requirement is read in relation to Section 1 of Rule 65. The court has discretion to dismiss outright for failure to comply, and such action generally cannot be assailed as grave abuse of discretion or reversible error; but if the court takes cognizance of the petition despite the lapse, Section 3, Rule 46 justifies that recourse. The five omitted documents dealt with events at best merely incidental to the complaint because they pertained to salaries that fell due after the alleged contumacious acts first complained of, which the Labor Arbiter even said should be the subject of separate complaints. Petitioners could not be faulted for submitting in good faith those documents they considered relevant and pertinent to the indirect contempt issue. Respondents' Urgent Motion to Cite for Contempt, Motion for the Issuance of Writ of Execution/Garnishment, and petitioners' joint Opposition sufficed to resolve the issue. While dismissal on technical grounds is generally sustained absent cogent reasons, exceptional cases permit setting aside procedural defects to correct a patent injustice, provided the party invoking liberality explains its failure; petitioners proffered adequate justification. Thus, the Court of Appeals' resolutions were set aside.
• Indirect Contempt and Compliance: Indirect contempt refers to contumacious or stubbornly disobedient acts perpetrated outside the court or tribunal, including disobedience of or resistance to a lawful writ, process, order, judgment, or command. To be contemptuous, an act must be clearly contrary to or prohibited by the order of the court or tribunal, and a person cannot be punished for contempt unless the act forbidden or required is clearly and exactly defined, leaving no reasonable doubt or uncertainty as to what specific act or thing is forbidden or required. The power to punish for contempt is exercised on the preservative, not vindictive, principle; it is drastic and extraordinary and should be resorted to only in cases of clear and contumacious refusal to obey. Here, RPN forthwith restored respondents in its payroll without diminution of benefits and privileges or loss of seniority rights; respondents retained their CBA benefits and regularly received salaries and benefits despite the company's financial straits. Any delays were due to misunderstandings as to the exact place and time of the fortnightly payments or because respondents were tardy in collecting from the Bank of Commerce at Broadcast City Branch or from the NLRC cashier. Petitioners proposed opening ATM accounts, but respondents rejected the idea. There was no sufficient basis for the charge of indirect contempt, and the Labor Arbiter's January 12, 2010 Order found no more legal basis to execute the May 3, 2007 Order, which had been mooted by compliance.
• Management Prerogative and Payroll Reinstatement: Under the third paragraph of Article 223 of the Labor Code, the Labor Arbiter's decision reinstating a dismissed or separated employee is immediately executory even pending appeal, and the employee shall either be admitted back to work under the same terms and conditions or, at the employer's option, merely reinstated in the payroll. Pioneer Texturizing Corp. vs. NLRC held that an order reinstating a dismissed employee is immediately self-executory without need of a writ of execution; even if the employee is able and willing to return to work, the option of payroll reinstatement belongs to the employer. The new NLRC Rules of Procedure, effective January 7, 2006, require the employer to submit a report of compliance within ten calendar days from receipt of the Labor Arbiter's decision, disobedience to which denotes refusal to reinstate; the employee need no longer file a motion for execution because the Labor Arbiter shall motu proprio issue the writ. The general policy of labor law discourages interference with an employer's judgment in the conduct of its business, and while the law is solicitous of employees' welfare, it must also protect the employer's right to exercise management prerogatives. As long as the exercise of judgment is in good faith to advance the employer's interest and not to defeat or circumvent employee rights under law or valid agreements, it will be upheld; labor law does not authorize substitution of the employer's judgment unless shown to be contrary to law, morals, or public policy, and the only condition is that the exercise not be done in bad faith or with abuse of discretion. In cases of strained relations or non-availability of positions, the employer may reinstate merely in the payroll precisely to avoid the intolerable presence of an unwanted employee. Maranaw Hotel Resort Corporation vs. NLRC explained that this option is based on practical considerations: the employer may insist that the dismissal was for just and valid cause and the employee's presence is intolerable, inimical to its interest, or demoralizing to co-employees; payroll reinstatement may be the lesser evil compared to the intolerable presence of an unwanted employee. The circumstances showed that physical restoration was impractical and hardly promoted the best interest of both parties: respondents accused petitioners of complicity in the plot to expel them from the union and terminate their employment, while petitioners charged respondents with trying to sabotage workplace peace; resentment and enmity strained their relationship and provoked antipathy and antagonism, borne out by physical clashes whenever respondents attempted to enter the RPN compound. Management has the right to formulate reasonable rules to regulate employee conduct for the protection of its interests. The proposal to pay salaries through ATM cards, now a wide practice, was not prejudicial or oppressive, and staggering salaries on the 5th and 20th due to RPN's erratic cash flows was permissible because the law only requires that fortnightly intervals be observed. Petitioners substantially complied in good faith with the terms of payroll reinstatement, and the Labor Arbiter's January 12, 2010 Order confirmed that the judgment award had been fully paid.

• Management Prerogative in Payroll Reinstatement — Under the third paragraph of Article 223 of the Labor Code, the reinstatement aspect of a Labor Arbiter's decision is immediately executory even pending appeal, and the employer has the option to reinstate the employee merely in the payroll instead of admitting the employee back to work. In cases of strained relations or non-availability of positions, payroll reinstatement may be chosen to avoid the intolerable presence of an unwanted employee. The exercise is upheld absent bad faith or abuse of discretion.
• Indirect Contempt — Indirect contempt consists of contumacious or stubbornly disobedient acts outside the court or tribunal, including disobedience of or resistance to a lawful writ, process, order, judgment, or command. For contempt to lie, the act must be clearly contrary to or prohibited by the order, and the act forbidden or required must be clearly and exactly defined so that there is no reasonable doubt or uncertainty as to what specific act or thing is forbidden or required. The power to punish contempt is preservative, not vindictive, and is exercised only for clear and contumacious refusal to obey.
• Substantial Compliance and Liberal Application of Procedural Rules — Failure to attach relevant pleadings under Section 1, Rule 65 and Section 3, Rule 46 may justify dismissal, but the omission of documents that are merely incidental to the issue does not warrant dismissal where the available pleadings suffice to resolve the matter. Courts may set aside procedural defects to correct a patent injustice, provided the party invoking liberality explains its failure to comply.
• Relevant Versus Incidental Pleadings — Section 3, Rule 46 authorizes dismissal for failure to attach relevant, not merely incidental, pleadings. The omitted documents in this case pertained to salaries that fell due after the alleged contumacious acts and were therefore incidental to the indirect contempt issue.
• Fortnightly Payment Rule — Labor law requires only that fortnightly intervals in salary payment be observed; an employer may stagger payment dates due to erratic cash flows, and payment through ATM cards is not prejudicial or oppressive absent unusual effort for employees to collect their money.

• "The court is given discretion to dismiss the petition outright for failure of the petitioner to comply with the requirement to attach relevant pleadings, and generally such action cannot be assailed as constituting either grave abuse of discretion or reversible error of law. But if the court takes cognizance of the petition despite such lapses, the phrasing of Section 3, Rule 46 sufficiently justifies such adjudicative recourse." — This passage states the procedural rule on dismissal for failure to attach relevant pleadings and the exception where the appellate court nonetheless takes cognizance of the petition.
• "The manner of reinstating a dismissed employee in the payroll generally involves an exercise of management prerogative." — This is the core doctrine on payroll reinstatement as a management prerogative.
• "To be considered contemptuous, an act must be clearly contrary to or prohibited by the order of the court or tribunal. A person cannot, for disobedience, be punished for contempt unless the act which is forbidden or required to be done is clearly and exactly defined, so that there can be no reasonable doubt or uncertainty as to what specific act or thing is forbidden or required." — This passage defines the requisites for indirect contempt and explains why the contempt charge failed.
• "Petitioners have substantially complied in good faith with the terms of payroll reinstatement." — This is the Court's conclusion on compliance, supporting the reversal of the indirect contempt order.

• Pioneer Texturizing Corp. vs. NLRC, 345 Phil. 1057 (1997) — Cited for the rule that an order reinstating a dismissed employee is immediately self-executory without need of a writ of execution under Article 223 of the Labor Code, and that the option of payroll reinstatement belongs to the employer.
• Maranaw Hotel Resort Corporation vs. NLRC, G.R. No. 110027, November 16, 1994, 238 SCRA 190 — Cited for the practical considerations behind payroll reinstatement, including avoiding the intolerable presence of an unwanted employee, which may be the lesser evil compared to actual reinstatement.
• Phil. Agila Satellite, Inc. vs. Usec. Trinidad-Lichauco, 522 Phil. 565, 582 (2006) — Cited for the discretion to dismiss a petition for failure to attach relevant pleadings and for the rule that taking cognizance despite the lapse is justified by Section 3, Rule 46.
• Regalado vs. Go, G.R. No. 167988, February 6, 2007, 514 SCRA 616 — Cited for the requirement that the act forbidden or required to be done must be clearly and exactly defined before a person may be punished for contempt.
• Inonog vs. Ibay, A.M. No. RTC-09-2175, July 28, 2009, 594 SCRA 168, 177-178 — Cited for the principle that the power to punish for contempt is preservative, not vindictive, and should be exercised only in cases of clear and contumacious refusal to obey.
• Garcia vs. Philippine Airlines, Inc., G.R. No. 164856, January 20, 2009, 576 SCRA 479, 495 — Cited in connection with the NLRC Rules requiring the employer to submit a report of compliance within ten calendar days from receipt of the Labor Arbiter's decision.
• San Miguel Brewery Sales Force Union (PTGWO) vs. Hon. Ople, 252 Phil. 27 (1989) — Cited for the management's right to formulate reasonable rules to regulate employee conduct for the protection of its interests.
• Kimberly Clark (Phils.), Inc. vs. Facundo, G.R. No. 144885, July 12, 2006 — Cited for the rule that in cases of strained relations or non-availability of positions, the employer is given the option to reinstate the employee merely in the payroll.
• Patricio vs. Hon. Suplico, 273 Phil. 353, 363 (1991) — Cited in defining indirect contempt under the Rules of Court.
• Lu Ym vs. Atty. Mahinay, 524 Phil. 564, 572-573 (2006) — Cited for the principle that the contempt power is drastic and extraordinary and should not be resorted to unless necessary in the interest of justice.

• Article 223, Labor Code — The third paragraph provides that the Labor Arbiter's decision reinstating a dismissed or separated employee is immediately executory even pending appeal, and the employee shall either be admitted back to work under the same terms and conditions or, at the employer's option, merely reinstated in the payroll; the posting of a bond by the employer shall not stay the execution for reinstatement. This provision supplied the basis for treating payroll reinstatement as an employer management prerogative.
• Section 1, Rule 65, Rules of Court — Requires that a petition for certiorari be accompanied by a certified true copy of the judgment, order, or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping. The Court considered this requirement in relation to the omitted attachments.
• Section 3, Rule 46, Rules of Court — Provides that the petition shall be accompanied by material portions of the record and other documents relevant or pertinent thereto, and that failure to comply with any of the documentary requirements shall be sufficient ground for dismissal. The Court held that the omitted documents were merely incidental, so dismissal was not warranted.
• Rule 71, Section 3, 1997 Rules of Civil Procedure — Defines indirect contempt, including disobedience of or resistance to a lawful writ, process, order, judgment, or command of a court. The Court applied this definition in finding no clear and contumacious disobedience.
• Revised Rules of Procedure of the NLRC, Rule V, Sec. 14 and Rule XI, Sec. 6 — Require the employer to submit a report of compliance within ten calendar days from receipt of the Labor Arbiter's decision, with disobedience denoting refusal to reinstate, and allow the Labor Arbiter to issue the writ motu proprio. These rules framed the compliance mechanism for reinstatement.

Antonio T. Carpio (Senior Associate Justice, Chairperson, Second Division), Roberto A. Abad, Martin S. Villarama, Jr., and Jose Portugal Perez concurred.