Secretary of Labor and Employment vs. Panay Veteran's Security and Investigation Agency, Inc.

An employer's appeal from a Regional Director's order involving a monetary award in the exercise of the Secretary of Labor and Employment's visitorial and enforcement powers may be perfected only by posting a cash or surety bond equivalent to the monetary award within ten calendar days from receipt; failure to do so renders the order final and executory, and a motion to reduce the bond is not allowed because the NLRC rules do not apply suppletorily to such appeals.

Agapay and Alonso were security guards employed by Panay Veteran's Security and Investigation Agency, Inc. and assigned to the plant site of Food Industries, Inc. in Sta. Rosa, Laguna. Their employment relationship with the security agency and the agency's contract with Food Industries, Inc. placed them within the coverage of labor standards enforcement by the Department of Labor and Employment. The dispute implicated the Secretary of Labor and Employment's visitorial and enforcement powers under Article 128 of the Labor Code and the procedural rules governing appeals from Regional Director orders involving monetary awards.

Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired by Panay Veteran's Security and Investigation Agency, Inc. as security guards sometime in 1988. They were stationed at the plant site of Food Industries, Inc. (FII) in Sta. Rosa, Laguna until FII terminated its contract with the security agency on July 6, 2000. They were not given new assignments, and their benefits—including 13th month pay, overtime pay, holiday pay, and wage differentials due to underpayment of wages—were withheld by the security agency. This prompted them to file a complaint for violation of labor standards in the regional office of the Department of Labor and Employment in the National Capital Region (DOLE-NCR).

Acting on the complaint, Manuel M. Cayabyab, a labor employment officer of the DOLE-NCR, conducted an inspection of the security agency on October 30, 2000. During the inspection, the agency failed to present its payroll as well as the daily time records submitted by Agapay and Alonso, and such failure was noted as a violation. After the inspection, Cayabyab issued a notice of inspection to the agency through its authorized representative, Julito Jaleco. Cayabyab explained the contents and significance of the notice to Jaleco and emphasized the need for respondents either to comply with labor standards by paying the claims of Agapay and Alonso as computed by Cayabyab or to raise any question regarding the notice to the DOLE-NCR within five days.

Respondents neither paid the claims of Agapay and Alonso nor questioned the labor employment officer's findings. Thus, in his May 10, 2001 order, the Regional Director of the DOLE-NCR adopted Cayabyab's findings and computation as to the unpaid benefits due to Agapay and Alonso. The order directed Panay Veterans Security and Investigation Agency, Inc. and/or Julius Jaleco to pay Edgardo Agapay, et al. the aggregate amount of P206,569.20 representing 13th month, overtime, legal holiday pay, and underpaid wages within ten days from receipt; otherwise, a writ of execution would issue. Respondents moved for reconsideration, but the DOLE-NCR Regional Director denied it.

Respondents then filed an appeal, with a motion to reduce cash or surety bond, to the Secretary of Labor and Employment. In his July 9, 2002 order, the Secretary found that respondents failed to perfect their appeal since they did not post a cash or surety bond equivalent to the monetary award. The appeal was dismissed, and the DOLE-NCR Regional Director's May 10, 2001 order was declared final and executory. The Secretary denied reconsideration.

Respondents assailed the Secretary's July 9, 2002 order via a petition for certiorari in the Court of Appeals. The Court of Appeals initially dismissed the petition for lack of merit and ordered respondents to pay a total recomputed amount of P224,603.26; it found that the underpayment of wages and nonpayment of 13th month pay and overtime pay were in the amounts of P109,727.63 and P114,875.63 in favor of Alonso, Jr. and Agapay, respectively. However, the Court of Appeals granted reconsideration by applying Star Angel Handicraft vs. National Labor Relations Commission by analogy, reasoning that the NLRC allows reduction of the appeal bond upon motion and on meritorious grounds, that such a motion may be filed within the reglementary period for appealing in lieu of a bond whose amount is being contested, and that the appeal is not deemed perfected while the Labor Arbiter retains jurisdiction until the NLRC acts and the appellant files the bond as fixed. The Court of Appeals thus amended its decision and allowed respondents to pursue their appeal. The Secretary moved for reconsideration, but it was denied, leading to the present petition.

• Perfection of Appeal: The Secretary of Labor and Employment contended that respondents failed to perfect their appeal in the manner prescribed by the Labor Code.
• Motion to Reduce Appeal Bond: The Secretary asserted that a motion to reduce the appeal bond is not allowed by the Labor Code and the Rules on the Disposition of Labor Standards Cases in the Regional Offices and does not suspend the period of appeal.
• Applicability of NLRC Rules: The Secretary maintained that the rules of procedure of the NLRC do not apply in this case.

• Perfection of Appeal: Whether respondents perfected their appeal to the Secretary of Labor and Employment despite their failure to post the cash or surety bond equivalent to the monetary award.
• Motion to Reduce Appeal Bond: Whether a motion to reduce the appeal bond is allowed in appeals to the Secretary of Labor and Employment in the exercise of visitorial and enforcement powers, or whether the NLRC rules of procedure may be applied suppletorily.
• Applicability of Star Angel Handicraft: Whether the Court of Appeals correctly applied Star Angel Handicraft vs. National Labor Relations Commission by analogy to allow respondents to pursue their appeal.
• Legal Interest: Whether the monetary award is subject to legal interest and, if so, at what rates and from what dates.

• Perfection of Appeal: No. Under Article 128(b) of the Labor Code, an employer's appeal involving a monetary award may be perfected only upon posting a cash or surety bond equivalent to the monetary award; failure renders the order final and executory.
• Motion to Reduce Appeal Bond: No. The Rules on the Disposition of Labor Standards Cases do not allow a motion to reduce the bond, and the NLRC rules do not apply suppletorily to appeals to the Secretary.
• Applicability of Star Angel Handicraft: No. Star Angel Handicraft cannot be applied by analogy because no practice of reducing bonds existed in visitorial and enforcement cases before the Secretary; the Court of Appeals exceeded its jurisdiction.
• Legal Interest: Yes. The award earns 6% legal interest per annum from October 30, 2000 until finality of the May 10, 2001 order, and 12% per annum thereafter until full satisfaction.

• Perfection of Appeal: Article 128(b) of the Labor Code provides that where the Secretary's duly authorized representative issues an order involving a monetary award, an employer's appeal may be perfected only upon posting a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary in an amount equivalent to the monetary award in the order appealed from. Section 1, Rule IV of the Rules on the Disposition of Labor Standards Cases requires the appeal to be filed within ten calendar days from receipt of the Regional Director's order. Guico, Jr. vs. Hon. Quisumbing construed these provisions to require both the filing of the appeal and the posting of the cash or surety bond within the ten-day period; failure to do either renders the order final and executory. The word "only" in Article 128(b) makes the bond the exclusive means of perfecting an employer's appeal. Respondents admitted that they did not post the required bond when they appealed to the Secretary. Consequently, their appeal was never perfected and the May 10, 2001 order of the DOLE-NCR Regional Director attained finality.

• Motion to Reduce Appeal Bond: The NLRC's jurisdiction is separate and distinct from that of the Secretary of Labor and Employment, and each agency is governed by its own rules of procedure. The NLRC rules do not apply to cases cognizable by the Secretary. The Rules on the Disposition of Labor Standards Cases contain no provision governing a motion to reduce the amount of the bond; they authorize only the suppletory application of the Rules of Court, not the NLRC rules. By applying the NLRC rules suppletorily, the Court of Appeals effectively amended the Rules on the Disposition of Labor Standards Cases and encroached on the Secretary's rule-making power. The Court of Appeals' ruling also disregarded the pro-labor purpose of the bond requirement, which is to assure the employee that the monetary award will be paid if the employer's appeal is dismissed and to discourage the employer from using the appeal to delay or evade payment. Doubts in the implementation and interpretation of the Labor Code and its implementing rules should be resolved in favor of labor.

• Applicability of Star Angel Handicraft: Star Angel Handicraft permitted a motion to reduce the appeal bond because the Court recognized the NLRC's existing practice of allowing reduction upon motion and meritorious grounds, a practice later institutionalized in the NLRC rules. No such practice ever existed in cases cognizable by the Secretary of Labor and Employment in the exercise of visitorial and enforcement powers. Thus, Star Angel Handicraft cannot be applied to labor standards cases appealed to the Secretary. In applying it by analogy, the Court of Appeals effectively reversed Guico, Jr. and Allied Investigation Bureau, Inc. vs. Secretary of Labor, a power only the Supreme Court sitting en banc may exercise. The amended decision was therefore invalid for having been rendered in excess of jurisdiction.

• Legal Interest: Under Eastern Shipping Lines, Inc. vs. Court of Appeals, when an obligation not constituting a loan or forbearance of money is breached, interest on the amount of damages may be imposed at 6% per annum from the time the claim is made judicially or extrajudicially, if the demand is established with reasonable certainty; once the judgment awarding a sum of money becomes final and executory, the rate becomes 12% per annum until satisfaction. The obligation of respondents to pay the lawful claims of Agapay and Alonso was established with reasonable certainty on October 30, 2000, when respondents received the notice of inspection from the labor employment officer. Because the obligation was not a loan or forbearance of money, it earned 6% legal interest per annum from that date until the May 10, 2001 order attained finality. From finality, the award earned 12% legal interest per annum until full satisfaction.

• Appeal Bond as Indispensable Requisite in Labor Standards Appeals — Under Article 128(b) of the Labor Code, an employer's appeal from a Regional Director's order involving a monetary award in the exercise of the Secretary of Labor and Employment's visitorial and enforcement powers may be perfected only upon posting a cash or surety bond equivalent to the monetary award. The appeal must be filed and the bond posted within ten calendar days from receipt of the order; failure to do either renders the order final and executory. The word "only" makes the bond the exclusive means of perfection.

• Non-Applicability of NLRC Rules to Appeals to the Secretary of Labor — The NLRC and the Secretary of Labor and Employment have separate and distinct jurisdictions, each governed by its own rules. The NLRC rules do not apply suppletorily to appeals to the Secretary in visitorial and enforcement cases. The Rules on the Disposition of Labor Standards Cases allow suppletory application only of the Rules of Court, not the NLRC rules. A motion to reduce the appeal bond is therefore not allowed in such appeals.

• Star Angel Handicraft Not Applicable to Secretary's Visitorial and Enforcement Cases — Star Angel Handicraft allowed reduction of the appeal bond because of the NLRC's existing practice, later institutionalized in its rules. No similar practice exists before the Secretary in visitorial and enforcement cases. Hence, Star Angel Handicraft cannot be applied by analogy to labor standards cases appealed to the Secretary.

• Pro-Labor Interpretation and Purpose of Appeal Bond — Labor laws and rules governing labor disputes are interpreted in favor of the worker. The appeal bond serves to assure the employee that the monetary award will be paid if the employer's appeal is dismissed and to discourage the employer from using the appeal to delay or evade payment.

• Legal Interest on Monetary Awards — Under Eastern Shipping Lines, an obligation not constituting a loan or forbearance of money earns 6% legal interest per annum from the time the claim is established with reasonable certainty, and 12% per annum from finality of the judgment until full satisfaction.

• Separate Jurisdiction and Rule-Making Power — The Court of Appeals cannot, through suppletory application of NLRC rules, amend the Secretary's rules or reverse Supreme Court en banc doctrines; such power belongs only to the Supreme Court sitting en banc.

• "The rule is that, to perfect an appeal of the Regional Director's order involving a monetary award in cases which concern the visitorial and enforcement powers of the Secretary of Labor and Employment, the appeal must be filed and the cash or surety bond equivalent to the monetary award must be posted within ten calendar days from receipt of the order. Failure either to file the appeal or post the bond within the prescribed period renders the order final and executory." — This passage states the controlling rule on perfection of an employer's appeal and the consequence of non-compliance, which was applied to render the May 10, 2001 order final and executory.

• "The word "only" makes it clear that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer's appeal may be perfected." — This excerpt defines the exclusivity of the bond requirement under Article 128(b) of the Labor Code and explains why the failure to post the bond prevented perfection of respondents' appeal.

• "On the contrary, no such practice ever existed in cases taken cognizance of by the Secretary of Labor and Employment in the exercise of his visitorial and enforcement powers. Hence, Star Angel Handicraft cannot be applied in labor standards cases appealed to the Secretary of Labor and Employment." — This passage distinguishes Star Angel Handicraft and explains why its rule on reduction of the appeal bond cannot be extended by analogy to appeals before the Secretary.

• "The obligation of respondents to pay the lawful claims of petitioners Agapay and Alonso, Jr. was established with reasonable certainty on October 30, 2000 when respondents received the notice of inspection from the labor employment officer. Since such obligation did not constitute a loan or forbearance of money, it was subject to legal interest at the rate of 6% per annum from that date until the May 10, 2001 order of the DOLE-NCR Regional Director attained finality. From the time the May 10, 2001 order of the DOLE-NCR Regional Director became final and executory, petitioners Agapay and Alonso, Jr. were entitled to 12% legal interest per annum until the full satisfaction of their respective claims." — This excerpt applies the Eastern Shipping Lines guidelines to fix the dates and rates of legal interest on the monetary award.

• Guico, Jr. vs. Hon. Quisumbing, 359 Phil. 197 (1998) — Controlling precedent; construed Article 128(b) of the Labor Code to require posting of a cash or surety bond equivalent to the monetary award within ten calendar days, and held that failure to do so renders the order final and executory.
• Allied Investigation Bureau, Inc. vs. Secretary of Labor, 377 Phil. 80 (1999) — Cited as a precedent where the appeal was dismissed for failure to post the required bond; the Court of Appeals' amended decision effectively reversed this ruling.
• Star Angel Handicraft vs. National Labor Relations Commission, G.R. No. 108914, 20 September 1994, 236 SCRA 580 — Distinguished and held inapplicable; it allowed reduction of the appeal bond under the NLRC's rules and practice, but no such practice exists before the Secretary in visitorial and enforcement cases.
• Eastern Shipping Lines, Inc. vs. Court of Appeals, G.R. No. 97412, 12 July 1994, 234 SCRA 78 — Laid down the guidelines on legal interest; applied to compute 6% and 12% interest on the monetary award.
• Ong vs. Court of Appeals, G.R. No. 152494, 22 September 2004, 438 SCRA 668 — Cited for the rule that the word "only" makes the posting of a cash or surety bond the exclusive means of perfecting an employer's appeal.
• Casimiro vs. Stern Real Estate, Inc., G.R. No. 162233, 10 March 2006, 484 SCRA 463 — Cited for the two-fold purpose of the appeal bond: to assure the employee of payment of the monetary award and to discourage the employer from delaying or evading payment.

• Article 128(b), Labor Code — Provides the Secretary of Labor and Employment's visitorial and enforcement power and states that an employer's appeal from an order involving a monetary award may be perfected only upon posting a cash or surety bond equivalent to the monetary award. Applied to hold that respondents' failure to post the bond rendered their appeal unperfected.
• Section 1, Rule IV (Appeals), Rules on the Disposition of Labor Standards Cases — Provides that the Regional Director's order shall be final and executory unless appealed to the Secretary within ten calendar days from receipt. Applied to require timely filing of the appeal and posting of the bond.
• Section 6, Rule I (Title, Construction and Definition), Rules on the Disposition of Labor Standards Cases — Authorizes suppletory application of the Rules of Court in the absence of an applicable provision. Applied to hold that the NLRC rules cannot be applied suppletorily to appeals to the Secretary.
• Section 4, Labor Code — Cited for the interpretation of labor laws in favor of labor. Applied to criticize the Court of Appeals' undue leniency toward respondents' failure to post the bond.
• Section 6, Rule VI (Appeals), New Rules of Procedure of the NLRC, as amended by Resolution 3-99, s. 99; Section 6, Rule VI, 2005 Revised Rules of the NLRC — Allow a motion to reduce the bond on meritorious grounds and upon posting of a reasonable amount. Cited to distinguish the NLRC practice from the rules governing appeals to the Secretary; not applied to this case.
• Article 1169, Civil Code — Cited in the Eastern Shipping Lines guidelines for when interest begins to run from judicial or extrajudicial demand. Applied to fix the start date of the 6% legal interest.
• Section 4(3), Article VIII, Constitution — Cited for the rule that only the Supreme Court sitting en banc may reverse doctrines laid down by it. Applied to hold that the Court of Appeals exceeded its jurisdiction in effectively reversing Guico, Jr. and Allied Investigation Bureau, Inc. vs. Secretary of Labor.
• Rule 45, Rules of Court — Basis for the petition for review filed with the Supreme Court.

Puno, C.J. (Chairperson), Carpio, Azcuna, and Leonardo-De Castro, JJ., concur.