Facts:
1. **Filing of Complaint (October 4, 2002)**: Andrew James McBurnie, an Australian national, filed a complaint for illegal dismissal and other monetary claims against respondents Eulalio Ganzon, EGI-Managers, Inc., and E. Ganzon, Inc.
2. **Employment Agreement (May 11, 1999)**: McBurnie entered into a five-year employment agreement to serve as Executive Vice-President. However, an accident in November 1999 forced McBurnie to return to Australia, upon which he was informed that his services were no longer needed.
3. **Respondents’ Defense**: Respondents argued that McBurnie was not an employee but a potential investor and that the employment contract was intended solely to facilitate McBurnie’s work permit.
4. **Labor Arbiter Decision (September 30, 2004)**: The LA ruled in favor of McBurnie, declaring his dismissal illegal and awarding him (a) US$985,162.00 in salary and benefits, (b) P2,000,000.00 in damages, and (c) attorney’s fees.
5. **NLRC Appeal (November 5, 2004)**: Respondents appealed to the NLRC, posting a P100,000.00 appeal bond and filing a motion to reduce the bond due to financial incapacity.
6. **NLRC’s Denial and Additional Bond (March 31, 2005)**: The NLRC denied the motion to reduce the bond and demanded an additional bond of P54,083,910.00.
7. **Subsequent Appeals**: Respondents elevated the matter to the Court of Appeals (CA) via petitions for certiorari after the NLRC dismissed their appeal for failure to post the additional bond.
8. **CA Decision and Remand (October 27, 2008)**: The CA granted the motion to reduce the bond to P10,000,000.00 and ordered the NLRC to give due course to respondents’ appeal.
9. **NLRC Reversal (November 17, 2009)**: On remand, the NLRC reversed the LA’s decision, declaring there was no employer-employee relationship and that McBurnie’s alleged employment was void for lack of a work permit.
10. **SC Decision (September 18, 2009)**: The Supreme Court’s Third Division reversed the CA’s decision, reinstating the NLRC’s dismissal of the appeal.
11. **Subsequent Motions**: Respondents filed successive motions for reconsideration with the Supreme Court, including a third motion based on perceived serious legal and factual errors.
Issues:
1. **Sufficiency of Appeal Bond**: Whether the respondents’ compliance with the bond requirement was sufficient to perfect their appeal to the NLRC.
2. **Employer-Employee Relationship**: Whether an employer-employee relationship existed between McBurnie and respondents.
3. **Validity of Employment Contract**: Whether the employment contract requiring a work permit was valid.
4. **Meritorious Grounds for Reduction of Bond**: Whether respondents had shown meritorious grounds to justify the reduction of the appeal bond.
5. **Immutability of Judgments**: Whether exceptional circumstances justified the reconsideration of the final and executory SC decision of September 18, 2009.
Court’s Decision:
1. **Appeal Bond Requirement**: The Supreme Court acknowledged that requiring the full bond amount would defeat the purpose of allowing a motion to reduce bond. It introduced guidelines requiring provisional posting of 10% of the monetary award subject to appeal, pending resolution on the bond’s reduction.
2. **Meritorious Grounds for Reduction**: The SC found that NLRC failed to exercise discretion by outright denying the motion to reduce the bond without evaluating the grounds and respondents’ financial incapability. The substantial award amount justified the reduced bond.
3. **Employer-Employee Relationship**: The SC found on the merits that no employer-employee relationship existed as the contract hinged on unattained contingencies (financing and work permit); any work performed was preparatory or in anticipation of an investment, not employment.
4. **Validity of Employment Contract**: Without a valid work permit, the alleged employment contract violated Philippine labor laws, rendering the agreement invalid and unenforceable.
5. **Immutability of Judgments**: Given the grave error and potential for unwarranted injury to the respondents, the SC set aside its previous final decision, emphasizing the need to rectify judicial errors in the interest of substantial justice.
Doctrine:
1. **Appeal Bond Requirements in Labor Cases**: Appeal bonds must be sufficient to ensure compliance with monetary awards yet consider the appellant’s capability to pay. The provisional posting of 10% provides interim relief until the NLRC decides.
2. **Meritorious Grounds for Reduction of Bond**: Demonstrated financial incapability or excessive judgment awards are valid grounds for bond reduction, which should be evaluated on a case-by-case basis.
3. **Employer-Employee Relationship in Labor Claims**: Employment relationships must be substantively established by both parties, with requisite permits and documentation evidencing actual employment conditions.
4. **Judicial Review and Modification of Final Judgments**: The SC can recall or modify final judgments in exceptional circumstances to prevent manifest injustice or uphold substantial justice.
Class Notes:
1. **Elements of Employment**: Selection, payment of wages, power to dismiss, and control over work performance (Control Test).
2. **Appeal Bond**: Required for appealing labor cases with monetary awards; typically 100% of the award, provisionally 10% pending NLRC action on reduction.
3. **Work Permit Requirement (Art. 40, Labor Code)**: Essential for foreign nationals seeking employment in the Philippines.
4. **NLRC Rules of Procedure**: Section 6, Rule VI – Bond requirement and conditions to reduce bond based on meritorious grounds.
5. **Substantial Justice Over Technicalities**: Courts retain discretion to relax procedural requirements to serve justice.
Historical Background: This case highlights the complexities in labor disputes involving foreign nationals and the procedural rigors in Philippine labor law, underscoring the balance between ensuring compliance with labor standards and providing procedural fairness to litigants. It also illustrates the SC’s authority to moderate its procedural rules to achieve just outcomes, a significant principle following constitutional and labor law imperatives.
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