MERS SHOES MANUFACTURING, INC., MARIANO ENRIQUEZ, ROSALITA S. ENRIQUEZ,  VILMA S. ENRIQUEZ, EDITH E. VALERIO,  RODOLFO S. ENRIQUEZ, MA. CRISTINA ENRIQUEZ AND EVERILDA ENRIQUEZ, …

Mer's Shoe Manufacturing versus Enriquez

The Case

This is a petition for certiorari brought by Mer's Shoe Manufacturing, Incorporated and its officers against the National Labor Relations Commission and a group of piece rate workers. The workers had complained that the company illegally stopped its operations, and the labor arbiter ruled that the shutdown was for a valid cause but was done without the required notices, and ordered the payment of separation pay, thirteenth month pay, indemnity and attorney's fees. The company appealed, but the appeal was dismissed because it failed to post the appeal bond within the period fixed by the Commission. The case matters because it settles a jurisdictional rule every labor practitioner must know: an employer's appeal in a monetary award case is perfected only upon the posting of a cash or surety bond, and that requirement cannot be trifled with.

Procedural History

The workers filed a complaint assailing the legality of the stoppage of the company's operations and seeking separation pay and other money claims. The labor arbiter rendered a decision finding the shutdown to be with cause but without the required notice, and ordered the company and its officers to pay indemnity pay, thirteenth month pay, separation pay and attorney's fees. The company received the decision and perfected its appeal before the National Labor Relations Commission within the reglementary period, and simultaneously moved to reduce the amount of the appeal bond. The Commission partially granted the motion and ordered the posting of a reduced bond within ten calendar days. Instead of posting the bond, the company filed a motion for reconsideration of that order. The Commission treated the motion as a motion for extension of time to perfect the appeal, which is a prohibited pleading under its New Rules of Procedure, and dismissed the appeal for failure to post the bond within the ten-day period. The company then came to the Supreme Court by petition.

Facts

In 1974 Mariano Enriquez operated a sole proprietorship engaged in the manufacture and export of shoes to the United States. In 1978 he formed a corporation with several stockholders, and when that corporation was dissolved, his son organized another shoe company. In December 1988 a new corporation was organized with the same family stockholders, and in May 1990 Mer's Shoe Manufacturing, Incorporated was formed involving the same stockholders.

The private respondents were hired by the company as piece rate workers. On February 22, 1993, they were allegedly barred from entering the company compound on the ground of the petitioner's serious business decline. They asserted that the company illegally ceased operations when it failed to issue the requisite notices to the Department of Labor and Employment and to the employees concerned. The company, for its part, contended that it acted in good faith and that there existed a valid cause for its shutdown.

The labor arbiter found the shutdown to be with cause but without the required notice, and awarded indemnity pay of 1,000 pesos to each complainant, thirteenth month pay for 1990 and proportionate thirteenth month pay for 1993, separation pay at fifteen days for every year of service or at least one month pay whichever is higher, and attorney's fees equivalent to five percent of the awarded money claims. The company appealed and sought a reduction of the bond, which the Commission partially granted, fixing the bond at 403,126 pesos and 20 centavos. The company moved for reconsideration of that order, and the Commission treated the motion as a prohibited motion for extension and dismissed the appeal.

Issues

• Whether or not the National Labor Relations Commission committed grave abuse of discretion in dismissing the employer's appeal for failure to post the required appeal bond within the reglementary period after the bond had been ordered reduced.
• Whether or not the rulings in the earlier cases invoked by the petitioner, where the appeal bond could not be determined or where moral and exemplary damages were improperly included, apply to this case.

Applicable Provisions

Article 223 of the Labor Code provides:

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from.

This is the provision the Court construes, and its requirement of a bond is the very ground for dismissing the appeal.

Section 6, Rule VI of the New Rules of Procedure of the National Labor Relations Commission provides:

The Commission may, in meritorious cases and upon motion of the appellant, reduce the amount of the bond.

This is the provision under which the petitioner sought and obtained a reduction, and its timing is decisive in this case.

Ruling

On the first issue, the Court ruled against the petitioner. Perfection of an appeal within the period and in the manner prescribed by law is jurisdictional, and non-compliance with such legal requirements is fatal and has the effect of rendering the judgment final and executory. The Court stressed that the requirement is intended to discourage employers from using the appeal to delay, or even evade, their obligation to satisfy their employees' just and lawful claims, and that it is jurisdictional and cannot be trifled with. The Court drew attention to the statutory word "only," which makes it perfectly 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. The Court added that the law does not require outright payment, but only the posting of a bond to ensure that the award will eventually be paid should the appeal fail.

The Court then explained that while the rules allow the reduction of the appeal bond upon motion of the appellant and on meritorious grounds, the motion must be filed within the reglementary period for appealing. Here the Commission had already exercised its discretion and fixed a reduced bond, and the petitioner should have complied with it. To file a subsequent motion seeking another reconsideration of the already reduced bond is, in effect, to request an extension of time to perfect the appeal, which is prohibited. To rule otherwise would encourage endless motions for reconsideration seeking reduction of the required bond, rendering futile the requirement of the law.

On the second issue, the Court distinguished the earlier cases. In one, the labor arbiter had included moral and exemplary damages in computing the appeal bond, when the law provides that moral and exemplary damages shall not be included in fixing the amount of the bond. In the other two, the decisions appealed from did not state the exact amounts awarded, so the amount of the bond could not be determined within the ten-day period. The Court found that this petition presented a different factual milieu, because the bond had been fixed and reduced, and the petitioner simply failed to post it.

Doctrine

An employer's appeal from a judgment involving a monetary award is perfected only upon the posting of a cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from. Perfection of an appeal within the period and in the manner prescribed by law is jurisdictional, and non-compliance renders the judgment final and executory. The word "only" in Article 223 makes the bond the exclusive means of perfecting the employer's appeal, and the requirement exists to discourage employers from using the appeal to delay or evade their obligations to their employees.

A motion to reduce the appeal bond must be filed within the reglementary period for appealing. Once the Commission, in the exercise of its sound discretion, fixes or reduces the bond, the appellant must comply with it. A further motion for reconsideration of the reduced bond is in effect a prohibited motion for extension of time to perfect the appeal. The exceptional rulings where the bond could not be determined, or where moral and exemplary damages were improperly included in the computation, do not apply where the bond has already been fixed and the employer simply failed to post it.

Disposition

The petition was dismissed and the decision of the National Labor Relations Commission was affirmed, so the workers prevailed and the company's appeal remained dismissed.

Remember This

Memorize the line: an employer's appeal in a monetary award case is perfected only upon the posting of a cash or surety bond, and that requirement is jurisdictional. Examiners use this case to test the appeal bond under Article 223 of the Labor Code, the timing of a motion to reduce the bond, and the distinction from cases where the bond could not be determined or where moral and exemplary damages were wrongly included.