BALAGTAS MULTI-PURPOSE COOPERATIVE, INC. AND AURELIO SANTIAGO, PETITIONERS, VS. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION AND JOSEFINA HERRERO, RESPONDENTS.

Balagtas Multi-Purpose Cooperative versus Court of Appeals

The Case

This is a petition for review on certiorari brought by Balagtas Multi-Purpose Cooperative, Incorporated and its manager Aurelio Santiago against the Court of Appeals, the National Labor Relations Commission, and Josefina Herrero. The cooperative was ordered by a Labor Arbiter to pay Herrero backwages, separation pay, and thirteenth month pay after she filed a complaint for illegal dismissal and nonpayment of thirteenth month pay. When the cooperative appealed to the National Labor Relations Commission without posting the required appeal bond, the Commission ordered it to post a cash or surety bond of two hundred eighteen thousand pesos or lose its appeal. The cooperative insisted it was exempt from posting a bond under the Cooperative Code. The case matters because it teaches two lessons at once: the rule on perfecting an employer's appeal by posting a bond, and the doctrine that rules of procedure are not to be applied in a very rigid, technical sense.

Procedural History

Josefina Herrero filed a complaint for illegal dismissal and nonpayment of thirteenth month pay against the cooperative and its manager before the Labor Arbiter. On March 23, 1998, the Labor Arbiter rendered judgment in her favor, ordering the respondents jointly and severally to pay two thousand pesos as thirteenth month pay for the years 1995 to 1997, one hundred eighty-eight thousand pesos as backwages, and twenty-eight thousand pesos as separation pay.

The cooperative appealed to the National Labor Relations Commission but did not post either a cash or a surety bond. Instead, it filed a manifestation and motion claiming exemption from the bond under the Cooperative Code. On July 20, 1998, the Commission issued an order giving the cooperative ten unextendible days to post a cash or surety bond of two hundred eighteen thousand pesos, failing which the appeal would be deemed waived and unperfected.

The cooperative went to the Court of Appeals on a petition for certiorari, arguing that the Commission acted with grave abuse of discretion in disregarding the Cooperative Code. The Court of Appeals dismissed the petition on January 29, 1999 for failure to attach the motion for reconsideration and the financial statement. The cooperative moved for reconsideration, attaching the missing documents and pleading substantial compliance. The Court of Appeals denied the motion on April 26, 1999, noting that other material documents were still not attached. The cooperative then came to the Supreme Court by petition for review.

Facts

Josefina Herrero was employed by the Balagtas Multi-Purpose Cooperative, a duly registered cooperative, and her employment ended in circumstances she challenged as illegal dismissal. She filed a complaint for illegal dismissal and nonpayment of thirteenth month pay against the cooperative and its manager, Aurelio Santiago.

On March 23, 1998, the Labor Arbiter ruled in her favor and ordered the cooperative to pay thirteenth month pay, backwages, and separation pay. The cooperative appealed to the National Labor Relations Commission but posted no bond, invoking the Cooperative Code's exemption for cooperatives.

The Commission refused to recognize the exemption and ordered the posting of a two hundred eighteen thousand peso bond within ten unextendible days, warning that failure would constitute a waiver and non-perfection of the appeal. The cooperative's subsequent petition for certiorari was dismissed by the Court of Appeals on technical grounds, and its motion for reconsideration was likewise denied. The cooperative elevated the matter to the Supreme Court.

Issues

• Whether or not the Court of Appeals erred in dismissing the petition for certiorari for failure to attach the motion for reconsideration, the financial statement, the complaint, the position papers, and the resignation letter of the private respondent.
• Whether or not the submission of the financial statement together with the motion for reconsideration constituted substantial compliance with the requirements of Section 3, Rule 46 in relation to Section 1, Rule 65 of the Rules of Court.

Applicable Provisions

Section 3, Rule 46 of the Rules of Court provides:

It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the respondent with the original copy intended for the court indicated as such by the petitioner, and shall be accompanied by a clearly legible duplicate original or certified true copy of the judgment, order, resolution, or ruling subject thereof, such material portions of the record as are referred to therein, and other documents relevant or pertinent thereto.

This is the provision the Court of Appeals applied in dismissing the petition, and which the Supreme Court construed in favor of substantial compliance.

Article 62, paragraph 7 of the Cooperative Code of the Philippines provides:

All cooperatives shall be exempt from putting up a bond for bringing an appeal from the decision of an inferior court or for seeking to set aside any third party claim: Provided, That a certification of the Authority showing that the net assets of the cooperative are in excess of the amount of the bond required by the court in similar cases shall be accepted by the court as a sufficient bond.

This is the exemption invoked by the cooperative, and it explains why the financial statement was material to the question of exemption from the bond.

Article 223 of the Labor Code, as amended, 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 bond requirement that the National Labor Relations Commission enforced against the cooperative.

Ruling

On the first issue, the Court held that the Court of Appeals erred in dismissing the petition. The petition before the Court of Appeals did not involve the validity of the dismissal from employment. The only issue raised was whether the petitioners are exempt from posting a cash or surety bond. The motion for reconsideration, the financial statement, the complaint, the position papers, and the resignation letter, though mentioned in the petition, were hardly material, relevant, or pertinent to the resolution of that issue.

On the second issue, the Court agreed that the financial statement is material to the question of exemption from the posting of a bond, since the Cooperative Code requires a certification of the Authority showing that the net assets of the cooperative are in excess of the amount of the bond required. The Cooperative Development Authority certification stated that the cooperative is entitled to exemption under Article 62, paragraph 7 of the Cooperative Code, and attached the financial statement. Nevertheless, the Court held that the submission of the financial statement together with the motion for reconsideration constituted substantial compliance with Section 3, Rule 46. The Court stressed that the rules of procedure are not to be applied in a very rigid, technical sense; rules of procedure are used only to help secure substantial justice, and a technical and rigid enforcement of the rules would defeat their aim.

Doctrine

First, under Article 223 of the Labor Code, an employer's appeal from a judgment involving a monetary award is perfected only upon the posting of a cash or surety bond equivalent to the monetary award.

Second, under Article 62, paragraph 7 of the Cooperative Code, a cooperative is exempt from putting up a bond for bringing an appeal, provided that a certification of the Authority showing that the net assets of the cooperative are in excess of the amount of the bond required is accepted by the court as a sufficient bond.

Third, the requirement in Section 3, Rule 46 that the petition be accompanied by material portions of the record and other documents relevant or pertinent thereto applies only to documents material to the issue raised. Documents that are not material to the issue need not be attached.

Fourth, the submission of the required documents with the motion for reconsideration constitutes substantial compliance with the rules. Rules of procedure are not to be applied in a very rigid, technical sense; they are used only to help secure substantial justice.

Disposition

The petition was granted, and the Court of Appeals was ordered to admit the petition filed before it.

Remember This

The single line worth memorizing is that rules of procedure are used only to help secure substantial justice, and a technical and rigid enforcement of the rules would defeat their aim. Examiners like to use this case on the perfection of an employer's appeal by posting a bond, on the cooperative exemption under Article 62, paragraph 7 of the Cooperative Code, and on the doctrine of substantial compliance with the Rules of Court.