FERNANDO JUAN, PROPRIETOR OF THE BUSINESS ENTITY UNDER THE NAME AND STYLE OF “FOTO ME”, PETITIONER, VS. CELSO MUSÑGI AND LABOR ARBITER EDUARDO G. MAGNO, RESPONDENTS.

Juan versus Musñgi

The Case

This is a petition for certiorari and prohibition, with a prayer for preliminary injunction, filed by Fernando Juan, the proprietor of the business entity known as Foto Me, against Celso Musñgi and Labor Arbiter Eduardo G. Magno. Juan asks the Supreme Court to annul the Labor Arbiter's order of July 22, 1986 and the writ of execution of September 25, 1986, and to stop the Labor Arbiter from proceeding further in the labor case for illegal deduction and unjust dismissal that Musñgi had filed against him. The case matters because it fixes the rule on when a decision of the National Labor Relations Commission becomes final and executory, and because it settles the hierarchy between the Labor Code and the Commission's own rules of procedure.

Procedural History

Musñgi filed a complaint for illegal deduction and unjust dismissal against his employer, Foto Me and Fernando Juan, before the National Labor Relations Commission, National Capital Region. On July 3, 1984, Labor Arbiter Porfirio Villanueva rendered a decision directing Juan to reinstate Musñgi with full backwages. Juan appealed to the National Labor Relations Commission on July 20, 1984, and on November 20, 1985 the Commission promulgated a resolution affirming the Labor Arbiter's decision. The records of the case then mysteriously disappeared and had to be reconstituted; Juan failed to appear at the reconstitution hearings despite due notice. After the records were endorsed to the Executive Labor Arbiter and the award was computed, Musñgi moved to deposit the amount due. The motion was heard and reset several times, and the case was eventually assigned to Labor Arbiter Eduardo G. Magno. On July 22, 1986, the Labor Arbiter issued the questioned order granting the motion to deposit, and on September 25, 1986 he issued the corresponding writ of execution. Juan then filed this petition with the Supreme Court on October 9, 1986. The Court required the respondents to comment and issued a temporary restraining order. The Office of the Solicitor General filed its comment on November 4, 1986, stating that it could not agree with the position of the public respondent and recommending that the petition be given due course. On March 9, 1987, the Court resolved to give due course to the petition, and the parties thereafter filed their comments and memoranda.

Facts

Celso Musñgi was employed by Foto Me, a business owned by Fernando Juan. He filed a complaint for illegal deduction and unjust dismissal against his employer, docketed as a labor case before the National Labor Relations Commission, National Capital Region. On July 3, 1984, Labor Arbiter Porfirio Villanueva decided the case in Musñgi's favor, ordering his reinstatement with full backwages. Juan appealed to the National Labor Relations Commission, which on November 20, 1985 promulgated a resolution affirming the Labor Arbiter's decision.

The records of the case then mysteriously disappeared and had to be reconstituted. Juan failed to appear at the reconstitution hearings held on March 19, 1986 and April 8, 1986, despite due notice. On April 8, 1986, the Commission's Executive Director endorsed the reconstituted records to the Executive Labor Arbiter of the National Capital Region, and the award was thereafter computed. On April 14, 1986, Musñgi filed a motion to deposit the amount of 49,626 pesos and 40 centavos, praying that a writ of execution issue should Juan fail to deposit the amount within seven days.

The motion was set for hearing, reset several times, and eventually assigned to Labor Arbiter Eduardo G. Magno after the Commission was reorganized. Despite due notice, neither Juan nor his counsel appeared at the hearing set on June 16, 1986. At the hearing set on July 15, 1986, Juan's counsel filed a manifestation and opposition alleging that they were not aware of any decision of the Commission dated November 30, 1985, and praying that the motion to deposit be denied. On July 22, 1986, the Labor Arbiter issued the questioned order granting the motion to deposit, on the premise that the resolution of the Second Division of the Commission was already final and executory, so that it was a matter of right of the complainant to request execution of the award. On September 25, 1986, the corresponding writ of execution was issued.

Issues

• Whether or not the resolution of the National Labor Relations Commission promulgated on November 20, 1985 became final and executory despite the lack of notice thereof to the petitioner.
• Whether or not the rule of the National Labor Relations Commission fixing a ten-day period from receipt for the finality of its decisions may prevail over the Labor Code, which provides that the decision of the Commission shall be immediately executory.
• Whether or not the petitioner was in fact served with a copy of the Commission's resolution, so that the period for seeking relief began to run.

Applicable Provisions

Article 223 of the Labor Code, as quoted in the decision, provides:

The decision of the Commission shall be immediately executory, even pending appeal, unless stayed by an order of the Secretary of Labor for special reasons.

This is the provision the Court reads as making the Commission's own decisions immediately executory, unlike the decisions of a Labor Arbiter, which cannot be declared final upon mere issuance.

Article 7 of the Civil Code, invoked by the Court, provides:

Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution.

This is the provision the Court uses to strike down the Commission's own rule of procedure insofar as it conflicts with the Labor Code.

Ruling

On the first issue, the Court held that the answer is in the affirmative. Under Article 223 of the Labor Code, the decisions, awards or orders of a Labor Arbiter cannot be declared final and executory upon the mere issuance thereof, because a period of ten days from receipt is granted to either or both parties to appeal to the Commission. The same cannot be said of the decision of the Commission itself, for under the same article its decision shall be immediately executory, even pending appeal, unless stayed by an order of the Secretary of Labor for special reasons. The Court noted that Webster's Third New International Dictionary defines immediately as without interval of time, without delay.

On the second issue, the Court held that Section 2 of Rule XI of the Rules of the National Labor Relations Commission, which provides that the decisions, resolutions or orders of the Commission shall become executory after ten calendar days from receipt, cannot prevail over the Labor Code. Article 7 of the Civil Code embodies the basic principle that administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution. Administrative regulations issued under legislative authority must be in harmony with the law and should be for the sole purpose of carrying its general provisions into effect; by such regulation the law itself cannot be extended, and an administrative agency cannot amend an act of Congress.

On the third issue, the Court held that it is not true that a copy of the resolution was not served on the petitioner. The bailiff who delivered the copy to the office of petitioner's counsel of record certified under oath that he served the same on December 9, 1985, but the employee present in that office refused to receive it on the ground that the counsel was no longer the counsel of the petitioner. No notice of withdrawal or substitution of counsel was shown, yielding to the rule that notice to counsel of record is, for all purposes, notice to the client. The Court further noted that at one of the hearings for the reconstitution of the records, a lawyer appeared on behalf of the petitioner and was provided with a copy of the Labor Arbiter's decision and of the Commission's resolution, which the Court treated as substantial compliance with the requirement of notice.

Doctrine

A Bar candidate should retain these rules. First, the decision of a Labor Arbiter cannot be declared final and executory upon mere issuance; the aggrieved party has ten days from receipt within which to appeal to the National Labor Relations Commission. Second, the decision of the Commission itself is immediately executory, even pending appeal, unless stayed by an order of the Secretary of Labor for special reasons, as Article 223 of the Labor Code expressly commands. Third, the Commission's own rule fixing a ten-day period from receipt for the finality of its decisions cannot prevail over the Labor Code, because under Article 7 of the Civil Code administrative regulations must not be contrary to the law, and an administrative agency cannot amend an act of Congress. Fourth, notice to counsel of record is, for all purposes, notice to the client, in the absence of a notice of withdrawal or substitution of counsel.

Disposition

The petition was dismissed for lack of merit, and the temporary restraining order issued by the Court was permanently lifted, leaving the Labor Arbiter's order and the writ of execution in force.

Remember This

Memorize the line that the decision of the National Labor Relations Commission is immediately executory, even pending appeal, and that the Commission's own ten-day rule cannot amend the Labor Code. Examiners use this case to test the hierarchy of laws over administrative rules and the rule that notice to counsel of record is notice to the client.