J.A.B. Bulao & Associates

CASE 2011-160: RE: RESOLUTION OF THE COURT DATED 1 JUNE 2004 IN G.R. NO. 72954 AGAINST ATTY. VICTOR C. AVECILLA (A.C. NO. 6683, 21 JUNE 2011, PEREZ, J.) SUBJECT: BRINGING OUT ROLLO OUTSIDE COURT FOR UNOFFICIAL USE. (BRIEF TITLE: CASE AGAINST ATTY. AVECILLA).

================================

ATTY. AVECILLA, THEN A COURT EMPLOYEE, TOOK OUT ROLLO OUTSIDE COURT. IS HIS ACT PUNISHABLE?

YES. COURT EMPLOYEES ARE NOT ALLOWED TO TAKE OUT ANY COURT RECORD OUTSIDE THE COURT PREMISES.

Given the foregoing, We find that there are sufficient grounds to hold respondent administratively liable. 

First.  Taking judicial records, such as a rollo, outside court premises, without the court’s consent, is an administratively punishable act.  In Fabiculana, Sr. v. Gadon,^[1][55] this Court previously sanctioned a sheriff for the wrongful act of bringing court records home, thus:

Likewise Ciriaco Y. Forlales, although not a respondent in complainant’s letter-complaint, should be meted the proper penalty, having admitted taking the records of the case home and forgetting about them.  Court employees are, in the first place, not allowed to take any court records, papers or documents outside the court premises.  It is clear that Forlales was not only negligent in his duty of transmitting promptly the records of an appealed case to the appellate court but he also failed in his duty not to take the records of the case outside of the court and to subsequently forget about them.^[2][56] (Emphasis supplied)

XXXXXXXXXXXXXXXXXXXXX

WHAT RULE DID ATTY. AVECILLA VIOLATE?

RULE 6.02, CANON 6 OF THE CODE OF PROFESSIONAL RESPONSIBILITY WHICH PROHIBITS GOVERNMENT LAWYERS TO USE THEIR PUBLIC POSITION TO ADVANCE THEIR INTERESTS.

Second.  The act of the respondent in borrowing a rollo for unofficial business entails the employment of deceit not becoming a member of the bar.  It presupposes the use of misrepresentation and, to a certain extent, even abuse of position on the part of the respondent because the lending of rollos are, as a matter of policy, only limited to official purposes.

As a lawyer then employed with the government, the respondent clearly violated Rule 6.02, Canon 6 of the Code of Professional Responsibility, to wit:

Rule 6.02 – A lawyer in the government service shall not use his public position to promote or advance his private interests, nor allow the latter to interfere with his public duties. (Emphasis supplied).

XXXXXXXXXXXXXXXX

THE OFFICE OF THE CHIEF ATTORNEY (OCAT) RECOMMENDED THAT ATTY. AVECILLA BE  METED PENALTY OF ONE YEAR SUSPENSION. WAS THIS PROPER?

NO. THE PENALTY IS TOO HARSH CONSIDERING CERTAIN CIRCUMSTANCES IN FAVOR OF ATTY. AVECILLA.

          Third.  However, We find the recommended penalty of suspension from the practice of law for one (1) year as too harsh for the present case.  We consider the following circumstances in favor of the respondent:

1.     G.R. No. 72954 was already finally resolved when its rollo was borrowed on 13 September 1991.  Thus, the act of respondent in keeping the subject rollo worked no prejudice insofar as deciding G.R. No. 72954 is concerned.

2.     It was never established that the contents of the rollo, which remained confidential despite the finality of the resolution in G.R. No. 72954, were disclosed by the respondent.

3.     After his possession of the subject rollo was discovered, the respondent cooperated with the JRO for the return of the rollo.

We, therefore, temper the period of suspension to only six (6) months.

================================   

EN BANC

x———————————————————————————————– x

D E C I S I O N

PEREZ, J.:

          The present administrative case is based on the following facts:

Prelude

          Sometime in 1985, respondent Atty. Victor C. Avecilla (Atty. Avecilla) and a certain Mr. Louis C. Biraogo (Mr. Biraogo) filed a petition before this Court impugning the constitutionality of Batas Pambansa Blg. 883, i.e., the law that called for the holding of a presidential snap election on 7 February 1986.  The petition was docketed as G.R. No. 72954 and was consolidated with nine (9) other petitions^[3][1] voicing a similar concern.

          On 19 December 1985, the Court En banc issued a Resolution dismissing the consolidated petitions, effectively upholding the validity of Batas Pambansa Blg. 883.^[4][2]

          On 8 January 1986, after the aforesaid resolution became final, the rollo^[5][3] of G.R. No. 72954 was entrusted to the Court’s Judicial Records Office (JRO) for safekeeping.^[6][4]

The Present Case

On 14 July 2003, the respondent and Mr. Biraogo sent a letter^[7][5] to the Honorable Hilario G. Davide, Jr., then Chief Justice of the Supreme Court (Chief Justice Davide), requesting that they be furnished several documents^[8][6] relative to the expenditure of the Judiciary Development Fund (JDF).  In order to show that they have interest in the JDF enough to be informed of how it was being spent, the respondent and Mr. Biraogo claimed that they made contributions to the said fund by way of the docket and legal fees they paid as petitioners in G.R No. 72954.^[9][7]

On 28 July 2003, Chief Justice Davide instructed^[10][8] Atty. Teresita Dimaisip (Atty. Dimaisip), then Chief of the JRO, to forward the rollo of G.R. No. 72954 for the purpose of verifying the claim of the respondent and Mr. Biraogo.

On 30 July 2003, following a diligent search for the rollo of G.R. No. 72954, Atty. Dimaisip apprised^[11][9] Chief Justice Davide that the subject rollo could not be found in the archives.  Resorting to the tracer card^[12][10] of G.R. No. 72954, Atty. Dimaisip discovered that the subject rollo had been borrowed from the JRO on 13 September 1991 but, unfortunately, was never since returned.^[13][11]  The tracer card named the respondent, although acting through a certain Atty. Salvador Banzon (Atty. Banzon), as the borrower of the subject rollo.^[14][12]

The next day, or on 31 July 2003, Chief Justice Davide took prompt action by directing^[15][13] Atty. Dimaisip to supply information about how the respondent was able to borrow the rollo of G.R. No. 72954 and also to take necessary measures to secure the return of the said rollo.

Reporting her compliance with the foregoing directives, Atty. Dimaisip sent to Chief Justice Davide a Memorandum^[16][14] on 13 August 2003.  In substance, the Memorandum relates that:

1.     At the time the rollo of G.R. No. 72954 was borrowed from the JRO, the respondent was employed with the Supreme Court as a member of the legal staff of retired Justice Emilio A. Gancayco (Justice Gancayco).  Ostensibly, it was by virtue of his confidential employment that the respondent was able to gain access to the rollo of G.R. No. 72954.^[17][15]

2.     Atty. Dimaisip had already contacted the respondent about the possible return of the subject rollo.^[18][16]  Atty. Dimaisip said that the respondent acknowledged having borrowed the rollo of G.R. No. 72954 through Atty. Banzon, who is a colleague of his in the office of Justice Gancayco.^[19][17]

On 18 August 2003, almost twelve (12) years after it was borrowed, the rollo of G.R. No. 72954 was finally turned over by Atty. Avecilla to the JRO.^[20][18]

          On 22 September 2003, Chief Justice Davide directed^[21][19] the Office of the Chief Attorney (OCAT) of this Court, to make a study, report and recommendation on the incident.  On 20 November 2003, the OCAT submitted a Memorandum^[22][20] to the Chief Justice opining that the respondent may be administratively charged, as a lawyer and member of the bar, for taking out the rollo of G.R. No. 72954.  The OCAT made the following significant observations:

1.     Justice Gancayco compulsorily retired from the Supreme Court on 20 August 1991.^[23][21]  However, as is customary, the coterminous employees of Justice Gancayco were given an extension of until 18 September 1991 to remain as employees of the court for the limited purpose of winding up their remaining affairs.  Hence, the respondent was already nearing the expiration of his “extended tenure” when he borrowed the rollo of G.R. No. 72954 on 13 September 1991.^[24][22]

2.     The above circumstance indicates that the respondent borrowed the subject rollo not for any official business related to his duties as a legal researcher for Justice Gancayco, but merely to fulfill a personal agenda.^[25][23]  By doing so, the respondent clearly abused his confidential position for which he may be administratively sanctioned.^[26][24]

3.     It must be clarified, however, that since the respondent is presently no longer in the employ of the Supreme Court, he can no longer be sanctioned as such employee.^[27][25]  Nevertheless, an administrative action against the respondent as a lawyer and officer of the court remains feasible.^[28][26]

Accepting the findings of the OCAT, the Court En banc issued a Resolution^[29][27] on 9 December 2003 directing the respondent to show cause why he should not be held administratively liable for borrowing the rollo of G.R. No. 72954 and for failing to return the same for a period of almost twelve (12) years.

The respondent conformed to this Court’s directive by submitting his Respectful Explanation (Explanation)^[30][28] on 21 January 2004.  In the said explanation, the respondent gave the following defenses:

1.     The respondent maintained that he neither borrowed nor authorized anyone to borrow the rollo of G.R. No. 72954.^[31][29]  Instead, the respondent shifts the blame on the person whose signature actually appears on the tracer card of G.R. No. 72954 and who, without authority, took the subject rollo in his name.^[32][30]  Hesitant to pinpoint anyone in particular as the author of such signature, the respondent, however, intimated that the same might have belonged to Atty. Banzon.^[33][31]

2.     The respondent asserted that, for some unknown reason, the subject rollo just ended up in his box of personal papers and effects, which he brought home following the retirement of Justice Gancayco.^[34][32]  The respondent can only speculate that the one who actually borrowed the rollo might have been a colleague in the office of Justice Gancayco and that through inadvertence, the same was misplaced in his personal box.^[35][33]

3.     The respondent also denounced any ill-motive for failing to return the rollo, professing that he had never exerted effort to examine his box of personal papers and effects up until that time when he was contacted by Atty. Dimaisip inquiring about the missing rollo.^[36][34]  The respondent claimed that after finding out that the missing rollo was, indeed, in his personal box, he immediately extended his cooperation to the JRO and wasted no time in arranging for its return.^[37][35]

On 24 February 2004, this Court referred the respondent’s Explanation to the OCAT for initial study.  In its Report^[38][36] dated 12 April 2004, the OCAT found the respondent’s Explanation to be unsatisfactory.

On 1 June 2004, this Court tapped^[39][37] the Office of the Bar Confidant (OBC) to conduct a formal investigation on the matter and to prepare a final report and recommendation.  A series of hearings were thus held by the OBC wherein the testimonies of the respondent,^[40][38] Atty. Banzon,^[41][39] Atty. Dimaisip^[42][40] and one Atty. Pablo Gancayco^[43][41] were taken.  On 6 August 2007, the respondent submitted his Memorandum^[44][42] to the OBC reiterating the defenses in his Explanation.

On 13 October 2009, the OBC submitted its Report and Recommendation^[45][43] to this Court.  Like the OCAT, the OBC dismissed the defenses of the respondent and found the latter to be fully accountable for taking out the rollo of G.R. No. 72954 and failing to return it timely.^[46][44]  The OBC, thus, recommended that the respondent be suspended from the practice of law for one (1) year.^[47][45]

Our Ruling

          We agree with the findings of the OBC.  However, owing to the peculiar circumstances in this case, we find it fitting to reduce the recommended penalty. 

The Respondent Borrowed The Rollo

          After reviewing the records of this case, particularly the circumstances surrounding the retrieval of the rollo of G.R. No. 72954, this Court is convinced that it was the respondent, and no one else, who is responsible for taking out the subject rollo.

          The tracer card of G.R. No. 72954 bears the following information:

1.     The name of the respondent, who was identified as borrower of the rollo,^[48][46] and

2.     The signature of Atty. Banzon who, on behalf of the respondent, actually received the rollo from the JRO.^[49][47]

The respondent sought to discredit the foregoing entries by insisting that he never authorized Atty. Banzon to borrow the subject rollo on his behalf.^[50][48]  We are, however, not convinced.

First.  Despite the denial of the respondent, the undisputed fact remains that it was from his possession that the missing rollo was retrieved about twelve (12) years after it was borrowed from the JRO.  This fact, in the absence of any plausible explanation to the contrary, is sufficient affirmation that, true to what the tracer card states, it was the respondent who borrowed the rollo of G.R. No. 72954.

Second.  The respondent offered no convincing explanation how the subject rollo found its way into his box of personal papers and effects.  The respondent can only surmise that the subject rollo may have been inadvertently placed in his personal box by another member of the staff of Justice Gancayco.^[51][49]  However, the respondent’s convenient surmise remained just that—a speculation incapable of being verified definitively.

Third. If anything, the respondent’s exceptional stature as a lawyer and former confidante of a Justice of this Court only made his excuse unacceptable, if not totally unbelievable.  As adequately rebuffed by the OCAT in its Report dated 12 April 2004:

x x x However, the excuse that the rollo “inadvertently or accidentally” found its way to his personal box through his officemates rings hollow in the face of the fact that he was no less than the confidential legal assistance of a Member of this Court.  With this responsible position, Avecilla is expected to exercise extraordinary diligence with respect to all matters, including seeing to it that only his personal belongings were in that box for taking home after his term of office in this Court has expired.^[52][50]

          Verily, the tracer card of G.R. No. 72954 was never adequately controverted.  We, therefore, sustain its entry and hold the respondent responsible for borrowing the rollo of G.R. No. 72954.

Respondent’s Administrative Liability

          Having settled that the respondent was the one who borrowed the rollo of G.R. No. 72954, We next determine his administrative culpability.

          We begin by laying the premises:

1.     The respondent is presently no longer in the employ of this Court and as such, can no longer be held administratively sanctioned as an employee.^[53][51]   However, the respondent, as a lawyer and a member of the bar, remains under the supervisory and disciplinary aegis of this Court.^[54][52]

2.     The respondent was already nearing the expiration of his “extended tenure” when he borrowed the rollo of G.R. No. 72954 on 13 September 1991.^[55][53]  We must recall that Justice Gancayco already retired as of 20 April 1991. Hence, it may be concluded that for whatever reason the respondent borrowed the subject rollo, it was not for any official reason related to the adjudication of pending cases.^[56][54]

3.     The respondent’s unjustified retention of the subject rollo for a considerable length of time all but confirms his illicit motive in borrowing the same.  It must be pointed out that the subject rollo had been in the clandestine possession of the respondent for almost twelve (12) years until it was finally discovered and recovered by the JRO.

          Given the foregoing, We find that there are sufficient grounds to hold respondent administratively liable. 

First.  Taking judicial records, such as a rollo, outside court premises, without the court’s consent, is an administratively punishable act.  In Fabiculana, Sr. v. Gadon,^[57][55] this Court previously sanctioned a sheriff for the wrongful act of bringing court records home, thus:

Likewise Ciriaco Y. Forlales, although not a respondent in complainant’s letter-complaint, should be meted the proper penalty, having admitted taking the records of the case home and forgetting about them.  Court employees are, in the first place, not allowed to take any court records, papers or documents outside the court premises.  It is clear that Forlales was not only negligent in his duty of transmitting promptly the records of an appealed case to the appellate court but he also failed in his duty not to take the records of the case outside of the court and to subsequently forget about them.^[58][56] (Emphasis supplied)

Second.  The act of the respondent in borrowing a rollo for unofficial business entails the employment of deceit not becoming a member of the bar.  It presupposes the use of misrepresentation and, to a certain extent, even abuse of position on the part of the respondent because the lending of rollos are, as a matter of policy, only limited to official purposes.

As a lawyer then employed with the government, the respondent clearly violated Rule 6.02, Canon 6 of the Code of Professional Responsibility, to wit:

Rule 6.02 – A lawyer in the government service shall not use his public position to promote or advance his private interests, nor allow the latter to interfere with his public duties. (Emphasis supplied).

          Third.  However, We find the recommended penalty of suspension from the practice of law for one (1) year as too harsh for the present case.  We consider the following circumstances in favor of the respondent:

1.     G.R. No. 72954 was already finally resolved when its rollo was borrowed on 13 September 1991.  Thus, the act of respondent in keeping the subject rollo worked no prejudice insofar as deciding G.R. No. 72954 is concerned.

2.     It was never established that the contents of the rollo, which remained confidential despite the finality of the resolution in G.R. No. 72954, were disclosed by the respondent.

3.     After his possession of the subject rollo was discovered, the respondent cooperated with the JRO for the return of the rollo.

We, therefore, temper the period of suspension to only six (6) months.

WHEREFORE, in light of the foregoing premises, the respondent is hereby SUSPENDED from the practice of law for six (6) months.  The respondent is also STERNLY WARNED that a repetition of a similar offense in the future will be dealt with more severely.

          SO ORDERED.

WE CONCUR:

RENATO C. CORONA

Chief Justice

ANTONIO T. CARPIO                         PRESBITERO J. VELASCO, JR.   

      Associate Justice                                   Associate Justice

TERESITA J. LEONARDO-DECASTRO           ARTURO D. BRION

     Associate Justice                                         Associate Justice

                    DIOSDADO M. PERALTA                         LUCAS P. BERSAMIN

       Associate Justice                                         Associate Justice

       MARIANO C. DEL CASTILLO                   ROBERTO A. ABAD

        Associate Justice                                        Associate Justice     

        MARTIN S. VILLARAMA, JR.            JOSE CATRAL MENDOZA

         Associate Justice                                    Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

CASE 2011-0159:  HOME DEVELOPMENT MUTUAL FUND (HDMF) VS. Spouses FIDEL and FLORINDA R. SEE and Sheriff MANUEL L. ARIMADO (G.R. NO. 170292, 22 JUNE 2011, DEL CASTILLO, J.) SUBJECT: CERTIORARI (BRIEF TITLE: HOME DEVELOPMENT VS. SEE).

====================================

SUBJECT/DOCTRINE/DIGEST:

RESPONDENT SPOUSES WON IN AN AUCTION SALE OF PAG-IBIG AND PAID THE PRICE TO THE SHERIFF. SHERIFF USED THE MONEY AND DID NOT REMIT TO PAG-IBIG. WHEN RESPONDENTS ASKED FOR THE TITLE PAG-IBIG REFUSED. RESPONDENTS SUED PAG-IBIG AND SHERIFF FOR DELIVERY OF TITLE. THE PARTIES ENTERED INTO COMPROMISE AGREEMENT WHICH PROVIDES THAT SHERIFF PAYS PAG-IBIG AND THE LATTER WILL DELIVER TITLE TO RESPONDENTS. IF SHERIFF FAILS TO PAY, COURT SHALL RESOLVE THE LEGAL ISSUE ON WHETHER PAG-IBIG IS OBLIGATED TO DELIVER TITLE. COURT ISSUED DECISION DIRECTING PARTIES TO ABIDE BY THE COMPROMISE AGREEMENT. SHERIFF DID NOT PAY. SPOUSES ASKED FOR EXECUTION. COURT ISSUED ANOTHER DECISION ORDERING PAG-IBIG TO DELIVER TITLE. PAG-IBIG FILED AT CA PETITION FOR CERTIORARI ON THE GROUND THAT COURT DID NOT CONDUCT TRIAL PRIOR TO ISSUANCE OF SECOND DECISION AND THAT THE SECOND DECISION AMENDED THE FIRST DECISION.

WAS CERTIORARI PETITION PROPER?

NO. RTC DID NOT COMMIT GRAVE ABUSE OF DISCRETION. TRIAL WAS NOT NECESSARY BECAUSE ONLY LEGAL ISSUE WAS TO BE RESOLVED. THE SECOND DECISION DID NOT AMEND THE FIRST DECISION BECAUSE IT  WAS PURSUANT TO THE FIRST DECISION WHICH  APPROVED THE COMPROMISE AGREEMENT. UNDER THE AGREEMENT THE COURT SHALL RESOLVE THE LEGAL ISSUE ON WHETHER PAG-IBIG IS LIABLE TO DELIVER TITLE IN CASE THE SHERIFF FAILS TO PAY.

As to Pag-ibig’s argument that the February 21, 2002 Decision of the RTC is null and void for having been issued without a trial, it is a mere afterthought which deserves scant consideration.  The Court notes that Pag-ibig did not object to the absence of a trial when it sought a reconsideration of the February 21, 2002 Decision.  Instead, Pag-ibig raised the following lone argument in their motion:

            3.  Consequently, [Pag-ibig] should not be compelled to release the title to other [respondent-spouses] See because Manuel Arimado [has] yet to deliver to [Pag-ibig] the sum of P 272,000.00.^[1][43]              

Under the Omnibus Motion Rule embodied in Section 8 of Rule 15 of the Rules of Court, all available objections that are not included in a party’s motion shall be deemed waived. 

            Pag-ibig next argues that the February 21, 2002 Decision of the trial court, in ordering Pag-ibig to release the title despite Sheriff Arimado’s failure to remit the P272,000.00 to Pag-ibig, “modified” the October 31, 2001 Decision.  According to Pag-ibig, the October 31, 2001 Decision allegedly decreed that Pag-ibig would deliver the title to respondent-spouses only after Sheriff Arimado has paid the P272,000.00.^[2][44]  In other words, under its theory, Pag-ibig cannot be ordered to release the title if Sheriff Arimado fails to pay the said amount.

            The Court finds no merit in this argument.  The October 31, 2001 Decision (as well as the Compromise Agreement on which it is based) does not provide that Pag-ibig cannot be ordered to release the title if Sheriff Arimado fails to pay.  On the contrary, what the Order provides is that if Sheriff Arimado fails to pay, the trial court shall litigate (and, necessarily, resolve) the issue of whether Pag-ibig is obliged to release the title.  This is based on paragraph 6 of the Compromise Agreement which states that in the event Sheriff Arimado fails to pay, “the [respondent-spouses] shall be entitled to an immediate writ of execution without further notice to [Sheriff] Arimado and the issue as to whether [Pag-ibig] shall be liable for the release of the title to [respondent spouses] under the circumstances or allegations narrated in the complaint shall continue to be litigated upon in order that the Honorable Court may resolve the legality of said issue.”  In fact, the trial court, in its October 31, 2001 Decision, already set the hearing of the same “on December 14, 2001 at 9:00 o’clock in the morning.”^[3][45]

                It is thus clear from both the October 31, 2001 Decision and the Compromise Agreement that the trial court was authorized to litigate and resolve the issue of whether Pag-ibig should release the title upon Sheriff Arimado’s failure to pay the P272,000.00.  As it turned out, the trial court eventually resolved the issue against Pag-ibig, i.e., it ruled that Pag-ibig is obliged to release the title.  In so doing, the trial court simply exercised the authority provided in the October 31, 2001 Decision (and stipulated in the Compromise Agreement).  The trial court did not thereby “modify” the October 31, 2001 Decision.

XXXXXXXXXXXXXXXXXXXXXXXXXXX

SINCE RTC DID NOT COMMIT GRAVE ABUSE OF DISCRETION, WHAT SHOULD HAVE BEEN THE REMEDY OF PAG-IBIG?

APPEAL UNDER RULE 41. CERTIORARI IS A REMEDY OF LAST  RESORT. IT IS NOT A SUBSTITUTE FOR A LOST APPEAL.

“[C]ertiorari is a limited form of review and is a remedy of last recourse.”^[4][36]  It is proper only when appeal is not available to the aggrieved party.^[5][37]  In the case at bar, the February 21, 2002 Decision of the trial court was appealable under Rule 41 of the Rules of Court because it completely disposed of respondent-spouses’ case against Pag-ibig.  Pag-ibig does not explain why it did not resort to an appeal and allowed the trial court’s decision to attain finality.  In fact, the February 21, 2002 Decision was already at the stage of execution when Pag-ibig belatedly resorted to a Rule 65 Petition for Certiorari.  Clearly, Pag-ibig lost its right to appeal and tried to remedy the situation by resorting to certiorari.  It is settled, however, that certiorari is not a substitute for a lost appeal, “especially if the [party’s] own negligence or error in [the] choice of remedy occasioned such loss or lapse.”^[6][38] 

XXXXXXXXXXXXXXXXXXXXXX

PAG-IBIG FILED CERTIORARI WITHIN 60 DAYS FROM RECEIPT OF WRIT OF EXECUTION. WAS CERTIORARI FILED WITHIN THE PERIOD REQUIRED?

NO. THE 60 DAY PERIOD IS COUNTED FROM RECEIPT OF JUDGMENT.

            Moreover, even assuming arguendo that a Rule 65 certiorari could still be resorted to, Pag-ibig’s petition would still have to be dismissed for having been filed beyond the reglementary period of 60 days from notice of the denial of the motion for reconsideration.^[7][39]  Pag-ibig admitted receiving the trial court’s Order denying its Motion for Reconsideration on March 22, 2002;^[8][40] it thus had until May 21, 2002 to file its petition for certiorari.  However, Pag-ibig filed its petition only on May 24, 2002,^[9][41] which was the 63rd day from its receipt of the trial court’s order and obviously beyond the reglementary 60-day period. 

            Pag-ibig stated that its petition for certiorari was filed “within sixty (60) days from receipt of the copy of the writ of execution by petitioner [Pag-ibig] on 07 May 2002,” which writ sought to enforce the Decision assailed in the petition.^[10][42]  This submission is beside the point.  Rule 65, Section 4 is very clear that the reglementary 60-day period is counted “from notice of the judgment, order or resolution” being assailed, or “from notice of the denial of the motion [for reconsideration],” and not from receipt of the writ of execution which seeks to enforce the assailed judgment, order or resolution.  The date of Pag-ibig’s receipt of the copy of the writ of execution is therefore immaterial for purposes of computing the timeliness of the filing of the petition for certiorari.

            Since Pag-ibig’s petition for certiorari before the CA was an improper remedy and was filed late, it is not even necessary to look into the other issues raised by Pag-ibig in assailing the February 21, 2002 Decision of the trial court and the CA’s rulings sustaining the same.  At any rate, Pag-ibig’s arguments on these other issues are devoid of merit.

====================================

FIRST DIVISION

x – – – – – – – – – – – – – – – – –  – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

D E C I S I O N

DEL CASTILLO, J.:

            A party that loses its right to appeal by its own negligence cannot seek refuge in the remedy of a writ of certiorari.

            This is a Petition for Review on Certiorari^[11][1] under Rule 45 of the Rules of Court assailing the August 31, 2005 Decision,^[12][2] as well as the October 26, 2005 Resolution,^[13][3] of the Court of Appeals (CA) in CA-G.R. SP No. 70828.  The dispositive portion of the assailed CA Decision reads thus:

                WHEREFORE, premises considered, the instant petition is DENIED DUE COURSE and is accordingly DISMISSED.  The assailed Decision of the Regional Trial Court, Branch 6, Legazpi City dated February 21, 2002 and its Order dated March 15, 2002 are AFFIRMED.

                SO ORDERED.^[14][4]

Factual Antecedents

            Respondent-spouses Fidel and Florinda See (respondent-spouses) were the highest bidders in the extrajudicial foreclosure sale of a property^[15][5] that was mortgaged to petitioner Home Development Mutual Fund or Pag-ibig Fund (Pag-ibig).  They paid the bid price of P272,000.00 in cash to respondent Sheriff Manuel L. Arimado (Sheriff Arimado).  In turn, respondent-spouses received a Certificate of Sale wherein Sheriff Arimado acknowledged receipt of the purchase price, and an Official Receipt No. 11496038 dated January 28, 2000 from Atty. Jaime S. Narvaez, the clerk of court with whom Sheriff Arimado deposited the respondent-spouses’ payment.^[16][6] 

            Despite the expiration of the redemption period, Pag-ibig refused to surrender its certificate of title to the respondent-spouses because it had yet to receive the respondent-spouses’ payment from Sheriff Arimado^[17][7] who failed to remit the same despite repeated demands.^[18][8]  It turned out that Sheriff Arimado withdrew from the clerk of court the P272,000.00 paid by respondent-spouses, on the pretense that he was going to deliver the same to Pag-ibig.  The money never reached Pag-ibig and was spent by Sheriff Arimado for his personal use.^[19][9]

            Considering Pag-ibig’s refusal to recognize their payment, respondent-spouses filed a complaint for specific performance with damages against Pag-ibig and Sheriff Arimado before Branch 3 of the Regional Trial Court (RTC) of LegazpiCity. The complaint alleged that the law on foreclosure authorized Sheriff Arimado to receive, on behalf of Pag-ibig, the respondent-spouses’ payment.  Accordingly, the payment made by respondent-spouses to Pag-ibig’s authorized agent should be deemed as payment to Pag-ibig.^[20][10]  It was prayed that Sheriff Arimado be ordered to remit the amount of P 272,000.00 to Pag-ibig and that the latter be ordered to release the title to the auctioned property to respondent-spouses.^[21][11]

            Pag-ibig admitted the factual allegations of the complaint (i.e., the bid of respondent-spouses,^[22][12] their full payment in cash to Sheriff Arimado,^[23][13] and the fact that Sheriff Arimado misappropriated the money^[24][14]) but maintained that respondent-spouses had no cause of action against it.  Pag-ibig insisted that it has no duty to deliver the certificate of title to respondent-spouses unless Pag-ibig actually receives the bid price.  Pag-ibig denied that the absconding sheriff was its agent for purposes of the foreclosure proceedings.^[25][15]

            When the case was called for pre-trial conference, the parties submitted their Compromise Agreement for the court’s approval.  The Compromise Agreement reads:

                Undersigned parties, through their respective counsels[,] to this Honorable Court respectfully submit this Compromise Agreement for their mutual interest and benefit that this case be amicably settled, the terms and conditions of which are as follows:

1.     [Respondent] Manuel L. Arimado, Sheriff IV RTC, Legazpi acknowledges his obligation to the Home Development Mutual Fund (PAG-IBIG), Regional Office V, Legazpi City and/or to [respondent-spouses] the amount of P300,000.00, representing payment for the bid price and other necessary expenses incurred by the [respondent-spouses], the latter being the sole bidder of the property subject matter of the Extrajudicial Foreclosure Sale conducted by Sheriff Arimado on January 14, 2000, at the Office of the Clerk of Court, RTC, Legazpi;

x x x x

3.     Respondent Manuel L. Arimado due to urgent financial need acknowledge[s] that he personally used the money paid to him by [respondent-spouses] which represents the bid price of the above[-]mentioned property subject of the foreclosure sale.  The [money] should have been delivered/paid by Respondent Arimado to Home Development Mutual Fund (PAG-IBIG) as payment and in satisfaction of its mortgage claim.

4.     Respondent Manuel L. Arimado obligates himself to pay in cash to [petitioner] Home Development Mutual Fund (PAG-IBIG) the amount of P272,000.00 representing full payment of its claim on or before October 31, 2001 [so] that the title to the property [could] be released by PAG-IBIG to [respondent-spouses].  An additional amount of P28,000.00 shall likewise be paid by [respondent] Arimado to the [respondent-spouses] as reimbursement for litigation expenses;

5.     [Petitioner] Home Development Mutual Fund (PAG-IBIG) shall upon receipt of the P272,000.00 from [respondent] Manuel L. Arimado release immediately within a period of three (3) days the certificate of title of the property above-mentioned to [respondent-spouses] being the rightful buyer or owner of the property;

6.     In the event [respondent] Manuel L. Arimado fails to pay [petitioner] Home Development Mutual Fund (PAG-IBIG), or, [respondent-spouses] the amount of P272,000.00 on or before October 31, 2001, the [respondent-spouses] shall be entitled to an immediate writ of execution without further notice to respondent Manuel L. Arimado and the issue as to whether [petitioner] Home Development Mutual Fund (PAG-IBIG) shall be liable for the release of the title to [respondent spouses] under the circumstances or allegations narrated in the complaint shall continue to be litigated upon in order that the Honorable Court may resolve the legality of said issue;

7.  In the event [respondent] Manuel L. Arimado complies with the payment as above-stated, the parties mutually agree to withdraw all claims and counterclaim[s] they may have against each other arising out of the above-entitled case.^[26][16] 

The trial court approved the compromise agreement and incorporated it in its Decision dated October 31, 2001.  The trial court stressed the implication of paragraph 6 of the approved compromise agreement:

Accordingly, the parties are enjoined to comply strictly with the terms and conditions of their Compromise Agreement.

                In the event that [respondent] Manuel L. Arimado fails to pay [petitioner] HDMF (Pag-ibig), or [respondent-spouses] the amount of P272,000.00 on October 31, 2001, the Court, upon motion of [respondent-spouses], may issue the necessary writ of execution.

                In this connection, with respect to the issue as to whether or not [petitioner] HDMF (Pag-ibig) shall be liable for the release of the title of the [respondent-spouses] under the circumstances narrated in the Complaint which necessitates further litigation in court, let the hearing of the same be set on December 14, 2001 at 9:00 o’clock in the morning. 

                SO ORDERED.^[27][17]

None of the parties sought a reconsideration of the aforequoted Decision.

            When Sheriff Arimado failed to meet his undertaking to pay on or before October 31, 2001, the trial court proceeded to rule on the issue of whether Pag-ibig is liable to release the title to respondent-spouses despite non-receipt of their payment.^[28][18] 

Ruling of the Regional Trial Court^[29][19]

            The trial court rendered its Decision dated February 21, 2002 in favor of respondent-spouses, reasoning as follows:  Under Article 1240 of the Civil Code, payment is valid when it is made to a person authorized by law to receive the same.  In foreclosure proceedings, the sheriff is authorized by Act No. 3135 and the Rules of Court to receive payment of the bid price from the winning bidder.  When Pag-ibig invoked the provisions of these laws by applying for extrajudicial foreclosure, it likewise constituted the sheriff as its agent in conducting the foreclosure and receiving the proceeds of the auction.  Thus, when the respondent-spouses paid the purchase price to Sheriff Arimado, a legally authorized representative of Pag-ibig, this payment effected a discharge of their obligation to Pag-ibig. 

            The trial court thus ordered Pag-ibig to deliver the documents of ownership to the respondent-spouses.  The dispositive portion reads thus:

                WHEREFORE, premises considered, decision is hereby rendered in favor of the [respondent-spouses] and against the [petitioner] HDMF, ordering said [petitioner] to execute a Release and/or Discharge of Mortgage, and to deliver the same to the [respondent-spouses] together with the documents of ownership and the owner’s copy of Certificate of Title No. T-78070 covering the property sold [to respondent-spouses] in the auction sale within ten (10) days from the finality of this decision.

                Should [petitioner] HDMF fail to execute the Release and/or Discharge of Mortgage and to deliver the same together with the documents of ownership and TCT No. T-78070 within ten (10) days from the finality of this decision, the court shall order the Clerk of Court to execute the said Release and/or Discharge of Mortgage and shall order the cancellation of TCT No. T-78070 and the issuance of a second owner’s copy thereof.

                SO ORDERED.^[30][20]

            Pag-ibig filed a motion for reconsideration on the sole ground that “[Pag-ibig] should not be compelled to release the title to x x x [respondent-spouses] See because Manuel Arimado [has] yet to deliver to [Pag-ibig] the sum of P272,000.00.”^[31][21]

            The trial court denied the motion on March 15, 2002.  It explained that the parties’ compromise agreement duly authorized the court to rule on Pag-ibig’s liability to respondent-spouses despite Sheriff Arimado’s non-remittance of the proceeds of the auction.^[32][22]

            Pag-ibig received the denial of its motion for reconsideration on March 22, 2002^[33][23] but took no further action.  Hence, on April 23, 2002, the trial court issued a writ of execution of its February 21, 2002 Decision.^[34][24]

            On May 24, 2002,^[35][25] Pag-ibig filed before the CA a Petition for Certiorari under Rule 65 in order to annul and set aside the February 21, 2002 Decision of the trial court.  Pag-ibig argued that the February 21, 2002 Decision, which ordered Pag-ibig to deliver the title to respondent-spouses despite its non-receipt of the proceeds of the auction, is void because it modified the final and executory Decision dated October 31, 2001.^[36][26]  It maintained that the October 31, 2001 Decision already held that Pag-ibig will deliver its title to respondent-spouses only upon receipt of the proceeds of the auction from Sheriff Arimado.  Since Sheriff Arimado did not remit the said amount to Pag-ibig, the latter has no obligation to deliver the title to the auctioned property to respondent-spouses.^[37][27] 

            Further, Pag-ibig contended that the February 21, 2002 Decision was null and void because it was issued without affording petitioner the right to trial.^[38][28]  

Ruling of the Court of Appeals^[39][29]

            The CA denied the petition due course.  The CA noted that petitioner’s remedy was to appeal the February 21, 2002 Decision of the trial court and not a petition for certiorari under Rule 65.  At the time the petition was filed, the Decision of the trial court had already attained finality.  The CA then held that the remedy of certiorari was not a substitute for a lost appeal.^[40][30] 

            The CA also ruled that petitioner’s case fails even on the merits.  It held that the February 21, 2002 Decision did not modify the October 31, 2001 Decision of the trial court.  The latter Decision of the trial court expressly declared that in case Sheriff Arimado fails to pay the P272,000.00 to Pag-ibig, the court will resolve the remaining issue regarding Pag-ibig’s obligation to deliver the title to the respondent-spouses.^[41][31] 

            As  to  the  contention that petitioner  was  denied due process when no trial was conducted for the reception of evidence, the CA held that there was no need for the trial court to conduct a full-blown trial given that the facts of the case were already admitted by Pag-ibig and what was decided in the February 21, 2002 Decision was only a legal issue.^[42][32]

            Petitioner filed a motion for reconsideration^[43][33] which was denied for lack of merit in the Resolution dated October 26, 2005.^[44][34]

Issues

            Petitioner then raises the following issues for the Court’s consideration:

            1.  Whether certiorari was the proper remedy;

            2.  Whether the February 21, 2002 Decision of the trial court modified its October 31, 2001 Decision based on the compromise agreement;

            3.  Whether petitioner was entitled to a trial prior to the rendition of the February 21, 2002 Decision.

Our Ruling

            Petitioner argues that the CA erred in denying due course to its petition for certiorari and maintains that the remedy of certiorari is proper for two reasons:  first, the trial court rendered its February 21, 2002 Decision without the benefit of a trial; and second, the February 21, 2002 Decision modified the October 31, 2001 Decision, which has already attained finality. These are allegedly two recognized instances where certiorari lies to annul the trial court’s Decision because of grave abuse of discretion amounting to lack of jurisdiction.^[45][35] 

            The argument does not impress.

            “[C]ertiorari is a limited form of review and is a remedy of last recourse.”^[46][36]  It is proper only when appeal is not available to the aggrieved party.^[47][37]  In the case at bar, the February 21, 2002 Decision of the trial court was appealable under Rule 41 of the Rules of Court because it completely disposed of respondent-spouses’ case against Pag-ibig.  Pag-ibig does not explain why it did not resort to an appeal and allowed the trial court’s decision to attain finality.  In fact, the February 21, 2002 Decision was already at the stage of execution when Pag-ibig belatedly resorted to a Rule 65 Petition for Certiorari.  Clearly, Pag-ibig lost its right to appeal and tried to remedy the situation by resorting to certiorari.  It is settled, however, that certiorari is not a substitute for a lost appeal, “especially if the [party’s] own negligence or error in [the] choice of remedy occasioned such loss or lapse.”^[48][38] 

            Moreover, even assuming arguendo that a Rule 65 certiorari could still be resorted to, Pag-ibig’s petition would still have to be dismissed for having been filed beyond the reglementary period of 60 days from notice of the denial of the motion for reconsideration.^[49][39]  Pag-ibig admitted receiving the trial court’s Order denying its Motion for Reconsideration on March 22, 2002;^[50][40] it thus had until May 21, 2002 to file its petition for certiorari.  However, Pag-ibig filed its petition only on May 24, 2002,^[51][41] which was the 63rd day from its receipt of the trial court’s order and obviously beyond the reglementary 60-day period. 

            Pag-ibig stated that its petition for certiorari was filed “within sixty (60) days from receipt of the copy of the writ of execution by petitioner [Pag-ibig] on 07 May 2002,” which writ sought to enforce the Decision assailed in the petition.^[52][42]  This submission is beside the point.  Rule 65, Section 4 is very clear that the reglementary 60-day period is counted “from notice of the judgment, order or resolution” being assailed, or “from notice of the denial of the motion [for reconsideration],” and not from receipt of the writ of execution which seeks to enforce the assailed judgment, order or resolution.  The date of Pag-ibig’s receipt of the copy of the writ of execution is therefore immaterial for purposes of computing the timeliness of the filing of the petition for certiorari.

            Since Pag-ibig’s petition for certiorari before the CA was an improper remedy and was filed late, it is not even necessary to look into the other issues raised by Pag-ibig in assailing the February 21, 2002 Decision of the trial court and the CA’s rulings sustaining the same.  At any rate, Pag-ibig’s arguments on these other issues are devoid of merit.

            As to Pag-ibig’s argument that the February 21, 2002 Decision of the RTC is null and void for having been issued without a trial, it is a mere afterthought which deserves scant consideration.  The Court notes that Pag-ibig did not object to the absence of a trial when it sought a reconsideration of the February 21, 2002 Decision.  Instead, Pag-ibig raised the following lone argument in their motion:

            3.  Consequently, [Pag-ibig] should not be compelled to release the title to other [respondent-spouses] See because Manuel Arimado [has] yet to deliver to [Pag-ibig] the sum of P 272,000.00.^[53][43]            

Under the Omnibus Motion Rule embodied in Section 8 of Rule 15 of the Rules of Court, all available objections that are not included in a party’s motion shall be deemed waived. 

            Pag-ibig next argues that the February 21, 2002 Decision of the trial court, in ordering Pag-ibig to release the title despite Sheriff Arimado’s failure to remit the P272,000.00 to Pag-ibig, “modified” the October 31, 2001 Decision.  According to Pag-ibig, the October 31, 2001 Decision allegedly decreed that Pag-ibig would deliver the title to respondent-spouses only after Sheriff Arimado has paid the P272,000.00.^[54][44]  In other words, under its theory, Pag-ibig cannot be ordered to release the title if Sheriff Arimado fails to pay the said amount.

            The Court finds no merit in this argument.  The October 31, 2001 Decision (as well as the Compromise Agreement on which it is based) does not provide that Pag-ibig cannot be ordered to release the title if Sheriff Arimado fails to pay.  On the contrary, what the Order provides is that if Sheriff Arimado fails to pay, the trial court shall litigate (and, necessarily, resolve) the issue of whether Pag-ibig is obliged to release the title.  This is based on paragraph 6 of the Compromise Agreement which states that in the event Sheriff Arimado fails to pay, “the [respondent-spouses] shall be entitled to an immediate writ of execution without further notice to [Sheriff] Arimado and the issue as to whether [Pag-ibig] shall be liable for the release of the title to [respondent spouses] under the circumstances or allegations narrated in the complaint shall continue to be litigated upon in order that the Honorable Court may resolve the legality of said issue.”  In fact, the trial court, in its October 31, 2001 Decision, already set the hearing of the same “on December 14, 2001 at 9:00 o’clock in the morning.”^[55][45]

                It is thus clear from both the October 31, 2001 Decision and the Compromise Agreement that the trial court was authorized to litigate and resolve the issue of whether Pag-ibig should release the title upon Sheriff Arimado’s failure to pay the P272,000.00.  As it turned out, the trial court eventually resolved the issue against Pag-ibig, i.e., it ruled that Pag-ibig is obliged to release the title.  In so doing, the trial court simply exercised the authority provided in the October 31, 2001 Decision (and stipulated in the Compromise Agreement).  The trial court did not thereby “modify” the October 31, 2001 Decision.

            WHEREFORE, premises considered, the petition is DENIED. The assailed August 31, 2005 Decision, as well as the October 26, 2005 Resolution,  of  the Court of Appeals in CA-G.R. SP No. 70828 are AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

Chairperson

JOSE CATRAL MENDOZA

Associate Justice

C E R T I F I C A T I O N

            Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA

                                                            Chief Justice

CASE 2011-0158: UNIVERSITY PLANS INCORPORATED VS. BELINDA P. SOLANO, TERRY A. LAMUG, GLENDA S. BELGA, MELBA S. ALVAREZ, WELMAR R. NAMATA, MARIETTA D. BACHO AND MANOLO L. CENIDO (G.R. NO. 170416, 22 JUNE 2011, DEL CASTILLO, J.) SUBJECTS: NLRC APPEAL BOND; MOTION TO REDUCE BOND. (BRIEF TITLE: UNIVERSITY PLANS VS. SOLANO)

=============================

SUBJECT/DOCTRINE/DIGEST:

PETITIONER WAS ADJUDGED LIABLE FOR ILLEGAL DISMISSAL. IT FILED AN  APPEAL WITH NLRC WITH MOTION TO REDUCE BOND AND POSTED BOND OF P30K ON THE GROUND THAT IT WAS UNDER RECEIVERSHIP. NLRC DENIED MOTION TO REDUCE BOND AND REQUIRED PETITIONER TO POST P3M BOND ON THE GROUND THAT THE BOND IS FIXED BY LAW. WAS NLRC CORRECT?

NO. UNDER THE NLRC RULES BOND MAY BE REDUCED ON MERITORIOUS GROUND AND UPON POSTING OF BOND IN REASONABLE AMOUNT IN RELATION TO THE MONETARY AWARD.

Notably, however, under Section 6, Rule VI of the NLRC’s  Revised  Rules of Procedure, the bond may be reduced albeit only on meritorious grounds and upon posting of a partial bond in a reasonable amount in relation to the monetary award.  Suffice it to state that while said Rules “allows the Commission to reduce the amount of the bond, the exercise of the authority is not a matter of right on the part of the movant, but lies within the sound discretion of the NLRC upon a showing of meritorious grounds.”^[1][26]

XXXXXXXXXXXXXXXXXXX

WHAT DOES THE LABOR CODE PROVIDES REGARDING APPEAL BOND?

Article 223 of the Labor Code provides in part:

Article 223.  Appeal. – Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. x x x

x x x x

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.  (Emphasis supplied.)

x x x x.

XXXXXXXXXXXXXXXXXXXXX

WHAT DOES THE REVISED RULES OF PROCEDURE OF NLRC PROVIDE REGARDING APPEAL BOND?

While pertinent portions of Sections 4 and 6, Rule VI of the Revised Rules of Procedure of the NLRC read:

SECTION 4. REQUISITES FOR PERFECTION OF APPEAL – a) The appeal shall be: 1) filed within the reglementary period provided in Section 1 of this Rule; 2) verified by the appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, as amended; 3) in the form of a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof, the relief prayed for, and with a statement of the date the appellant received the appealed decision, resolution or order; 4) in three (3) legibly typewritten or printed copies; and 5) accompanied by i) proof of payment of the required appeal fee; ii) posting of a cash or surety bond as provided in Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv) proof of service upon the other parties.

                                x x x x

SECTION 6. BOND. – In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon the posting of a bond, which shall either be in the form of cash deposit or surety bond equivalent in amount to the monetary award, exclusive of damages and attorney’s fees.

x x x x

                No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting of a bond in a reasonable amount in relation to the monetary award.  x x x   (Emphasis supplied.)

The abovementioned provisions highlight the importance of posting a cash or surety bond in the perfection of an appeal to the NLRC from the Labor Arbiter’s judgment involving a monetary award.  Thus, in Ramirez v. Court of Appeals,^[2][24] this Court held, viz:

            Under the Rules, appeals involving monetary awards are perfected only upon compliance with the following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of the memorandum of appeal; and (3) payment of the required cash or surety bond.

                The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the labor arbiter.  The intention of the lawmakers to make the bond a mandatory requisite for the perfection of an appeal by the employer is clearly expressed in the provision that an appeal by the employer may be perfected ‘only upon the posting of a cash or surety bond.’  The word ‘only’ in Article 223 of the Labor Code makes it unmistakably plain that the lawmakers intended the posting of a cash or surety bond by the employer to be the essential and exclusive means by which an employer’s appeal may be perfected.  The word ‘may’ refers to the perfection of an appeal as optional on the part of the defeated party, but not to the compulsory posting of an appeal bond, if he desires to appeal.  The meaning and the intention of the legislature in enacting a statute must be determined from the language employed; and where there is no ambiguity in the words used, then there is no room for construction.^[3][25]   (Emphasis supplied; citations omitted.)

XXXXXXXXXXXXXXXXXXXX

WHAT ARE THE GUIDELINES FOR REDUCTION OF APPEAL BOND?

[T]HE BOND REQUIREMENT ON APPEALS INVOLVING MONETARY AWARDS HAS BEEN AND MAY BE RELAXED IN MERITORIOUS CASES. 

THESE CASES INCLUDE INSTANCES IN WHICH

(1) THERE WAS SUBSTANTIAL COMPLIANCE WITH THE RULES,

(2) SURROUNDING FACTS AND CIRCUMSTANCES CONSTITUTE MERITORIOUS GROUNDS TO REDUCE THE BOND,

(3) A LIBERAL INTERPRETATION OF THE REQUIREMENT OF AN APPEAL BOND WOULD SERVE THE DESIRED OBJECTIVE OF RESOLVING CONTROVERSIES ON THE MERITS, OR

(4) THE APPELLANTS, AT THE VERY LEAST, EXHIBITED THEIR WILLINGNESS AND/OR GOOD FAITH BY POSTING A PARTIAL BOND DURING THE REGLEMENTARY PERIOD. 

CONVERSELY THE REDUCTION OF THE BOND IS NOT WARRANTED WHEN NO MERITORIOUS GROUND IS SHOWN TO JUSTIFY THE SAME; THE APPELLANT ABSOLUTELY FAILED TO COMPLY WITH THE REQUIREMENT OF POSTING A BOND, EVEN IF PARTIAL; OR WHEN THE CIRCUMSTANCES SHOW THE EMPLOYER’S UNWILLINGNESS TO ENSURE THE SATISFACTION OF ITS WORKERS’ VALID CLAIMS.^[4][29]

In Nicol v. Footjoy Industrial Corporation,^[5][27] the Court reviewed the jurisprudence^[6][28] respecting the bond requirement for perfecting appeal and summarized the guidelines under which the NLRC must exercise its discretion in considering an appellant’s motion for reduction of bond, viz:

[T]he bond requirement on appeals involving monetary awards has been and may be relaxed in meritorious cases.  These cases include instances in which (1) there was substantial compliance with the Rules, (2) surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits, or (4) the appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period. 

Conversely the reduction of the bond is not warranted when no meritorious ground is shown to justify the same; the appellant absolutely failed to comply with the requirement of posting a bond, even if partial; or when the circumstances show the employer’s unwillingness to ensure the satisfaction of its workers’ valid claims.^[7][29]

XXXXXXXXXXXXXXXXXXX

CITE A CASE SIMILAR TO THE CASE AT HAND?

THE NICOL CASE.

In Nicol, the Labor Arbiter ordered the employer to pay the employees monetary award in the total amount of P51,956,314.00. When the employer appealed to the NLRC, it claimed that it was in dire financial condition and thus moved to reduce the bond to P10 million, for which it posted a surety bond.  The NLRC however denied the motion and required the employer to file an additional bond of P41,956,314.00.  Failing to do so, the NLRC dismissed the employer’s appeal for non-perfection thereof.  

On appeal, the CA held that the NLRC should have determined the merit of employer’s grounds for the reduction of its appeal bond through the reception of evidence instead of requiring it to put up a bond in the equivalent amount of the award without regard to its reasons and arguments, and without determining for itself what amount would be reasonable under the circumstances.  Hence, it directed the NLRC to consider the employer’s motion to reduce bond after receiving evidence thereon, and upon a timely posting of the required reasonable supersedeas bond, to give due course to the appeal and to determine the merits of the case.

When the case reached this Court, we affirmed the CA’s ruling that the NLRC gravely abused its discretion in denying the motion to reduce bond peremptorily without considering the evidence presented.  We further ruled, viz::

[T]he NLRC was not precluded from making a preliminary determination of their [the employer] financial capability to post the required bond, without necessarily passing upon the merits.  Since the intention is merely to give the NLRC an idea of the justification for the reduced bond, the evidence for the purpose would necessarily be less than the evidence required for a ruling on the merits.

Indeed, it only bears stressing that the NLRC is not precluded from receiving evidence on appeal as technical rules of evidence are not binding in labor cases.  On the contrary, the Labor Code explicitly mandates it to ‘use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.^[8][30]

XXXXXXXXXXXXXX

WAS THE MOTION TO REDUCE BOND FILED BY PETITIONER MERITORIOUS?

YES. THE DOCUMENTS PETITIONER PRESENTED SHOW THAT IT IS UNDER RECEIVERSHIP.  ITS OFFICERS ARE PROHIBITED BY SEC TO WITHRAW FROM ITS FUNDS. SEC HAS FROZEN ITS ASSETS. HOW THEN CAN IT RAISE THE SUM OF P30M AS APPEAL BOND?

The NLRC erred in not considering the merit or lack of merit of petitioner’s Motion to Reduce Bond.

Petitioner attached to its Motion to Reduce Bond the SEC Orders dated August 23, 1999 and May 23, 2000. The Order of August 23, 1999 is a Cease and Desist Order which, among others, prohibited the officers and agents of petitioner from withdrawing from its trust funds or from making any disposition thereof and, ordered the freeze of all its assets and properties.  On the other hand, the May 23, 2000 Order reads in part that:

In view of the voluntary request for receivership of the University Plans, Inc. (UPI), after being found to have a Trust Fund and Capital Deficiency, unable to pay the same despite its commitment to pay, and pursuant to Presidential Decree No. 902-A, as amended, University Plans, Inc. is therefore, placed under the management and control of a RECEIVER x x x^[9][31] (Emphasis supplied.)

            From the said SEC Orders, it is unmistakable that petitioner was under receivership.  And from the tenor and contents of said Orders, it is possible that petitioner has no liquid asset which it could use to post the required amount of bond.  Also, it is quite understandable that because of petitioner’s financial state, it cannot raise the amount of more than P3 million within a period of 10 days from receipt of the Labor Arbiter’s judgment. 

            However, the NLRC ignored petitioner’s allegations and instead remained adamant that since the amount of bond is fixed by law, petitioner must post an additional bond of more than P3 million.  This, to us, is an utter disregard of the provision of the Labor Code and of the NLRC Revised Rules of Procedure allowing the reduction of bond in meritorious cases.  While the NLRC tried to correct this error in its March 21, 2003 Resolution^[10][32] by further explaining that it was not persuaded by petitioner’s alleged incapability of posting the required amount of bond for failure to submit financial statement, list of sources of income and other details with respect to the alleged receivership, we still find the hasty denial of the motion to reduce bond not proper.

Notwithstanding petitioner’s failure to submit its financial statement and list of sources of income and to give more details relative to its receivership, it was nevertheless able to show through the abovementioned SEC Orders that it was indeed under a state of receivership.  This should have been sufficient reason for the NLRC to not outrightly deny petitioner’s motion.  As to the lacking documents and details on the receivership, it is true that they are needed by the NLRC in determining petitioner’s capacity to post the required amount of bond.  However, their absence should not lead to the outright denial of the motion since as earlier discussed, the NLRC is not precluded from conducting a preliminary determination on the merit or lack of merit of a motion to reduce bond. Here, considering the clear showing of petitioner’s state of receivership, the NLRC should have conducted such preliminary determination and therein require the submission of said documents and other necessary evidence before proceeding to resolve the subject motion.  After all, the present case falls under those cases where the bond requirement on appeal may be relaxed considering that (1) there was substantial compliance with the Rules;^[11][33] (2) the surrounding facts and circumstances constitute meritorious grounds to reduce the bond; and (3) the petitioner, at the very least, exhibited its willingness and/or good faith by posting a partial bond during the reglementary period.  Also, such a procedure would be in keeping with the Labor Code’s mandate to ‘use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.’^[12][34]  We thus find error on the part of the NLRC when it denied petitioner’s Motion to Reduce Bond and likewise on the part of the CA when it affirmed said denial. 

=============================

FIRST DIVISION

x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

D E C I S I O N

DEL CASTILLO, J.:

            The National Labor Relations Commission (NLRC) is not precluded from conducting a preliminary determination of the merit or lack of merit of a motion to reduce bond.^[13][1]

            This Petition for Review on Certiorari assails the Decision^[14][2] dated October 27, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 77397 which denied the Petition for Certiorari filed before it.  Likewise assailed is the CA Resolution^[15][3] dated November 10, 2005 denying the Motion for Reconsideration thereto.

Factual Antecedents

            Respondents Belinda P. Solano (Solano), Terry A. Lamug (Lamug), Glenda S. Belga (Belga), Melba S. Alvarez (Alvarez), Welma R. Namata (Namata), Marietta D. Bacho (Bacho) and Manolo L. Cenido (Cenido) filed before the Labor Arbiter complaints for illegal dismissal, illegal deductions, overriding commissions, unfair labor practice, moral and exemplary damages, and actual damages against petitioner University Plans Incorporated. 

Ruling of the Labor Arbiter

In a Decision^[16][4] dated July 31, 2000, the Labor Arbiter found petitioner guilty of illegal dismissal and ordered respondents’ reinstatement as well as the payment of their full backwages, proportionate 13^th month pay, moral/exemplary damages, and attorney’s fees, viz:

WHEREFORE, premises considered, therespondentsUniversityPlans, Inc., Ernesto D. Tuazon, Joel D. Paguio, Maribel Sto. Domingo and Renato P. Dragon are hereby ordered to reinstate the seven complainants to their former positions without loss of seniority rights and other appurtenant benefits and to pay said complainants jointly and severally the amounts computed as follows:

Respondents are likewise ordered to pay attorney’s fees equivalent to ten (10%) percent of the judgment award.

All other claims are hereby dismissed for lack of merit.

SO ORDERED.^[17][5]

Ruling of the National Labor Relations Commission

            Petitioner filed before the NLRC its Memorandum on Appeal^[18][6] as well as a Motion to Reduce Bond.^[19][7] Simultaneous with the filing of said pleadings, it posted a cash bond in the amount of P30,000.00. 

In its Motion to Reduce Bond, petitioner alleged that it was under receivership and that it cannot dispose of its assets at such a short notice.  Because of this, it could not post the required bond.  Nevertheless, it has P30,000.00 available for immediate disposition and thus prayed that said amount be deemed sufficient to satisfy the required bond for the perfection of its appeal.

            In an Order^[20][8] dated April 25, 2001, the NLRC denied petitioner’s Motion to Reduce Bond and directed it to post an additional appeal bond in the amount of P3,013,599.50 within an unextendible period of 10 days from notice, otherwise the appeal shall be dismissed for non-perfection.  In resolving the motion, the NLRC held that the amount of the appeal bond is fixed by law pursuant to Article 223 of the Labor Code which provides in part that:

Article 223.  Appeal . – x x x

                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. (Emphasis ours.)

                x x x x

            Petitioner filed a Motion for Reconsideration^[21][9] insisting that the NLRC has the discretion to reduce the appeal bond upon motion of appellant and on meritorious grounds.  It argued that the fact that it was under receivership and could not dispose of any or all of its assets without prior court approval are meritorious grounds justifying the reduction of the appeal bond. 

The NLRC, however, denied petitioner’s motion for reconsideration in a Resolution^[22][10] dated March 21, 2003.  It ruled that while it has the discretion to reduce the appeal bond, it is nevertheless not persuaded that petitioner was incapable of posting the required bond.  It noted that petitioner failed to submit any financial statement or provide details anent its alleged receivership or its sources of income. Citing Rubber World (Phils.) Inc. v. National Labor Relations Commission^[23][11] where the Security and Exchange Commission (SEC) issued an Order of Suspension of Payments, the NLRC noted that this was not obtaining in the present case.  And since the appeal was not perfected due to petitioner’s failure to post the required bond, the NLRC dismissed the same.

Unsatisfied, petitioner went to the CA through a Petition for Certiorari.^[24][12]

Ruling of the Court of Appeals

In a Decision^[25][13] dated October 27, 2004, the CA held that the NLRC in meritorious cases and upon motion by the appellant may reduce the amount of the bond.  However, in order for the NLRC to exercise this discretion, it is imperative for the petitioner to show veritable proof that it is entitled to the same.  Since petitioner failed to provide the NLRC with sufficient basis to determine its incapacity to post the required appeal bond, the CA opined that the NLRC’s denial of petitioner’s Motion to Reduce Bond was justified.  Hence, it denied the petition. 

As  petitioner’s   Motion  for  Reconsideration^[26][14]  was  likewise  denied  in  a

Resolution^[27][15] dated November 10, 2005, petitioner is now before this Court through the present Petition for Review on Certiorari.^[28][16]

Issues

            Petitioner advances the following grounds:

I.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR WHEN IT DID NOT CONSIDER THE FACT THAT PETITIONER UNIVERSITY PLANS, INC. IS UNDER RECEIVERSHIP.

II.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR WHEN IT FAILED TO CONSIDER AND DISPOSE OF THE MERITS OF THE CASE.

A.                     THERE WAS ABSENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN RESPONDENTS SOLANO, BELGA, NAMATA, LAMUG AND ALVAREZ AND UPI.

B.                      RESPONDENT BACHO WAS VALIDLY RETRENCHED.

C.                      RESPONDENT CENIDO WAS DISMISSED FOR CAUSE.

III.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR, WHEN IT FAILED TO APPRECIATE THE FACT [THAT] MESSRS. ERNESTO D. TUAZON AND JOEL D. PAGUIO, MS. MARIBEL STO. DOMINGO AND MR. RENATO DRAGON, WERE IMPROPERLY IMPLEADED AND CONSEQUENTLY, THE LABOR ARBITER DID NOT ACQUIRE JURISDICTION OVER THEM.

IV.

CONSEQUENTLY, IT IS SIMPLY GRAVE ABUSE OF DISCRETION, NOT TO MENTION GROSS AND PALPABLE ERROR FOR THE HONORABLE COURT OF APPEALS TO HAVE UPHELD THE LABOR ARBITER’S ORDER OF REINSTATEMENT OF RESPONDENTS AND TO PAY THEM BACKWAGES, MORAL AND EXEMPLARY DAMAGES AND 10% ATTORNEY’S FEES.^[29][17]

The Parties’ Arguments

                Petitioner stresses that it is under receivership pursuant to Presidential Decree No. 902-A.  As such, all pending actions for claims are automatically stayed to enable the management committee or the rehabilitation receiver to effectively exercise its powers free from any judicial or extrajudicial interference.  And since such suspension is automatic, there is no need for it to submit an Order of Suspension of Payments from the SEC, contrary to the ruling of the NLRC.  The Cease and Desist Order^[30][18] dated August 23, 1999 and the May 23, 2000 Order^[31][19] placing petitioner under receivership both issued by the SEC would have sufficed.

  Also, since its assets could not be disposed of nor could a case be filed against its receiver without prior leave of court pursuant to Section 6, Rule 59 of the Rules of Court,^[32][20] petitioner argues it was difficult for it to raise the required amount of the bond.  Petitioner insists that the NLRC should have considered these circumstances when it resolved its Motion to Reduce Bond and likewise by the CA when it affirmed the NLRC’s denial of said motion.  Besides, this Court, in several cases, has relaxed the requirement of posting an appeal bond as a condition for perfecting an appeal under Article 223 of the Labor Code in line with the desired objective of resolving the controversies on the merits.

            Petitioner likewise faults the CA when it did not dispose of the case on the merits.  It then insists that there is no employer-employee relationship between it and respondents Solano, Belga, Namata, Lamug and Alvarez; that respondent Bacho was validly retrenched; that respondent Cenido was dismissed for cause; and consequently, that they are all not entitled to reinstatement, backwages, moral and exemplary damages, and attorney’s fees.  It also asserts that its officers should not have been held jointly and severally liable to respondents.

            For their part, respondents aver that the CA correctly affirmed the NLRC’s denial of petitioner’s Motion to Reduce Bond.  Aside from the very clear provisions of Article 223 of the Labor Code and of Section 6, Rule VI of the NLRC Rules of Procedure on the matter, the discretion to reduce the appeal bond rests upon the NLRC and only in justifiable and meritorious cases.  And since petitioner failed to justify its claim to a reduction of the appeal bond, the NLRC properly denied its motion. 

            Respondents likewise assert that petitioner has already lost its right to appeal considering that same was not perfected when it failed to put up the required appeal bond within the time prescribed by the NLRC.  Because of this, the Labor Arbiter’s Decision became final and executory and, hence, the NLRC did not err in not touching upon the merits of the appeal.

            Meanwhile, in the Memorandum^[33][21] filed by respondent Solano, she informs this Court that upon verification from the SEC, petitioner was placed under liquidation as early as 2002. This can further be deduced from the September 1, 2003 Order^[34][22] of the SEC designating Atty. Francis Carlo D. Taparan as its liquidator and from the February 13, 2007 letter^[35][23] of SEC Secretary C.A. Gerard M. Lukban, which quoted excerpts from the minutes of the April 13, 2005 SEC Meeting designating him as petitioner’s new liquidator. In view of these, respondents argue that petitioner’s claim of receivership has already lost significance and therefore has become moot and academic.

Our Ruling

There is merit in the petition.

Posting of bond is indispensable to the perfection of an appeal in cases involving monetary awards from the Decision of the Labor Arbiter.

Article 223 of the Labor Code provides in part:

Article 223.  Appeal. – Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. x x x

x x x x

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.  (Emphasis supplied.)

x x x x.

While pertinent portions of Sections 4 and 6, Rule VI of the Revised Rules of Procedure of the NLRC read:

SECTION 4. REQUISITES FOR PERFECTION OF APPEAL – a) The appeal shall be: 1) filed within the reglementary period provided in Section 1 of this Rule; 2) verified by the appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, as amended; 3) in the form of a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof, the relief prayed for, and with a statement of the date the appellant received the appealed decision, resolution or order; 4) in three (3) legibly typewritten or printed copies; and 5) accompanied by i) proof of payment of the required appeal fee; ii) posting of a cash or surety bond as provided in Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv) proof of service upon the other parties.

                                x x x x

SECTION 6. BOND. – In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon the posting of a bond, which shall either be in the form of cash deposit or surety bond equivalent in amount to the monetary award, exclusive of damages and attorney’s fees.

x x x x

                No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting of a bond in a reasonable amount in relation to the monetary award.  x x x   (Emphasis supplied.)

The abovementioned provisions highlight the importance of posting a cash or surety bond in the perfection of an appeal to the NLRC from the Labor Arbiter’s judgment involving a monetary award.  Thus, in Ramirez v. Court of Appeals,^[36][24] this Court held, viz:

            Under the Rules, appeals involving monetary awards are perfected only upon compliance with the following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of the memorandum of appeal; and (3) payment of the required cash or surety bond.

                The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the labor arbiter.  The intention of the lawmakers to make the bond a mandatory requisite for the perfection of an appeal by the employer is clearly expressed in the provision that an appeal by the employer may be perfected ‘only upon the posting of a cash or surety bond.’  The word ‘only’ in Article 223 of the Labor Code makes it unmistakably plain that the lawmakers intended the posting of a cash or surety bond by the employer to be the essential and exclusive means by which an employer’s appeal may be perfected.  The word ‘may’ refers to the perfection of an appeal as optional on the part of the defeated party, but not to the compulsory posting of an appeal bond, if he desires to appeal.  The meaning and the intention of the legislature in enacting a statute must be determined from the language employed; and where there is no ambiguity in the words used, then there is no room for construction.^[37][25]   (Emphasis supplied; citations omitted.)

When the amount of bond may be reduced.

            Notably, however, under Section 6, Rule VI of the NLRC’s  Revised  Rules of Procedure, the bond may be reduced albeit only on meritorious grounds and upon posting of a partial bond in a reasonable amount in relation to the monetary award.  Suffice it to state that while said Rules “allows the Commission to reduce the amount of the bond, the exercise of the authority is not a matter of right on the part of the movant, but lies within the sound discretion of the NLRC upon a showing of meritorious grounds.”^[38][26]

In Nicol v. Footjoy Industrial Corporation,^[39][27] the Court reviewed the jurisprudence^[40][28] respecting the bond requirement for perfecting appeal and summarized the guidelines under which the NLRC must exercise its discretion in considering an appellant’s motion for reduction of bond, viz:

[T]he bond requirement on appeals involving monetary awards has been and may be relaxed in meritorious cases.  These cases include instances in which (1) there was substantial compliance with the Rules, (2) surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits, or (4) the appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period. 

Conversely the reduction of the bond is not warranted when no meritorious ground is shown to justify the same; the appellant absolutely failed to comply with the requirement of posting a bond, even if partial; or when the circumstances show the employer’s unwillingness to ensure the satisfaction of its workers’ valid claims.^[41][29]

The NLRC is not precluded from conducting a preliminary determination of the merit or lack of merit of a motion to reduce bond.

In Nicol, the Labor Arbiter ordered the employer to pay the employees monetary award in the total amount of P51,956,314.00. When the employer appealed to the NLRC, it claimed that it was in dire financial condition and thus moved to reduce the bond to P10 million, for which it posted a surety bond.  The NLRC however denied the motion and required the employer to file an additional bond of P41,956,314.00.  Failing to do so, the NLRC dismissed the employer’s appeal for non-perfection thereof.  

On appeal, the CA held that the NLRC should have determined the merit of employer’s grounds for the reduction of its appeal bond through the reception of evidence instead of requiring it to put up a bond in the equivalent amount of the award without regard to its reasons and arguments, and without determining for itself what amount would be reasonable under the circumstances.  Hence, it directed the NLRC to consider the employer’s motion to reduce bond after receiving evidence thereon, and upon a timely posting of the required reasonable supersedeas bond, to give due course to the appeal and to determine the merits of the case.

When the case reached this Court, we affirmed the CA’s ruling that the NLRC gravely abused its discretion in denying the motion to reduce bond peremptorily without considering the evidence presented.  We further ruled, viz::

[T]he NLRC was not precluded from making a preliminary determination of their [the employer] financial capability to post the required bond, without necessarily passing upon the merits.  Since the intention is merely to give the NLRC an idea of the justification for the reduced bond, the evidence for the purpose would necessarily be less than the evidence required for a ruling on the merits.

Indeed, it only bears stressing that the NLRC is not precluded from receiving evidence on appeal as technical rules of evidence are not binding in labor cases.  On the contrary, the Labor Code explicitly mandates it to ‘use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.^[42][30]

The NLRC erred in not considering the merit or lack of merit of petitioner’s Motion to Reduce Bond.

Petitioner attached to its Motion to Reduce Bond the SEC Orders dated August 23, 1999 and May 23, 2000. The Order of August 23, 1999 is a Cease and Desist Order which, among others, prohibited the officers and agents of petitioner from withdrawing from its trust funds or from making any disposition thereof and, ordered the freeze of all its assets and properties.  On the other hand, the May 23, 2000 Order reads in part that:

In view of the voluntary request for receivership of the University Plans, Inc. (UPI), after being found to have a Trust Fund and Capital Deficiency, unable to pay the same despite its commitment to pay, and pursuant to Presidential Decree No. 902-A, as amended, University Plans, Inc. is therefore, placed under the management and control of a RECEIVER x x x^[43][31] (Emphasis supplied.)

            From the said SEC Orders, it is unmistakable that petitioner was under receivership.  And from the tenor and contents of said Orders, it is possible that petitioner has no liquid asset which it could use to post the required amount of bond.  Also, it is quite understandable that because of petitioner’s financial state, it cannot raise the amount of more than P3 million within a period of 10 days from receipt of the Labor Arbiter’s judgment. 

            However, the NLRC ignored petitioner’s allegations and instead remained adamant that since the amount of bond is fixed by law, petitioner must post an additional bond of more than P3 million.  This, to us, is an utter disregard of the provision of the Labor Code and of the NLRC Revised Rules of Procedure allowing the reduction of bond in meritorious cases.  While the NLRC tried to correct this error in its March 21, 2003 Resolution^[44][32] by further explaining that it was not persuaded by petitioner’s alleged incapability of posting the required amount of bond for failure to submit financial statement, list of sources of income and other details with respect to the alleged receivership, we still find the hasty denial of the motion to reduce bond not proper.

Notwithstanding petitioner’s failure to submit its financial statement and list of sources of income and to give more details relative to its receivership, it was nevertheless able to show through the abovementioned SEC Orders that it was indeed under a state of receivership.  This should have been sufficient reason for the NLRC to not outrightly deny petitioner’s motion.  As to the lacking documents and details on the receivership, it is true that they are needed by the NLRC in determining petitioner’s capacity to post the required amount of bond.  However, their absence should not lead to the outright denial of the motion since as earlier discussed, the NLRC is not precluded from conducting a preliminary determination on the merit or lack of merit of a motion to reduce bond. Here, considering the clear showing of petitioner’s state of receivership, the NLRC should have conducted such preliminary determination and therein require the submission of said documents and other necessary evidence before proceeding to resolve the subject motion.  After all, the present case falls under those cases where the bond requirement on appeal may be relaxed considering that (1) there was substantial compliance with the Rules;^[45][33] (2) the surrounding facts and circumstances constitute meritorious grounds to reduce the bond; and (3) the petitioner, at the very least, exhibited its willingness and/or good faith by posting a partial bond during the reglementary period.  Also, such a procedure would be in keeping with the Labor Code’s mandate to ‘use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.’^[46][34]  We thus find error on the part of the NLRC when it denied petitioner’s Motion to Reduce Bond and likewise on the part of the CA when it affirmed said denial. 

In view of the foregoing, a remand of this case to the NLRC for the conduct of preliminary determination of the merit or lack of merit of petitioner’s Motion to Reduce Bond is proper.  In so doing, the NLRC is also reminded to consider respondent Solano’s allegation that petitioner is now under liquidation and to receive evidence thereon so that it may judiciously resolve the Motion to Reduce Bond.  As regards the issues relating to the substantial merits of the case, we shall leave the same to the NLRC.  This is because should the NLRC eventually find the Motion to Reduce Bond meritorious, it shall give due course to the appeal upon the timely posting of a reasonable amount of  supersedeas bond it deems appropriate under the circumstances, and shall then proceed to determine the merits of the case. 

WHEREFORE, the petition is GRANTED. The assailed Decision dated October 27, 2004 and Resolution dated November 10, 2005 of the Court of Appeals in CA-G.R. SP No. 77397 are REVERSED and SET ASIDE.  This case is ordered remanded to the National Labor Relations Commission for the conduct of preliminary determination of the merit or lack of merit of petitioner’s Motion to Reduce Bond.  Should the National Labor Relations Commission find the Motion to Reduce Bond meritorious, it is directed to give due course to the appeal upon timely filing of a reasonable supersedeas bond in an amount it deems appropriate under the circumstances, and to hear and resolve the case with dispatch.

            SO ORDERED. 

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

Chairperson

JOSE CATRAL MENDOZA

Associate Justice

C E R T I F I C A T I O N

            Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA

Chief Justice