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G.R. No. 164888 - RURAL BANK OF CORON (PALAWAN), INC., ET AL. v. ANNALISA CORTES : DECEMBER 2006 - PHILIPPINE SUPREME

THIRDDIVISION
[G.R.NO.164888:December6,2006]
RURALBANKOFCORON(PALAWAN),INC.,EMPIRECOLDSTORAGEANDDEVELOPMENTCORPORATION,
CITIZENSDEVELOPMENTINCOPRORATED,CARIDADB.GARCIA,SANDRAG.ESCAT,LORNAGARCIA,and
OLGAG.ESCAT,Petitioners,v.ANNALISACORTES,Respondent.
DECISION
CARPIOMORALES,J.:
In 1987, Virgilio Garcia, "founder" of petitioner corporations (the corporations), hired the then still single Annalisa
Cortes(respondent)asclerkoftheRuralBankofCoron(ManilaOffice).
AfterVirgiliodied,hissonVictortookoverthemanagementofthecorporations.
AnitaCortes(Anita),thewifeofVictorGarcia,wasalsoinvolvedinthemanagementofthecorporations.Respondent
latermarriedAnita'sbrotherEduardoCortes.
Anita soon assumed the position of Vice President of petitioner Citizens Development Incorporated (CDI) and
practicallycontrolledthefinancialoperationsofalmostalloftheothercorporationsinthecourseofwhichsheallowed
someofherrelativesandinlaws,includingrespondent,toholdseveralkeysensitivepositionsthereat.
Respondent later became the Financial Assistant, Personnel Officer and Corporate Secretary of The Rural Bank of
Coron, Personnel Officer of CDI, and also Personnel Officer and Disbursing Officer of The Empire Cold Storage
DevelopmentCorporation(ECSDC).Shesimultaneouslyreceivedsalariesfromthesecorporations.
On examination of the financial books of the corporations by petitioner Sandra Garcia Escat, a daughter of Virgilio
Garcia who was previously residing in Spain, she found out that respondent was involved in several
anomalies,1drawingpetitionerstoterminaterespondent'sservicesonNovember23,1998inpetitionercorporations.2
By letter of November 25, 19983 addressed to individual petitioners Caridad B. Garcia (widow of Virgilio Garcia),
SandraG.Escat,andOlgaG.Escat(anotherdaughterofVirgilioGarcia),respondent'scounselconveyedrespondent's
willingness to abide by the decision to terminate her but reminded them that she was entitled to separation pay
equivalentto11monthssalaryaswellastotheotherbenefitsprovidedbylawinherfavor.
Respondent's counsel thus demanded the payment of respondent's unpaid salary for the months of October and
November1998,separationpayequivalentto12monthssalary,413thmonthpayandotherbenefits.
Asthedemandremainedunheeded,respondentfiledacomplaint5for illegal dismissal and nonpayment of salaries
andotherbenefits,docketedasNLRCNCRCaseNo.00050573899.
Petitioners moved for the dismissal of the complaint on the ground of lack of jurisdiction, contending that the case
was an intracorporate controversy involving the removal of a corporate officer, respondent being the Corporate
Secretary of the Rural Bank of Coron, Inc., hence, cognizable by the Securities and Exchange Commission (SEC)
pursuanttoSection5ofPD902A.6
Inresolvingtheissueofjurisdiction,theLaborArbiternotedasfollows:
It is to be noted that complainant, aside from her being Corporate Secretary of Rural Bank of
Coron,complainant was likewise appointed as Financial Assistant & Personnel Officer of all
respondents herein, whose services w[ere] terminated on 23 November 1998, hence, the instant
complaint.
Verily,aFinancialAssistant&PersonnelOfficerisnotaCorporateOfficerofthe[petitioners']
corporation,thus,pursuanttoArticle217oftheLaborCode,asamended,theinstantcasefallswithin
theambitoforiginalandexclusivejurisdictionofthisOffice.7(Emphasisandunderscoringsupplied).
Eventually,theLaborArbiterfoundforrespondent,computingthemonetaryawarddueherasfollows:

Backwages
13th Month Pay for
1998,1999&2000
SeparationPay

P658,000.00
63,000.00
P721,000.00
315,000.00

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UnpaidSalary
Attorney'sfees

25,900.00
106,190.00
P1,168,090.00

Thus,theLaborArbiter,byDecisionofJuly18,2001,disposed:
WHEREFORE,inviewofalltheforegoing,respondentsareherebyorderedtojointlyandseverallypay
complainant the total amount of ONE MILLION ONE HUNDRED SIXTYEIGHT THOUSAND NINETY
(P1,168,090.00)PESOSasdiscussedabove.8
OnAugust13,2001,thetenthorlastdayoftheperiodofappeal,9petitionersfiledaNoticeofAppealandMotionfor
Reduction of Bond10 to which they attached a Memorandum on Appeal.11 In their Motion for Reduction of Bond,
petitioners alleged that the corporations were under financial distress and the Rural Bank of Coron was under
receivership. They thus prayed that the amount of bond be substantially reduced, preferably to one half thereof or
evenlower.12
ByResolutionofOctober16,200113,theNationalLaborRelationsCommission(NLRC),whilenotingthatpetitioners
timelyfiledtheappeal,heldthatthesamewasnotaccompaniedbyanappealbond,amandatoryrequirementunder
Article 22314 of the Labor Code and Section 6, Rule VI of the NLRC New Rules of Procedure. It also noted that
theMotionforReductionofBondwas"premisedonselfservingallegations."Itaccordinglydismissedtheappeal.
Petitioners' Motion for Reconsideration15was denied by the NLRC by November 26, 2001 Resolution,16hence, they
filedaPetitionforCertiorari17beforetheCourtofAppeals.
ByDecisiondatedMay26,200418,theappellatecourtdismissedthepetitionforlackofmerit.Petitioners'motionfor
reconsiderationwasalsodeniedbyResolutionofAugust13,2004.19
Hence,thispetition,20petitionersfaultingtheappellatecourtfor:
I
...FAIL[URE]TORULETHATTHENLRC'SRULEOFPROCEDUREWHICHPROVIDESFORTHEPOSTING
OFABONDASACONDITIONPRECEDENTFORPERFECTINGANAPPEALASACONDITIONPRECEDENT
FORPERFECTINGANAPPEALISCONTRARYTOLAWANDESTABLISHEDJURISPRUDENCE.
II
. . . DISMISS[ING] PETITIONERS['] PETITION FOR [CERTIORARI] BASED ON TECHNICALITY AND
FAIL[URE]TODECIDETHESAMEBASEDONITSMERIT.
III
...DISMISSINGPETITIONERS'PETITIONFORCERTIORARIFROMTHEDECISIONOFTHENLRCFOR
NONPERFECTIONTHEREOF.
IV
. . . DISMISSING PETITIONERS' PETITION FOR [CERTIORARI] FROM THE DECISION OF THE NLRC
WITHOUTRESOLVINGTHECASEBASEDONITSMERITS.
V
...FAIL[URE]TODECLARETHATINDIVIDUALPETITIONERSARENOTSOLIDARYLIABLETOPAYTHE
RESPONDENT FOR HER MONETARY CLAIM IN VIEW OF THE ABSENCE OF ANY EVIDENCE SHOWING
THATTHEYWEREMOTIVATEDBYILLWILLORMALICEINSEVERINGHEREMPLOYMENT.
VI
...FAIL[URE]TORESOLVETHEISSUEOFJURISDICTION.21
While, indeed, respondent was the Corporate Secretary of the Rural Bank of Coron, she was also its Financial
AssistantandthePersonnelOfficerofthetwootherpetitionercorporations.22
MainlandConstructionCo.,Inc.v.Movilla23instructsthatacorporationcanengageitscorporateofficerstoperform
servicesunderacircumstancewhichwouldmakethememployees.24
TheLaborArbiterhasthusjurisdictionoverrespondent'scomplaint.
Onthefirstthreeassignederrorswhichbearonwhetherpetitioners'appealbeforetheNLRCwasperfected:
AsbeforetheCourtofAppeals,petitionersciteCosico,Jr.v.NLRC[25]andTaberrahv.NLRC[26]insupportoftheir
contentionthattheirappealbeforetheNLRCwasperfected.AscorrectlyruledbytheCourtofAppeals,however,the
citedcasesarenotinpoint.
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'TheappellantinTaberrahfiledamotiontofixappealbondinsteadofpostinganappealbondandthe
SupremeCourtrelaxedtherequirementconsideringthatthelaborarbiter'sdecisiondidnotcontaina
computationofthemonetaryaward.InCosico,theappealbondpostedwasofinsufficientamountbut
the Supreme Court ruled that provisions of the Labor Code on requiring a bond on appeal involving
monetary awards must be given liberal interpretation in line with the desired objective of resolving
controversiesontheirmerits.Herein,noappealbond,whethersufficientornot,waseverfiled
bythepetitioners.27(Italicsintheoriginalemphasisandunderscoringsupplied)
Petitioners additionally cite Star Angel Handicraft v. NLRC[28] to support their position that there is a distinction
between the filing of an appeal within the reglementary period and its perfection. In the parallel case ofComputer
Innovations Center v. National Labor Relations Commission,29this Court hesitated to reiterate the doctrine inStar
Angelinthiswise:
PetitionersinvoketheaforementionedholdinginStarAngelthatthereisadistinctionbetweenthefiling
ofanappealwithinthereglementaryperiodanditsperfection,andthattheappealmaybeperfected
afterthesaidreglementaryperiod.Indeed,StarAngelheldthatthefilingofamotionforreductionof
appealbondnecessarilystaysthereglementaryperiodforappeal.However,inthiscase,themotionfor
reduction of appeal bond, which was incorporated in the appeal memorandum, wasfiled only on the
tenthorfinaldayofthereglementaryperiod.Undersuchcircumstance,themotionforreductionof
appeal bond can no longer be deemed to have stayed the appeal, and the petitioner faces
the risk, as had happened in this case, of summary dismissal of the appeal for non
perfection.
Moreover, the reference inStarAngelto the distinction between the period to file the appeal and to
perfecttheappealhasbeenpointedlymadeonlyoncebythisCourtinGensoliv.NLRCthus,ithasnot
acquired the sheen of venerability reserved for repeatedlycited cases. The distinction, if any, is not
particularly evident or material in the Labor Code hence, the reluctance of the Court to adopt such
doctrine.Moreover,the present provision in the NLRC Rules of Procedure,that "the filing of a
motion to reduce bond shall not stop the running of the period to perfect appeal"flatlycontradicts
the notion expressed inStarAngelthat there is a distinction between the filing an appeal
andperfectinganappeal.
Ultimately,thedispositionofStarAngelwaspremisedontherulingthatamotionforreductionofthe
appeal bond necessarily stays the period for perfecting the appeal, and that the employer cannot be
expectedtoperfecttheappealbypostingtheproperbonduntilsuchtimethesaidmotionforreduction
isresolved.Theundulystretchedoutdistinctionbetweentheperiodtofileanappealandto
perfectanappealwasnotmaterialtotheresolutionofStarAngel,andthiscouldbeproperly
consideredasobiterdictum.30(Italicsintheoriginalemphasisandunderscoringsupplied)
The appellate court did not thus err in dismissing the petition before it. And contrary to petitioners' assertion, the
appellatecourtdismisseditspetitionnot"onameretechnicality."Forthenonpostingofanappealbondwithinthe
reglementaryperioddiveststheNLRCofitsjurisdictiontoentertaintheappeal.Thus,inthesamecaseofComputer
InnovationsCenter,thisCourtheld:
Petitionersalsocharacterizetheappealbondrequirementasatechnicalrule,andthatthedismissalof
anappealonpurelytechnicalgroundsisfrownedupon.However,Article223,whichprescribesthe
appealbondrequirement,isaruleofjurisdictionandnotofprocedure.Thereisalittleleeway
for condoning a liberal interpretation thereof, and certainly none premised on the ground that its
requirements are mere technicalities. It must be emphasized that there is no inherent right to an
appealinalaborcase,asitarisessolelyfromgrantofstatute,namelytheLaborCode.
We have indeed held that therequirement for posting the surety bondis not merely procedural
butjurisdictionalandcannotbetrifledwith.Noncompliancewithsuchlegalrequirementsisfataland
hastheeffectofrenderingthejudgmentfinalandexecutory.Thepetitionerscannotbeallowedtoseek
refuge in a liberal application of rules for their act of negligence.31 (Emphasis and underscoring
supplied)
cralawlibrary

Itbearsemphasisthatallthatisrequiredtoperfecttheappealisthepostingofabondtoensurethattheawardis
eventually paid should the appeal be dismissed. Petitioners should thus have posted a bond, even if it were only
partial,buttheydidnot.NorelaxationoftheRulemaythusbeconsidered.32
Inthecaseatbar,petitionerdidnotpostafullorpartialappealbondwithintheprescribedperiod,thus,noappeal
wasperfectedfromthedecisionoftheLaborArbiter.Forthisreason,thedecisionsoughttobeappealedtotheNLRC
hadbecomefinalandexecutoryandthereforeimmutable.Clearlythen,theNLRChasnoauthoritytoentertainthe
appeal,muchlesstoreversethedecisionoftheLaborArbiter.Anyamendmentoralterationmadewhichsubstantially
affectsthefinalandexecutoryjudgmentisnullandvoidforlackofjurisdiction,includingtheentireproceedingheld
forthatpurpose.33(Emphasisandunderscoringsupplied)
cralawlibrary

As the decision of the Labor Arbiter had become final and executory, a discussion of the fourth and fifth assigned
errorsisnolongernecessary.
WHEREFORE,thepetitionisDENIED.
SOORDERED.
Quisumbing,J.,Chairperson,Carpio,Tinga,andVelasco,Jr.,JJ.,concur.
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Endnotes:
1PositionPaperofhereinpetitioners,NLRCrecords,5455.
2Theletter(NLRCrecords,p.46)whichwassignedbypetitionersCaridadB.Garcia,SandraG.Escat

andOlgaG.Escat,read:

xxx
You are hereby notified that the Management has decided to terminate your services
with RURAL BANK OF CORON, (Palawan), Inc. and EMPIRE COLD STORAGE & DEV.
CORP.effectiveimmediately.
Youarefurtherinstructedtoturnoverallaccountableformsandotherrelateddocuments
toMyleenAdduccul.Yourclearancewillbeissueduponclearingallyouraccountabilities.
xxx
Ontheotherhand,theMinutesoftheManagementMeetingheldonNovember23,1998
(NLRCrecords,p.47)reflectedthat
xxx
V. The management also decided to terminate services of Annalisa Cortes in whatever
function she is holding with CDI effective immediately without clearance until all
accountabilitiesareestablish[ed].
xxx
3NLRCrecords,p.48.
4IntheletterofNovember25,1998,respondent'scounselstatedthatseparationpayisequivalentto

11monthssalary.IntheletterofFebruary3,1999,itwascomputedto12monthssincerespondent
workedforabout11'years,afractionofayearbeingconsideredasonemonth.(NLRCrecords,p.50).
5 NLRC

records, pp. 24. Complaint was later amended showing respondent's computation of the
moneyclaims.(NLRCrecords,pp.1620)
6Section5ofPD902AhasbeenamendedbytheenactmentofRepublicActNo.8799,theSecurities

RegulationCode,in2000.Section5.2ofRA8799provides:

The[SEC]'sjurisdictionoverallcasesenumeratedunderSection5ofPresidentialDecree
No. 902A is hereby transferred to the Courts of general jurisdiction or the appropriate
Regional Trial Court: Provided that the Supreme Court in the exercise of its authority
may designate the Regional Trial Court branches that shall exercise jurisdiction over
these cases. The [SEC] shall retain jurisdiction over pending cases involving intra
corporatedisputessubmittedforfinalresolutionwhichshouldberesolvedwithinone(1)
year from the enactment of this Code. The [SEC] shall retain jurisdiction over pending
suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally
disposed.
7NLRCrecords,pp.166167.
8Id.at172173.
9Petitioners'counselreceivedacopyoftheJuly18,2001DecisionoftheLaborArbiteronAugust3,

2001.Hence,petitionershaveuntilAugust13,2001toappealthecasetotheNLRCpursuanttoArticle
223oftheLaborCode.
10NLRCrecords,pp.181183.
11Id.at184200.
12Id.at182.
13Id.at427430.
14ART.223.Appeal'xxxx

Incaseofajudgmentinvolvingamonetaryaward,anappealbytheemployermaybe
perfectedonlyuponthepostingofacashorsuretybondissuedbyareputablebonding
companydulyaccreditedbytheCommissionintheamountequivalenttothemonetary
awardinthejudgmentappealedfrom.
xxx
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15NLRCrecords,pp.439448.
16Id.at467469.
17CArollo,pp.240.
18Id.at354360.PennedbyJusticeLucasP.BersaminwiththeconcurrenceofJusticesRemediosA.

SalazarFernandoandMarioL.GuariaIII.
19

CA rollo, pp. 390391. Penned by Justice Lucas P. Bersamin with the concurrence of Justices
RemediosA.SalazarFernandoandMarioL.GuariaIII.
20Rollo,pp.950.
21Id.at2223.
22Certifications issued by Rolando S. Madrigal, Annexes "A" and "B" and Victor Garcia, Annex "C,"

NLRCrecords,pp.4345.
23320Phil,353(1995).
24Id.at362(1995).

25338Phil.1080(1997).
26342Phil.394(1997).
27CArollo,pp.358359.
28G.R.No.108914,September20,1994,236SCRA580.
29G.R.No.152410,June29,2005,462SCRA183.
30Id.at192193.
31Id.at193.
32

StoltNielsen Marine Services, Inc. v. National Labor Relations Commission, G.R. No. 147623,
December13,2005,477SCRA516,531Ongv.CourtofAppeals, G.R. No. 152494, September 22,
2004,438SCRA668,677678.
33Ongv.CourtofAppeals,supraat678.

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