Case Summary (A.M. No. P-18-3848)
Key Dates
• May 11, 1999 – Employment agreement executed.
• Oct. 4, 2002 – McBurnie files complaint for illegal dismissal and monetary claims.
• Sept. 30, 2004 – Labor Arbiter awards US$985,162, P2 million damages, and 10% attorney’s fees.
• Nov. 5, 2004 – Respondents appeal to NLRC, post P100,000 bond, and file motion to reduce bond.
• Mar. 8 & June 30, 2006 – NLRC dismisses appeal for failure to post additional P54,083,910 bond.
• Feb. 16, 2007 – CA issues preliminary injunction conditioned on P10 million bond.
• Oct. 27, 2008 – CA grants motion to reduce bond to P10 million and remands appeal to NLRC.
• Sept. 18, 2009 – SC Third Division reverses CA, reinstates NLRC dismissal for bond default.
• Mar. 14, 2012 – SC decision becomes final and executory.
• Mar. 27, 2012 – Respondents file third motion for reconsideration, seek en banc referral.
• Sept. 4, 2012 – SC en banc accepts case and issues TRO enjoining enforcement of Labor Arbiter’s award.
Applicable Law
• 1987 Philippine Constitution.
• Labor Code, Art. 223 – appeal bond equivalent to monetary award for employers.
• 2011 NLRC Rules of Procedure, Rule VI Sec. 6 – bond requirement and motion to reduce bond on meritorious grounds and upon posting a reasonable provisional bond.
• Rules of Court, Rule 52 Sec. 2 & SC Internal Rules, Rule 15 Sec. 3 – prohibition on second motions for reconsideration with limited exceptions.
Antecedent Facts and Lower-Court Proceedings
McBurnie alleged he was illegally dismissed after undertaking work for the respondents under a five-year contract. The respondents countered that the contract served only to secure McBurnie’s work permit and that no employment relationship ensued once their hotel project failed. The Labor Arbiter ruled in McBurnie’s favor, awarding substantial sums. Respondents appealed to the NLRC, posted an initial P100,000 bond, and moved to reduce the balance required against a P60 million award. The NLRC denied reduction, required an additional P54,083,910 bond, and ultimately dismissed the appeal when respondents failed to post it.
Court of Appeals Proceedings
The respondents petitioned the CA for certiorari, secured a preliminary injunction on bond of P10 million, and later won a decision reducing the required bond to P10 million. The CA found the original bond requirement excessive, recognized the NLRC’s discretion to reduce bonds on meritorious grounds, and remanded the case.
Supreme Court Third Division Decision (September 18, 2009)
The Third Division reversed the CA, held that posting a bond equal to the full monetary award within the ten-day reglementary period is a jurisdictional requirement under Art. 223, and reinstated the NLRC’s dismissal of respondents’ appeal. The decision emphasized strict compliance with bond requirements and ruled that a motion to reduce bond does not suspend the appeal period unless the full bond is posted.
Motions for Reconsideration and En Banc Referral
Respondents’ first and second motions for reconsideration were denied for lack of merit and as prohibited pleadings. After entry of judgment, respondents filed a third motion for reconsideration and petitioned the Court en banc. The Court en banc granted leave to file the second motion, accepted the case, and issued a TRO on implementation of the Labor Arbiter’s award.
En Banc Ruling on Appeal Bonds
The Court en banc recognized exceptions to the prohibition on second motions for reconsideration where substantial justice so requires. It found that the NLRC had abused its discretion by outright denying respondents’ bond-reduction motion without preliminarily assessing meritorious grounds or the reasonableness of a reduced bond. The Court reaffirmed Art. 223 as jurisdictional but clarified that the timely filing of a meritorious motion to reduce bond, accompanied by a reasonable provisional bond, suspends the ten-day appeal period.
New Guidelines for Bond Reduction
- A motion to reduce bond must show meritorious grounds and be accompanied by a provisional bond of ten percent of the monetary award (excluding damages and attorney’s fees).
- Filing such motion and posting the provisional bond suspends the ten-day period to perfect the appeal.
- The NLRC retains discretion to set the final bond amount based on meritorious grounds and reasonableness.
- If the NLRC increases the bond, the appellant gets a
Case Syllabus (A.M. No. P-18-3848)
Antecedent Facts
- On May 11, 1999, McBurnie, an Australian national, signed a five-year “Employment Contract” with EGI-Managers, Inc. as Executive Vice-President to oversee Philippine hotels and resorts.
- In November 1999, McBurnie suffered an accident and returned to Australia for medical treatment.
- While recuperating abroad, respondent Ganzon informed McBurnie that his services were no longer needed as the intended hotel project would not push through.
- Respondents contended the contract was a vehicle to secure an alien work permit and that McBurnie was a potential investor, not an employee; McBurnie had not yet obtained the required work permit when he left.
Labor Arbiter Proceedings
- On October 4, 2002, McBurnie filed a complaint for illegal dismissal and related monetary claims before the Labor Arbiter (LA).
- By Decision dated September 30, 2004, the LA declared McBurnie illegally dismissed and awarded:
- US$985,162.00 for unexpired salary and benefits;
- ₱2,000,000.00 as moral and exemplary damages;
- Attorney’s fees equivalent to 10% of the total award.
NLRC Proceedings
- Respondents filed an appeal on November 5, 2004, posting a ₱100,000.00 bond and a Motion to Reduce Bond, arguing the LA’s award was null, excessive, and beyond their capacity to bond.
- On March 31, 2005, the NLRC denied the motion to reduce bond, requiring an additional bond of ₱54,083,910.00 under Article 223, Labor Code.
- Respondents’ motion for reconsideration was denied on June 30, 2006; they failed to post the additional bond, resulting in the NLRC’s dismissal of their appeal on March 8, 2006.
Certiorari Petitions Before the Court of Appeals
- Respondents sought certiorari relief to invalidate the NLRC’s bond order and dismissal (CA-G.R. SP Nos. 90845 & 95916).
- February 16, 2007 CA Resolution granted preliminary injunction enjoining execution of the LA decision upon posting a ₱10,000,000.00 bond.
- On October 27, 2008, the CA’s Decision:
- Granted respondents’ Motion to Reduce Appeal Bond to ₱10,000,000.00;
- Directed NLRC to give due course to their appeal and remanded the case.
- On March 3, 2009, the CA denied competing motions but maintained its remand directive.
Supreme Court Division Proceedings
- McBurnie filed Petitions for Review on Certiorari (G.R. Nos. 178034 & 178117; G.R. Nos. 186984-85), challenging CA’s bond reduction and injunction orders.
- On July 4, 2007, the Court denied his petition for fail