Sara Lee Philippines, Inc. vs. Emilinda D. Macatlang, et al. 

G.R. No. 180147/G.R. No. 180148/G.R. No. 180149/G.R. No. 180150/G.R. No. 180319 & G.R. No. 180685. January 14, 2015


Aris Philippines, Inc. (Aris) permanently ceased operations on 9 October 1995 displacing 5,984 rank-and-file employees. On 26 October 1995, Fashion Accessories Phils. Inc. (FAPI) was incorporated prompting former Aris employees to file a case for illegal dismissal on the allegations that FAPI was a continuing business of Aris. Sara Lee Corporation (SLC), Sala Lee Philippines Inc. (SLP) and Cesar Cruz were impleaded as defendants being major stockholders of FAPI and officers of Aris, respectively.

LA Ruling:

On 30 October 2004, the Labor Arbiter found the dismissal of 5,984 Aris employees illegal and awarded them monetary benefits amounting to P3,453,664,710.86. The judgment award is composed of separation pay of one month for every year of service, backwages, moral and exemplary damages and attorney’s fees.

The Corporations filed a Notice of Appeal with Motion to Reduce Appeal Bond. They posted a P4.5 Million bond. The NLRC granted the reduction of the appeal bond and ordered the Corporations to post an additional P4.5 Million bond.

The 5,984 former Aris employees, represented by Emilinda Macatlang (Macatlang petition), filed a petition for review before the Court of Appeals insisting that the appeal was not perfected due to failure of the Corporations to post the correct amount of the bond which is equivalent to the judgment award.

NLRC Ruling:

While the case was pending before the appellate court, the NLRC prematurely issued an order setting aside the decision of the Labor Arbiter for being procedurally infirmed.

CA Ruling:

The Court of Appeals, on 26 March 2007, ordered the Corporations to post an additional appeal bond of P1 Billion.


Whether or not the 10% bond in McBurnie is the minimum amount of bond to perfect an appeal

Whether or not judicial courtesy applies when the NLRC issued a Decision while the complainants are challenging the issue on provisional bond before the Court of Appeals

Whether or not compromise agreement is proper if complainants are left with about 10% of the judgment award.

SC Ruling:

The SC modified the CA Decision directing the corporations to post P725 Million, in cash or surety bond, within TEN (10) days. The Resolution of the NLRC dated 19 December 2006 was VACATED for being premature and the NLRC was DIRECTED to act with dispatch to resolve the merits of the case upon perfection of the appeal.

The corporations filed an MR arguing that the Court failed to consider the ruling in McBurnie vs. Ganzon which purportedly required only the posting of a bond equivalent to 10% of the monetary award.

SC Ruling on the MR:

The Corporations gravely misappreciated the ruling in McBurnie. The 10% requirement pertains to the reasonable amount which the NLRC would accept as the minimum of the bond that should accompany the motion to reduce bond in order to suspend the period to perfect an appeal under the NLRC rules. The 10% is based on the judgment award and should in no case be construed as the minimum amount of bond to be posted in order to perfect appeal. There is no room for a different interpretation when McBurnie made it clear that the percentage of bond set is provisional.

The Corporations argue that there was no legal impediment for the NRLC to issue its 19 December 2006 Resolution vacating the Labor Arbiter’s Decision as no TRO or injunction was issued by the Court of Appeals. The Corporations assert that the rule on judicial courtesy remains the exception rather than the rule.

The SC did not agree citing the case of Trajano v. Uniwide Sales Warehouse Club, which gave a brief discourse on judicial courtesy, which concept was first introduced in Eternal Gardens Memorial Park Corp. vs. Court of Appeals. This principle justifies the suspension of the proceedings before the lower court even without an injunctive writ or order from the higher court.

In that case, the SC pronounced that due respect for the Supreme Court and practical and ethical considerations should have prompted the appellate court to wait for the final determination of the petition for certiorari before taking cognizance of the case and trying to render moot exactly what was before the SC.

The SC subsequently reiterated the concept of judicial courtesy in Joy Mart Consolidated Corp. vs. Court of Appeals

The Corporations’ argument is specious. Judicial courtesy indeed applies if there is a strong probability that the issues before the higher court would be rendered moot as a result of the continuation of the proceedings in the lower court. This is the exception contemplated in the aforesaid ruling and it obtains in this case. The 19 December 2006 ruling of the NLRC would moot the appeal filed before the higher courts because the issue involves the appeal bond which is an indispensable requirement to the perfection of the appeal before the NLRC. Unless this issue is resolved, the NLRC should be precluded from ruling on the merits on the case. This is the essence of judicial courtesy.

The corporations filed a Motion for Leave to Admit Confession of Judgment.

A review of the compromise agreement shows a gross disparity between the amount offered by the Corporations compared to the judgment award. The judgment award is P3,453,664,710.86 or each employee is slated to receive P577,149.85. On the other hand, the P342,284,800.00 compromise is to be distributed among 5,984 employees which would translate to only P57,200.00 per employee. From this amount, P8,580.00 as attorney’s fees will be deducted, leaving each employee with a measly P48,620.00. In fact, the compromised amount roughly comprises only 10% of the judgment award.

Get a copy of the re-numbered Labor Code 2017

Article 227 of the Labor Code of the Philippines authorizes compromise agreements voluntarily agreed upon by the parties, in conformity with the basic policy of the State “to promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes.

In Arellano vs. Powertech Corporation, the SC voided the P150,000.00 compromise for the P2.5 Million judgment on appeal to the NLRC. The Court noted that the compromise is a mere 6% of the contingent sum that may be received by petitioners and the minuscule amount is certainly questionable because it does not represent a true and fair amount which a reasonable agent may bargain for his principal. In Mindoro Lumber and Hardware vs. Bacay, the SC found that the private respondents’ individual claims, ranging from P6,744.20 to P242,626.90, are grossly disproportionate to what each of them actually received under the Sama-samang Salaysay sa Pag-uurong ng Sakdal. The amount of the settlement is indubitably unconscionable; hence, ineffective to bar the workers from claiming the full measure of their legal rights.

In fine, the SC held that it will not hesitate to strike down a compromise agreement which is unconscionable and against public policy.

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