BONA FIDE SUSPENSION OF OPERATION BEYOND SIX MONTHS RESULTS IN CONSTRUCTIVE DISMISSAL

Bona fide suspension of the operation of business may be made by the employer for a period of not exceeding six months under Article 286 of the Labor Code, the same should not exceed six months.

Employment is deemed terminated where the suspension exceeds said period. Hence, the Supreme Court held in the following case:

Manila Mining Corporation vs. Lowito R. Amor, et al.
G.R. No. 182800, April 20, 2015

Facts:

Respondents Lowito Amor, Rollybie Ceredon, Julius Cesar, Ronito Martinez and Fermin Tabili, Jr. were regular employees of Petitioner Manila Mining Corporation a corporation engaged in the business of large-scale open-pit mining for gold and copper ore.

In compliance with existing environmental laws, Manila Mining maintained Tailing Pond No. 7 (TP No. 7), a tailings containment facility required for the storage of waste materials generated by its mining operations. When the mine tailings being pumped into TP No. 7 reached the maximum level in December 2000, Manila Mining temporarily shut down its mining operations pending approval of its application to increase said facility’s capacity by the Department of Environment and Natural Resources-Environment Management Bureau (DENR-EMB), Butuan City. Although the DENR-EMB issued a temporary authority for it to be able to continue operating TP No. 7 for another six (6) months and to increase its capacity, Manila Mining failed to secure an extension permit when said temporary authority eventually lapsed.

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On 27 July 2001, Manila Mining served a notice, informing its employees and the Department of Labor and Employment Regional Office No. XII (DOLE) of the temporary suspension of its operations for six months and the temporary lay-off of two-thirds of its employees. After the lapse of said period, Manila Mining notified the DOLE on 11 December 2001 that it was extending the temporary shutdown of its operations for another six months.

Adversely affected by Manila Mining’s continued failure to resume its operations, Amor, et al. filed the complaint for constructive dismissal and monetary claims.

LA Ruling:

The Executive Labor Arbiter Benjamin E. Pelaez rendered a Decision holding Manila Mining liable for constructive dismissal in view of the suspension of its operations beyond the six-month period allowed under Article 286 of the Labor Code of the Philippines. Finding that the cause of suspension of Manila Mining’s business was not beyond its control, the Labor Arbiter applied Article 283 of the same Code declaring complainants to have been constructively dismissed.

Aggrieved, Manila Mining filed its memorandum of appeal before the NLRC and moved for the reduction of the appeal bond to P100,000.00, on the ground that its financial losses in the preceding years had rendered it unable to put up one in cash and/or surety equivalent to the monetary award.

In opposition, Amor, et al. moved for the dismissal of the appeal in view of the fact that, despite receipt of the appealed decision on 24 November 2004, Manila Mining mailed their copy of the memorandum of appeal only on 7 February 2005. Amor, et al. also argued that the appeal bond tendered by Manila Mining was so grossly disproportionate to monetary award for the same to be considered substantial compliance with the requirements for the perfection of an appeal from a Labor Arbiter’s decision.

NLRC Ruling:

Without addressing the procedural issues raised by Amor, et al., however, the NLRC Fifth Division went on to render a Resolution reversing the appealed decision and dismissing the complaint for lack of merit. Finding that the continued suspension of Manila Mining’s operations was due to circumstances beyond its control, the NLRC ruled that, under Article 283 of the Labor Code, Amor, et al. were not even entitled to separation pay considering the eventual closure of their employer’s business due to serious business losses or financial reverses.

Unfazed by the denial of their motion for reconsideration in the NLRC, Amor, et al. filed the Rule 65 petition for certiorari before the Mindanao Station of the CA. Insisting that Manila Mining’s memorandum of appeal was filed 65 days after the lapse of reglementary period for appeal, Amor, et al. called attention to the fact that, as grossly inadequate as it already was vis-à-vis the P2,138,190.0216 monetary award adjudicated in their favor, the check in the sum of P100,000.00 deposited by Manila Mining by way of appeal bond was dishonored upon presentment for payment.

Aside from the fact that the Labor Arbiter’s Decision had already attained finality, Amor, et al. faulted the NLRC for applying Article 283 of the Labor Code absent allegation and proof of compliance with the requirements for the closure of an employer’s business due to serious business losses. In its comment, on the other hand, Manila Mining claimed that, having caused the same to be immediately funded, the check it issued for the appeal bond had since been deposited by the NLRC. Insisting that the cessation of its operations was due to causes beyond its control, Manila Mining argued that the subsequent closure of its business due to business losses exempted it from paying separation pay.

CA Ruling:

The CA rendered the assailed decision, granting Amor, et al.s’ petition and nullifying the NLRC’s Resolution. In reinstating the Labor Arbiter’s Decision, the CA ruled that Manila Mining failed to perfect its appeal therefrom considering that the copy of its Memorandum of Appeal intended for Amor, et al. was served the latter by registered mail only on 7 February 2005.

Aside from posting an unusually smaller sum as appeal bond, Manila Mining was likewise faulted for replenishing the check it issued only on 1 April 2005 or 24 days before the rendition of the assailed NLRC Decision. Applying the principle that the right to appeal is merely a statutory remedy and that the party who seeks to avail of the same must strictly follow the requirements therefor, the CA decreed that the Labor Arbiter’s Decision had already attained finality and, for said reason, had been placed beyond the NLRC’s power of review.

Manila Mining’s motion for reconsideration of the foregoing decision was denied for lack of merit in the CA. Hence, the Rule 45 petition for review on certiorari.

Issue/s:

Whether or not failure to furnish the other party a copy of the memorandum of appeal is a jurisdictional defect

Whether or not the posting of the amount less than the judgment award stops the running of the period to perfect an appeal

Whether or not the tendering of the check as bond is rendered ineffectual by the dishonor thereof and failed to perfect the appeal

Whether or not the six-month bona fide suspension period can be extended

SC Ruling:

The SC denied the petition.

On the principle that justice should not be sacrificed for technicality, it has been ruled that the failure of a party to serve a copy of the memorandum to the opposing party is not a jurisdictional defect and does not bar the NLRC from entertaining the appeal.

The issue that has bedevilled labor litigation for long has been clarified by the ruling in McBurnie vs. Ganzon, et al., which built on and extended the ruling that while it is true that reduction of the appeal bond has been allowed in meritorious cases on the principle that substantial justice is better served by allowing appeals on the merits, it has been ruled that the employer should comply with the following conditions: (1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is posted by the appellant, otherwise the filing of the motion to reduce bond shall not stop the running of the period to perfect an appeal.

The amount of P100,000.00 supposedly posted was provisional bond sufficient to suspend the running of the 10-day reglementary period to perfect an appeal from the Labor Arbiter’s decision. Although appeal is an essential part of our judicial process, it has been held, time and again, that the right thereto is not a natural right or a part of due process but is merely a statutory privilege.

Thus, the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but also jurisdictional and failure of a party to conform to the rules regarding appeal will render the judgment final and executory. Once a decision attains finality, it becomes the law of the case and can no longer be revised, reviewed, changed or altered. The basic rule of finality of judgment is grounded on the fundamental principle of public policy and sound practice that, at the risk of occasional error, the judgment of courts and the award of quasi-judicial agencies must become final at some definite date fixed by law.

Since it is the posting of a cash or surety bond which confers jurisdiction upon the NLRC, the rule is settled that non-compliance is fatal and has the effect of rendering the award final and executory.

The perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but also jurisdictional and failure of a party to conform to the rules regarding appeal will render the judgment final and executory. Once a decision attains finality, it becomes the law of the case and can no longer be revised, reviewed, changed or altered. The basic rule of finality of judgment is grounded on the fundamental principle of public policy and sound practice that, at the risk of occasional error, the judgment of courts and the award of quasi-judicial agencies must become final at some definite date fixed by law.

The employer may at any rate, bona fide suspend the operation of its business for a period of not exceeding six months under Article 286 of the Labor Code. While the employer is, on the one hand, duty bound to reinstate his employees to their former positions without loss of seniority rights if the operation of the business is resumed within six months, employment is deemed terminated where the suspension exceeds said period.

Not having resumed its operations within six months from the time it suspended its operations on 27 July 2001, it necessarily follows that Manila Mining is liable to pay Amor, et al.’ separation pay computed at one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher, as well as the damages and attorney’s fees adjudicated by the Labor Arbiter.

Without proof of the serious business losses it allegedly sustained and/or compliance with the reportorial requirements under Article 283 of the Labor Code, Manila Mining cannot expediently plead exemption from said liabilities due to the supposed financial reverses which led to the eventual closure of its business.