G.R. No. L-67272 June 30, 1988
Bonifacio Murillo, Jose Domingo, Arsenio Tagura, Nicasio Canete, and Mario Velasquez, petitioners, vs. Sun Valley Realty, Inc., State Realty & Investment Corp., Honorable Commissioners Gabriel M. Gatchalian and Miguel B. Varela, in their capacity as Commissioners of the National Labor Relations Commission, Third Division, respondents.

FACTS

Petitioners were employed as maintenance men for Sun Valley Subdivision since April 1967. On January 11, 1980, they were notified by State Realty and Investment Corporation of the termination of their services effective January 31, 1980, allegedly due to the termination of a contract between Sun Valley Realty, Inc. and State Realty. Their employment was terminated without the required prior clearance from the Ministry of Labor. Petitioners filed a complaint for illegal dismissal and monetary claims on February 26, 1980. The Labor Arbiter ruled in their favor, declaring the dismissal illegal and awarding separation pay, emergency living allowances, and service incentive leave pay.
Private respondents appealed to the NLRC. The NLRC reversed the Labor Arbiter’s decision solely on the procedural ground that petitioners’ Position Paper-Affidavit was not verified, and therefore could not be considered as evidence. Petitioners then filed this petition, arguing that the private respondents’ appeal to the NLRC was filed out of time, as it was filed 19 calendar days after receipt of the Labor Arbiter’s decision, beyond the then-presumed 10-calendar-day period.

ISSUE

The primary issues were: (1) whether the NLRC correctly dismissed the case due to lack of verification of the position paper; (2) whether the appeal to the NLRC was timely; and (3) whether the dismissal was legal.

RULING

The Supreme Court granted the petition, reinstating the Labor Arbiter’s decision with modification. On the procedural issues, the Court held that the lack of verification was a formal, not substantial, defect that could be easily corrected and was not fatal. On the timeliness of the appeal, the Court ruled it was filed on time. The appeal was filed on January 6, 1981. Applying the law prevailing at that time, as clarified in RJL Martinez Fishing Corporation v. NLRC, the reglementary period was ten working days, not calendar days. From December 18, 1980, to January 6, 1981, exactly ten working days elapsed, considering intervening holidays and weekends. The Vir-Jen case, which established the calendar-day rule, was promulgated later and applied prospectively.
On the substantive issue of illegal dismissal, the Court found the termination unlawful. At the time of dismissal, Article 278 of the Labor Code and its implementing rules required prior clearance from the Ministry of Labor for termination of employees with at least one year of service. The failure to secure such clearance resulted in a conclusive presumption that the dismissal was without just cause. Since no clearance was obtained, the dismissal was illegal.
The Court modified the monetary awards, ruling that money claims (like emergency living allowances) were subject to a three-year prescriptive period from the time the cause of action accrued under Article 291 of the Labor Code. Thus, only claims accruing within three years prior to February 26, 1980 (the complaint filing date), were recoverable. On service incentive leave, the Court held that the burden was on the employer to prove it qualified for the exemption for establishments with fewer than ten employees. Private respondents failed to discharge this burden. Finally, the Court upheld the Labor Arbiter’s finding that both corporate respondents were liable as employers, this being a factual finding entitled to finality.