G.R. No.

164856

January 20, 2009

JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners,

vs.
PHILIPPINE AIRLINES, INC., Respondent.
DECISION
CARPIO MORALES, J.:
Petitioners Juanito A. Garcia and Alberto J. Dumago assail the December 5, 2003 Decision and April 16, 2004 Resolution of the Court of Appeals 1 in
CA-G.R. SP No. 69540 which granted the petition for certiorari of respondent, Philippine Airlines, Inc. (PAL), and denied petitioners Motion for
Reconsideration, respectively. The dispositive portion of the assailed Decision reads:
WHEREFORE, premises considered and in view of the foregoing, the instant petition is hereby GIVEN DUE COURSE. The assailed November 26,
2001 Resolution as well as the January 28, 2002 Resolution of public respondent National Labor Relations Commission [NLRC] is hereby
ANNULLED and SET ASIDE for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Consequently, the
Writ of Execution and the Notice of Garnishment issued by the Labor Arbiter are hereby likewise ANNULLED and SET ASIDE.
SO ORDERED.2
The case stemmed from the administrative charge filed by PAL against its employees-herein petitioners 3 after they were allegedly caught in the act of
sniffing shabu when a team of company security personnel and law enforcers raided the PAL Technical Centers Toolroom Section on July 24, 1995.
After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL Code of Discipline, 4prompting them to file a complaint for
illegal dismissal and damages which was, by Decision of January 11, 1999, 5 resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter
alia, immediately comply with the reinstatement aspect of the decision.
Prior to the promulgation of the Labor Arbiters decision, the Securities and Exchange Commission (SEC) placed PAL (hereafter referred to as
respondent), which was suffering from severe financial losses, under an Interim Rehabilitation Receiver, who was subsequently replaced by a
Permanent Rehabilitation Receiver on June 7, 1999.
From the Labor Arbiters decision, respondent appealed to the NLRC which, by Resolution of January 31, 2000, reversed said decision and dismissed
petitioners complaint for lack of merit.6
Petitioners Motion for Reconsideration was denied by Resolution of April 28, 2000 and Entry of Judgment was issued on July 13, 2000. 7
Subsequently or on October 5, 2000, the Labor Arbiter issued a Writ of Execution (Writ) respecting thereinstatement aspect of his January 11, 1999
Decision, and on October 25, 2000, he issued a Notice of Garnishment (Notice). Respondent thereupon moved to quash the Writ and to lift the Notice
while petitioners moved to release the garnished amount.
In a related move, respondent filed an Urgent Petition for Injunction with the NLRC which, by Resolutions of November 26, 2001 and January 28,
2002, affirmed the validity of the Writ and the Notice issued by the Labor Arbiter but suspended and referred the action to the Rehabilitation Receiver
for appropriate action.
Respondent elevated the matter to the appellate court which issued the herein challenged Decision and Resolution nullifying the NLRC Resolutions
on two grounds, essentially espousing that: (1) a subsequent finding of a valid dismissal removes the basis for implementing the reinstatement aspect
of a labor arbiters decision (the first ground), and (2) the impossibility to comply with the reinstatement order due to corporate rehabilitation
provides a reasonable justification for the failure to exercise the options under Article 223 of the Labor Code (the second ground).
By Decision of August 29, 2007, this Court PARTIALLY GRANTED the present petition and effectively reinstated the NLRC Resolutions insofar as
it suspended the proceedings, viz:

Since petitioners claim against PAL is a money claim for their wages during the pendency of PALs appeal to the NLRC, the same should have been
suspended pending the rehabilitation proceedings. The Labor Arbiter, the NLRC, as well as the Court of Appeals should have abstained from
resolving petitioners case for illegal dismissal and should instead have directed them to lodge their claim before PALs receiver.
However, to still require petitioners at this time to re-file their labor claim against PAL under peculiar circumstances of the case that their dismissal
was eventually held valid with only the matter of reinstatement pending appeal being the issue this Court deems it legally expedient to suspend the
proceedings in this case.
WHEREFORE, the instant petition is PARTIALLY GRANTED in that the instant proceedings herein are SUSPENDED until further notice from this
Court. Accordingly, respondent Philippine Airlines, Inc. is hereby DIRECTED to quarterly update the Court as to the status of its ongoing
rehabilitation. No costs.
SO ORDERED.8 (Italics in the original; underscoring supplied)
By Manifestation and Compliance of October 30, 2007, respondent informed the Court that the SEC, by Order of September 28, 2007, granted its
request to exit from rehabilitation proceedings. 9
In view of the termination of the rehabilitation proceedings, the Court now proceeds to resolve the remaining issuefor consideration, which is
whether petitioners may collect their wages during the period between the Labor Arbiters order of reinstatement pending appeal and the NLRC
decision overturning that of the Labor Arbiter, now that respondent has exited from rehabilitation proceedings.
Amplification of the First Ground
The appellate court counted on as its first ground the view that a subsequent finding of a valid dismissal removes the basis for implementing the
reinstatement aspect of a labor arbiters decision.
On this score, the Courts attention is drawn to seemingly divergent decisions concerning reinstatement pending appeal or, particularly, the option of
payroll reinstatement. On the one hand is the jurisprudential trend as expounded in a line of cases including Air Philippines Corp. v. Zamora,10 while
on the other is the recent case ofGenuino v. National Labor Relations Commission.11 At the core of the seeming divergence is the application of
paragraph 3 of Article 223 of the Labor Code which reads:
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior
to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay
the execution for reinstatement provided herein. (Emphasis and underscoring supplied)
The view as maintained in a number of cases is that:
x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate
and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court . On the other hand, if the employee
has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse
whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. 12 (Emphasis in the original; italics
and underscoring supplied)
In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages pending appeal upon
reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement and it is mandatory on the employer to comply therewith. 13
The opposite view is articulated in Genuino which states:
If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right
to require the dismissed employee on payroll reinstatement to refund the salaries s/he received while the case was pending appeal, or it can be
deducted from the accrued benefits that the dismissed employee was entitled to receive from his/her employer under existing laws, collective
bargaining agreement provisions, and company practices. However, if the employee was reinstated to work during the pendency of the appeal, then
the employee is entitled to the compensation received for actual services rendered without need of refund.

Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is based on a just cause, then she is not
entitled to be paid the salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC Decision.14 (Emphasis, italics and underscoring
supplied)
It has thus been advanced that there is no point in releasing the wages to petitioners since their dismissal was found to be valid, and to do so would
constitute unjust enrichment.
Prior to Genuino, there had been no known similar case containing a dispositive portion where the employee was required to refund the salaries
received on payroll reinstatement. In fact, in a catena of cases,15 the Court did not order the refund of salaries garnished or received by payrollreinstated employees despite a subsequent reversal of the reinstatement order.
The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise render inutile the rationale of reinstatement pending
appeal.
x x x [T]he law itself has laid down a compassionate policy which, once more, vivifies and enhances the provisions of the 1987 Constitution on labor
and the working man.
xxxx
These duties and responsibilities of the State are imposed not so much to express sympathy for the workingman as to forcefully and meaningfully
underscore labor as a primary social and economic force, which the Constitution also expressly affirms with equal intensity. Labor is an indispensable
partner for the nation's progress and stability.
xxxx
x x x In short, with respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its execution
pending appeal.
xxxx
x x x Then, by and pursuant to the same power (police power), the State may authorize an immediate implementation, pending appeal, of a decision
reinstating a dismissed or separated employee since that saving act is designed to stop, although temporarily since the appeal may be decided in favor
of the appellant, a continuing threat or danger to the survival or even the life of the dismissed or separated employee and his family. 16
The social justice principles of labor law outweigh or render inapplicable the civil law doctrine of unjust enrichment espoused by Justice Presbitero
Velasco, Jr. in his Separate Opinion. The constitutional and statutory precepts portray the otherwise "unjust" situation as a condition affording full
protection to labor.
Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the "refund doctrine" easily
demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a dismissed employee. The employee, to make both ends
meet, would necessarily have to use up the salaries received during the pendency of the appeal, only to end up having to refund the sum in case of a
final unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff of insolvency.
Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll reinstatement and simply find work
elsewhere in the interim, if any is available. Notably, the option of payroll reinstatement belongs to the employer, even if the employee is able and
raring to return to work. Prior toGenuino, it is unthinkable for one to refuse payroll reinstatement. In the face of the grim possibilities, the rise of
concerned employees declining payroll reinstatement is on the horizon.
Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also institutes a scheme unduly favorable to
management. Under such scheme, the salaries dispensed pendente lite merely serve as a bond posted in installment by the employer. For in the event
of a reversal of the Labor Arbiters decision ordering reinstatement, the employer gets back the same amount without having to spend ordinarily for
bond premiums. This circumvents, if not directly contradicts, the proscription that the "posting of a bond [even a cash bond] by the employer shall
not stay the execution for reinstatement."17

In playing down the stray posture in Genuino requiring the dismissed employee on payroll reinstatement to refund the salaries in case a final decision
upholds the validity of the dismissal, the Court realigns the proper course of the prevailing doctrine on reinstatement pending appeal vis--vis the
effect of a reversal on appeal.
Respondent insists that with the reversal of the Labor Arbiters Decision, there is no more basis to enforce the reinstatement aspect of the said
decision. In his Separate Opinion, Justice Presbitero Velasco, Jr. supports this argument and finds the prevailing doctrine in Air Philippines and allied
cases inapplicable because, unlike the present case, the writ of execution therein was secured prior to the reversal of the Labor Arbiters decision.
The proposition is tenuous. First, the matter is treated as a mere race against time. The discussion stopped there without considering the cause of the
delay. Second, it requires the issuance of a writ of execution despite the immediately executory nature of the reinstatement aspect of the decision. In
Pioneer Texturing Corp. v. NLRC,18which was cited in Panuncillo v. CAP Philippines, Inc.,19 the Court observed:
x x x The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be immediately executory even pending
appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make
an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as
prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the
immediate execution of a reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for
numerous reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the
NLRC could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223. In other
words, if the requirements of Article 224 [including the issuance of a writ of execution] were to govern, as we so declared in Maranaw, then the
executory nature of a reinstatement order or award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual. In enacting
the law, the legislature is presumed to have ordained a valid and sensible law, one which operates no further than may be necessary to achieve its
specific purpose. Statutes, as a rule, are to be construed in the light of the purpose to be achieved and the evil sought to be remedied. x x x In
introducing a new rule on the reinstatement aspect of a labor decision under Republic Act No. 6715, Congress should not be considered to be
indulging in mere semantic exercise. x x x20 (Italics in the original; emphasis and underscoring supplied)
The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the
part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. 21 It
settles the view that the Labor Arbiter's order of reinstatement is immediately executory and the employer has to either re-admit them to work under
the same terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the
alternative, employer must pay the employees salaries. 22
Amplification of the Second Ground
The remaining issue, nonetheless, is resolved in the negative on the strength of the second ground relied upon by the appellate court in the assailed
issuances. The Court sustains the appellate courts finding that the peculiar predicament of a corporate rehabilitation rendered it impossible for
respondent to exercise its option under the circumstances.
The spirit of the rule on reinstatement pending appeal animates the proceedings once the Labor Arbiter issues the decision containing an order of
reinstatement. The immediacy of its execution needs no further elaboration.Reinstatement pending appeal necessitates its immediate execution during
the pendency of the appeal, if the law is to serve its noble purpose. At the same time, any attempt on the part of the employer to evade or delay its
execution, as observed in Panuncillo and as what actually transpired in Kimberly,23 Composite,24 Air Philippines,25 and Roquero,26 should not be
countenanced.
After the labor arbiters decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is
shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer.
The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal;
and (2) the delay must not be due to the employers unjustified act or omission. If the delay is due to the employers unjustified refusal, the employer
may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiters decision.
In Genuino, there was no showing that the employer refused to reinstate the employee, who was the Treasury Sales Division Head, during the short
span of four months or from the promulgation on May 2, 1994 of the Labor Arbiters Decision up to the promulgation on September 3, 1994 of the
NLRC Decision. Notably, the former NLRC Rules of Procedure did not lay down a mechanism to promptly effectuate the self-executory order of
reinstatement, making it difficult to establish that the employer actually refused to comply.

In a situation like that in International Container Terminal Services, Inc. v. NLRC27 where it was alleged that the employer was willing to comply
with the order and that the employee opted not to pursue the execution of the order, the Court upheld the self-executory nature of the reinstatement
order and ruled that the salary automatically accrued from notice of the Labor Arbiter's order of reinstatement until its ultimate reversal by the NLRC.
It was later discovered that the employee indeed moved for the issuance of a writ but was not acted upon by the Labor Arbiter. In that scenario where
the delay was caused by the Labor Arbiter, it was ruled that the inaction of the Labor Arbiter who failed to act upon the employees motion for the
issuance of a writ of execution may no longer adversely affect the cause of the dismissed employee in view of the self-executory nature of the order
of reinstatement.28
The new NLRC Rules of Procedure, which took effect on January 7, 2006, now require the employer to submit areport of compliance within 10
calendar days from receipt of the Labor Arbiters decision,29 disobedience to which clearly denotes a refusal to reinstate. The employee need not file a
motion for the issuance of the writ of execution since the Labor Arbiter shall thereafter motu proprio issue the writ. With the new rules in place,
there is hardly any difficulty in determining the employers intransigence in immediately complying with the order.
In the case at bar, petitioners exerted efforts30 to execute the Labor Arbiters order of reinstatement until they were able to secure a writ of execution,
albeit issued on October 5, 2000 after the reversal by the NLRC of the Labor Arbiters decision. Technically, there was still actual delay which brings
to the question of whether the delay was due to respondents unjustified act or omission.
It is apparent that there was inaction on the part of respondent to reinstate them, but whether such omission was justified depends on the onset of the
exigency of corporate rehabilitation.
It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any court, tribunal or board against the
corporation shall ipso jure be suspended.31 As stated early on, during the pendency of petitioners complaint before the Labor Arbiter, the SEC placed
respondent under an Interim Rehabilitation Receiver. After the Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation
Receiver with a Permanent Rehabilitation Receiver.
Case law recognizes that unless there is a restraining order, the implementation of the order of reinstatement is ministerial and mandatory.32 This
injunction or suspension of claims by legislative fiat 33 partakes of the nature of a restraining order that constitutes a legal justification for respondents
non-compliance with the reinstatement order. Respondents failure to exercise the alternative options of actual reinstatement and payroll
reinstatement was thus justified. Such being the case, respondents obligation to pay the salaries pending appeal, as the normal effect of the nonexercise of the options, did not attach.
While reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even the life of the dismissed employee and his
family, it does not contemplate the period when the employer-corporation itself is similarly in a judicially monitored state of being resuscitated in
order to survive.
The parallelism between a judicial order of corporation rehabilitation as a justification for the non-exercise of its options, on the one hand, and a
claim of actual and imminent substantial losses as ground for retrenchment, on the other hand, stops at the red line on the financial statements.
Beyond the analogous condition of financial gloom, as discussed by Justice Leonardo Quisumbing in his Separate Opinion, are more salient
distinctions. Unlike the ground of substantial losses contemplated in a retrenchment case, the state of corporate rehabilitation was judicially predetermined by a competent court and not formulated for the first time in this case by respondent.
More importantly, there are legal effects arising from a judicial order placing a corporation under rehabilitation. Respondent was, during the period
material to the case, effectively deprived of the alternative choices under Article 223 of the Labor Code, not only by virtue of the statutory injunction
but also in view of the interim relinquishment of management control to give way to the full exercise of the powers of the rehabilitation receiver. Had
there been no need to rehabilitate, respondent may have opted for actual physical reinstatement pending appeal to optimize the utilization of
resources. Then again, though the management may think this wise, the rehabilitation receiver may decide otherwise, not to mention the subsistence
of the injunction on claims.
In sum, the obligation to pay the employees salaries upon the employers failure to exercise the alternative options under Article 223 of the Labor
Code is not a hard and fast rule, considering the inherent constraints of corporate rehabilitation.
WHEREFORE, the petition is PARTIALLY DENIED. Insofar as the Court of Appeals Decision of December 5, 2003 and Resolution of April 16,
2004 annulling the NLRC Resolutions affirming the validity of the Writ of Execution and the Notice of Garnishment are concerned, the Court finds
no reversible error.
SO ORDERED.

FACTS:
PAL dismissed Juanito Garcia and Alberto Dumago (collectively, Employees) for violating the PAL Code of Discipline when they were caught
using drugs in company premises. The Employees filed a complaint for illegal dismissal with the Labor Arbiter. In the meantime, the Securities and
Exchange Commission placed PAL under an Interim Rehabilitation Receiver. On 31 January 1999, The Labor Arbiter ruled in the Employees favor
and ordered immediate compliance with the reinstatement aspect of its decision. On 7 June 1999, PAL was placed under a Permanent Rehabilitation
Receiver. Upon PALs appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiters decision in a resolution dated 31
January 2000. The subsequent Motion for Reconsideration was denied and, on 13 July 2000, entry of judgment was issued.
On 5 October 2000, the Labor Arbiter issued a writ of execution as to the reinstatement aspect of its previous decision. Subsequently, he issued a
notice of garnishment. While moving to quash both the writ and the notice, PAL likewise filed a petition for injunction with the NLRC. The NLRC
affirmed the validity of the writ and the notice but suspended their enforcement and referred them to the Rehabilitation Receiver. Upon PALs appeal,
the Court of Appeals nullified the NLRC resolutions on two grounds: (1) a subsequent finding of a valid dismissal removes the basis for
implementing the reinstatement aspect of a labor arbiters decision, and (2) the impossibility to comply with the reinstatement order due to
corporate rehabilitation provides a reasonable justification for the failure to exercise the options under Article 223 of the Labor Code. Upon
Employees petition for review, the Supreme Courts Second Division partially granted the petition by suspending the proceedings on the ground that
Employees claim is a money claim suspended pending PALs corporate rehabilitation proceedings. PAL subsequently informed the Supreme Court of
its exit from rehabilitation proceedings.
ISSUE:
(1) Whether Employees were entitled to wages corresponding to the period pending their appeal to the NLRC, despite the subsequent reversal of the
Labor Arbiters decision by the NLRC.
(2) Whether enforcement can still be effected despite the delay caused the corporate rehabilitation proceedings.
HELD (EN BANC) (CARPIO MORALES, J.):
(1) Employees are entitled to reinstatement or wages corresponding to the period pending their appeal to the NLRC, despite the subsequent
reversal of the Labor Arbiters decision by the NLRC. The relevant provision is Article 223 of the Labor Code, which states that a Labor
Arbiters order to reinstate is immediately executory pending appeal, which cannot be stayed even if the employer posts a bond. The employer
has the option of actual or payroll reinstatement. 1
The Court affirmed the prevailing jurisprudential principle interpreting this provision to mean that, unless a restraining order is issued, the
reinstatement order (and, consequently, the payment of wages) is mandatory on the employer during the period of appeal until reversal by the
higher court,2 without need for reimbursement by the employee in the event of reversal, especially if he actually rendered services. 3 The Court
found Genuino v. NLRC which accorded the employer the right to require a refund of the salaries received from payroll reinstatement
pending appeal or its deduction from accrued benefits the employee is entitled to 4 to be a stray decision, whose underlying reasoning is
contrary to the rationale of reinstatement pending appeal. 5
The Court ruled that [t]he social justice principles of labor law outweigh or render inapplicable the civil law doctrine of unjust
enrichment. To rule in favor of the Genuino refund doctrine would unduly prejudice labor (i.e. the amount received pending appeal better left
unused or refused as it requires the employee to refund the amount meant to help him make ends meet during the pendency of the appeal) and

1 LABOR CODE, art. 223, 3 (emphasis supplied). In any event, the decision of the Labor
Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, pending appeal. The employee shall either be admitted
back to work under the same terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement provided herein.

2 Air Philippines Corporation v. Zamora, G.R. No. 148247, Aug. 7, 2006.

3 Air Philippines Corporation v. Zamora, G.R. No. 148247, Aug. 7, 2006. The Court cites cases where payroll-reinstated
employees were not required to refund salaries received despite the reversal of the orders for reinstatement. Composite
Enterprises, Inc. v. Caparoso, G.R. No. 159919, Aug. 8, 2007; Kimberly Clark (Phils), Inc. v. Facundo, G.R. No. 144885,
July 26, 2006 (unsigned resolution); Sanchez v. NLRC, G.R. No. 124348, Feb. 7, 2001 (unsigned resolution);
International Container Terminal Services, Inc. v. NLRC, 360 Phil. 527 (1998).
6

unduly favor management (i.e. the salaries merely serving as a bond posted in installment, without the employer needing to spend for bond
premiums).
The argument that a writ of execution must be procured prior to the reversal of the order for reinstatement is tenuous. Jurisprudence has
established that to require a writ of execution would be contrary to the immediately executory nature of the reinstatement order. 6
In sum, the Court ruled that the immediately executory nature of the order of reinstatement requires the employer to choose between actual or
payroll reinstatement. Failure to exercise the options requires in the mandatory payment of the employees salaries. 7
(2) Employees are barred from collecting the accrued wages after the NLRCs reversal because the delay in enforcing the reinstatement
pending appeal was caused by corporate rehabilitation proceedings. An employee may be barred from collecting accrued wages after
reversal of the order for reinstatement, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the
part of the employer.8 The two-fold test requires that (a) there must be actual delay or the fact that the order of reinstatement pending appeal
was not executed prior to its reversal; and (b) the delay must not be due to the employers unjustified act or omission . Jurisprudence has
established that enforcement of an order for reinstatement is mandatory unless there is a restraining order. 9 The suspension of all claims upon
appointment of a rehabilitation receiver partakes of the nature of a restraining order that constitutes a legal justification for [PAL]s noncompliance with the reinstatement order. PALs obligation to pay wages pending appeal did not attach as a result of its justified failure to
choose between actual reinstatement and payroll reinstatement.

G.R. No. 118651 October 16, 1997

PIONEER TEXTURIZING CORP. and/or JULIANO LIM, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, PIONEER TEXTURIZING WORKERS UNION and LOURDES A. DE
JESUS, respondents.

FRANCISCO, J.:

4 Genuino v. NLRC, G.R. Nos. 142732-33, Dec. 4, 2007. The Court, however, ruled that an employee actually reinstated
pending appeal is entitle to compensation for actual services without need of refund. It must be noted that the Court found
that the employee was neither reinstated
5 Roquero v. Philippine Airlines, G.R. No. 152329, Apr. 22, 2003 (citing Aris (Phil.) Inc. v.
NLRC, G.R. No. 90501, Aug. 5, 1991).Then, by and pursuant to the same power (police power),
the State may authorize an immediate implementation, pending appeal, of a decision reinstating a
dismissed or separated employee since that saving act is designed to stop, although temporarily
since the appeal may be decided in favor of the appellant, a continuing threat or danger to the
survival or even the life of the dismissed or separated employee and his family.

6 Panuncillo v. CAP Philippines, G.R. No. 161305, Feb. 9, 2007 (citing Pioneer Texturing Corporation v. NLRC, 345
Phil. 1057 (1997)).
7 See Kimberly Clark (Phils), Inc. v. Facundo, G.R. No. 144885, July 26, 2006 (unsigned resolution).
8 The Court cited cases where the employer attempted to evade or delay the execution. See Panuncillo v. CAP
Philippines, Inc., G.R. No. 161305, Feb. 9, 2007; Air Philippines Corporation v. Zamora, G.R. No. 148247, Aug. 7, 2006;
Composite Enterprises, Inc. v. Caparoso, G.R. No. 159919, Aug. 8, 2007; Kimberly Clark (Phils), Inc. v. Facundo, G.R.
No. 144885, July 26, 2006 (unsigned resolution); Roquero v. Philippine Airlines, G.R. No. 152329, Apr. 22, 2003.
9 Roquero v. Philippine Airlines, G.R. No. 152329, Apr. 22, 2003.
7

The facts are as follows:

Private respondent Lourdes A. de Jesus is petitioners' reviser/trimmer since 1980. As reviser/trimmer, de Jesus based her assigned work on a paper
note posted by petitioners. The posted paper which contains the corresponding price for the work to be accomplished by a worker is identified by its
P.O. Number. On August 15, 1992, de Jesus worked on P.O. No. 3853 by trimming the cloths' ribs. She thereafter submitted tickets corresponding to
the work done to her supervisor. Three days later, de Jesus received from petitioners' personnel manager a memorandum requiring her to explain why
no disciplinary action should be taken against her for dishonesty and tampering of official records and documents with the intention of cheating as
P.O. No. 3853 allegedly required no trimming. The memorandum also placed her under preventive suspension for thirty days starting from August
19, 1992. In her handwritten explanation, de Jesus maintained that she merely committed a mistake in trimming P.O. No. 3853 as it has the same
style and design as P.O. No. 3824 which has an attached price list for trimming the ribs and admitted that she may have been negligent in presuming
that the same work was to be done with P.O. No. 3853, but not for dishonesty or tampering. Petitioners' personnel department, nonetheless,
terminated her from employment and sent her a notice of termination dated September 18, 1992.
On September 22, 1992, de Jesus filed a complaint for illegal dismissal against petitioners. The Labor Arbiter who heard the case noted that de Jesus
was amply accorded procedural due process in her termination from service. Nevertheless, after observing that de Jesus made some further trimming
on P.O. No. 3853 and that her dismissal was not justified, the Labor Arbiter held petitioners guilty of illegal dismissal. Petitioners were accordingly
ordered to reinstate de Jesus to her previous position without loss of seniority rights and with full backwages from the time of her suspension on
August 19, 1992. Dissatisfied with the Labor Arbiter's decision, petitioners appealed to public respondent National Labor Relations Commission
(NLRC). In its July 21, 1994 decision, the NLRC 1 ruled that de Jesus was negligent in presuming that the ribs of P.O. No. 3853 should likewise be
trimmed for having the same style and design as P.O. No. 3824, thus petitioners cannot be entirely faulted for dismissing de Jesus. The NLRC
declared that the status quo between them should be maintained and affirmed the Labor Arbiter's order of reinstatement, but without backwages. The
NLRC further "directed petitioner to pay de Jesus her back salaries from the date she filed her motion for execution on September 21, 1993 up to the
date of the promulgation of [the] decision." 2 Petitioners filed their partial motion for reconsideration which the NLRC denied, hence this petition
anchored substantially on the alleged NLRC's error in holding that de Jesus is entitled to reinstatement and back salaries. On March 6, 1996,
petitioners filed its supplement to the petition amplifying further their arguments. In a resolution dated February 20, 1995, the Court required
respondents to comment thereon. Private respondent de Jesus and the Office of the Solicitor General, in behalf of public respondent NLRC,
subsequently filed their comments. Thereafter, petitioners filed two rejoinders [should be replies] to respondents' respective comments. Respondents
in due time filed their rejoinders.
There are two interrelated and crucial issues, namely: (1) whether or not de Jesus was illegally dismissed, and (2) whether or not an order for
reinstatement needs a writ of execution.
Petitioners insist that the NLRC gravely abused its discretion in holding that de Jesus is entitled to reinstatement to her previous position for she was
not illegally dismissed in the first place. In support thereof, petitioners quote portions of the NLRC decision which stated that "respondents
[petitioners herein] cannot be entirely faulted for dismissing the complainant" 3 and that there was "no illegal dismissal to speak of in the case at
bar". 4 Petitioners further add that de Jesus breached the trust reposed in her, hence her dismissal from service is proper on the basis of loss of
confidence, citing as authority the cases of Ocean Terminal Services, Inc. v. NLRC, 197 SCRA 491; Coca-Cola Bottlers Phil., Inc. v. NLRC, 172
SCRA 751, and Piedad v. Lanao del Norte Electric Cooperative, 5 154 SCRA 500.
The arguments lack merit.
The entire paragraph which comprises the gist of the NLRC's decision from where petitioners derived and isolated the aforequoted portions of the
NLRC's observation reads in full as follows:
We cannot fully subscribe to the complainant's claim that she trimmed the ribs of PO3853 in the light of the sworn statement of her
supervisor Rebecca Madarcos (Rollo, p. 64) that no trimming was necessary because the ribs were already of the proper length. The
complainant herself admitted in her sinumpaang salaysay (Rollo, p. 45) that "Aking napansin na hindi pantay-pantay ang lapad ng mga ribs
PO3853 mas maigsi ang nagupit ko sa mga ribs ng PO3853 kaysa sa mga ribs ng mga nakaraang PO's. The complainant being an
experienced reviser/trimmer for almost twelve (12) years should have called the attention of her supervisor regarding her observation of
PO3853. It should be noted that complainant was trying to claim as production output 447 pieces of trimmed ribs of PO3853 which
respondents insists that complainant did not do any. She was therefore negligent in presuming that the ribs of PO3853 should likewise be
trimmed for having the same style and design as PO3824. Complainant cannot pass on the blame to her supervisor whom she claimed
checked the said tickets prior to the submission to the Accounting Department. As explained by respondent, what the supervisor does is
merely not the submission of tickets and do some checking before forwarding the same to the Accounting Department. It was never
disputed that it is the Accounting Department who does the detailed checking and computation of the tickets as has been the company
policy and practice. Based on the foregoing and considering that respondent cannot be entirely faulted for dismissing complainant as the
complainant herself was also negligent in the performance of her job, We hereby rule that status quo between them should be maintained as

a matter of course. We thus affirm the decision of Labor Arbiter reinstating the complainant but without backwages. The award of
backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal.
(Indophil Acrylic Mfg. Corporation vs. NLRC, G.R. No. 96488 September 27, 1993) There being no illegal dismissal to speak in the case at
bar, the award for backwages should necessarily be deleted. 6
We note that the NLRC's decision is quite categorical in finding that de Jesus was merely negligent in the performance of her duty. Such negligence,
the Labor Arbiter delineated, was brought about by the petitioners' plain improvidence. Thus:
After careful assessment of the allegations and documents available on record, we are convinced that the penalty of dismissal was not
justified.
At the outset, it is remarkable that respondents did not deny nor dispute that P.O. 3853 has the same style and design as P.O. 3824; that P.O.
3824 was made as guide for the work done on P.O. 3853; and, most importantly, that the notation correction on P.O. 3824 was made only
after the error was discovered by respondents' Accounting Department.
Be that as it may, the factual issue in this case is whether or not complainant trimmed the ribs of P.O. 3853?
Respondents maintained that she did not because the record in Accounting Department allegedly indicates that no trimming is to be done
on P.O. 3853. Basically, this allegation is unsubstantiated.
It must be emphasized that in termination cases the burden of proof rests upon the employer.
In the instant case, respondents' mere allegation that P.O. 3853 need not be trimmed does not satisfy the proof required to warrant
complainant's dismissal.
Now, granting that the Accounting record is correct, we still believe that complainant did some further trimming on P.O. 3853 based on the
following grounds:
Firstly, Supervisor Rebecca Madarcos who ought to know the work to be performed because she was in-charged of assigning jobs, reported
no anomally when the tickets were submitted to her.
Incidentally, supervisor Madarcos testimony is suspect because if she could recall what she ordered the complainant to do seven (7) months
ago (to revise the collars and plackets of shirts) there was no reason for her not to detect the alleged tampering at the time complainant
submitted her tickets, after all, that was part of her job, if not her main job.
Secondly, she did not exceed her quota, otherwise she could have simply asked for more.
That her output was remarkably big granting it is true, is well explained in that the parts she had trimmed were lesser compared to those
which she had cut before.
In this connection, respondents misinterpreted the handwritten explanation of the complainant dated 20 August 1992, because the letter
never admits that she never trimmed P.O. 3853, on the contrary the following sentence,
Sa katunayan nakapagbawas naman talaga ako na di ko inaasahang inalis na pala ang presyo ng Sec. 9 P.O. 3853 na ito.
is crystal clear that she did trim the ribs on P.O. 3853. 7
Gleaned either from the Labor Arbiter's observations or from the NLRC's assessment, it distinctly appears that petitioners' accusation of dishonesty
and tampering of official records and documents with intention of cheating against de Jesus was not substantiated by clear and convincing evidence.
Petitioners simply failed, both before the Labor Arbiter and the NLRC, to discharge the burden of proof and to validly justify de Jesus' dismissal from
service. The law, in this light, directs the employers, such as herein petitioners, not to terminate the services of an employee except for a just or
authorized cause under the Label Code. 8 Lack of a just cause in the dismissal from service of an employee, as in this case, renders the dismissal
illegal, despite the employer's observance of procedural due process. 9 And while the NLRC stated that "there was no illegal dismissal to speak of in
the case at bar" and that petitioners cannot be entirely faulted therefor, said statements are inordinate pronouncements which did not remove the
assailed dismissal from the realm of illegality. Neither can these pronouncements preclude us from holding otherwise.

We also find the imposition of the extreme penalty of dismissal against de Jesus as certainly harsh and grossly disproportionate to the negligence
committed, especially where said employee holds a faithful and an untarnished twelve-year service record. While an employer has the inherent right
to discipline its employees, we have always held that this right must always be exercised humanely, and the penalty it must impose should be
commensurate to the offense involved and to the degree of its infraction. 10 The employer should bear in mind that, in the exercise of such right, what
is at stake is not only the employee's position but her livelihood as well.
Equally unmeritorious is petitioners' assertion that the dismissal is justified on the basis of loss of confidence. While loss of confidence, as correctly
argued by petitioners, is one of the valid grounds for termination of employment, the same, however, cannot be used as a pretext to vindicate each
and every instance of unwarranted dismissal. To be a valid ground, it must be shown that the employee concerned is responsible for the misconduct
or infraction and that the nature of his participation therein rendered him absolutely unworthy of the trust and confidence demanded by his
position. 11 In this case, petitioners were unsuccessful in establishing their accusations of dishonesty and tampering of records with intention of
cheating. Indeed, even if petitioners' allegations against de Jesus were true, they just the same failed to prove that her position needs the continued
and unceasing trust of her employers. The breach of trust must be related to the performance of the employee's
functions. 12 Surely, de Jesus who occupies the position of a reviser/trimmer does not require the petitioners' perpetual and full confidence. In this
regard, petitioners' reliance on the cases of Ocean Terminal Services, Inc. v. NLRC; Coca-Cola Bottlers Phil., Inc. v. NLRC; and Piedad v. Lanao del
Norte Electric Cooperative, which when perused involve positions that require the employers' full trust and confidence, is wholly misplaced.
In Ocean Terminal Services, for instance, the dismissed employee was designated as expediter and canvasser whose responsibility is mainly to make
emergency procurements of tools and equipments and was entrusted with the necessary cash for buying them. The case of Coca-Cola Bottlers, on the
other hand, involves a sales agent whose job exposes him to the everyday financial transactions involving the employer's goods and funds, while that
of Piedad concerns a bill collector who essentially handles the employer's cash collections. Undoubtedly, the position of a reviser/trimmer could not
be equated with that of a canvasser, sales agent, or a bill collector. Besides, the involved employees in the three aforementioned cases were clearly
proven guilty of infractions unlike private respondent in the case at bar. Thus, petitioners dependence on these cited cases is inaccurate, to say the
least. More, whether or not de Jesus meets the day's quota of work she, just the same, is paid the daily minimum wage. 13
Corollary to our determination that de Jesus was illegally dismissed is her imperative entitlement to reinstatement and backwages as mandated by
law. 14 Whence, we move to the second issue, i.e., whether or not an order for reinstatement needs a writ of execution.
Petitioners' theory is that an order for reinstatement is not self-executory. They stress that there must be a writ of execution which may be issued by
the NLRC or by the Labor Arbiter motu proprio or on motion of an interested party. They further maintain that even if a writ of execution was issued,
a timely appeal coupled by the posting of appropriate supersedeas bond, which they did in this case, effectively forestalled and stayed execution of
the reinstatement order of the Labor Arbiter. As supporting authority, petitioners emphatically cite and bank on the case of Maranaw Hotel Resort
Corporation (Century Park Sheraton Manila) v. NLRC, 238 SCRA 190.
Private respondent de Jesus, for her part, maintains that petitioners should have reinstated her immediately after the decision of the Labor Arbiter
ordering her reinstatement was promulgated since the law mandates that an order for reinstatement is immediately executory. An appeal, she says,
could not stay the execution of a reinstatement order for she could either be admitted back to work or merely reinstated in the payroll without need of
a writ of execution. De Jesus argues that a writ of execution is necessary only for the enforcement of decisions, orders, or awards which have
acquired finality. In effect, de Jesus is urging the Court to re-examine the ruling laid down in Maranaw.
Article 223 of the Labor Code, as amended by R.A. No. 6715 which took effect on March 21, 1989, pertinently provides:
Art. 223. Appeal. Decision, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or
both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of
the following grounds:
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting
of a bond by the employer shall not stay the execution for reinstatement provided herein.
xxx xxx xxx
We initially interpreted the aforequoted provision in Inciong v. NLRC. 15 The Court 16 made this brief comment:

10

The decision of the Labor Arbiter in this case was rendered on December 18, 1988, or three (3) months before Article 223 of the Labor
Code was amended by Republic Act 6715 (which became law on March 21, 1989), providing that a decision of the Labor Arbiter ordering
the reinstatement of a dismissed or separated employee shall be immediately executory insofar as the reinstatement aspect is concerned,
and the posting of an appeal bond by the employer shall not stay such execution. Since this new law contains no provision giving it
retroactive effect (Art. 4, Civil Code), the amendment may not be applied to this case.
which the Court adopted and applied in Callanta v. NLRC. 17 In Zamboanga City Water District v. Buat, 18 the Court construed Article 223 to mean
exactly what it says. We said:
Under the said provision of law, the decision of the Labor Arbiter reinstating a dismissed or separated employee insofar as the reinstatement
aspect is concerned, shall be immediately executory, even pending appeal. The employer shall reinstate the employee concerned either by:
(a) actually admitting him back to work under the same terms and conditions prevailing prior to his dismissal or separation; or (b) at the
option of the employer, merely reinstating him in the payroll. Immediate reinstatement is mandated and is not stayed by the fact that the
employer has appealed, or has posted a cash or surety bond pending appeal. 19
We expressed a similar view a year earlier in Medina v. Consolidated Broadcasting System (CBS) DZWX 20and laid down the rule that an employer
who fails to comply with an order of reinstatement makes him liable for the employee's salaries. Thus:
Petitioners construe the above paragraph to mean that the refusal of the employer to reinstate an employee as directed in an executory order
of reinstatement would make it liable to pay the latter's salaries. This interpretation is correct. Under Article 223 of the Labor Code, as
amended, an employer has two options in order for him to comply with an order of reinstatement, which is immediately executory, even
pending appeal. Firstly, he can admit the dismissed employee back to work under the same terms and conditions prevailing prior to his
dismissal or separation or to a substantially equivalent position if the former position is already filled up as we have ruled in Union of
Supervisors (RB) NATU vs. Sec. of Labor, 128 SCRA 442 [1984]; and Pedroso vs. Castro, 141 SCRA 252 [1986]. Secondly, he can
reinstate the employee merely in the payroll. Failing to exercise any of the above options, the employer can be compelled under pain of
contempt, to pay instead the salary of the employee. This interpretation is more in consonance with the constitutional protection to labor
(Section 3, Art. XIII, 1987 Constitution). The right of a person to his labor is deemed to be property within the meaning of the
constitutional guaranty that no one shall be deprived of life, liberty, and property without due process of law. Therefore, he should be
protected against any arbitrary and unjust deprivation of his job (Bondoc vs. People's Bank and Trust Co., Inc., 103 SCRA 599 [1981]). The
employee should not be left without any remedy in case the employer unreasonably delays reinstatement. Therefore, we hold that the
unjustified refusal of the employer to reinstate an illegally dismissed employee entitles the employee to payment of his salaries . . . . 21
The Court, however, deviated from this construction in the case of Maranaw. Reinterpreting the import of Article 223 in Maranaw, the
Court 22 declared that the reinstatement aspect of the Labor Arbiter's decision needs a writ of execution as it is not self-executory, a declaration the
Court recently reiterated and adopted in Archilles Manufacturing Corp.v. NLRC. 23
We note that prior to the enactment of R.A. No. 6715, Article 223 24 of the Labor Code contains no provision dealing with the reinstatement of an
illegally dismissed employee. The amendment introduced by R.A. No. 6715 is an innovation and a far departure from the old law indicating thereby
the legislature's unequivocal intent to insert a new rule that will govern the reinstatement aspect of a decision or resolution in any given labor dispute.
In fact, the law as now worded employs the phrase "shall immediately be executory" without qualification emphasizing the need for prompt
compliance. As a rule, "shall" in a statute commonly denotes an imperative obligation and is inconsistent with the idea of discretion 25 and that the
presumption is that the word "shall", when used in a statute, is mandatory. 26 An appeal or posting of bond, by plain mandate of the law, could not
even forestall nor stay the executory nature of an order of reinstatement. The law, moreover, is unambiguous and clear. Thus, it must be applied
according to its plain and obvious meaning, according to its express terms. In Globe-Mackay Cable and Radio Corporation v. NLRC, 27 we held that:
Under the principles of statutory construction, if a statute is clear, plain and free from ambiguity, it must be given its literal meaning and
applied without attempted interpretation. This plain-meaning rule or verba legisderived from the maxim index animi sermo est (speech is
the index of intention) rests on the valid presumption that the words employed by the legislature in a statute correctly express its intent or
will and preclude the court from construing it differently. The legislature is presumed to know the meaning of the words, to have used
words advisedly, and to have expressed its intent by the use of such words as are found in the statute. Verba legis non est recedendum, or
from the words of a statute there should be no departure. 28
And in conformity with the executory nature of the reinstatement order, Rule V, Section 16 (3) of the New Rules of Procedure of the NLRC strictly
requires the Labor Arbiter to direct the employer to immediately reinstate the dismissed employee. Thus:

11

In case the decision includes an order of reinstatement, the Labor Arbiter shall direct the employer to immediately reinstate the dismissed or
separated employee even pending appeal. The order of reinstatement shall indicate that the employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the
payroll.
In declaring that reinstatement order is not self-executory and needs a writ of execution, the Court, in Maranaw, adverted to the rule provided under
Article 224. We said:
It must be stressed, however, that although the reinstatement aspect of the decision is immediately executory, it does not follow that it
is self-executory. There must be a writ of execution which may be issuedmotu proprio or on motion of an interested party. Article 224 of the
Labor Code provides:
Art. 224. Execution of decision, orders or awards. (a) The Secretary of Labor and Employment or any Regional Director, the
Commission or any Labor Arbiter, or med-arbitter or voluntary arbitrator may, motu proprio or on motion of any interested party, issue a
writ of execution on a judgment within five (5) years from the date it becomes final and executory . . . (emphasis supplied)
The second paragraph of Section 1, Rule VIII of the New Rules of Procedure of the NLRC also provides:
The Labor Arbiter, POEA Administrator, or the Regional Director, or his duly authorized hearing officer of origin shall, motu proprio or on
motion of any interested party, issue a writ of execution on a judgment only within five (5) years from the date it becomes final and
executory . . . . No motion for execution shall be entertained nor a writ he issued unless the Labor Arbiter is in possession of the records of
the case which shall include an entry of judgment. (emphasis supplied)
xxx xxx xxx
In the absence then of an order for the issuance of a writ of execution on the reinstatement aspect of the decision of the Labor Arbiter, the
petitioner was under no legal obligation to admit back to work the private respondent under the terms and conditions prevailing prior to her
dismissal or, at the petitioner's option, to merely reinstate her in the payroll. An option is a right of election to exercise a privilege, and the
option in Article 223 of the Labor Code is exclusively granted to the employer. The event that gives rise for its exercise is not the
reinstatement decree of a Labor Arbiter, but the writ for its execution commanding the employer to reinstate the employee, while the final
act which compels the employer to exercise the option is the service upon it of the writ of execution when, instead of admitting the
employee back to his work, the employer chooses to reinstate the employee in the payroll only. If the employer does not exercise this
option, it must forthwith admit the employee back to work, otherwise it may be punished for contempt. 29
A closer examination, however, shows that the necessity for a writ of execution under Article 224 applies only to final and executory decisions which
are not within the coverage of Article 223. For comparison, we quote the material portions of the subject articles:
Art. 223. Appeal. . . .
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting
of a bond by the employer shall not stay the execution for reinstatement provided herein.
xxx xxx xxx
Art. 224. Execution of decisions, orders, or awards. (a) The Secretary of Labor and Employment or any Regional Director, the
Commission or any Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu propio or on motion of any interested party, issue a writ
of execution on a judgment within five (5) years from the date it becomes final and executory, requiring a sheriff or a duly deputized officer
to execute or enforce final decisions, orders or awards of the Secretary of Labor and Employment or regional director, the Commission, the
Labor Arbiter or med-arbiter, or voluntary arbitrators. In any case, it shall be the duty of the responsible officer to separately furnish
immediately the counsels of record and the parties with copies of said decisions, orders or awards. Failure to comply with the duty
prescribed herein shall subject such responsible officer to appropriate administrative sanctions.
Article 224 states that the need for a writ of execution applies only within five (5) years from the date a decision, an order or award becomes final
and executory. It can not relate to an award or order of reinstatement still to be appealed or pending appeal which Article 223 contemplates. The

12

provision of Article 223 is clear that an award for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the
employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement immediately
enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a
reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a
reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons. A mere
continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the
issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223. In other words, if the requirements of
Article 224 were to govern, as we so declared in Maranaw, then the executory nature of a reinstatement order or award contemplated by Article 223
will be unduly circumscribed and rendered ineffectual. In enacting the law, the legislature is presumed to have ordained a valid and sensible law, one
which operates no further than may be necessary to achieve its specific purpose. Statutes, as a rule, are to be construed in the light of the purpose to
be achieved and the evil sought to be remedied. 30 And where the statute is fairly susceptible of two or more constructions, that construction should be
adopted which will most tend to give effect to the manifest intent of the lawmaker and promote the object for which the statute was enacted, and a
construction should be rejected which would tend to render abortive other provisions of the statute and to defeat the object which the legislator
sought to attain by its enactment. 31 In introducing a new rule on the reinstatement aspect of a labor decision under R.A. No. 6715, Congress should
not be considered to be indulging in mere semantic exercise. On appeal, however, the appellate tribunal concerned may enjoin or suspend the
reinstatement order in the exercise of its sound discretion.
Furthermore, the rule is that all doubts in the interpretation and implementation of labor laws should be resolved in favor of labor. 32 In ruling that an
order or award for reinstatement does not require a writ of execution the Court is simply adhering and giving meaning to this rule. Henceforth, we
rule that an award or order for reinstatement is self-executory. After receipt of the decision or resolution ordering the employee's reinstatement, the
employer has the right to choose whether to re-admit the employee to work under the same terms and conditions prevailing prior to his dismissal or
to reinstate the employee in the payroll. In either instance, the employer has to inform the employee of his choice. The notification is based on
practical considerations for without notice, the employee has no way of knowing if he has to report for work or not.
WHEREFORE, the petition is DENIED and the decision of the Labor Arbiter is hereby REINSTATED.
Costs against petitioner.
SO ORDERED.

G.R. No. 110419 March 3, 1997

UERM-MEMORIAL MEDICAL CENTER and DR. ISIDRO CARINO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and UERM Employees ASSOCIATION, Priscillo Dalogdog and 516 MembersEmployees of UERM Hospital, respondents.

PUNO, J.:
The question presented in this petition for certiorari under Rule 65 is whether or not in perfecting an appeal to the National Labor Relations
Commission (NLRC) a property bond is excluded by the two forms of appeal bond cash or surety as enumerated in Article 223 of the Labor
Code.
The facts show that on 14 December 1987 Republic Act No. 6640 took effect which mandated a ten (P10.00) peso increase on the prevailing daily
minimum wage of P54.00. In applying said law, the petitioners granted salary increases to their employees based on the following computation, to
wit:
1. To members of the faculty who are non-union members, P304.17 per month;
2. To rank-and-file employees (individual complainants who are union members), P209.17 per month.

13

There was a difference of P95.00 in the salaries of the two classes of employees. Private respondents who are rank and file employees
demanded payment of the difference. Before the parties could settle their dispute, Republic Act No. 6727 took effect on 1 July 1989 which
again increased the daily minimum wage in the private sector (whether agricultural or non-agricultural) by P25.00. In compliance,
petitioners paid their employees using the following computation, to wit:
1. To members of the faculty who are non-union members, P760.42 a month; and
2. To rank-and-file employees (individual complainants who are union members), P523.00 a month.
Again, there was a difference of P237.42 per month between the salaries of union members and non-union members. In September 1987,
petitioners increased the hiring rate of the new employees to P188.00 per month. Private respondents once more demanded from the
petitioners payment of the salary differential mandated by RA No. 6727 and correction of the wage distortion brought about by the increase
in the hiring rate of new employees.
On 12 April 1988, Policy Instruction No. 54 was issued by the then Secretary of Labor Franklin Drilon, the pertinent provision of which reads:
. . . the personnel in subject hospitals and clinics are entitled to a full weekly wage of seven days if they have completed the 40hour/5-day workweek in any given workweek.
All enforcement and adjudicatory agencies of this Department shall be guided by this issuance in the disposition of cases
involving the personnel of covered hospitals and clinics.
Done in the City of Manila, this 12th day of April, 1988.
(Sgd) FRANKLIN M.
DRILON
Secretary
Petitioners challenged the validity of said Policy Instruction and refused to pay the salaries of the private respondents for Saturdays and Sundays.
Consequently, a complaint was filed by the private respondents, represented by the Federation of Free Workers (FFW), claiming salary differentials
under Republic Act Nos. 6640 and 6727, correction of the wage distortion and the payment of salaries for Saturdays and Sundays under Policy
Instruction No. 54.
Labor Arbiter Nieves de Castro sustained the private respondents except for their claim of wage distortion. The dispositive portion of the decision
reads:
PREMISES CONSIDERED, respondents are hereby directed to pay the 517 individual complainants:
(1) Their Salary Differentials, to wit:
1.1 Under RA 6640 P1,743,582.50
1.2 Under RA 6727 P3,559,613.06
1.3 Policy Instruction 54 P11,779,328.00

Total P17,082,448.56
(2) Exemplary Damages of P2,000.00 each.
SO ORDERED. 1
Within the reglementary period for appeal, the petitioners filed their Notice and Memorandum of Appeal with a Real Estate Bond consisting of land
and various improvements therein worth P102,345,650. 2 The private respondents moved to dismiss the appeal on the ground that Article 223 of the
Labor Code, as amended, requires the posting of a cash or surety bond. The NLRC directed petitioners to post a cash or surety bond of
P17,082,448.56 with a warning that failure to do so would cause the dismissal of the appeal. The petitioners filed a Motion for Reconsideration

14

alleging it is not in a viable financial condition to post a cash bond nor to pay the annual premium of P700,000.00 for a surety bond. On 6 October
1992, the NLRC dismissed petitioners' appeal. Petitioners' Motion for Reconsideration was also denied by the NLRC in a resolution 3 dated 7 June
1993.
Hence, this petition assailing the two resolutions as having been issued with grave abuse of discretion. On 28 June 1993, we temporarily enjoined the
NLRC from implementing the questioned resolutions and from executing the decision of the Labor Arbiter.
The applicable law is Article 223 of the Labor Code, as amended by Republic Act No. 6715, which provides:
In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.
We have given a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC 4 we ruled:
. . . that while Article 223 of the Labor Code, as amended by Republic Act No. 6715, requiring a cash or surety bond in the
amount equivalent to the monetary award in the judgment appealed from for the appeal to be perfected, may be considered a
jurisdictional requirement, nevertheless, adhering to the principle that substantial justice is better served by allowing the appeal
on the merits threshed out by the NLRC, the Court finds and so holds that the foregoing requirement of the law should be given a
liberal interpretation.
Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations Commission 5 we held:
The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is
underscored by the provision that an appeal by the employer may be perfected "only upon the posting of a cash or surety bond."
The word "only" makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the employer to be
the exclusive means by which an employer's appeal may be perfected. The requirement is intended to discourage employers from
using an appeal to delay, or even evade, their obligation to satisfy their employees' just and lawful claims.
Considering, however, that the current policy is not to strictly follow technical rules but rather to take into account the spirit and
intention of the Labor Code, it would be prudent for us to look into the merits of the case, especially since petitioner disputes the
allegation that private respondent was illegally dismissed.
We reiterate this policy which stresses the importance of deciding cases on the basis of their substantive merit and not on strict technical
rules. In the case at bar, the judgment involved is more than P17 million and its precipitate execution can adversely affect the existence of
petitioner medical center. Likewise, the issues involved are not insignificant and they deserve a full discourse by our quasi-judicial and
judicial authorities. We are also confident that the real property bond posted by the petitioners sufficiently protects the interests of private
respondents should they finally prevail. It is not disputed that the real property offered by petitioners is worth P102,345,650. The judgment
in favor of private respondent is only a little more than P17 million.
IN VIEW WHEREOF, the resolutions dated October 6, 1992 and June 7, 1993 of the public respondent are set aside. The case is remanded to the
NLRC for continuation of proceedings. No costs.
SO ORDERED.

PEOPLE BROAD ULIT SA BOND

G.R. No. 106915 August 31, 1993

JARDINE DAVIES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FOURTH DIVISION, CEBU CITY, and SALVADOR SALUTIN,respondents.
Hilado, Hagad, & Hilado Law Office for petitioner.

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Romeo B. Esuerte for private respondent.

VITUG, J.:
The instant petition for certiorari seeks the reversal of the resolution of respondent National Labor Relations Commission, dated 22 July 1992, which
declared private respondent Salvador Salutin as not having abandoned his work by his alleged failure to report for work during the pendency of the
petitioner's appeal before the respondent Commission.
Respondent Salvador Salutin ("Salutin") was employed by petitioner Jardine Davies, Inc. ("JDI"), on 15 July 1985, as a demonstrator/agronomist to
provide services relating to, and to give advice on, the promotion and use of JDI's pesticides and other products.
The controversy that spawned two (2) special Civil actions for certiorari (this instance included) with this Court, began when respondent Salutin
filed a complaint against petitioner JDI for illegal dismissal, with prayer for reinstatement and backwages or, in the alternative, separation pay plus
wage differential, service incentive leave pay, thirteenth (13th) month pay, holiday pay, moral and exemplary damages, and attorney's fees. The
complaint was decided by the Labor Arbiter in favor of respondent Salutin in a decision, dated 08 August 1991, the decretal portion of which reads:
WHEREFORE, PREMISES CONSIDERED, respondent Jardine Davies, Inc./Jardine Agchem is hereby ordered to reinstate
complaint to his former position, without loss of seniority and other rights, and with backwages, in amount of FIFTY SIX
THOUSAND SEVEN HUNDRED PESOS (P56,700.00), without deduction and qualification.
Respondent is further ordered to pay complaint the following:
a.) 13th month pay P 8,100.00
b.) Holiday pay 13,115.84
c.) Service Incentive pay 1,557.60
d.) Moral Damages 20,000.00
e.) Exemplary Damages 10,000.00
f.) Attorney's fees, which is ten percent (10%) of the total awarded amount.
SO ORDERED.
JDI appealed the case to the National Labor Relations Commission (NLRC), and it posted a supersedeas bond to answer for the monetary awards. It
also reinstated Salutin, "on payroll only", beginning 26 August 1991, 1 in compliance with the writ of execution issued by the Labor Arbiter pursuant
to Article 223, paragraph 3, of the Labor Code. In a decision, dated 17 October 1991, NLRC dismissed JDI's appeal for lack of merit but modified the
decision by eliminating the awards given for holiday pay, service incentive leave pay, moral and exemplary damages. 2 A motion for reconsideration
was filed which was denied in NLRC's resolution of 13 January 1992. 3
On 14 February 1992, JDI filed its first petition for certiorari with this Court, docketed as G.R. No. 103720, assailing the 17 October 1991 decision
and the resolution of 13 January 1992 of respondent Commission. In our resolution, dated 26 February 1992, the petition was dismissed for failure to
comply with this Court's Circular No. 28-91 on forum-shopping. Its subsequent motion for reconsideration was itself denied on 20 May 1992. The
resolution of 26 February 1992 became final and executory on 19 June 1992, and an entry of judgment was accordingly made on 20 August 1992.
At the time when the above narrated events were still unfolding, some material facts occured beginning with JDI's appeal to the NLRC on the 08
August 1991 decision of the Labor Arbiter. Shortly after the reinstatement of Salutin "on payroll only", JDI sent a letter, dated 21 September 1991, to
Salutin directing him to report for work to their Bacolod Branch Manager. Salutin, as directed reported on the 24th of September 1991 at around 9:20
a.m. He did not stay long, however, since after fifteen minutes or so, he left and was reported not to have thereafter returned for work. JDI forthwith
stopped further payment of salary to Salutin.
On 17 October 1991, JDI filed a "Manisfestation and Motion" with the respondent Commission stating, inter alia, that:
Salutin be considered as having abandoned his work considering his continuous absence of more than three (3) weeks since he
was required to report for work . . . and that any award for reinstatement to his former position, without loss of seniority and other
rights, in the Arbiter's decision subject of this appeal be considered and held as waived or lost. 4

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Salutin opposed the motion, claiming that he was forced to leave in haste because he was then suffering from a serious ailment. He submitted a
medical certificate to support his claim. 5
On 13 January 1992, respondent Commission denied JDI's "Manifestation & Motion" stating, among other things, that:
As to the issue of whether the complaint-appellee Salvador Salutin is guilty of work abandonment, this is a new and factual
matter which has to be determined and resolved in appropriate proceedings before the Arbitration Branch, more especially in the
present case, where the charge of abandonment is seriously controverted.
Prescinding from its receipt of an information that Salutin was employed elsewhere, JDI filed an ex parte motion, dated 16 June 1992, to set for
hearing the aforestated "Manifestation and Motion." 6 Salutin, on his part, also filed a motion praying that JDI be ordered to release his withheld
salary, 7 claiming that he had reported for work when he recovered from his ailment on 11 December 1991. 8
On 22 July 1992, respondent Commission issued its assailed resolution stating, viz:
WHEREFORE, Premises considered, the respondent's prayer to declare or consider the complainant to have abandoned his job
for his alleged failure to report back to work during the pendency of the appeal in this case is hereby denied for lack of merit.
The complainant's motion for release of his salary since 24 September 1991, until he formally seeks for the enforcement of the
decision is likewise denied.
SO ORDERED.
When the motion for reconsideration was likewise denied, JDI instituted on 18 September 1992 the present petition for certiorari.
During the pendency of this petition, JDI filed an "urgent motion for the issuance of writ of preliminary injunction and/or restraining order" to
prevent the respondent Commission from enforcing its resolution of 22 July 1992 and 25 August 1992 insofar as it ordered the reinstatement of
Salutin. In its resolution, dated 3 March 1993, this Court resolved to issue a temporary restraining order.
Petitioner raises this sole assignment of error, to wit:
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION IN DENYING PETITIONER'S
CONTENTION/SUBMISSION THAT PRIVATE RESPONDENT SALUTIN SHOULD BE CONSIDERED AS HAVING
ABANDONED HIS WORK WHEN HE FAILED TO REPORT FOR WORK PENDING THE PETITIONER-EMPLOYER'S
APPEAL FROM THE ARBITER'S DECISION GRANTING REINSTATEMENT, ALTHOUGH AT THAT TIME HE WAS ON
REINSTATEMENT ON PAYROLL THIS NOTWITHSTANDING PETITIONER'S SHOWING THAT SUCH FAILURE TO
REPORT WAS BECAUSE RESPONDENT-EMPLOYEE WAS THEN WORKING ALSO WITH ANOTHER COMPANY,
HENCE HE WAS RECEIVING SALARIES FROM BOTH.
In the subsequent pages of its petition, JDI paraphrased the assigned issue in this wise: Is Salutin, who was then on payroll reinstatement since 26
August 1991, not guilty of abandonment when his failure to report for work was because he was also working for another entity from 01 September
1991 to 31 December 1991? Correlatively, did respondent Commission not gravely abuse its discretion when it did not take into consideration such
other employment?
Our answer is in the negative.
The records show that at the time JDI filed its Manifestation and Motion, dated 17 October 1991, the sole basis of its prayer for a declaration that
Salutin abandoned his work was his alleged unauthorized absences from the date he was notified to report for work. 11 A shift to a new focus took
place when, on 30 January 1992, JDI, at its request, received a letter-certification issued by the Officer-in-Charge of King's Enterprises of Iloilo City
that Salutin was employed by Monsato Philippines, Inc., from 01 September to 31 December 1991, as Aggressive Crop Technician, for which he was
paid P5,146.00 per month. 12 Thus, this was the reason given by JDI in its ex parte motion, dated 16 June 1992, to set for hearing the Manifestation
and Motion of 17 October 1991. NLRC denied the said ex parte motion in the now assailed resolution of 22 July 1992.
When JDI filed its first petition for certiorari (in G.R. No. 103720) with this Court on 14 February 1992, assailing the 17 October 1991 decision of
NLRC, it also raised, as an added argument on the alleged abandonment of work by Salutin, the fact that he was gainfully employed

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elsewhere. 13 Considering that this matter was thus already taken up by the petitioner in its first petition for certiorari, which this Court dismissed
with finality, the petitioner should really now be barred from invoking anew that issue in this present (second) petition.
Be that as it may, the same fate of dismissal is still inevitable. Although this Court is not a trier of facts, it may still wade through the records of a case
if only to prevent any possible misgiving in its ultimate disposition. 14 The petitioner's evidence to establish Salutin's supposed abandonment of work
is the certification of employment issued by King's Enterprises at the request of herein petitioner to the effect that Salutin had indeed been employed
by Monsato Philippines, Inc., during the period from 01 September to 31 December 1991. Is this enough? What we have heretofore said is this
For abandonment to constitute a valid cause for termination of employment, there must be a deliberate unjustified refusal of the
employee to resume his employment. This refusal must be clearly shown. Mere absence is not sufficient; it must be accompanied
by overt acts pointing to the fact that the employee simply does not want to work anymore. 15
Abandonment of position is a matter of intention expressed in clearly certain and unequivocal acts. In this instance, however, certain uncontroverted
facts show just exactly the opposite. Hence, Salutin did report, as directed, on 24 September 1991, but that he could not stay long because he was
ailing at that time; he, although perhaps belatedly made, did seek medical consultation on 7 November 1991, at the Corazon Locsin Montelibano
Memorial Regional Hospital, for "peptic ulcer"; and on 11 December 1991, he did, in fact, manifest his desire to assume his work with the petitioner.
This Court's resolution of 26 February 1992, denying the petition in G.R. No. 103720, became final and executory on 19 June 1992. Respondent
Salutin's interim employment, stressed by the petitioner, did not stain the picture at all. Here, we second the well-considered view of NLRC, thus
The order of immediate reinstatement pending appeal, in cases of illegal dismissal is an ancillary relief under R.A. 6715 granted
to a dismissed employee to cushion him and his family against the impact of economic dislocation or abrupt loss of earnings. If
the employee chooses not to report for work pending resolution of the case appeal, he foregoes such a temporary relief and is not
paid of his salary. The final determination of the rights and obligations respectively of the parties is the ultimate and final
resolution of this Commission.
WHEREFORE, the petition is hereby DISMISSED. The questioned resolutions of the National Labor Relations Commission are AFFIRMED, and
the temporary restraining order issued by this Court is hereby LIFTED.
SO ORDERED.

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