Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 190724

March 12, 2014

DIAMOND TAXI and/or BRYAN ONG, Petitioners,

vs.
FELIPE LLAMAS, JR., Respondent.
Labor Law; Certiorari; Grave Abuse of Discretion; In reviewing the
legal correctness of the Court of Appeals (CA) decision in a labor case
made under Rule 65 of the Rules of Court, the Supreme
Courtexamines the CA decision in the context that it determined the
presence or the absence of grave abuse of discretion in the National
Labor Relations Commission (NLRC) decision before it and not on the
basis of whether the NLRC decision, on the merits of the case, was
correct.In this Rule 45 petition for review on certiorari, we review
the legal errors that the CA may have committed in the assailed
decision, in contrast with the review for jurisdictional error
undertaken in an original certiorari action. In reviewing the legal
correctness of the CA decision in a labor case made under Rule 65 of
the Rules of Court, we examine the CA decision in the context that it
determined the presence or the absence of grave abuse of discretion in
the NLRC decision before it and not on the basis of whether the NLRC
decision, on the merits of the case, was correct. In other words, we
have to be keenly aware that the CA undertook a Rule 65 review, not a
review on appeal, of the challenged NLRC decision. In question form,
the question that we ask is: Did the CA correctly determine whether
the NLRC committed grave abuse of discretion in ruling on the case?
In addition, the Courts jurisdiction in a Rule 45 petition for review on
certiorari is limited to resolving only questions of law. A question of
law arises when the doubt or controversy concerns the correct
application of law or jurisprudence to a certain set of facts. In
contrast, a question of fact exists when the doubt or controversy
concerns the truth or falsehood of facts.
Same; Appeals; In this jurisdiction, courts generally accord great
respect and finality to factual findings of administrative agencies, i.e.,

labor tribunals, in the exercise of their quasi-judicial function.In this

jurisdiction, courts generally accord great respect and finality to
factual findings of administrative agencies, i.e., labor tribunals, in the
exercise of their quasi-judicial function. These findings, however, are
not infallible. This doctrine espousing comity to administrative
findings of facts cannot preclude the courts from reviewing and, when
proper, disregarding these findings of facts when shown that the
administrative body committed grave abuse of discretion by
capriciously, whimsically or arbitrarily disregarding evidence or
circumstances of considerable importance that are crucial or decisive
of the controversy.
Same; Same; Under Section 4(a), Rule VI of the 2005 National Labor
Relations Commission (NLRC) Rules, the appeal shall be in the form
of a verified memorandum of appeal and accompanied by
12
proof of payment of the appeal fee, posting of cash or surety bond
(when necessary), certificate of non-forum shopping, and proof of
service upon the other parties.Article 223 (now Article 229) of the
Labor Code states that decisions (or awards or orders) of the LA shall
become final and executory unless appealed to the NLRC within ten
(10) calendar days from receipt of the decision. Consistent with Article
223, Section 1, Rule VI of the 2005 NLRC Rules also provides for a ten
(10)-day period for appealing the LAs decision. Under Section 4(a),
Rule VI of the 2005 NLRC Rules, the appeal shall be in the form of a
verified memorandum of appeal and accompanied by proof of
payment of the appeal fee, posting of cash or surety bond (when
necessary), certificate of non-forum shopping, and proof of service
upon the other parties. Failure of the appealing party to comply with
any or all of these requisites within the reglementary period will
render the LAs decision final and executory.
Same; Same; What should guide judicial action is that a party is given
the fullest opportunity to establish the merits of his action or defense
rather than for him to lose life, honor, or property on mere
technicalities.Under Article 221 (now Article 227) of the Labor Code,
the Commission and its members and the Labor Arbiters shall use
every and all reasonable means to ascertain the facts in each case
speedily and objectively and without regard to technicalities of law or

procedure, all in the interest of due process. Consistently, we have

emphasized that rules of procedure are mere tools designed to
facilitate the attainment of justice. A strict and rigid application which
would result in technicalities that tend to frustrate rather than
promote substantial justice should not be allowed x x x. No procedural
rule is sacrosanct if such shall result in subverting justice. Ultimately,
what should guide judicial action is that a party is given the fullest
opportunity to establish the merits of his action or defense rather than
for him to lose life, honor, or property on mere technicalities.
Same; Same; The dismissal of an employees appeal on purely
technical ground is inconsistent with the constitutional mandate on
protection to labor.We should remember that the dismissal of an
employees appeal on purely technical ground is inconsistent with the
constitutional mandate on protection to labor. Under the
Constitution and the Labor Code, the State is bound to protect labor
and
13

refusal to resume his employment. Mere absence of the employee is

not enough.
Same; Same; Constructive Dismissals; Constructive dismissal is a
dismissal in disguise or an act amounting to dismissal but made to
appear as if it were not.The CA, therefore, correctly regarded Llamas
as constructively dismissed for the petitioners failure to prove the
alleged just cause abandonment for his dismissal. Constructive
dismissal exists when there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely.
Constructive dismissal is a dismissal in disguise or an act amounting
to dismissal but made to appear as if it were not. In constructive
dismissal cases, the employer is, concededly, charged with the burden
of proving that its conduct and action were for valid and legitimate
grounds. The petitioners persistent refusal to give Llamas the key to
his assigned taxi cab, on the condition that he should first sign the
resignation letter, rendered, without doubt, his continued
employment impossible, unreasonable and unlikely; it, thus,
constituted constructive dismissal. Diamond Taxi vs. Llamas, Jr., 719
SCRA 10, G.R. No. 190724 March 12, 2014

assure the rights of workers to security of tenure tenurial security

being a preferred constitutional right that, under these fundamental
guidelines, technical infirmities in labor pleadings cannot defeat.

DECISION
BRION, J.:

Same; Termination of Employment; Abandonment; To successfully

invoke abandonment, whether as a ground for dismissing an
employee or as a defense, the employer bears the burden of proving
the employees unjustified refusal to resume his employment.
Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment. It is a form of neglect of duty
that constitutes just cause for the employer to dismiss the employee.
To constitute abandonment of work, two elements must concur: (1)
the employee must have failed to report for work or must have been
absent without valid or justifiable reason; and (2) there must have
been a clear intention [on the part of the employee] to sever the
employer-employee relationship manifested by some overt act. The
employees absence must be accompanied by overt acts that
unerringly point to the employees clear intention to sever the
employment relationship. And, to successfully invoke abandonment,
whether as a ground for dismissing an employee or as a defense, the
employer bears the burden of proving the employees unjustified

In this petition for review on certiorari,1 we resolve the challenge to

the August 13, 2008 decision2 and the November 27, 2009
resolution3 of the Court of Appeals (CA) in CA-G.R. CEB-S.P. No.
02623. This CA decision reversed and set aside the May 30, 2006
resolution4 of the National Labor Relations Commission (NLRC) in
NLRC Case No. V-000294-06 (RAB VII-07-1574-05) that dismissed
respondent Felipe Llamas, Jr.'s appeal for non-perfection.
The Factual Antecedents
Llamas worked as a taxi driver for petitioner Diamond Taxi, owned
and operated by petitioner Bryan Ong. On July 18, 2005, Llamas filed
before the Labor Arbiter (LA) a complaint for illegal dismissal against
the petitioners.
In their position paper, the petitioners denied dismissing Llamas.
They claimed that Llamas had been absent without official leave for

several days, beginning July 14, 2005 until August 1, 2005. The
petitioners submitted a copy of the attendance logbook to prove that
Llamas had been absent on these cited dates. They also pointed out
that Llamas committed several traffic violations in the years 20002005 and that they had issued him several memoranda for acts of
insubordination and refusal to heed management instructions. They
argued that these acts traffic violations, insubordination and refusal
to heed management instructions constitute grounds for the
termination of Llamas employment.

governing NLRC Rules of Procedure at the time Llamas filed his

complaint before the LA).
In its May 30, 2006 resolution,7 the NLRC dismissed for nonperfection Llamas motion for reconsideration treated as an appeal.
The NLRC pointed out that Llamas failed to attach the required
certification of non-forum shopping per Section 4, Rule VI of the 2005
NLRC Rules.

Llamas failed to seasonably file his position paper.

Llamas moved to reconsider the May 30, 2006 NLRC resolution; he

attached the required certification of non-forum shopping.

On November 29, 2005, the LA rendered a decision5 dismissing

Llamas complaint for lack of merit. The LA held that Llamas was not
dismissed, legally or illegally. Rather, the LA declared that Llamas left
his job and had been absent for several days without leave.

When the NLRC denied his motion for reconsideration8 in its August
31, 2006 resolution,9 Llamas filed before the CA a petition for
certiorari.10

Llamas received a copy of this LA decision on January 5, 2006.

Meanwhile, he filed his position paper6 on December 20, 2005.
In his position paper, Llamas claimed that he failed to seasonably file
his position paper because his previous counsel, despite his repeated
pleas, had continuously deferred compliance with the LAs orders for
its submission. Hence, he was forced to secure the services of another
counsel on December 19, 2005 in order to comply with the LAs
directive.
On the merits of his complaint, Llamas alleged that he had a
misunderstanding with Aljuver Ong, Bryans brother and operations
manager of Diamond Taxi, on July 13, 2005 (July 13, 2005 incident).
When he reported for work on July 14, 2005, Bryan refused to give
him the key to his assigned taxi cab unless he would sign a prepared
resignation letter. He did not sign the resignation letter. He reported
for work again on July 15 and 16, 2005, but Bryan insisted that he sign
the resignation letter prior to the release of the key to his assigned taxi
cab. Thus, he filed the illegal dismissal complaint.
On January 16, 2006, Llamas filed before the LA a motion for
reconsideration of its November 29, 2005 decision. The LA treated
Llamas motion as an appeal per Section 15, Rule V of the 2005
Revised Rules of Procedure of the NLRC (2005 NLRC Rules) (the

The CAs ruling

In its August 13, 2008 decision,11 the CA reversed and set aside the
assailed NLRC resolution. Citing jurisprudence, the CA pointed out
that non-compliance with the requirement on the filing of a certificate
of non-forum shopping, while mandatory, may nonetheless be
excused upon showing of manifest equitable grounds proving
substantial compliance. Additionally, in order to determine if cogent
reasons exist to suspend the rules of procedure, the court must first
examine the substantive aspect of the case.
The CA pointed out that the petitioners failed to prove overt acts
showing Llamas clear intention to abandon his job. On the contrary,
the petitioners placed Llamas in a situation where he was forced to
quit as his continued employment has been rendered impossible,
unreasonable or unlikely, i.e., making him sign a resignation letter as
a precondition for giving him the key to his assigned taxi cab. To the
CA, the petitioners act amounted to constructive dismissal. The CA
additionally noted that Llamas immediately filed the illegal dismissal
case that proved his desire to return to work and negates the charge of
abandonment.
Further, the CA brushed aside the petitioners claim that Llamas
committed several infractions that warranted his dismissal. The CA
declared that the petitioners should have charged Llamas for these
infractions to give the latter an opportunity to explain his side. As

matters then stood, they did not charge him for these infractions;
hence, the petitioners could not have successfully used these as
supporting grounds to justify Llamas dismissal on the ground of
abandonment.

several liabilities he incurred that would certainly have, in any case,

warranted his dismissal.

As the CA found equitable grounds to take exception from the rule on

certificate of non-forum shopping, it declared that the NLRC had
acted with grave abuse of discretion when it dismissed Llamas appeal
purely on a technicality. To the CA, the NLRC should have considered
as substantially compliant with this rule Llamas subsequent
submission of the required certificate with his motion for
reconsideration (of the NLRCs May 30, 2006 resolution).

Llamas argues in his comment14 that the CA correctly found that the
NLRC acted with grave abuse of discretion when it maintained its
dismissal of his appeal despite his subsequent filing of the certificate
of non-forum shopping. Quoting the CAs ruling, Llamas argues that
the NLRC should have given due course to his appeal to avoid
miscarriage of substantial justice.

Accordingly, the CA ordered the petitioners to pay Llamas separation

pay, full backwages and other benefits due the latter from the time of
the dismissal up to the finality of the decision. The CA awarded
separation pay in lieu of reinstatement because of the resulting
strained work relationship between Llamas and Bryan following the
altercation between the former and the latters brother.
The petitioners filed the present petition after the CA denied their
motion for reconsideration12 in the CAs November 27, 2009
resolution.13
The Petition

The Case for the Respondent

On the issue of dismissal, Llamas argues that the CA correctly

reversed the LAs ruling that found him not dismissed, legally or
illegally. Relying on the CAs ruling, Llamas points out that the
petitioners bore the burden of proving the abandonment charge. In
this case, the petitioners failed to discharge their burden; hence, his
dismissal was illegal.
The Courts Ruling
We do not find the petition meritorious.
Preliminary considerations: factual-issue-bar-rule

Moreover, the petitioners point out that the NLRC did not gravely
abuse its discretion when it rejected Llamas appeal. They argue that
the NLRCs action conformed with its rules and with this Courts
decisions that upheld the dismissal of an appeal for failure to file a
certificate of non-forum shopping.

In this Rule 45 petition for review on certiorari, we review the legal

errors that the CA may have committed in the assailed decision, in
contrast with the review for jurisdictional error undertaken in an
original certiorari action. In reviewing the legal correctness of the CA
decision in a labor case made under Rule 65 of the Rules of Court, we
examine the CA decision in the context that it determined the
presence or the absence of grave abuse of discretion in the NLRC
decision before it and not on the basis of whether the NLRC decision,
on the merits of the case, was correct. In other words, we have to be
keenly aware that the CA undertook a Rule 65 review, not a review on
appeal, of the challenged NLRC decision. In question form, the
question that we ask is: Did the CA correctly determine whether the
NLRC committed grave abuse of discretion in ruling on the case? 15

Directly addressing the CAs findings on the dismissal issue, the

petitioners argue that they did not constructively dismiss Llamas.
They maintain that Llamas no longer reported for work because of the

In addition, the Courts jurisdiction in a Rule 45 petition for review on

certiorari is limited to resolving only questions of law. A question of
law arises when the doubt or controversy concerns the correct

The petitioners argue that the CA erred when it encroached on the

NLRCs exclusive jurisdiction to review the merits of the LAs decision.
To the petitioners, the CA should have limited its action in
determining whether grave abuse of discretion attended the NLRCs
dismissal of Llamas appeal; finding that it did, the CA should have
remanded the case to the NLRC for further proceedings.

application of law or jurisprudence to a certain set of facts. In

contrast, a question of fact exists when the doubt or controversy
concerns the truth or falsehood of facts.16

capriciously, whimsically or arbitrarily disregarding evidence or

circumstances of considerable importance that are crucial or decisive
of the controversy.18

As presented by the petitioners, the petition before us involves mixed

questions of fact and law, with the core issue being one of fact.
Whether the CA, in ruling on the labor case before it under an original
certiorari action, can make its own factual determination requires the
consideration and application of law and jurisprudence; it is
essentially a question of law that a Rule 45 petition properly
addresses.

Hence, in labor cases elevated to it via petition for certiorari, the CA

can grant this prerogative writ when it finds that the NLRC acted with
grave abuse of discretion in arriving at its factual conclusions. To
make this finding, the CA necessarily has to view the evidence if only
to determine if the NLRC ruling had basis in evidence. It is in the
sense and manner that the CA, in a Rule 65 certiorari petition before
it, had to determine whether grave abuse of discretion on factual
issues attended the NLRCs dismissal of Llamas appeal. Accordingly,
we do not find erroneous the course that the CA took in resolving
Llamas certiorari petition. The CA may resolve factual issues by
express legal mandate and pursuant to its equity jurisdiction.

In the context of this case, however, this legal issue is inextricably

linked with and cannot be resolved without the definitive resolution of
the core factual issue whether Llamas abandoned his work or had
been constructively dismissed. As a proscribed question of fact, we
generally cannot address this issue, except to the extent necessary to
determine whether the CA correctly found that the NLRC acted with
grave abuse of discretion in dismissing Llamas appeal on purely
technical grounds.
For raising mixed questions of fact and law, we deny the petition
outright. Even if this error were to be disregarded, however, we would
still deny the petition as we find the CA legally correct in reversing the
NLRCs resolution on the ground of grave abuse of discretion.
The CA has ample authority to make its
own factual determination
We agree that remanding the case to the NLRC for factual
determination and decision of the case on the merits would have been,
ordinarily, a prudent approach. Nevertheless, the CAs action on this
case was not procedurally wrong and was not without legal and
jurisprudential basis.
In this jurisdiction, courts generally accord great respect and finality
to factual findings of administrative agencies, i.e., labor tribunals, in
the exercise of their quasi-judicial function.17 These findings, however,
are not infallible. This doctrine espousing comity to administrative
findings of facts cannot preclude the courts from reviewing and, when
proper, disregarding these findings of facts when shown that the
administrative body committed grave abuse of discretion by

The NLRC committed grave abuse of

discretion in dismissing Llamas appeal on
mere technicality
Article 223 (now Article 229)19 of the Labor Code states that decisions
(or awards or orders) of the LA shall become final and executory
unless appealed to the NLRC within ten (10) calendar days from
receipt of the decision. Consistent with Article 223, Section 1, Rule VI
of the 2005 NLRC Rules also provides for a ten (10)-day period for
appealing the LAs decision. Under Section 4(a), Rule VI20 of the 2005
NLRC Rules, the appeal shall be in the form of a verified
memorandum of appeal and accompanied by proof of payment of the
appeal fee, posting of cash or surety bond (when necessary), certificate
of non-forum shopping, and proof of service upon the other parties.
Failure of the appealing party to comply with any or all of these
requisites within the reglementary period will render the LAs decision
final and executory.
Indisputably, Llamas did not file a memorandum of appeal from the
LAs decision. Instead, he filed, within the ten (10)-day appeal period,
a motion for reconsideration. Under Section 15, Rule V of the 2005
NLRC Rules, motions for reconsideration from the LAs decision are
not allowed;
they may, however, be treated as an appeal provided they comply with
the requirements for perfecting an appeal. The NLRC dismissed

Llamas motion for reconsideration treated as an appeal for failure to

attach the required certificate of non-forum shopping per Section 4(a),
Rule VI of the 2005 NLRC Rules.
The requirement for a sworn certification of non-forum shopping was
prescribed by the Court under Revised Circular 28-91,21 as amended
by Administrative Circular No. 04-94,22 to prohibit and penalize the
evils of forum shopping. Revised Circular 28-91, as amended by
Administrative Circular No. 04-94, requires a sworn certificate of nonforum shopping to be filed with every petition, complaint, application
or other initiatory pleading filed before the Court, the CA, or the
different divisions thereof, or any other court, tribunal or agency.
Ordinarily, the infirmity in Llamas appeal would have been fatal and
would have justified an end to the case. A careful consideration of the
circumstances of the case, however, convinces us that the NLRC
should, indeed, have given due course to Llamas appeal despite the
initial absence of the required certificate. We note that in his motion
for reconsideration of the NLRCs May 30, 2006 resolution, Llamas
attached the required certificate of non-forum shopping.
Moreover, Llamas adequately explained, in his motion for
reconsideration, the inadvertence and presented a clear justifiable
ground to warrant the relaxation of the rules. To recall, Llamas was
able to file his position paper, through his new counsel, only on
December 20, 2005. He hired the new counsel on December 19, 2005
after several repeated, albeit failed, pleas to his former counsel to
submit, on or before October 25, 2005 per the LAs order, the required
position paper. On November 29, 2005, however, the LA rendered a
decision that Llamas and his new counsel learned and received a copy
of only on January 5, 2006. Evidently, the LAs findings and
conclusions were premised solely on the petitioners pleadings and
evidence. And, while not the fault of the LA, Llamas, nevertheless, did
not have a meaningful opportunity to present his case, refute the
contents and allegations in the petitioners position paper and submit
controverting evidence.
Faced with these circumstances, i.e., Llamas subsequent compliance
with the certification-against-forum-shopping requirement; the utter
negligence and inattention of Llamas former counsel to his pleas and
cause, and his vigilance in immediately securing the services of a new
counsel; Llamas filing of his position paper before he learned and

received a copy of the LAs decision; the absence of a meaningful

opportunity for Llamas to present his case before the LA; and the clear
merits of his case (that our subsequent discussion will show), the
NLRC should have relaxed the application of procedural rules in the
broader interests of substantial justice.
Indeed, while the requirement as to the certificate of non-forum
shopping is mandatory, this requirement should not, however, be
interpreted too literally and thus defeat the objective of preventing the
undesirable practice of forum-shopping.23
Under Article 221 (now Article 227)24 of the Labor Code, "the
Commission and its members and the Labor Arbiters shall use every
and all reasonable means to ascertain the facts in each case speedily
and objectively and without regard to technicalities of law or
procedure, all in the interest of due process."25 Consistently, we have
emphasized that "rules of procedure are mere tools designed to
facilitate the attainment of justice. A strict and rigid application which
would result in technicalities that tend to frustrate rather than
promote substantial justice should not be allowed x x x. No procedural
rule is sacrosanct if such shall result in subverting
justice."26 Ultimately, what should guide judicial action is that a party
is given the fullest opportunity to establish the merits of his action or
defense rather than for him to lose life, honor, or property on mere
technicalities.27
Then, too, we should remember that "the dismissal of an employees
appeal on purely technical ground is inconsistent with the
constitutional mandate on protection to labor."28 Under the
Constitution29 and the Labor Code,30 the State is bound to protect
labor and assure the rights of workers to security of tenure tenurial
security being a preferred constitutional right that, under these
fundamental guidelines, technical infirmities in labor pleadings
cannot defeat.31
In this case, Llamas action against the petitioners concerned his job,
his security of tenure.1wphi1 This is a property right of which he
could not and should not be deprived of without due process.32 But,
more importantly, it is a right that assumes a preferred position in our
legal hierarchy.33

Under these considerations, we agree that the NLRC committed grave

abuse of discretion when, in dismissing Llamas appeal, it allowed
purely technical infirmities to defeat Llamas tenurial security without
full opportunity to establish his cases merits.
Llamas did not abandon his work; he was
constructively dismissed
"Abandonment is the deliberate and unjustified refusal of an employee
to resume his employment."34 It is a form of neglect of duty that
constitutes just cause for the employer to dismiss the employee. 35
To constitute abandonment of work, two elements must concur: "(1) x
x x the employee must have failed to report for work or must have
been absent without valid or justifiable reason; and (2) x x x there
must have been a clear intention [on the part of the employee] to sever
the employer-employee relationship manifested by some overt
act."36 The employees absence must be accompanied by overt acts that
unerringly point to the employees clear intention to sever the
employment relationship.37 And, to successfully invoke abandonment,
whether as a ground for dismissing an employee or as a defense, the
employer bears the burden of proving the employees unjustified
refusal to resume his employment.38 Mere absence of the employee is
not enough.39
Guided by these parameters, we agree that the petitioners unerringly
failed to prove the alleged abandonment. They did not present proof
of some overt act of Llamas that clearly and unequivocally shows his
intention to abandon his job. We note that, aside from their bare
allegation, the only evidence that the petitioners submitted to prove
abandonment were the photocopy of their attendance logbook and the
July 15, 2005 memorandum40 that they served on Llamas regarding
the July 13, 2005 incident. These pieces of evidence, even when
considered collectively, indeed failed to prove the clear and
unequivocal intention, on Llamas part, that the law requires to deem
as abandonment Llamas absence from work. Quite the contrary, the
petitioners July 15, 2005 memorandum, in fact, supports, if not
strengthens, Llamas' version of the events that led to his filing of the
complaint, i.e., that as a result of the July 13, 2005 incident, the
petitioners refused to give him the key to his assigned taxi cab unless
he would sign the resignation letter.

Moreover, and as the CA pointed out, Llamas lost no time in filing the
illegal dismissal case against them. To recall, he filed the complaint on
July 18, 2005 or only two days from the third time he was refused
access to his assigned taxi cab on July 16, 2005. Clearly, Llamas could
not be deemed to have abandoned his work for, as we have previously
held, the immediate filing by the employee of an illegal dismissal
complaint is proof enough of his intention to return to work and
negates the employer's charge of abandonment.41
To reiterate and emphasize, abandonment is a matter of intention that
cannot lightly be presumed from certain equivocal acts of the
employee.42
The CA, therefore, correctly regarded Llamas as constructively
dismissed for the petitioners' failure to prove the alleged just cause
-abandonment - for his dismissal. Constructive dismissal exists when
there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely. Constructive dismissal is a
dismissal in disguise or an act amounting to dismissal but made to
appear as if it were not. In constructive dismissal cases, the employer
is, concededly, charged with the burden of proving that its conduct
and action were for valid and legitimate grounds.43 The petitioners'
persistent refusal to give Llamas the key to his assigned taxi cab, on
the condition that he should first sign the resignation letter, rendered,
without doubt, his continued employment impossible, unreasonable
and unlikely; it, thus, constituted constructive dismissal.
In sum, the CA correctly found equitable grounds to warrant
relaxation of the rule on perfection of appeal (filing of the certificate of
non-forum shopping) as there was patently absent sufficient proof for
the charge of abandonment. Accordingly, we find the CA legally
correct in reversing and setting aside the NLRC's resolution rendered
in grave abuse of discretion.
WHEREFORE, in light of these considerations, we hereby DENY the
petition. We AFFIRM the decision dated August 13, 2008 and the
resolution dated November 27, 2009 of the Court of Appeals in CAG.R. CEB-S.P. No. 02623.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 196830

February 29, 2012

CESAR V. GARCIA, CARLOS RAZON, ALBERTO DE

GUZMAN, TOMAS RAZON, OMER E. PALO, RIZALDE
VALENCIA, ALLAN BASA, JESSIE GARCIA,JUANITO
PARAS, ALEJANDRO ORAG, ROMMEL PANGAN, RUEL
SOLIMAN, and CENEN CANLAPAN, represented by
SERENO, and CESAR V. GARCIA, Petitioners,
vs.
KJ COMMERCIAL and REYNALDO QUE, Respondents.
Labor Law; Appeals; Appeal Bond; The filing of a motion to reduce
bond and compliance with the two conditions stop the running of the
period to perfect an appeal.The Rules of Procedure of the NLRC
allows the filing of a motion to reduce bond subject to two conditions:
(1) there is meritorious ground, and (2) a bond in a reasonable
amount is posted. Section 6 of Article VI states: No motion to reduce
bond shall be entertained except on meritorious grounds and upon the
posting of a bond in a reasonable amount in relation to the monetary
award. The mere filing of the motion to reduce bond without
compliance with the requisites in the preceding paragraph shall not
stop the running of the period to perfect an appeal. The filing of a
motion to reduce bond and compliance with the two conditions stop
the running of the period to perfect an appeal. In McBurnie v. Ganzon,
600 SCRA 658 (2009), the Court held: x x x [T]he bond may be
reduced upon motion by the employer, this is subject to the conditions
that (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.

Same; Same; Same; National Labor Relations Commission (NLRC)

Rules of Procedure; Section 2, Article I of the Rules of Procedure of
the NLRC states that, These Rules shall be liberally construed to
carry out the objectives of the Constitution, the Labor Code of the
Philippines and other relevant legislations, and to assist the parties in
obtaining just, expeditious and inexpensive resolution and settlement
of labor disputes.Section 2, Article I of the Rules of Procedure of
the NLRC states that, These Rules shall be liberally construed to
carry out the objectives of the Constitution, the Labor Code of the
Philippines and other relevant legislations, and to assist the parties in
obtaining just, expeditious and inexpensive resolution and settlement
of labor disputes. In order to give full effect to the provisions on
motion to reduce bond, the appellant must be allowed to wait for the
ruling of the NLRC on the motion even beyond the 10-day period to
perfect an appeal. If the NLRC grants the motion and rules that there
is indeed meritorious ground and that the amount of the bond posted
is reasonable, then the appeal is perfected. If the NLRC denies the
motion, the appellant may still file a motion for reconsideration as
provided under Section 15, Rule VII of the Rules. If the NLRC grants
the motion for reconsideration and rules that there is indeed
meritorious ground and that the amount of the bond posted is
reasonable, then the appeal is perfected. If the NLRC denies the
motion, then the decision of the labor arbiter becomes final and
executory.
Same; Same; Same; The rule that the filing of a motion to reduce bond
shall not stop the running of the period to perfect an appeal is not
absolute.In any case, the rule that the filing of a motion to reduce
bond shall not stop the running of the period to perfect an appeal is
not absolute. The Court may relax the rule. In Intertranz Container
Lines, Inc. v. Bautista, 625 SCRA 75 (2010), the Court held:
Jurisprudence tells us that in labor cases, an appeal from a decision
involving a monetary award may be perfected only upon the posting of
a cash or surety bond. The Court, however, has relaxed this
requirement under certain exceptional circumstances in order to
resolve controversies on their merits. These circumstances include: (1)
fundamental consideration of substantial justice; (2) prevention of
miscarriage of justice or of unjust enrichment; and (3) special
circumstances of the case combined with its legal merits, and the
amount and the issue involved.

Same; Same; Same; While the bond requirement on appeals involving

monetary awards has been relaxed in certain cases, this can only be
done where there was substantial compliance of the Rules or where
the appellants, at the very least, exhibited willingness to pay by
posting a partial bond.In Ong v. Court of Appeals, 438 SCRA 668
the Court held that the bond requirement on appeals may be relaxed
when there is substantial compliance with the Rules of Procedure of
the NLRC or when the appellant shows willingness to post a partial
bond. The Court held that, While the bond requirement on appeals
involving monetary awards has been relaxed in certain cases, this can
only be done where there was substantial compliance of the Rules or
where the appellants, at the very least, exhibited willingness to pay by
posting a partial bond. Garcia vs. KJ Commercial, 667 SCRA 396,
G.R. No. 196830 February 29, 2012

On 2 January 2006, petitioners demanded for a P40 daily salary

increase. To pressure KJ Commercial to grant their demand, they
stopped working and abandoned their trucks at the Northern Cement
Plant Station in Sison, Pangasinan. They also blocked other workers
from reporting to work.

DECISION

After a careful examination and evaluation of the facts and evidences

adduced by both parties, we find valid and cogent reasons to declare
that these complainants were illegally dismissed from their work to be
entitled to their separation in lieu of reinstatement equivalent to their
salary for one (1) month for every year of service and backwages from
the time that they were terminated on January 2, 2006 up to the date
of this Decision.

CARPIO, J.:
The Case
This is a petition1 for review on certiorari under Rule 45 of the Rules of
Court. The petition challenges the 29 April 2011 Decision2 of the Court
of Appeals in CA-G.R. SP No. 115851, affirming the 8 February 3 and 25
June4 2010 Resolutions of the National Labor Relations Commission
(NLRC) in NLRC-LAC-No. 12-004061-08. The NLRC set aside the 30
October 2008 Decision5 of the Labor Arbiter in NLRC Case No. RABIII-02-9779-06.
The Facts
Respondent KJ Commercial is a sole proprietorship. It owns trucks
and engages in the business of distributing cement products. On
different dates, KJ Commercial employed as truck drivers and truck
helpers petitioners Cesar V. Garcia, Carlos Razon, Alberto De
Guzman, Tomas Razon, Omer E. Palo, Rizalde Valencia, Allan Basa,
Jessie Garcia, Juanito Paras, Alejandro Orag, Rommel Pangan, Ruel
Soliman, and Cenen Canlapan (petitioners).

On 3 February 2006, petitioners filed with the Labor Arbiter a

complaint6 for illegal dismissal, underpayment of salary and nonpayment of service incentive leave and thirteenth month pay.
The Labor Arbiters Ruling
In his 30 October 2008 Decision, the Labor Arbiter held that KJ
Commercial illegally dismissed petitioners. The Labor Arbiter held:

We carefully examined the defense set up by the respondents that

these complainants were not terminated from their employment but
were the one [sic] who abandoned their work by staging strike and
refused to perform their work as drivers of the trucks owned by the
respondents on January 2, 2006, vis--vis, he [sic] allegations and
claims of the complainants that when they asked for an increase of
their salary for P40.00, they were illegally dismissed from their
employment without due process, and we gave more credence and
value to the allegations of the complainants that they were illegally
dismissed from their employment without due process and did not
abandoned [sic] their work as the respondents wanted to project. We
examined the narration of facts of the respondents in their Position
Paper and Supplemental Position Paper and we concluded that these
complainants were actually terminated on January 2, 2006 and did
not abandoned [sic] their jobs as claimed by the respondents when the
respondents, in their Position Paper, admitted that their cement plant

was shutdown on January 3, 2006 and when it resumed its operation

on January 7, 2006, they ordered the other drivers to get the trucks in
order that the hauling of the cements will not incur further delay and
that their business will not be prejudiced.
Granting for the sake of discussion that indeed these complainants
abandoned their work on January 2, 2006, why then that [sic] the
cement plant was shutdown on January 3, 2006 and resumed
operation on January 7, 2006, when there are fifty (50) drivers of the
respondents and only thirteen (13) of them were allegedly stopped
from working. Further, if these complainants actually abandoned their
work, as claimed by the respondents, they miserably failed to show by
substantial evidence that these complainants deliberately and
unjustifiably refused to resume their employment.
xxxx
The acts of these complainants in filing this instant case a month after
they were terminated from their work is more than sufficient evidence
to prove and show that they do not have the intention of abandoning
their work. While we acknowledged the offer of the respondents for
these complainants to return back to work during the mandatory
conference, the fact that these complainants were illegally terminated
and prevented from performing their work as truck drivers of the
respondents and that there was no compliance with the substantive
and procedural due process of terminating an employee, their
subsequent offer to return to work will not cure the defect that there
was already illegal dismissal committed against these complainants. 7
KJ Commercial appealed to the NLRC. It filed before the NLRC a
motion to reduce bond and posted a P50,000 cash bond.
The NLRCs Ruling

We find no merit on [sic] the respondents-appellants Motion. It must

be stressed that under Section 6, Rule VI of the 2005 Revised Rules of
this Commission, a motion to reduce bond shall only be entertained
when the following requisites concur:
1. The motion is founded on meritorious ground; and
2. A bond of reasonable amount in relation to the monetary
award is posted.
We note that while respondents-appellants claim that they could not
possibly produce enough cash for the required appeal bond, they are
unwilling to at least put up a property to secure a surety bond.
Understandably, no surety agency would normally accept a surety
obligation involving a substantial amount without a guarantee that it
would be indemnified in case the surety bond posted is forfeited in
favor of a judgment creditor. Respondents-appellants insinuation that
no surety company can finish the processing of a surety bond in ten
days time is not worthy of belief as it is contrary to ordinary business
experience. What is obvious is that respondents-appellants are not
willing to accept the usual conditions of a surety agreement that is
why no surety bond could be processed. The reduction of the required
bond is not a matter of right o[n] the part of the movant but lies
within the sound discretion of the NLRC upon showing of meritorious
grounds x x x. In this case, we find that the instant motion is not
founded on a meritorious ground. x x x Moreover, we note that
the P50,000.00 cash bond posted by respondents-appellants which
represents less than two (2) percent of the monetary award is dismally
disproportionate to the monetary award of P2,612,930.00 and that the
amount of bond posted by respondents-appellants is not reasonable in
relation to the monetary award. x x x A motion to reduce bond that
does not satisfy the conditions required under NLRC Rules shall not
stop the running of the period to perfect an appeal x x x.

In its 9 March 2009 Decision,8 the NLRC dismissed the appeal. The
NLRC held:

Conversely, respondents-appellants failed to perfect an appeal for

failure to post the required bond.9

Filed with respondents-appellants Appeal Memorandum is a Motion

to Reduce Appeal Bond and a cash bond ofP50,000.00 only. x x x

KJ Commercial filed a motion10 for reconsideration and posted

a P2,562,930 surety bond. In its 8 February 2010 Resolution, the

NLRC granted the motion and set aside the Labor Arbiters 30
October 2008 Decision. The NLRC held:
x x x [T]his Commission opts to resolve and grant the Motion for
Reconsideration filed by respondent-appellant seeking for
reconsideration of Our Decision promulgated on March 9, 2009
dismissing the Appeal for non-perfection, there being an honest effort
by the appellants to comply with putting up the full amount of the
required appeal bond. Moreover, considering the merit of the appeal,
by granting the motion for reconsideration, the paramount interest of
justice is better served in the resolution of this case.
xxxx
Going over the record of the case, this Commission noted that in
respondents Supplemental Position Paper, in denying complainants
imputation of illegal dismissal, respondents categorically alleged "..[.]
that complainants were not illegally dismissed but on January 2,
2006, they abandoned their work by means of []work stoppage[] or
they engaged in an []illegal strike[] when they demanded for a higher
rate..[.] that while their respective assigned trucks were all in the
cement plant ready to be loaded, complainants paralyzed respondents
hauling or trucking operation by staging a work stoppage at the
premises of KJ Commercial compound by further blocking their codrivers not to report for work." We have observed that despite these
damaging allegations, complainants never bothered to dispute nor
contradicted these material allegations. Complainants silence on
these material allegations consequently lends support to respondentsappellants[] contention that complainants were never dismissed at all
but had stopped driving the hauler truck assigned to each of them
when their demand for salary increase in the amount they wish was
not granted by respondents-appellants.
Moreover, contrary to the findings of the Labor Arbiter, the purported
shutdown of the cement plant being cited by the Labor Arbiter a quo
as the principal cause of complainants purported dismissal cannot be
attributed to respondents because it was never established by evidence
that respondents were the owner [sic] of the cement plant where
complainants as truck drivers were hauling cargoes of cement with

trucks owned by respondents whose business is confined to that of a

cement distributor and cargo truck hauler. Based on the undisputed
account of respondents-appellants, it appears that the cement plant
was compelled to shut down because the hauling or trucking operation
was paralyzed due to complainants resort to work stoppage by
refusing to drive their hauler trucks despite the order of the
management for them to get the trucks which blockaded the cement
plant.
Furthermore, a perusal of the complainants position paper and
amended position paper failed to allege the overt acts showing how
they were in fact dismissed on 02 January 2006. The complainants
had not even alleged that they were specifically told that they were
dismissed after they demanded for a salary increase or any statement
to that effect. Neither had they alleged that they were prevented from
reporting for work. This only shows there was never a dismissal to
begin with.
xxxx
We cannot affirm the Labor Arbiters conclusions absent showing a
fact of termination or circumstances under which the dismissal was
effected. Though only substantial evidence is required in proceedings
before the Labor Arbiter to support a litigants claim, the same still
requires evidence separate and different, and something which
supports the allegations affirmatively made. The complainants claim
that they were dismissed on 02 January 2006, absent proof thereof or
any supporting evidence thereto is at best self serving.11
Petitioners filed a motion for reconsideration. In its 25 June 2010
Resolution, the NLRC denied the motion for lack of merit. The NLRC
held:
We stress that it is within the power and discretion of this
Commission to grant or deny a motion to reduce appeal bond. Having
earlier denied the motion to reduce bond of the respondentsappellants, this Commission is not precluded from reconsidering its
earlier Decision on second look when it finds meritorious ground to
serve the ends of justice. Settled is the norm in the matter of appeal

bonds that letter-perfect rules must yield to the broader interest of

substantial justice x x x. In this case, the Decision of the Labor Arbiter
had not really become final and executory as respondents timely filed
a Memorandum of Appeal with a Motion to Reduce Appeal Bond and
a partial appeal bond. Although the respondents[] appeal was
dismissed, in the earlier decision, the same Decision was later
reconsidered on considerations that the Labor Arbiter committed
palpable errors in his findings and the monetary awards to the
appellees are secured by a partial bond and then later, by an appeal
bond for the full amount of the monetary awards.12

should not expect this Court to swallow their asseveration hook, line
and sinker in the absence of supporting proof. Allegation that one was
illegally dismissed from work is not a magic word that once invoked
will automatically sway this Court to rule in favor of the party invoking
it. There must first be substantial evidence to prove that indeed there
was illegal dismissal before the employer bears the burden to prove
the contrary.14
Hence, the present petition.
The Issue

Petitioners filed with the Court of Appeals a petition13 for certiorari

under Rule 65 of the Rules of Court.
The Court of Appeals Ruling
In its 29 April 2011 Decision, the Court of Appeals dismissed the
petition and affirmed the NLRCs 8 February and 25 June 2010
Resolutions. The Court of Appeals held:

Petitioners raise as issue that the Labor Arbiters 30 October 2008

Decision became final and executory; thus, the NLRCs 8 February
and 25 June 2010 Resolutions and the Court of Appeals 29 April 2011
Decision are void for lack of jurisdiction. Petitioners claim that KJ
Commercial failed to perfect an appeal since the motion to reduce
bond did not stop the running of the period to appeal.
The Courts Ruling

After scrupulously examining the contrasting positions of the parties,

and the conflicting decisions of the labor tribunals, We find the
records of the case bereft of evidence to substantiate the conclusions
reached by the Labor Arbiter that petitioners were illegally dismissed
from employment.
While petitioners vehemently argue that they were unlawfully
separated from work, records are devoid of evidence to show the fact
of dismissal. Neither was there any evidence offered by petitioners to
prove that they were no longer allowed to perform their duties as
truck drivers or they were prevented from entering KJ Commercials
premises, except for their empty and general allegations that they
were illegally dismissed from employment. Such bare and sweeping
statement contains nothing but empty imputation of a fact that could
hardly be given any evidentiary weight by this Court. At the very least,
petitioners should have detailed or elaborated the circumstances
surrounding their dismissal or substantiate their claims by submitting
evidence to butress such contention. Without a doubt, petitioners
allegation of illegal dismissal has no leg to stand on. Accordingly, they

The petition is unmeritorious.

When petitioners filed with the Court of Appeals a petition for
certiorari, they did not raise as issue that the Labor Arbiters 30
October 2008 Decision had become final and executory. They
enumerated the issues in their petition:
GROUNDS FOR THE PETITION
I.
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION
WHEN IT REVERSED THE DECISION OF THE LABOR
ARBITER A QUO AND PRONOUNCED THAT THE
PETITIONERS WERE NOT ILLEGALLY DISMISSED
DESPITE CLEAR AND SUBSTANTIAL EVIDENCE ON THE
RECORDS SHOWING THAT COMPLAINANTS WERE

REGULAR EMPLOYEES TO BE ENTITLED TO SECURITY

OF TENURE AND WERE ILLEGALLY DISMISSED FROM
THEIR EMPLOYMENT.

Hence, petitioners seek recourse before this Court via this Petition
for Certiorari challenging the NLRC Resolutions and raising the
following issues:

II.

I.

THE NLRC HAS COMMITTED GRAVE ABUSE OF

DISCRETION TANTAMOUNT TO LACK OR EXCESS OF
JURISDICTION WHEN IT GIVE [sic] MUCH WEIGHT TO
PRIVATE RESPONDENTS[] BASELESS ALLEGATIONS IN
ITS [sic] MOTION FOR RECONSIDERATION WHEN IT [sic]
ALLEGED THAT COMPLAINANTS HAD ABANDONED
THEIR WORK BY MEANS OF "WORK STOPPAGE" OR THEY
ENGAGED IN AN "ILLEGAL STRIKE" WHEN THEY
DEMANDED FOR A HIGHER RATE.

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION

TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION
WHEN IT REVERSED THE DECISION OF THE LABOR
ARBITER A QUO AND PRONOUNCED THAT PETITIONERS
WERE NOT ILLEGALLY DISMISSED DESPITE CLEAR AND
SUBSTANTIAL EVIDENCE ON THE RECORDS SHOWING
THAT PETITIONERS WERE REGULAR EMPLOYEES TO BE
ENTITLED TO SECURITY OF TENURE AND WERE
ILLEGALLY DISMISSED FROM THEIR EMPLOYMENT.

III.

II.

THE NLRC GRAVELY ERRED TANTAMOUNT TO LACK OR

EXCESS OF JURISDICTION WHEN IT CONCLUDED THAT
"COMPLAINANTS PARALYZED HAULING OR TRUCKING
OPERATION BY STAGING A WORK STOPPAGE AT THE
PREMISES OF KJ COMMERCIAL COMPOUND BY
FURTHER BLOCKING THEIR CO-DRIVERS NOT TO
REPORT FOR WORK" WITHOUT A SINGLE EVIDENCE TO
SUPPORT SUCH ALLEGATIONS OF PRIVATE
RESPONDENTS.

THE NLRC HAS COMMITTED GRAVE ABUSE OF

DISCRETION TANTAMOUNT TO LACK OR EXCESS OF
JURISDICTION WHEN IT GAVE MUCH WEIGHT TO
PRIVATE RESPONDENTS BASELESS ALLEGATIONS IN ITS
[sic] MOTION FOR RECONSIDERATION WHEN IT [sic]
ALLEGED THAT PETITIONERS HAD ABANDONED THEIR
WORK BY MEANS OF "WORK STOPPAGE" OR THEY
ENGAGED IN AN "ILLEGAL STRIKE" WHEN THEY
DEMANDED FOR A HIGHER RATE.

IV.

III.

THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT

THE PRINCIPAL CAUSE OF COMPLAINANTS DISMISSAL
WAS DUE TO THE PURPORTED SHUTDOWN OF THE
CEMENT PLANT CITED BY THE LABOR ARBITER IN HIS
DECISION.15

THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT

"PETITIONERS PARALYZED HAULING AND TRUCKING
OPERATION BY STAGING A WORK STOPPAGE AT THE
PREMISES OF KJ COMMERCIAL COMPOUND BY
FURTHER BLOCKING THEIR CO-DRIVERS NOT TO
REPORT FOR WORK" WITHOUT A SINGLE EVIDENCE TO
SUPPORT SUCH ALLEGATIONS OF PRIVATE
RESPONDENTS.

Accordingly, the Court of Appeals limited itself to the resolution of the

enumerated issues. In its 29 April 2011 Decision, the Court of Appeals
held:

IV.
THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT
THE PRINCIPAL CAUSE OF PETITIONERS DISMISSAL
WAS DUE TO THE PURPORTED SHUTDOWN OF THE
CEMENT PLANT CITED BY THE LABOR ARBITER IN HIS
DECISION.16
Petitoners cannot, for the first time, raise as issue in their petition
filed with this Court that the Labor Arbiters 30 October 2008
Decision had become final and executory. Points of law, theories and
arguments not raised before the Court of Appeals will not be
considered by this Court. Otherwise, KJ Commercial will be denied its
right to due process. In Tolosa v. National Labor Relations
Commission,17 the Court held:
Petitioner contends that the labor arbiters monetary award has
already reached finality, since private respondents were not able to file
a timely appeal before the NLRC.
This argument cannot be passed upon in this appeal,
because it was not raised in the tribunals a quo. Well-settled
is the rule that issues not raised below cannot be raised for
the first time on appeal. Thus, points of law, theories, and
arguments not brought to the attention of the Court of
Appeals need not and ordinarily will not be considered
by this Court. Petitioners allegation cannot be accepted by
this Court on its face; to do so would be tantamount to a
denial of respondents right to due process.
Furthermore, whether respondents were able to appeal on time is a
question of fact that cannot be entertained in a petition for review
under Rule 45 of the Rules of Court. In general, the jurisdiction of this
Court in cases brought before it from the Court of Appeals is limited to
a review of errors of law allegedly committed by the court a
quo.18(Emphasis supplied)
KJ Commercials filing of a motion to reduce bond and delayed
posting of the P2,562,930 surety bond did not render the Labor

Arbiters 30 October 2008 Decision final and executory. The Rules of

Procedure of the NLRC allows the filing of a motion to reduce bond
subject to two conditions: (1) there is meritorious ground, and (2) a
bond in a reasonable amount is posted. Section 6 of Article VI states:
No motion to reduce bond shall be entertained except on meritorious
grounds and upon the posting of a bond in a reasonable amount in
relation to the monetary award.
The mere filing of the motion to reduce bond without compliance with
the requisites in the preceding paragraph shall not stop the running of
the period to perfect an appeal.
The filing of a motion to reduce bond and compliance with the two
conditions stop the running of the period to perfect an appeal.
In McBurnie v. Ganzon,19 the Court held:
x x x [T]he bond may be reduced upon motion by the employer, this is
subject to the conditions that (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.20
The NLRC has full discretion to grant or deny the motion to reduce
bond,21 and it may rule on the motion beyond the 10-day period within
which to perfect an appeal. Obviously, at the time of the filing of the
motion to reduce bond and posting of a bond in a reasonable amount,
there is no assurance whether the appellants motion is indeed based
on "meritorious ground" and whether the bond he or she posted is of a
"reasonable amount." Thus, the appellant always runs the risk of
failing to perfect an appeal.
Section 2, Article I of the Rules of Procedure of the NLRC states that,
"These Rules shall be liberally construed to carry out the objectives of
the Constitution, the Labor Code of the Philippines and other relevant
legislations, and to assist the parties in obtaining just, expeditious and
inexpensive resolution and settlement of labor disputes." In order to
give full effect to the provisions on motion to reduce bond, the

appellant must be allowed to wait for the ruling of the NLRC on the
motion even beyond the 10-day period to perfect an appeal. If the
NLRC grants the motion and rules that there is indeed meritorious
ground and that the amount of the bond posted is reasonable, then the
appeal is perfected. If the NLRC denies the motion, the appellant may
still file a motion for reconsideration as provided under Section 15,
Rule VII of the Rules. If the NLRC grants the motion for
reconsideration and rules that there is indeed meritorious ground and
that the amount of the bond posted is reasonable, then the appeal is
perfected. If the NLRC denies the motion, then the decision of the
labor arbiter becomes final and executory.
In the present case, KJ Commercial filed a motion to reduce bond and
posted a P50,000 cash bond. When the NLRC denied its motion, KJ
Commercial filed a motion for reconsideration and posted the
full P2,562,930 surety bond. The NLRC then granted the motion for
reconsideration.
In any case, the rule that the filing of a motion to reduce bond shall
not stop the running of the period to perfect an appeal is not absolute.
The Court may relax the rule. In Intertranz Container Lines, Inc. v.
Bautista,22 the Court held:
Jurisprudence tells us that in labor cases, an appeal from a decision
involving a monetary award may be perfected only upon the posting of
a cash or surety bond. The Court, however, has relaxed this
requirement under certain exceptional circumstances in order to
resolve controversies on their merits. These circumstances include: (1)
fundamental consideration of substantial justice; (2) prevention of
miscarriage of justice or of unjust enrichment; and (3) special
circumstances of the case combined with its legal merits, and the
amount and the issue involved.23
In Rosewood Processing, Inc. v. NLRC,24 the Court held:
The perfection of an appeal within the reglementary period and in the
manner prescribed by law is jurisdictional, and noncompliance with
such legal requirement is fatal and effectively renders the judgment
final and executory. The Labor Code provides:

ART. 223. Appeal. Decisions, 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.
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.
Indisputable is the legal doctrine that the appeal of a decision
involving a monetary award in labor cases may be perfected "only
upon the posting of a cash or surety bond." The lawmakers intended
the posting of the bond to be an indispensable requirement to perfect
an employers appeal.
However, in a number of cases, this Court has relaxed this
requirement in order to bring about the immediate and appropriate
resolution of controversies on the merits. Some of these cases include:
"(a) counsels reliance on the footnote of the notice of the decision of
the labor arbiter that the aggrieved party may appeal within ten (10)
working days; (b) fundamental consideration of substantial justice; (c)
prevention of miscarriage of justice or of unjust enrichment, as where
the tardy appeal is from a decision granting separation pay which was
already granted in an earlier final decision; and (d) special
circumstances of the case combined with its legal merits or the
amount and the issue involved."
In Quiambao vs. National Labor Relations Commission, this Court
ruled that a relaxation of the appeal bond requirement could be
justified by substantial compliance with the rule.
In Globe General Services and Security Agency vs. National Labor
Relations Commission, the Court observed that the NLRC, in actual
practice, allows the reduction of the appeal bond upon motion of the
appellant and on meritorious grounds; hence, petitioners in that case
should have filed a motion to reduce the bond within the reglementary
period for appeal.

That is the exact situation in the case at bar. Here, petitioner claims to
have received the labor arbiters Decision on April 6, 1993. On April
16, 1993, it filed, together with its memorandum on appeal and notice
of appeal, a motion to reduce the appeal bond accompanied by a
surety bond for fifty thousand pesos issued by Prudential Guarantee
and Assurance, Inc. Ignoring petitioners motion (to reduce bond),
Respondent Commission rendered its assailed Resolution dismissing
the appeal due to the late filing of the appeal bond.
The solicitor general argues for the affirmation of the assailed
Resolution for the sole reason that the appeal bond, even if it was filed
on time, was defective, as it was not in an amount "equivalent to the
monetary award in the judgment appealed from." The Court disagrees.
We hold that petitioners motion to reduce the bond is a substantial
compliance with the Labor Code. This holding is consistent with the
norm that letter-perfect rules must yield to the broader interest of
substantial justice.25
In Ong v. Court of Appeals,26 the Court held that the bond
requirement on appeals may be relaxed when there is substantial
compliance with the Rules of Procedure of the NLRC or when the
appellant shows willingness to post a partial bond. The Court held
that, "While the bond requirement on appeals involving monetary
awards has been relaxed in certain cases, this can only be done where
there was substantial compliance of the Rules or where the appellants,
at the very least, exhibited willingness to pay by posting a partial
bond."27
In the present case, KJ Commercial showed willingness to post a
partial bond.1wphi1 In fact, it posted a P50,000 cash bond. In Ong,
the Court held that, "Petitioner in the said case substantially complied
with the rules by posting a partial surety bond of fifty thousand pesos
issued by Prudential Guarantee and Assurance, Inc. while his motion
to reduce appeal bond was pending before the NLRC."28
Aside from posting a partial bond, KJ Commercial immediately posted
the full amount of the bond when it filed its motion for

reconsideration of the NLRCs 9 March 2009 Decision. In Dr. Postigo

v. Philippine Tuberculosis Society, Inc.,29 the Court held:
x x x [T]he respondent immediately submitted a supersedeas bond
with its motion for reconsideration of the NLRC resolution dismissing
its appeal. In Ong v. Court of Appeals, we ruled that the aggrieved
party may file the appeal bond within the ten-day reglementary period
following the receipt of the resolution of the NLRC to forestall the
finality of such resolution. Hence, while the appeal of a decision
involving a monetary award in labor cases may be perfected only upon
the posting of a cash or surety bond and the posting of the bond is an
indispensable requirement to perfect such an appeal, a relaxation of
the appeal bond requirement could be justified by substantial
compliance with the rule.30
WHEREFORE, the Court DENIES the petition and AFFIRMS the
29 April 2011 Decision of the Court of Appeals in CA-G.R. SP No.
115851.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Baguio City
SECOND DIVISION
G.R. No. 195227

April 21, 2014

FROILAN M. BERGONIO, JR., DEAN G. PELAEZ,

CRISANTO O. GEONGO, WARLITO O. JANAYA, SALVADOR
VILLAR, JR., RONALDO CAFIRMA, RANDY LUCAR,
ALBERTO ALBUERA, DENNIS NOPUENTE and ALLAN
SALVACION, Petitioners,
vs.
SOUTH EAST ASIAN AIRLINES and IRENE
DORNIER, Respondents.
Remedial Law; Civil Procedure; Appeals; Petition for Review on
Certiorari; In a Rule 45 petition for review on certiorari, what we

review are the legal errors that the Court of Appeals (CA) may have
committed in the assailed decision, in contrast with the review for
jurisdictional errors that we undertake in an original certiorari action.
In a Rule 45 petition for review on certiorari, what we review are the
legal errors that the CA may have committed in the assailed decision,
in contrast with the review for jurisdictional errors that we undertake
in an original certiorari action. In reviewing the legal correctness of
the CA decision in a labor case taken under Rule 65 of the Rules of
Court, we examine the CA decision in the context that it determined
the presence or the absence of grave abuse of discretion in the NLRC
decision before it and not on the basis of whether the NLRC decision,
on the merits of the case, was correct. Otherwise stated, we proceed
from the premise that the CA undertook a Rule 65 review, not a review
on appeal, of the NLRC decision challenged before it. Within this
narrow scope of our Rule 45 review, the question that we ask is: Did
the CA correctly determine whether the NLRC committed grave abuse
of discretion in ruling on the case?

Labor Law; Appeals; Article 229 of the Labor Code governs appeals
from, and the execution of, the Labor Arbiters (LAs) decision.
Article 223 (now Article 229) of the Labor Code governs appeals from,
and the execution of, the LAs decision. Pertinently, paragraph 3,
Article 223 of the Labor Code provides: Article 223. APPEAL x x x x 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.
Same; Illegal Dismissals; Reinstatement; Under paragraph 3, Article
223 of the Labor Code, the Labor Arbiters (LAs) order for the
reinstatement of an employee found illegally dismissed is immediately
executory even during pendency of the employers appeal from the
decision either by physically admitting him under the conditions
prevailing prior to his dismissal, and paying his wages; or, at the
employers option, merely reinstating the employee in the payroll until
the decision is reversed by the higher court.Under paragraph 3,
Article 223 of the Labor Code, the LAs order for the reinstatement of
an employee found illegally dismissed is immediately executory even
during pendency of the employers appeal from the decision. Under
this provision, the employer must reinstate the employee either by
physically admitting him under the conditions prevailing prior to his
dismissal, and paying his wages; or, at the employers option, merely
reinstating the employee in the payroll until the decision is reversed
by the higher court. Failure of the employer to comply with the
reinstatement order, by exercising the options in the alternative,
renders him liable to pay the employees salaries. Otherwise stated, a
dismissed employee whose case was favorably decided by the LA is
entitled to receive wages pending appeal upon reinstatement, which
reinstatement is immediately executory. Unless the appellate tribunal
issues a restraining order, the LA is duty bound to implement the
order of reinstatement and the employer has no option but to comply
with it.

Same; Same; Same; An order of reinstatement issued by the Labor

Arbiter (LA) is self-executory, i.e., the dismissed employee need not
even apply for and the LA need not even issue a writ of execution to
trigger the employers duty to reinstate the dismissed employee.An
order of reinstatement issued by the LA is self-executory, i.e., the
dismissed employee need not even apply for and the LA need not even
issue a writ of execution to trigger the employers duty to reinstate the
dismissed employee. In Pioneer Texturizing Corp. v. NLRC, et al., 280
SCRA 806, decided in 1997, the Court clarified once and for all this
self-executory nature of a reinstatement order. After tracing back the
various Court rulings interpreting the amendments introduced by
Republic Act No. 6715 on the reinstatement aspect of a labor decision
under Article 223 of the Labor Code, the Court concluded that to
otherwise 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.
Same; Same; Same; The employer is duty-bound to reinstate the
employee, failing which, the employer is liable instead to pay the
dismissed employees salary.With respect to decisions reinstating
employees, the law itself has determined a sufficiently overwhelming
reason for its immediate and automatic execution even pending
appeal. The employer is duty-bound to reinstate the employee, fail363
ing which, the employer is liable instead to pay the dismissed
employees salary. The Courts consistent and prevailing treatment
and interpretation of the reinstatement order as immediately
enforceable, in fact, merely underscores the right to security of tenure
of employees that the Constitution protects.
Same; Same; Same; After the Labor Arbiters (LAs) decision is
reversed by a higher tribunal, the employers duty to reinstate the
dismissed employee is effectively terminated.An employer is obliged
to immediately reinstate the employee upon the LAs finding of illegal
dismissal; if the employer fails, it is liable to pay the salary of the
dismissed employee. Of course, it is not always the case that the LAs

finding of illegal dismissal is, on appeal by the employer, upheld by

the appellate court. After the LAs decision is reversed by a higher
tribunal, the employers duty to reinstate the dismissed employee is
effectively terminated. This means that an employer is no longer
obliged to keep the employee in the actual service or in the payroll.
The employee, in turn, is not required to return the wages that he had
received prior to the reversal of the LAs decision.
Same; Same; Same; The reversal by a higher tribunal of the Labor
Arbiters (LAs) finding (of illegal dismissal), notwithstanding, an
employer, who, despite the LAs order of reinstatement, did not
reinstate the employee during the pendency of the appeal up to the
reversal by a higher tribunal may still be held liable for the accrued
wages of the employee, i.e., the unpaid salary accruing up to the time
the higher tribunal reverses the decision.The reversal by a higher
tribunal of the LAs finding (of illegal dismissal), notwithstanding, an
employer, who, despite the LAs order of reinstatement, did not
reinstate the employee during the pendency of the appeal up to the
reversal by a higher tribunal may still be held liable for the accrued
wages of the employee, i.e., the unpaid salary accruing up to the time
the higher tribunal reverses the decision. The rule, therefore, is that an
employee may still recover the accrued wages up to and despite the
reversal by the higher tribunal. This entitlement of the employee to
the accrued wages proceeds from the immediate and self-executory
nature of the reinstatement aspect of the LAs decision. By way of
exception to the above rule, an employee may be barred from
collecting the accrued wages if shown that the delay in enforcing the
reinstatement pending appeal was without fault on the part of the
employer. To determine whether an employee is thus barred, two
364
tests must be satisfied: (1) 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. Note that under the second test, the delay must be without
the employers fault. 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 LAs decision.

Same; Same; Same; The Labor Code mandates the employer to

immediately reinstate the dismissed employee, either by actually
reinstating him/her under the conditions prevailing prior to the
dismissal or, at the option of the employer, in the payroll. The
respondents failure in this case to exercise either option rendered
them liable for the petitioners accrued salary until the Labor Arbiter
(LA) decision was reversed by the Court of Appeals (CA).All told,
under the facts and the surrounding circumstances, the delay was due
to the acts of the respondents that we find were unjustified. We
reiterate and emphasize, Article 223, paragraph 3, of the Labor Code
mandates the employer to immediately reinstate the dismissed
employee, either by actually reinstating him/her under the conditions
prevailing prior to the dismissal or, at the option of the employer, in
the payroll. The respondents failure in this case to exercise either
option rendered them liable for the petitioners accrued salary until
the LA decision was reversed by the CA on December 17, 2008. We,
therefore, find that the NLRC, in affirming the release of the garnished
amount, merely implemented the mandate of Article 223; it simply
recognized as immediate and self-executory the reinstatement aspect
of the LAs decision. Bergonio, Jr. vs. South East Asian Airlines, 722
SCRA 360, G.R. No. 195227 April 21, 2014
DECISION
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge to the
September 30, 2010 decision2 and the January 13, 2011 resolution3 of
the Court of Appeals (CA) in CA-G.R. SP No. 112011.
This CA decision reversed the July 16, 2008 decision 4 of the National
Labor Relations Commission (NLRC), which, in turn, affirmed the
March 13, 2008 order5 of the Labor Arbiter (LA) in NLRC Case No.
00-04-05469- 2004. The LA granted the Motion filed by petitioners
Froilan M. Bergonio, Jr., Dean G. Pelaez, et.al., (collectively, the
petitioners) for the release of the garnished amount to satisfy the
petitioners accrued wages.
The Factual Antecedents

On April 30, 2004, the petitioners filed before the LA a complaint for
illegal dismissal and illegal suspension with prayer for reinstatement
against respondents South East Asian Airlines (SEAIR) and Irene
Dornier as SEAIRs President (collectively, the respondents).
In a decision dated May 31, 2005, the LA found the petitioners
illegally dismissed and ordered the respondents, among others, to
immediately reinstate the petitioners with full backwages. The
respondents received their copy of this decision on July 8, 2005. 6
On August 20, 2005, the petitioners filed before the LA a Motion for
issuance of Writ of Execution for their immediate reinstatement.
During the scheduled pre-execution conference held on September 14,
2005, the respondents manifested their option to reinstate the
petitioners in the payroll. The payroll reinstatement, however, did not
materialize. Thus, on September 22, 2005, the petitioners filed before
the LA a manifestation for their immediate reinstatement.
On October 3, 2005, the respondents filed an opposition to the
petitioners motion for execution.7 They claimed that the relationship
between them and the petitioners had already been strained because
of the petitioners threatening text messages, thus precluding the
latters reinstatement.
On October 7, 2005, the LA granted the petitioners motion and issued
a writ of execution.8
The respondents moved to quash the writ of execution with a prayer to
hold in abeyance the implementation of the reinstatement
order.9 They maintained that the relationship between them and the
petitioners had been so strained that reinstatement was no longer
possible.
The October 7, 2005 writ of execution was returned unsatisfied. In
response, the petitioners filed a motion for re-computation of accrued
wages, and, on January 25, 2006, a motion for execution of the recomputed amount. On February 16, 2006, the LA granted this motion
and issued an alias writ of execution.10

On February 21, 2006, the respondents issued a

Memorandum11 directing the petitioners to report for work on
February 24, 2006. The petitioners failed to report for work on the
appointed date. On February 28, 2006, the respondents moved before
the LA to suspend the order for the petitioners reinstatement. 12
Meanwhile, the respondents appealed with the NLRC the May 31,
2005 illegal dismissal ruling of the LA.
In an order dated August 15, 2006,13 the NLRC dismissed the
respondents appeal for non-perfection. The NLRC likewise denied the
respondents motion for reconsideration in its November 29, 2006
resolution, prompting the respondents to file before the CA a petition
for certiorari.
The NLRC issued an Entry of Judgment on February 6, 2007
declaring its November 29, 2006 resolution final and executory. The
petitioners forthwith filed with the LA another motion for the issuance
of a writ of execution, which the LA granted on April 24, 2007. The LA
also issued another writ of execution.14 A Notice of Garnishment was
thereafter issued to the respondents depositary bank MetrobankSan Lorenzo Village Branch, Makati City in the amount
of P1,900,000.00 on June 6, 2007.
On December 18, 2007, the CA rendered its decision (on the illegal
dismissal ruling of the LA) partly granting the respondents petition.
The CA declared the petitioners dismissal valid and awarded
them P30,000.00 as nominal damages for the respondents failure to
observe due process.
The records show that the petitioners appealed the December 18,
2007 CA decision with this Court. In a resolution dated August 4,
2008, the Court denied the petition. The Court likewise denied the
petitioners subsequent motion for reconsideration, and thereafter
issued an Entry of Judgment certifying that its August 4, 2008
resolution had become final and executory on March 9, 2009.
On January 31, 2008, the petitioners filed with the LA an Urgent ExParte Motion for the Immediate Release of the Garnished Amount.

In its March 13, 2008 order,15 the LA granted the petitioners motion;
it directed Metrobank-San Lorenzo to release the P1,900,000.00
garnished amount. The LA found valid and meritorious the
respondents claim for accrued wages in view of the respondents
refusal to reinstate the petitioners despite the final and executory
nature of the reinstatement aspect of its (LAs) May 31, 2005 decision.
The LA noted that as of the December 18, 2007 CA decision (that
reversed the illegal dismissal findings of the LA), the petitioners
accrued wages amounted toP3,078,366.33.
In its July 16, 2008 resolution,16 the NLRC affirmed in toto the LAs
March 13, 2008 order. The NLRC afterwards denied the respondents
motion for reconsideration for lack of merit.17
The respondents assailed the July 16, 2008 decision and September
29, 2009 resolution of the NLRC via a petition for certiorari filed with
the CA.
The CAs ruling
The CA granted the respondents petition.18 It reversed and set aside
the July 16, 2008 decision and the September 29, 2009 resolution of
the NLRC and remanded the case to the Computation and
Examination Unit of the NLRC for the proper computation of the
petitioners accrued wages, computed up to February 24, 2006.
The CA agreed that the reinstatement aspect of the LAs decision is
immediately executory even pending appeal, such that the employer is
obliged to reinstate and pay the wages of the dismissed employee
during the period of appeal until the decision (finding the employee
illegally dismissed including the reinstatement order) is reversed by a
higher court. Applying this principle, the CA noted that the
petitioners accrued wages could have been properly computed until
December 18, 2007, the date of the CAs decision finding the
petitioners validly dismissed.
The CA, however, pointed out that when the LAs decision is "reversed
by a higher tribunal, an employee may be barred from collecting the
accrued wages if shown that the delay in enforcing the reinstatement

pending appeal was without fault" on the employers part. In this case,
the CA declared that the delay in the execution of the reinstatement
order was not due to the respondents unjustified act or omission.
Rather, the petitioners refusal to comply with the February 21, 2006
return-to-work Memorandum that the respondents issued and
personally delivered to them (the petitioners) prevented the
enforcement of the reinstatement order.
Thus, the CA declared that, given this peculiar circumstance (of the
petitioners failure to report for work), the petitioners accrued wages
should only be computed until February 24, 2006 when they were
supposed to report for work per the return-to-work Memorandum.
Accordingly, the CA reversed, for grave abuse of discretion, the
NLRCs July 16, 2008 decision that affirmed the LAs order to release
the garnished amount.
The Petition
The petitioners argue that the CA gravely erred when it ruled, contrary
to Article 223, paragraph 3 of the Labor Code, that the computation of
their accrued wages stopped when they failed to report for work on
February 24, 2006. They maintain that the February 21, 2006
Memorandum was merely an afterthought on the respondents part to
make it appear that they complied with the LAs October 7, 2005 writ
of execution. They likewise argue that had the respondents really
intended to have them report for work to comply with the writ of
execution, the respondents could and should have issued the
Memorandum immediately after the LA issued the first writ of
execution. As matters stand, the respondents issued the Memorandum
more than four months after the issuance of this writ and only after
the LA issued the alias writ of execution on February 16, 2006.
Additionally, the petitioners direct the Courts attention to the several
pleadings that the respondents filed to prevent the execution of the
reinstatement aspect of the LAs May 31, 2005 decision, i.e., the
Opposition to the Issuance of the Writ of Execution, the Motion to
Quash the Writ of Execution and the Motion to Suspend the Order of
Reinstatement. They also point out that in all these pleadings, the
respondents claimed that strained relationship barred their (the

petitioners) reinstatement, evidently confirming the respondents lack

of intention to reinstate them.
Finally, the petitioners point out that the February 21, 2006
Memorandum directed them to report for work at Clark Field,
Angeles, Pampanga instead of at the NAIA-Domestic Airport in Pasay
City where they had been assigned. They argue that this directive to
report for work at Clark Field violates Article 223, paragraph 3 of the
Labor Code that requires the employees reinstatement to be under
the same terms and conditions prevailing prior to the dismissal.
Moreover, they point out that the respondents handed the
Memorandum only to Pelaez, who did not act in representation of the
other petitioners, and only in the afternoon of February 23, 2006.
Thus, the petitioners claim that the delay in their reinstatement was in
fact due to the respondents unjustified acts and that the respondents
never really complied with the LAs reinstatement order.
The Case for the Respondents
The respondents counter, in their comment,19 that the issues that the
petitioners raise in this petition are all factual in nature and had
already considered and explained in the CA decision. In any case, the
respondents maintain that the petitioners were validly dismissed and
that they complied with the LAs reinstatement order when it directed
the petitioners to report back to work, which directive the petitioners
did not heed.
The respondents add that while the reinstatement of an employee
found illegally dismissed is immediately executory, the employer is
nevertheless not prohibited from questioning this rule especially when
the latter has valid and legal reasons to oppose the employees
reinstatement. In the petitioners case, the respondents point out that
their relationship had been so strained that reinstatement was no
longer possible. Despite this strained relationship, the respondents
point out that they still required the petitioners to report back to work
if only to comply with the LAs reinstatement order. Instead of
reporting for work as directed, the petitioners, however, insisted for a
payroll reinstatement, which option the law grants to them (the

respondents) as employer. Also, contrary to the petitioners claim, the

Memorandum directed them to report at Clark Field, Pampanga only
for a re-orientation of their respective duties and responsibilities.
Thus, relying on the CAs ruling, the respondents claim that the delay
in the petitioners reinstatement was in fact due to the latters refusal
to report for work after the issuance of the February 21, 2006
Memorandum in addition to their strained relationship.
The Courts Ruling
We GRANT the petition.
Preliminary considerations: jurisdictional
limitations of the Courts Rule 45 review of
the CAs Rule 65 decision in labor cases
In a Rule 45 petition for review on certiorari, what we review are the
legal errors that the CA may have committed in the assailed decision,
in contrast with the review for jurisdictional errors that we undertake
in an original certiorari action. In reviewing the legal correctness of
the CA decision in a labor case taken under Rule 65 of the Rules of
Court, we examine the CA decision in the context that it determined
the presence or the absence of grave abuse of discretion in the NLRC
decision before it and not on the basis of whether the NLRC decision,
on the merits of the case, was correct. Otherwise stated, we proceed
from the premise that the CA undertook a Rule 65 review, not a review
on appeal, of the NLRC decision challenged before it. Within this
narrow scope of our Rule 45 review, the question that we ask is: Did
the CA correctly determine whether the NLRC committed grave abuse
of discretion in ruling on the case?20
In addition, the Courts jurisdiction in a Rule 45 petition for review on
certiorari is limited to resolving only questions of law.
The present petition essentially raises the question whether the
petitioners may recover the accrued wages prior to the CAs reversal of
the LAs May 31, 2005 decision. This is a question of law that falls well
within the Courts power in a Rule 45 petition.

Resolution of this question of law, however, is inextricably linked with

the largely factual issue of whether the accrued wages should be
computed until December 17, 2008 when the CA reversed the illegal
dismissal findings of the LA or only until February 24, 2006 when the
petitioners were supposed to report for work per the February 21,
2006 Memorandum. In either case, the determination of this factual
issue presupposes another factual issue, i.e., whether the delay in the
execution of the reinstatement order was due to the respondents
fault. As questions of fact, they are proscribed by our Rule 45
jurisdiction; we generally cannot address these factual issues except to
the extent necessary to determine whether the CA correctly found the
NLRC in grave abuse of discretion in affirming the release of the
garnished amount despite the respondents issuance of and the
petitioners failure to comply with the February 21, 2006 return-towork Memorandum.
The jurisdictional limitations of our Rule 45 review of the CAs Rule 65
decision in labor cases, notwithstanding, we resolve this petitions
factual issues for we find legal errors in the CAs decision. Our
consideration of the facts taken within this narrow scope of our factual
review power convinced us, as our subsequent discussion will show,
that no grave abuse of discretion attended the NLRC decision.
Nature of the reinstatement aspect of the
LAs decision on a finding of illegal
dismissal
Article 223 (now Article 229)21 of the Labor Code governs appeals
from, and the execution of, the LAs decision. Pertinently, paragraph
3, Article 223 of the Labor Code provides:
Article 223. APPEAL
xxxx
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]
Under paragraph 3, Article 223 of the Labor Code, the LAs order for
the reinstatement of an employee found illegally dismissed is
immediately executory even during pendency of the employers appeal
from the decision. Under this provision, the employer must reinstate
the employee either by physically admitting him under the
conditions prevailing prior to his dismissal, and paying his wages; or,
at the employers option, merely reinstating the employee in the
payroll until the decision is reversed by the higher court.22 Failure of
the employer to comply with the reinstatement order, by exercising
the options in the alternative, renders him liable to pay the employees
salaries.23
Otherwise stated, a dismissed employee whose case was favorably
decided by the LA is entitled to receive wages pending appeal upon
reinstatement, which reinstatement is immediately
executory.24 Unless the appellate tribunal issues a restraining order,
the LA is duty bound to implement the order of reinstatement and the
employer has no option but to comply with it.25
Moreover, and equally worth emphasizing, is that an order of
reinstatement issued by the LA is self-executory, i.e., the dismissed
employee need not even apply for and the LA need not even issue a
writ of execution to trigger the employers duty to reinstate the
dismissed employee.
In Pioneer Texturizing Corp. v. NLRC, et. al.,26 decided in 1997, the
Court clarified once and for all this self-executory nature of a
reinstatement order. After tracing back the various Court rulings
interpreting the amendments introduced by Republic Act No.
671527 on the reinstatement aspect of a labor decision under Article
223 of the Labor Code, the Court concluded that to otherwise "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."28
In short, therefore, with respect to decisions reinstating employees,
the law itself has determined a sufficiently overwhelming reason for
its immediate and automatic execution even pending appeal. 29 The
employer is duty-bound to reinstate the employee, failing which, the
employer is liable instead to pay the dismissed employees salary. The
Courts consistent and prevailing treatment and interpretation of the
reinstatement order as immediately enforceable, in fact, merely
underscores the right to security of tenure of employees that the
Constitution30 protects.
The employer is obliged to pay the
dismissed employees salary if he
refuses to reinstate until actual
reinstatement or reversal by a higher
tribunal; circumstances that may bar an
employee from receiving the accrued wages
As we amply discussed above, an employer is obliged to immediately
reinstate the employee upon the LAs finding of illegal dismissal; if the
employer fails, it is liable to pay the salary of the dismissed employee.
Of course, it is not always the case that the LAs finding of illegal
dismissal is, on appeal by the employer, upheld by the appellate court.
After the LAs decision is reversed by a higher tribunal, the employers
duty to reinstate the dismissed employee is effectively terminated.
This means that an employer is no longer obliged to keep the
employee in the actual service or in the payroll. The employee, in turn,
is not required to return the wages that he had received prior to the
reversal of the LAs decision.31
The reversal by a higher tribunal of the LAs finding (of illegal
dismissal), notwithstanding, an employer, who, despite the LAs order
of reinstatement, did not reinstate the employee during the pendency
of the appeal up to the reversal by a higher tribunal may still be held
liable for the accrued wages of the employee, i.e., the unpaid salary
accruing up to the time the higher tribunal reverses the decision.32 The
rule, therefore, is that an employee may still recover the accrued

wages up to and despite the reversal by the higher tribunal. This

entitlement of the employee to the accrued wages proceeds from the
immediate and self-executory nature of the reinstatement aspect of
the LAs decision.
By way of exception to the above rule, an employee may be barred
from collecting the accrued wages if shown that the delay in enforcing
the reinstatement pending appeal was without fault on the part of the
employer. To determine whether an employee is thus barred, two tests
must be satisfied: (1) 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. Note that under the second test, the delay must be without
the employers fault. 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 LAs decision.33
Application of the two-fold test; the
petitioners are entitled to receive their
accrued salaries until December 18, 2007
As we earlier pointed out, the core issue to be resolved is whether the
petitioners may recover the accrued wages until the CAs reversal of
the LAs decision. An affirmative answer to this question will lead us
to reverse the assailed CA decision for legal errors and reinstate the
NLRCs decision affirming the release of the garnished amount.
Otherwise, we uphold the CAs decision to be legally correct. To
resolve this question, we apply the two-fold test.
First, the existence of delay - whether there was actual delay or
whether the order of reinstatement pending appeal was not executed
prior to its reversal? We answer this test in the affirmative.
To recall, on May 31, 2005, the LA rendered the decision finding the
petitioners illegally dismissed and ordering their immediate
reinstatement. Per the records, the respondents received copy of this
decision on July 8, 2005. On August 20, 2005, the petitioners filed
before the LA a Motion for Issuance of Writ of Execution for their
immediate reinstatement. The LA issued the Writ of Execution on

October 7, 2005. From the time the respondents received copy of the
LAs decision, and the issuance of the writ of execution, until the CA
reversed this decision on December 17, 2008, the respondents had not
reinstated the petitioners, either by actual reinstatement or in the
payroll. This continued non-execution of the reinstatement order in
fact moved the LA to issue an alias writ of execution on February 16,
2006 and another writ of execution on April 24, 2007.
From these facts and without doubt, there was actual delay in the
execution of the reinstatement aspect of the LAs May 31, 2005
decision before it was reversed in the CAs decision.
Second, the cause of the delay whether the delay was not due to the
employers unjustified act or omission. We answer this test in the
negative; we find that the delay in the execution of the reinstatement
pending appeal was due to the respondents unjustified acts.
In reversing, for grave abuse of discretion, the NLRCs order affirming
the release of the garnished amount, the CA relied on the fact of the
issuance of the February 21, 2006 Memorandum and of the
petitioners failure to comply with its return-to-work directive. In
other words, with the issuance of this Memorandum, the CA
considered the respondents as having sufficiently complied with their
obligation to reinstate the petitioners. And, the subsequent delay in or
the non-execution of the reinstatement order was no longer the
respondents fault, but rather of the petitioners who refused to report
back to work despite the directive.
Our careful consideration of the facts and the circumstances that
surrounded the case convinced us that the delay in the reinstatement
pending appeal was due to the respondents fault. For one, the
respondents filed several pleadings to suspend the execution of the
LAs reinstatement order, i.e., the opposition to the petitioners
motion for execution filed on October 3, 2005; the motion to quash
the October 7, 2005 writ of execution with prayer to hold in abeyance
the implementation of the reinstatement order; and the motion to
suspend the order for the petitioners reinstatement filed on February
28, 2006 after the LA issued the February 16, 2006 alias writ of
execution. These pleadings, to our mind, show a determined effort on

the respondents part to prevent or suspend the execution of the

reinstatement pending appeal.
Another reason is that the respondents, contrary to the CAs
conclusion, did not sufficiently notify the petitioners of their intent to
actually reinstate them; neither did the respondents give them ample
opportunity to comply with the return-to-work directive. We note that
the respondents delivered the February 21, 2006 Memorandum
(requiring the petitioners to report for work on February 24, 2006)
only in the afternoon of February 23, 2006. Worse, the respondents
handed the notice to only one of the petitioners Pelaez who did
not act in representation of the others. Evidently, the petitioners could
not reasonably be expected to comply with a directive that they had no
or insufficient notice of.
Lastly, the petitioners continuously and actively pursued the execution
of the reinstatement aspect of the LAs decision, i.e., by filing several
motions for execution of the reinstatement order, and motion to cite
the respondents in contempt and re-computation of the accrued wages
for the respondents continued failure to reinstate them.
These facts altogether show that the respondents were not at all
sincere in reinstating the petitioners. These facts when taken
together with the fact of delay reveal the respondents obstinate
resolve and willful disregard of the immediate and self-executory
nature of the reinstatement aspect of the LAs decision.
A further and final point that we considered in concluding that the
delay was due to the respondents fault is the fact that per the 2005
Revised Rules of Procedure of the NLRC (2005 NLRC
Rules),34 employers are required to submit a report of compliance
within ten (10) calendar days from receipt of the LAs decision,
noncompliance with which signifies a clear refusal to reinstate.
Arguably, the 2005 NLRC Rules took effect only on January 7, 2006;
hence, the respondents could not have been reasonably expected to
comply with this duty that was not yet in effect when the LA rendered
its decision (finding illegal dismissal) and issued the writ of execution
in 2005. Nevertheless, when the LA issued the February 16, 2006 alias
writ of execution and the April 24, 2007 writ of execution, the 2005

NLRC Rules was already in place such that the respondents had
become duty-bound to submit the required compliance report; their
noncompliance with this rule all the more showed a clear and
determined refusal to reinstate.
All told, under the facts and the surrounding circumstances, the delay
was due to the acts of the respondents that we find were unjustified.
We reiterate and emphasize, Article 223, paragraph 3, of the Labor
Code mandates the employer to immediately reinstate the dismissed
employee, either by actually reinstating him/her under the conditions
prevailing prior to the dismissal or, at the option of the employer, in
the payroll. The respondents' failure in this case to exercise either
option rendered them liable for the petitioners' accrued salary until
the LA decision was reversed by the CA on December 17, 2008. We,
therefore, find that the NLRC, in affirming the release of the garnished
amount, merely implemented the mandate of Article 223; it simply
recognized as immediate and self-executory the reinstatement aspect
of the LA's decision.
Accordingly, we reverse for legal errors the CA decision.1wphi1 We
find no grave abuse of discretion attended the NLRC's July 16, 2008
resolution that affirmed the March 13, 2008 decision of the LA
granting the release of the garnished amount.
WHEREFORE, in light of these considerations, we hereby GRANT the
petition. We REVERSE and SET ASIDE the September 30, 2010
decision and the January 13, 2011 resolution of the Court of Appeals
(CA) in CA-G.R. Sp No. 112011. Accordingly, we REINSTATE the July
16, 2008 decision of the National Labor Relations Commission
(NLRC) affirming the March 13, 2008 order of the Labor Arbiter in
NLRC Case No. 00-04-05469-2004.
Costs against the respondents South East Asian Airlines and Irene
Dornier.
SO ORDERED.

backwages shall be computed from the time of their illegal

termination up to the finality of the decision.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 147806

November 12, 2002

NERISSA BUENVIAJE, SONIA FLORES, BELMA OLIVIO,

GENALYN PELOBELLO, MARY JANE MENOR, JOSIE
RAQUERO,
ESTRELITA MANAHAN, REBECCA EBOL, and ERLINDA
ARGA, petitioners,
vs.
THE HONORABLE COURT OF APPEALS (SPECIAL
FORMER SEVENTH DIVISION),
HONORABLE ARBITER ROMULUS PROTASIO,
COTTONWAY MARKETING CORPORATION and MICHAEL
G. TONG, President and General Manager, respondents.
Labor Law; Dismissals; Benefits; Illegally dismissed employees are
entitled to full backwages, inclusive of allowances and other benefits
or their monetary equivalent, computed from the time their actual
compensation was withheld from them up to the time of actual
reinstatement; If reinstatement is no longer possible, the same shall
be computed from the time of their illegal termination up to the
finality of the decision.Under R.A. 6715, employees who are illegally
dismissed are entitled to full backwages, inclusive of allowances and
other benefits or their monetary equivalent, computed from the time
their actual compensation was withheld from them up to the time of
their actual reinstatement. If reinstatement is no longer possible, the

Same; Same; Same; Full backwages means without deducting from

backwages the earnings derived elsewhere by the concerned employee
during the period of his illegal dismissal.Thus, a closer adherence to
the legislative policy behind Rep. Act No. 6715 points to full
backwages as meaning exactly that, i.e., without deducting from
backwages the earnings derived elsewhere by the concerned employee
during the period of his illegal dismissal. In other words, the provision
calling for full backwages to illegally dismissed employees is clear,
plain and free from ambiguity and, therefore, must be applied without
attempted or strained, interpretation. Index animi sermo est.
Same; Same; Abandonment; Elements to be proven to warrant a valid
dismissal on the ground of abandonment.Petitioners alleged failure
to return to work cannot be made the basis for their termination. Such
failure does not amount to abandonment which would justify the
severance of their employment. To warrant a valid dismissal on the
ground of abandonment, the employer must prove the concurrence of
two elements: (1) the failure to report for work or absence without
valid or justifiable reason, and (2) a clear intention to sever the
employer-employee relationship. Buenviaje vs. Court of Appeals, 391
SCRA 440, G.R. No. 147806 November 12, 2002
DECISION
PUNO, J.:
This petition seeks to set aside the Decision dated March 13, 2000 and
Resolution dated February 13, 2001 of the Court of Appeals in CAG.R. SP No. 53204 entitled "Cottonway Marketing Corp. vs. National
Labor Relations Commission, et al."
The facts are as follows:
Petitioners were former employees of Cottonway Marketing Corp.
(Cottonway), hired as promo girls for their garment products. In
October, 1994, after their services were terminated as the company

was allegedly suffering business losses, petitioners filed with the

National Labor Relations Commission (NLRC) a complaint for illegal
dismissal, underpayment of salary, and non-payment of premium pay
for rest day, service incentive leave pay and thirteenth month pay
against Cottonway Marketing Corp. and Network Fashion Inc./JCT
International Trading.1
On December 19, 1995, Labor Arbiter Romulus S. Protasio issued a
Decision finding petitioners' retrenchment valid and ordering
Cottonway to pay petitioners' separation pay and their proportionate
thirteenth month pay.2
On appeal, the NLRC, in its Decision dated March 26, 1996, reversed
the Decision of the Labor Arbiter and ordered the reinstatement of
petitioners without loss of seniority rights and other privileges. It also
ordered Cottonway to pay petitioners their proportionate thirteenth
month pay and their full backwages inclusive of allowances and other
benefits, or their monetary equivalent computed from the time their
salaries were withheld from them up to the date of their actual
reinstatement.3
Cottonway filed a motion for reconsideration which was denied by the
Commission in a Resolution dated July 31, 1996. 4
On August 30, 1996, Cottonway filed with the NLRC a manifestation
stating that they have complied with the order of reinstatement by
sending notices dated June 5, 1996 requiring the petitioners to return
to work, but to no avail; and consequently, they sent letters to
petitioners dated August 1, 1996 informing them that they have lost
their employment for failure to comply with the return to work
order.5 Cottonway also filed a petition for certiorari with the Supreme
Court which was dismissed on October 14, 1996.6
On November 6, 1997, petitioners filed with the NLRC a motion for
execution of its Decision on the ground that it had become final and
executory.7

On December 4, 1996, the Research and Investigation Unit of the

NLRC issued a computation of the monetary award in accordance with
the March 26 Decision of the NLRC.8
Meanwhile, Cottonway filed a motion for reconsideration of the
Supreme Court Resolution of October 14, 1996 dismissing the petition
for certiorari. The motion for reconsideration was denied with finality
on January 13, 1997.9
On March 4, 1997, Cottonway filed a manifestation with the NLRC
reiterating their allegations in their manifestation dated August 30,
1996, and further alleging that petitioners have already found
employment elsewhere.10
On March 13, 1997, the Research and Investigation Unit of the NLRC
issued an additional computation of petitioners' monetary award in
accordance with the March 26 NLRC decision.11
On the same date, Cottonway filed with the NLRC a supplemental
manifestation praying that the Commission allow the reception of
evidence with respect to their claim that petitioners have found new
employment. The Commission denied Cottonways prayer in an Order
dated March 24, 199712 and Resolution dated July 24, 1997.13
Nonetheless, on April 8, 1998, Labor Arbiter Romulus S. Protasio
issued an Order declaring that the award of backwages and
proportionate thirteenth month pay to petitioners should be limited
from the time of their illegal dismissal up to the time they received the
notice of termination sent by the company upon their refusal to report
for work despite the order of reinstatement. He cited the fact that
petitioners failed to report to their posts without justifiable reason
despite respondent's order requiring them to return to work
immediately. The Labor Arbiter ordered the Research and
Investigation Unit to recompute the monetary award in accordance
with its ruling.14
The April 8 Order of the Labor Arbiter, however, was set aside by the
Commission in its Resolution dated September 21, 1998. The
Commission ruled that its Decision dated March 26, 1996 has become

final and executory and it is the ministerial duty of the Labor Arbiter
to issue the corresponding writ of execution to effect full and
unqualified implementation of said decision.15 The Commission thus
ordered that the records of the case be remanded to the Labor Arbiter
for execution. Cottonway moved for reconsideration of said resolution,
to no avail.
Hence, Cottonway filed a petition for certiorari with the Court of
Appeals seeking the reversal of the ruling of the NLRC and the
reinstatement of the Order dated April 8, 1998 issued by Labor Arbiter
Romulus S. Protasio.
The appellate court granted the petition in its Decision dated March
13, 2000.16 It ruled that petitioners' reinstatement was no longer
possible as they deliberately refused to return to work despite the
notice given by Cottonway. The Court of Appeals thus held that the
amount of backwages due them should be computed only up to the
time they received their notice of termination. It said:
"Petitioner's termination of private respondents' employment by
reason of their failure to report for work despite due notice being
valid, it would change the substance of the questioned March 26, 1996
decision which awards backwages to the complainants up to their
reinstatement. Again, private respondents' reinstatement is no longer
possible because of the supervening event which is their valid
termination. The deliberate failure to report for work after notice to
return bars reinstatement. It would be unjust and inequitable then to
require petitioner to pay private respondents their backwages even
after the latter were validly terminated when in fact petitioner
dutifully complied with the reinstatement aspect of the decision. Thus,
the period within which the monetary award of private respondents
should be based is limited up to the time of private respondents'
receipt of the respective notices of termination on August 27, 1998." 17
The Court of Appeals denied petitioners' motion for reconsideration in
a Resolution issued on February 13, 2001.18
Petitioners now question the Decision and Resolution of the Court of
Appeals. They impute the following errors:

"I. That the Honorable Court of Appeals gravely abused its

discretion amounting to lack of and/or in excess of jurisdiction
in rendering the assailed decision in CA-G.R. No. SP 53204
without first performing its ministerial duty of taking initial
judicial action thereon unlawfully depriving the petitioners the
opportunity to comment and/or file responsive pleadings to
the petition resulting to their being unlawfully denied a day in
court;
II. That the Honorable Court of Appeals gravely abused its
discretion amounting to lack of and/or in excess of jurisdiction
in rendering a decision in CA-G.R. No. SP 53204 reversing and
setting aside the lawful and appropriate September 21, 1998
and March 31, 1999 resolutions of the Honorable NLRC and
reinstating the irregular and illegal April 8, 1998 Order of
Honorable Arbiter Romulus Protasio; and
III. That the Honorable Court of Appeals gravely abused its
discretion amounting to lack of and/or in excess of jurisdiction
in issuing the February 13, 2001 Resolution which denied
petitioners' motion for reconsideration from the decision of
March 13, 2000 without stating the legal basis therefor." 19
We proceed directly to the central issue in this case which is the
computation of petitioners' backwageswhether it should be limited
from the time they were illegally dismissed until they received the
notice of termination sent by Cottonway on August 1, 1996 as argued
by respondent company, or whether it should be computed from the
time of their illegal dismissal until their actual reinstatement as
argued by the petitioners.
We agree with the petitioners.
The issue of the legality of the termination of petitioners services has
been settled in the NLRC decision dated March 26, 1996. Thus,
Cottonway was ordered to reinstate petitioners to their former
position without loss of seniority rights and other privileges and to pay
them full backwages. The dispositive portion of the decision read:

"WHEREFORE, the decision appealed from is hereby REVERSED.

Respondent Cottonway Marketing Corporation is hereby ordered to
reinstate the complainants without loss of seniority rights and other
privileges and to pay them the following: (1) their proportionate 13th
month pay for 1994; and (2) their full backwages inclusive of
allowances and other benefits, or their monetary equivalent computed
from the time their salaries were withheld from them up to the date of
their actual reinstatement.
SO ORDERED."
These are the reliefs afforded to employees whose employment is
unlawfully severed. Reinstatement restores the employee to the
position from which he was removed, i.e., to his status quo ante
dismissal, while the grant of backwages allows the same employee to
recover from the employer that which he lost by way of wages because
of his dismissal.20
Under R.A. 6715, employees who are illegally dismissed are entitled to
full backwages, inclusive of allowances and other benefits or their
monetary equivalent, computed from the time their actual
compensation was withheld from them up to the time of their actual
reinstatement. If reinstatement is no longer possible, the backwages
shall be computed from the time of their illegal termination up to the
finality of the decision.21 The Court explained the meaning of "full
backwages" in the case of Bustamante vs. NLRC:22
"The Court deems it appropriate, however, to reconsider such earlier
ruling on the computation of backwages as enunciated in said Pines
City Educational Center case, by now holding that conformably with
the evident legislative intent as expressed in Rep. Act No. 6715, abovequoted, backwages to be awarded to an illegally dismissed employee,
should not, as a general rule, be diminished or reduced by the
earnings derived by him elsewhere during the period of his illegal
dismissal. The underlying reason for this ruling is that the employee,
while litigating the legality (illegality) of his dismissal, must still earn a
living to support himself and family, while full backwages have to be
paid by the employer as part of the price or penalty he has to pay for
illegally dismissing his employee. The clear legislative intent of the

amendment in Rep. Act No. 6715 is to give more benefits to workers

than was previously given them under the Mercury Drug rule or the
"deduction of earnings elsewhere" rule. Thus, a closer adherence to
the legislative policy behind Rep. Act No. 6715 points to "full
backwages" as meaning exactly that, i.e., without deducting from
backwages the earnings derived elsewhere by the concerned employee
during the period of his illegal dismissal. In other words, the provision
calling for "full backwages" to illegally dismissed employees is clear,
plain and free from ambiguity and, therefore, must be applied without
attempted or strained interpretation. Index animi sermo est."
(emphasis supplied)
The Court does not see any reason to depart from this rule in the case
of herein petitioners. The decision of the NLRC dated March 26, 1996
has become final and executory upon the dismissal by this Court of
Cottonways petition for certiorari assailing said decision and the
denial of its motion for reconsideration. Said judgment may no longer
be disturbed or modified by any court or tribunal. It is a fundamental
rule that when a judgment becomes final and executory, it becomes
immutable and unalterable, and any amendment or alteration which
substantially affects a final and executory judgment is void, including
the entire proceedings held for that purpose. Once a judgment
becomes final and executory, the prevailing party can have it executed
as a matter of right, and the issuance of a writ of execution becomes a
ministerial duty of the court. A decision that has attained finality
becomes the law of the case regardless of any claim that it is
erroneous. The writ of execution must therefore conform to the
judgment to be executed and adhere strictly to the very essential
particulars.23
To justify the modification of the final and executory decision of the
NLRC dated March 26, 1996, the Court of Appeals cited the existence
of a supervening event, that is, the valid termination of petitioners'
employment due to their refusal to return to work despite notice from
respondents reinstating them to their former position.
We cannot concur with said ruling. Petitioners' alleged failure to
return to work cannot be made the basis for their termination. Such
failure does not amount to abandonment which would justify the

severance of their employment. To warrant a valid dismissal on the

ground of abandonment, the employer must prove the concurrence of
two elements: (1) the failure to report for work or absence without
valid or justifiable reason, and (2) a clear intention to sever the
employer-employee relationship.24
The facts of this case do not support the claim of Cottonway that
petitioners have abandoned their desire to return to their previous
work at said company. It appears that three months after the NLRC
had rendered its decision ordering petitioners reinstatement to their
former positions, Cottonway sent individual notices to petitioners
mandating them to immediately report to work. The standard letter,
signed by the companys legal counsel, Atty. Ambrosio B. De Luna,
and sent to each of the petitioners read:
"June 5, 1996
Dear Ms. Alivid,25
By virtue of the decision of the National Labor Relation(s)
Commission dated March 26, 1996 in Belma Alivid vs. Network
Fashion, Inc., JCT Intl Trading and, Cotton Mktg., Corp., NLRC CASE
NO. NCR-010210-96 and NLRC NCR-00-10-07238-94, you are
hereby ordered to report for work within five (5) days from receipt of
this letter, otherwise, your failure will be deemed lack of interest to
continue and considered to have abandoned your employment with
the company.

comply with said order since the NLRC has not yet finally disposed of
the case. The reply letter stated:26
"June 20, 1996
ATTY. AMBROSIO B. DE LUNA
Unit 2-D Bouganvilla (sic) Mansions
91 P. Tuazon Street, Cubao
Quezon City
Compaero,
Your letter dated June 5, 1996 to our clients, Erlinda Arga, et al.,
complainants in NLRC NCR CASE NO. 00-10-07238-94, Genalyn
Pelobello, et al. vs. Network Fashion, et al., was referred to us for
reply.
Please be informed that our said clients are not in a position now to
comply with your order for them to report for work within five (5)
days from receipt thereof since the National Labor Relations
Commission, First Division, has yet to finally disposed off (sic) the
case.
However, if it is now a case that your client, Mr. Michael Tong, is
yielding to the Decision dated March 26, 1996 of the NLRC, we are
then willing to sit down with you relative to the satisfaction of the
same to avoid said decision from being enforced by the sheriff.

Please give this matter your utmost attention.

Trusting your cooperation on this matter.

Very truly your(s),

Thank you.

(Sgd) AMBROSIO B. DE LUNA

Legal Counsel"
The petitioners, however, were not able to promptly comply with the
order. Instead, their counsel, Atty. Roberto LL. Peralta, sent a reply
letter to Atty. De Luna stating that his clients were not in a position to

Very truly yours,

(Sgd) ROBERTO LL. PERALTA
Counsel For The Complainants"

Consequently, Cottonway sent the petitioners individual notices of

termination. The standard letter of termination which was likewise
signed by counsel and individually addressed to petitioners stated:
"August 1, 1996
BELMA ALIVID
c/o Sonia Flores
#1256-A St. Nino Street
Tondo(,) Manila
Dear Ms. Alivid,27
For your failure to report for work as per letter dated June 5, 1996
within the period of five days from receipt of the same, you are
considered to have lost your employment status effective this date
with the company on the ground of failure to report for work.
Please be guided accordingly.
Very truly yours,
(Sgd) Ambrosio B. De Luna
Legal Counsel of
Network Fashion(,) Inc."
We note that Cottonway, before finally deciding to dispense with their
services, did not give the petitioners the opportunity to explain why
they were not able to report to work. The records also do not bear any
proof that all the petitioners received a copy of the letters. Cottonway
merely claimed that some of them have left the country and some have
found other employment. This, however, does not necessarily mean
that petitioners were no longer interested in resuming their
employment at Cottonway as it has not been shown that their
employment in the other companies was permanent. It should be
expected that petitioners would seek other means of income to tide
them over during the time that the legality of their termination is
under litigation. Furthermore, petitioners never abandoned their suit
against Cottonway. While the case was pending appeal before the

NLRC, the Court of Appeals and this Court, petitioners continued to

file pleadings to ensure that the company would comply with the
directive of the NLRC to reinstate them and to pay them full
backwages in case said decision is upheld. Moreover, in his reply to
the companys first letter, petitioners counsel expressed willingness to
meet with the companys representative regarding the satisfaction of
the NLRC decision.
It appears that the supposed notice sent by Cottonway to the
petitioners demanding that they report back to work immediately was
only a scheme to remove the petitioners for good. Petitioners failure
to instantaneously abide by the directive gave them a convenient
reason to dispense with their services. This the Court cannot allow.
Cottonway cited Article 223 of the Labor Code providing that the
decision ordering the reinstatement of an illegally dismissed employee
is immediately executory even pending appeal as basis for its decision
to terminate the employment of petitioners. We are not convinced.
Article 223 of the Labor Code provides:
"ART. 223. Appeal. Decisions, 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. x x x
xxxxxxxxx
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. x x x
x x x x x x x x x."
The foregoing provision is intended for the benefit of the employee
and cannot be used to defeat their own interest. The law mandates the

employer to either admit the dismissed employee back to work under

the same terms and conditions prevailing prior to his dismissal or to
reinstate him in the payroll to abate further loss of income on the part
of the employee during the pendency of the appeal. But we cannot
stretch the language of the law as to give the employer the right to
remove an employee who fails to immediately comply with the
reinstatement order, especially when there is reasonable explanation
for the failure. If Cottonway were really sincere in its offer to
immediately reinstate petitioners to their former positions, it should
have given them reasonable time to wind up their current
preoccupation or at least to explain why they could not return to work
at Cottonway at once. Cottonway did not do either. Instead, it gave
them only five days to report to their posts and when the petitioners
failed to do so, it lost no time in serving them their individual notices
of termination. We are, therefore, not impressed with the claim of
respondent company that petitioners have been validly dismissed on
August 1, 1996 and hence their backwages should only be computed
up to that time. We hold that petitioners are entitled to receive full
backwages computed from the time their compensation was actually
withheld until their actual reinstatement, or if reinstatement is no
longer possible, until the finality of the decision, in accordance with
the Decision of the NLRC dated March 26, 1996 which has attained
finality.28
IN VIEW WHEREOF, the petition is GRANTED. The Decision of
the Court of Appeals dated March 13, 2000 and Resolution dated
February 13, 2001 in CA-G.R. SP No. 53204 are REVERSED and SET
ASIDE. Let the records of this case be remanded to the Labor Arbiter
for execution in accordance with the Decision of the NLRC dated
March 26, 1996.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 177467

March 9, 2011

PFIZER, INC. AND/OR REY GERARDO BACARRO, AND/OR

FERDINAND CORTES, AND/OR ALFRED MAGALLON,
AND/OR ARISTOTLE ARCE, Petitioners,
vs.
GERALDINE VELASCO, Respondent.
Labor Law; Illegal Dismissals; Under Article 223 of the Labor Code,
an employee entitled to reinstatement 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.Under Article 223 of the Labor Code, an
employee entitled to reinstatement shall either be admitted back to
** Designated as additional member in lieu of Associate Justice
Antonio
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. It is established in jurisprudence that
reinstatement means restoration to a state or condition from which
one had been removed or separated. The person reinstated assumes
the position he had occupied prior to his dismissal.
Same; Same; The option of the employer to effect actual or payroll
reinstatement must be exercised in good faith.Foreseeably, an
employer may circumvent the immediately enforceable reinstatement
order of the Labor Arbiter by crafting return-to-work directives that
are ambiguous or meant to be rejected by the employee and then
disclaim liability for backwages due to non-reinstatement by

capitalizing on the employees purported refusal to work. In sum, the

option of the employer to effect actual or payroll reinstatement must
be exercised in good faith.
Same; Same; An order for reinstatement entitles an employee to
receive his accrued backwages from the moment the reinstatement
order was issued up to the date when the same was reversed by a
higher court without fear of refunding what he had received.In sum,
the Court reiterates the principle that reinstatement pending appeal
necessitates that it must be immediately self-executory without need
for a writ of execution during the pendency of the appeal, if the law is
to serve its noble purpose, and any attempt on the part of the
employer to evade or delay its execution should not be allowed.
Furthermore, we likewise restate our ruling that an order for
reinstatement entitles an employee to receive his accrued backwages
from the moment the reinstatement order was issued up to the date
when the same was reversed by a higher court without fear of
refunding what he had received. Pfizer, Inc. vs. Velasco, 645 SCRA
135, G.R. No. 177467 March 9, 2011
DECISION
LEONARDO-DE CASTRO, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of
Civil Procedure to annul and set aside the Resolution 1 dated October
23, 2006 as well as the Resolution2 dated April 10, 2007 both issued
by the Court of Appeals in CA-G.R. SP No. 88987 entitled, "Pfizer,
Inc. and/or Rey Gerardo Bacarro, and/or Ferdinand Cortes, and/or
Alfred Magallon, and/or Aristotle Arce v. National Labor Relations
Commission Second Division and Geraldine Velasco." The October
23, 2006 Resolution modified upon respondents motion for
reconsideration the Decision3 dated November 23, 2005 of the Court
of Appeals by requiring PFIZER, Inc. (PFIZER) to pay respondents
wages from the date of the Labor Arbiters Decision 4 dated December
5, 2003 until it was eventually reversed and set aside by the Court of
Appeals. The April 10, 2007 Resolution, on the other hand, denied
PFIZERs motion for partial reconsideration.
The facts of this case, as stated in the Court of Appeals Decision dated
November 23, 2005, are as follows:

Private respondent Geraldine L. Velasco was employed with petitioner

PFIZER, INC. as Professional Health Care Representative since 1
August 1992. Sometime in April 2003, Velasco had a medical work up
for her high-risk pregnancy and was subsequently advised bed rest
which resulted in her extending her leave of absence. Velasco filed her
sick leave for the period from 26 March to 18 June 2003, her vacation
leave from 19 June to 20 June 2003, and leave without pay from 23
June to 14 July 2003.
On 26 June 2003, while Velasco was still on leave, PFIZER through its
Area Sales Manager, herein petitioner Ferdinand Cortez, personally
served Velasco a "Show-cause Notice" dated 25 June 2003. Aside from
mentioning about an investigation on her possible violations of
company work rules regarding "unauthorized deals and/or discounts
in money or samples and unauthorized withdrawal and/or pull-out of
stocks" and instructing her to submit her explanation on the matter
within 48 hours from receipt of the same, the notice also advised her
that she was being placed under "preventive suspension" for 30 days
or from that day to 6 August 2003 and consequently ordered to
surrender the following "accountabilities;" 1) Company Car, 2)
Samples and Promats, 3) CRF/ER/VEHICLE/SOA/POSAP/MPOA
and other related Company Forms, 4) Cash Card, 5) Caltex Card, and
6) MPOA/TPOA Revolving Travel Fund. The following day, petitioner
Cortez together with one Efren Dariano retrieved the abovementioned "accountabilities" from Velascos residence.
In response, Velasco sent a letter addressed to Cortez dated 28 June
2003 denying the charges. In her letter, Velasco claimed that the
transaction with Mercury Drug, Magsaysay Branch covered by her
check (no. 1072) in the amount of P23,980.00 was merely to
accommodate two undisclosed patients of a certain Dr. Renato
Manalo. In support thereto, Velasco attached the Doctors letter and
the affidavit of the latters secretary.
On 12 July 2003, Velasco received a "Second Show-cause Notice"
informing her of additional developments in their investigation.
According to the notice, a certain Carlito Jomen executed an affidavit
pointing to Velasco as the one who transacted with a printing shop to
print PFIZER discount coupons. Jomen also presented text messages
originating from Velascos company issued cellphone referring to the
printing of the said coupons. Again, Velasco was given 48 hours to
submit her written explanation on the matter. On 16 July 2003,

Velasco sent a letter to PFIZER via Aboitiz courier service asking for
additional time to answer the second Show-cause Notice.
That same day, Velasco filed a complaint for illegal suspension with
money claims before the Regional Arbitration Branch. The following
day, 17 July 2003, PFIZER sent her a letter inviting her to a
disciplinary hearing to be held on 22 July 2003. Velasco received it
under protest and informed PFIZER via the receiving copy of the said
letter that she had lodged a complaint against the latter and that the
issues that may be raised in the July 22 hearing "can be tackled during
the hearing of her case" or at the preliminary conference set for 5 and
8 of August 2003. She likewise opted to withhold answering the
Second Show-cause Notice. On 25 July 2003, Velasco received a
"Third Show-cause Notice," together with copies of the affidavits of
two Branch Managers of Mercury Drug, asking her for her comment
within 48 hours. Finally, on 29 July 2003, PFIZER informed Velasco
of its "Management Decision" terminating her employment.
On 5 December 2003, the Labor Arbiter rendered its decision
declaring the dismissal of Velasco illegal, ordering her reinstatement
with backwages and further awarding moral and exemplary damages
with attorneys fees. On appeal, the NLRC affirmed the same but
deleted the award of moral and exemplary damages.5
The dispositive portion of the Labor Arbiters Decision dated
December 5, 2003 is as follows:
WHEREFORE, judgment is hereby rendered declaring that
complainant was illegally dismissed. Respondents are ordered to
reinstate the complainant to her former position without loss of
seniority rights and with full backwages and to pay the complainant
the following:
1.

Full backwages (basic salary, company

benefits, all allowances
as of December 5, 2003 in the amount of

2.

13th Month Pay, Midyear, Christmas and

performance bonuses
in the amount of

3.

Moral damages of

4.

Exemplary damages in the amount of

P30,000.00;

5.

Attorneys Fees of 10% of the award excluding

damages in the
amount of

P67,808.00.

The total award is in the amount of

P758,080.00.6

PFIZER appealed to the National Labor Relations Commission

(NLRC) but its appeal was denied via the NLRC Decision7 dated
October 20, 2004, which affirmed the Labor Arbiters ruling but
deleted the award for damages, the dispositive portion of which is as
follows:
WHEREFORE, premises considered, the instant appeal and the
motion praying for the deposit in escrow of complainants payroll
reinstatement are hereby denied and the Decision of the Labor Arbiter
is affirmed with the modification that the award of moral and
exemplary damages is deleted and attorneys fees shall be based on the
award of 13th month pay pursuant to Article III of the Labor Code. 8
PFIZER moved for reconsideration but its motion was denied for lack
of merit in a NLRC Resolution9 dated December 14, 2004.
Undaunted, PFIZER filed with the Court of Appeals a special civil
action for the issuance of a writ of certiorari under Rule 65 of the
Rules of Court to annul and set aside the aforementioned NLRC
issuances. In a Decision dated November 23, 2005, the Court of
Appeals upheld the validity of respondents dismissal from
employment, the dispositive portion of which reads as follows:

WHEREFORE, the instant petition is GRANTED. The assailed

Decision of the NLRC dated 20 October 2004 as well as its Resolution
of 14 December 2004 is hereby ANNULED and SET ASIDE. Having
found the termination of Geraldine L. Velascos employment in
accordance with the two notice rule pursuant to the due process
P572,780.00);
requirement and with just cause, her complaint for illegal dismissal is
hereby DISMISSED.10
P105,300.00; Respondent filed a Motion for Reconsideration which the Court of
Appeals resolved in the assailed Resolution dated October 23, 2006
P50,000.00; wherein it affirmed the validity of respondents dismissal from

employment but modified its earlier ruling by directing PFIZER to pay

respondent her wages from the date of the Labor Arbiters Decision
dated December 5, 2003 up to the Court of Appeals Decision dated
November 23, 2005, to wit:
IN VIEW WHEREOF, the dismissal of private respondent Geraldine
Velasco is AFFIRMED, but petitioner PFIZER, INC. is hereby ordered
to pay her the wages to which she is entitled to from the time the
reinstatement order was issued until November 23, 2005, the date of
promulgation of Our Decision.11
Respondent filed with the Court a petition for review under Rule 45 of
the Rules of Civil Procedure, which assailed the Court of Appeals
Decision dated November 23, 2005 and was docketed as G.R. No.
175122. Respondents petition, questioning the Court of Appeals
dismissal of her complaint, was denied by this Courts Second Division
in a minute Resolution12 dated December 5, 2007, the pertinent
portion of which states:
Considering the allegations, issues and arguments adduced in the
petition for review on certiorari, the Court resolves to DENY the
petition for failure to sufficiently show any reversible error in the
assailed judgment to warrant the exercise of this Courts discretionary
appellate jurisdiction, and for raising substantially factual issues.
On the other hand, PFIZER filed the instant petition assailing the
aforementioned Court of Appeals Resolutions and offering for our
resolution a single legal issue, to wit:
Whether or not the Court of Appeals committed a serious but
reversible error when it ordered Pfizer to pay Velasco wages from the
date of the Labor Arbiters decision ordering her reinstatement until
November 23, 2005, when the Court of Appeals rendered its decision
declaring Velascos dismissal valid.13
The petition is without merit.
PFIZER argues that, contrary to the Court of Appeals pronouncement
in its assailed Decision dated November 23, 2005, the ruling
in Roquero v. Philippine Airlines, Inc.14 is not applicable in the case at
bar, particularly with regard to the nature and consequences of an
order of reinstatement, to wit:

The order of reinstatement is immediately executory. The unjustified

refusal of the employer to reinstate a dismissed employee entitles him
to payment of his salaries effective from the time the employer failed
to reinstate him despite the issuance of a writ of execution. Unless
there is a restraining order issued, it is ministerial upon the Labor
Arbiter to implement the order of reinstatement. In the case at bar, no
restraining order was granted. Thus, it was mandatory on PAL to
actually reinstate Roquero or reinstate him in the payroll. Having
failed to do so, PAL must pay Roquero the salary he is entitled to, as if
he was reinstated, from the time of the decision of the NLRC until the
finality of the decision of the Court.15 (Emphases supplied.)
It is PFIZERs contention in its Memorandum 16 that "there was no
unjustified refusal on [its part] to reinstate [respondent] Velasco
during the pendency of the appeal,"17 thus, the pronouncement
in Roquero cannot be made to govern this case. During the pendency
of the case with the Court of Appeals and prior to its November 23,
2005 Decision, PFIZER claimed that it had already required
respondent to report for work on July 1, 2005. However, according to
PFIZER, it was respondent who refused to return to work when she
wrote PFIZER, through counsel, that she was opting to receive her
separation pay and to avail of PFIZERs early retirement program.
In PFIZERs view, it should no longer be required to pay wages
considering that (1) it had already previously paid an enormous sum
to respondent under the writ of execution issued by the Labor Arbiter;
(2) it was allegedly ready to reinstate respondent as of July 1, 2005 but
it was respondent who unjustifiably refused to report for work; (3) it
would purportedly be tantamount to allowing respondent to choose
"payroll reinstatement" when by law it was the employer which had
the right to choose between actual and payroll reinstatement; (4)
respondent should be deemed to have "resigned" and therefore not
entitled to additional backwages or separation pay; and (5) this Court
should not mechanically apply Roquero but rather should follow the
doctrine in Genuino v. National Labor Relations Commission18 which
was supposedly "more in accord with the dictates of fairness and
justice."19
We do not agree.
At the outset, we note that PFIZERs previous payment to respondent
of the amount of P1,963,855.00 (representing her wages from

December 5, 2003, or the date of the Labor Arbiter decision, until May
5, 2005) that was successfully garnished under the Labor Arbiters
Writ of Execution dated May 26, 2005 cannot be considered in its
favor. Not only was this sum legally due to respondent under
prevailing jurisprudence but also this circumstance highlighted
PFIZERs unreasonable delay in complying with the reinstatement
order of the Labor Arbiter. A perusal of the records, including
PFIZERs own submissions, confirmed that it only required
respondent to report for work on July 1, 2005, as shown by its
Letter20 dated June 27, 2005, which is almost two years from the time
the order of reinstatement was handed down in the Labor Arbiters
Decision dated December 5, 2003.
As far back as 1997 in the seminal case of Pioneer Texturizing
Corporation v. National Labor Relations Commission,21 the Court
held that an award or order of reinstatement is immediately selfexecutory without the need for the issuance of a writ of execution in
accordance with the third paragraph of Article 223 22 of the Labor
Code. In that case, we discussed in length the rationale for that
doctrine, to wit:
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 prevented. 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 x23 (Italics in the original; emphasis and underscoring
supplied.)
In the case at bar, PFIZER did not immediately admit respondent
back to work which, according to the law, should have been done as
soon as an order or award of reinstatement is handed down by the
Labor Arbiter without need for the issuance of a writ of execution.
Thus, respondent was entitled to the wages paid to her under the
aforementioned writ of execution. At most, PFIZERs payment of the
same can only be deemed partial compliance/execution of the Court of
Appeals Resolution dated October 23, 2006 and would not bar
respondent from being paid her wages from May 6, 2005 to November
23, 2005.
It would also seem that PFIZER waited for the resolution of its appeal
to the NLRC and, only after it was ordered by the Labor Arbiter to pay
the amount of P1,963,855.00 representing respondents full
backwages from December 5, 2003 up to May 5, 2005, did PFIZER
decide to require respondent to report back to work via the Letter
dated June 27, 2005.
PFIZER makes much of respondents non-compliance with its returnto-work directive by downplaying the reasons forwarded by
respondent as less than sufficient to justify her purported refusal to be
reinstated. In PFIZERs view, the return-to-work order it sent to
respondent was adequate to satisfy the jurisprudential requisites
concerning the reinstatement of an illegally dismissed employee.
It would be useful to reproduce here the text of PFIZERs Letter dated
June 27, 2005:
Dear Ms. Velasco:
Please be informed that, pursuant to the resolutions dated 20 October
2004 and 14 December 2004 rendered by the National Labor
Relations Commission and the order dated 24 May 2005 issued by
Executive Labor Arbiter Vito C. Bose, you are required to report for

work on 1 July 2005, at 9:00 a.m., at Pfizers main office at the 23rd
Floor, Ayala LifeFGU Center, 6811 Ayala Avenue, Makati City, Metro
Manila.
Please report to the undersigned for a briefing on your work
assignments and other responsibilities, including the appropriate
relocation benefits.
For your information and compliance.
Very truly yours,
(Sgd.)
Ma. Eden Grace Sagisi
Labor and Employee Relations Manager24
To reiterate, under Article 223 of the Labor Code, an employee
entitled to reinstatement "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."
It is established in jurisprudence that reinstatement means
restoration to a state or condition from which one had been removed
or separated. The person reinstated assumes the position he had
occupied prior to his dismissal. Reinstatement presupposes that the
previous position from which one had been removed still exists, or
that there is an unfilled position which is substantially equivalent or of
similar nature as the one previously occupied by the employee. 25
Applying the foregoing principle to the case before us, it cannot be
said that with PFIZERs June 27, 2005 Letter, in belated fulfillment of
the Labor Arbiters reinstatement order, it had shown a clear intent to
reinstate respondent to her former position under the same terms and
conditions nor to a substantially equivalent position. To begin with,
the return-to-work order PFIZER sent respondent is silent with regard
to the position or the exact nature of employment that it wanted
respondent to take up as of July 1, 2005. Even if we assume that the
job awaiting respondent in the new location is of the same designation
and pay category as what she had before, it is plain from the text of
PFIZERs June 27, 2005 letter that such reinstatement was not "under

the same terms and conditions" as her previous employment,

considering that PFIZER ordered respondent to report to its main
office in Makati City while knowing fully well that respondents
previous job had her stationed in Baguio City (respondents place of
residence) and it was still necessary for respondent to be briefed
regarding her work assignments and responsibilities, including her
relocation benefits.
The Court is cognizant of the prerogative of management to transfer
an employee from one office to another within the business
establishment, provided that there is no demotion in rank or
diminution of his salary, benefits and other privileges and the action is
not motivated by discrimination, made in bad faith, or effected as a
form of punishment or demotion without sufficient cause. 26 Likewise,
the management prerogative to transfer personnel must be exercised
without grave abuse of discretion and putting to mind the basic
elements of justice and fair play. There must be no showing that it is
unnecessary, inconvenient and prejudicial to the displaced
employee.27
The June 27, 2005 return-to-work directive implying that respondent
was being relocated to PFIZERs Makati main office would necessarily
cause hardship to respondent, a married woman with a family to
support residing in Baguio City. However, PFIZER, as the employer,
offered no reason or justification for the relocation such as the filling
up of respondents former position and the unavailability of
substantially equivalent position in Baguio City. A transfer of work
assignment without any justification therefor, even if respondent
would be presumably doing the same job with the same pay, cannot be
deemed faithful compliance with the reinstatement order. In other
words, in this instance, there was no real, bona fide reinstatement to
speak of prior to the reversal by the Court of Appeals of the finding of
illegal dismissal.
In view of PFIZERs failure to effect respondent's actual or payroll
reinstatement, it is indubitable that the Roqueroruling is applicable to
the case at bar. The circumstance that respondent opted for separation
pay in lieu of reinstatement as manifested in her counsels
Letter28 dated July 18, 2005 is of no moment. We do not see
respondents letter as taking away the option from management to
effect actual or payroll reinstatement but, rather under the factual
milieu of this case, where the employer failed to categorically reinstate

the employee to her former or equivalent position under the same

terms, respondent was not obliged to comply with PFIZERs
ambivalent return-to-work order. To uphold PFIZERs view that it was
respondent who unjustifiably refused to work when PFIZER did not
reinstate her to her former position, and worse, required her to report
for work under conditions prejudicial to her, is to open the doors to
potential employer abuse. Foreseeably, an employer may circumvent
the immediately enforceable reinstatement order of the Labor Arbiter
by crafting return-to-work directives that are ambiguous or meant to
be rejected by the employee and then disclaim liability for backwages
due to non-reinstatement by capitalizing on the employees purported
refusal to work. In sum, the option of the employer to effect actual or
payroll reinstatement must be exercised in good faith.
Moreover, while the Court has upheld the employers right to choose
between actually reinstating an employee or merely reinstating him in
the payroll, we have also in the past recognized that reinstatement
might no longer be possible under certain circumstances. In F.F.
Marine Corporation v. National Labor Relations Commission, 29 we
had the occasion to state:
It is well-settled that when a person is illegally dismissed, he is
entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages. In the event, however, that
reinstatement is no longer feasible, or if the employee decides not
be reinstated, the employer shall pay him separation pay in lieu of
reinstatement. Such a rule is likewise observed in the case of a
strained employer-employee relationship or when the work or
position formerly held by the dismissed employee no longer exists. In
sum, an illegally dismissed employee is entitled to: (1) either
reinstatement if viable or separation pay if reinstatement is no longer
viable, and (2) backwages.30 (Emphasis supplied.)
Similarly, we have previously held that an employees demand for
separation pay may be indicative of strained relations that may justify
payment of separation pay in lieu of reinstatement. 31 This is not to say,
however, that respondent is entitled to separation pay in addition to
backwages. We stress here that a finding of strained relations must
nonetheless still be supported by substantial evidence. 32
In the case at bar, respondents decision to claim separation pay over
reinstatement had no legal effect, not only because there was no

genuine compliance by the employer to the reinstatement order but

also because the employer chose not to act on said claim. If it was
PFIZERs position that respondents act amounted to a "resignation" it
should have informed respondent that it was accepting her resignation
and that in view thereof she was not entitled to separation pay.
PFIZER did not respond to respondents demand at all. As it was,
PFIZERs failure to effect reinstatement and accept respondents offer
to terminate her employment relationship with the company meant
that, prior to the Court of Appeals reversal in the November 23, 2005
Decision, PFIZERs liability for backwages continued to accrue for the
period not covered by the writ of execution dated May 24, 2005 until
November 23, 2005.
Lastly, PFIZER exhorts the Court to re-examine the application
of Roquero with a view that a mechanical application of the same
would cause injustice since, in the present case, respondent was able
to gain pecuniary benefit notwithstanding the circumstance of reversal
by the Court of Appeals of the rulings of the Labor Arbiter and the
NLRC thereby allowing respondent to profit from the dishonesty she
committed against PFIZER which was the basis for her termination.
In its stead, PFIZER proposes that the Court apply the ruling
in Genuino v. National Labor Relations Commission 33 which it
believes to be more in accord with the dictates of fairness and justice.
In that case, we canceled the award of salaries from the date of the
decision of the Labor Arbiter awarding reinstatement in light of our
subsequent ruling finding that the dismissal is for a legal and valid
ground, to wit:
Anent the directive of the NLRC in its September 3, 1994 Decision
ordering Citibank "to pay the salaries due to the complainant from the
date it reinstated complainant in the payroll (computed
at P60,000.00 a month, as found by the Labor Arbiter) up to and until
the date of this decision," the Court hereby cancels said award in view
of its finding that the dismissal of Genuino is for a legal and valid
ground.
Ordinarily, the employer is required to reinstate the employee during
the pendency of the appeal pursuant to Art. 223, paragraph 3 of the
Labor Code, which states:
xxxx

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.34 (Emphases
supplied.)
Thus, PFIZER implores the Court to annul the award of backwages
and separation pay as well as to require respondent to refund the
amount that she was able to collect by way of garnishment from
PFIZER as her accrued salaries.
The contention cannot be given merit since this question has been
settled by the Court en banc.
In the recent milestone case of Garcia v. Philippine Airlines,
Inc.,35 the Court wrote finis to the stray posture inGenuino requiring
the dismissed employee placed on payroll reinstatement to refund the
salaries in case a final decision upholds the validity of the dismissal.
In Garcia, we clarified the principle of reinstatement pending appeal
due to the emergence of differing rulings on the issue, to wit:
On this score, the Court's 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, while on the other is the recent case
ofGenuino v. National Labor Relations Commission. At the core of
the seeming divergence is the application of paragraph 3 of Article 223
of the Labor Code x x x.

xxxx
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. (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.
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 [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]
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. (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,
the Court did not order the refund of salaries garnished or received by
payroll-reinstated 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.
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.36
Furthermore, in Garcia, the Court went on to discuss the illogical and
unjust effects of the "refund doctrine" erroneously espoused
in Genuino:
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.1avvphi1
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 to Genuino, 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 Arbiter's
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."
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.
xxxx
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. x x x.37 (Emphasis supplied.)
In sum, the Court reiterates the principle that reinstatement pending
appeal necessitates that it must be immediately self-executory without
need for a writ of execution during the pendency of the appeal, if the
law is to serve its noble purpose, and any attempt on the part of the
employer to evade or delay its execution should not be allowed.
Furthermore, we likewise restate our ruling that an order for
reinstatement entitles an employee to receive his accrued backwages
from the moment the reinstatement order was issued up to the date
when the same was reversed by a higher court without fear of
refunding what he had received. It cannot be denied that, under our
statutory and jurisprudential framework, respondent is entitled to

payment of her wages for the period after December 5, 2003 until the
Court of Appeals Decision dated November 23, 2005, notwithstanding
the finding therein that her dismissal was legal and for just cause.
Thus, the payment of such wages cannot be deemed as unjust
enrichment on respondents part.
WHEREFORE, the petition is DENIED and the assailed Resolution
dated October 23, 2006 as well as the Resolution dated April 10, 2007
both issued by the Court of Appeals in CA-G.R. SP No. 88987 are
hereby AFFIRMED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Baguio City
SECOND DIVISION
G.R. No. 207983

April 7, 2014

WENPHIL CORPORATION, Petitioner,

vs.
ALMER R. ABING and ANABELLE M. TUAZON, Respondents.
Labor Law; Illegal Dismissals; Termination of Employment;
Reinstatement; 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 posting of a bond by the employer shall not stay the execution for
reinstatement.Under Article 223 of the Labor Code, 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.
Same; Same; Same; Same; Since the decision is immediately
executory, it is the duty of the employer to comply with the order of
reinstatement, which can be done either actually or through payroll
reinstatement.Since the decision is immediately executory, it is the
duty of the employer to comply with the order of reinstatement, which
can be done either actually or through payroll reinstatement. As
provided under Article 223 of the Labor Code, this immediately
executory nature of an order of reinstatement is not affected by the
existence of an ongoing appeal. The employer has the duty to reinstate
the employee in the interim period until a reversal is decreed by a
higher court or tribunal.

Same; Same; Same; Same; In the case of payroll reinstatement, even if

the employers appeal turns the tide in its favor, the reinstated
employee has no duty to return or reimburse the salary he received
during the period that the lower court or tribunals governing decision
was for the employees illegal dismissal.In the case of payroll
reinstatement, even if the employers appeal turns the tide in its favor,
the reinstated employee has no duty to return or reimburse the salary
he received during the period that the lower court or tribunals
governing decision was for the employees illegal dismissal. Otherwise,
the situation would run counter to the immediately executory nature
of an order of reinstatement. The case of Garcia v. Philippine Airlines,
576 SCRA 479 (2009), is enlightening on this point: 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.
Same; Termination of Employment; Illegal Dismissals;
Reinstatement; Backwages; The normal consequences of a finding
that an
128
employee has been illegally dismissed are: first, that the employee
becomes entitled to reinstatement to his former position without loss
of seniority rights; and second, the payment of backwages covers the
period running from his illegal dismissal up to his actual
reinstatement.We point out that reinstatement and backwages are
two separate reliefs available to an illegally dismissed employee. The
normal consequences of a finding that an employee has been illegally

dismissed are: first, that the employee becomes entitled to

reinstatement to his former position without loss of seniority rights;
and second, the payment of backwages covers the period running from
his illegal dismissal up to his actual reinstatement. These two reliefs
are not inconsistent with one another and the labor arbiter can award
both simultaneously.
Same; Same; Same; Same; Same; Strained Relations; Separation Pay;
An illegally dismissed employee should be entitled to either
reinstatement if viable, or separation pay if reinstatement is no
longer be viable, plus backwages in either instance.The relief of
separation pay may be granted in lieu of reinstatement but it cannot
be a substitute for the payment of backwages. In instances where
reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay should be
granted. In effect, an illegally dismissed employee should be entitled
to either reinstatement if viable, or separation pay if reinstatement
is no longer be viable, plus backwages in either instance.
Same; Same; Separation Pay; Backwages; Separation pay is granted
where reinstatement is no longer advisable because of strained
relations between the employee and the employer. Backwages
represent compensation that should have been earned but were not
collected because of the unjust dismissal.We emphasize that the
basis for the payment of backwages is different from that of the award
of separation pay. Separation pay is granted where reinstatement is no
longer advisable because of strained relations between the employee
and the employer. Backwages represent compensation that should
have been earned but were not collected because of the unjust
dismissal. The basis for computing separation pay is usually the length
of the employees past service, while that for backwages is the actual
period when the employee was unlawfully prevented from working.
129

Same; Same; Same; Same; Reinstatement; Until a higher courts or

tribunals reversal of the finding that an employee had been illegally

dismissed, the employee would be entitled to receive his reinstatement

salary or backwages during the period of appeal until such reversal.
Separation pay cannot be a substitute for backwages but only for
reinstatement. The award of separation pay is not inconsistent with
the payment of backwages. Thus, until a higher courts or tribunals
reversal of the finding that an employee had been illegally dismissed,
the employee would be entitled to receive his reinstatement salary or
backwages during the period of appeal until such reversal. This is in
line with the Labor Codes policy that an order of reinstatement, which
can either be actual or through the payroll, is immediately executory
and is not affected by the period of appeal.
Same; Backwages; The period for computing the backwages due to the
respondents during the period of appeal should end on the date that a
higher court reversed the labor arbitration ruling of illegal dismissal.
The commanding one is the rule in Pfizer, which merely echoes the
rulings we made in the cases of Roquero v. Philippine Airlines, 401
SCRA 424 (2003) and Garcia v. Philippine Airlines, 576 SCRA 479
(2009), that the period for computing the backwages due to the
respondents during the period of appeal should end on the date that a
higher court reversed the labor arbitration ruling of illegal dismissal.
In this case, the higher court which first reversed the NLRCs ruling
was not the SC but rather the CA. In this light, the CA was correct
when it found that that the period of computation should end on
August 27, 2003. The date when the SCs decision became final and
executory need not matter as the rule in Roquero, Garcia and Pfizer
merely referred to the date of reversal, not the date of the ultimate
finality of such reversal. Wenphil Corporation vs. Abing, 721 SCRA
126, G.R. No. 207983 April 7, 2014

These assailed CA rulings annulled and set aside the March 26, 2010
Decision4 and September 15, 20105resolution (NLRC rulings) of the
National Labor Relations Commission (NLRC) in NLRC CA No. 028233-01 (Rl-08).
The NLRC rulings, in turn, fully affirmed the November 16, 2007
Order6 of the Labor Arbiter (LA) in NLRC-NCR Case Nos. 30-0300993-00 and 30-03-01020-00. The LAs order found that an illegal
dismissal took place. Thus, the LA directed petitioner Wenphil
Corporation (Wenphil) to pay respondents Almer Abing and Anabelle
Tuazon (respondents) their backwages for the period from February
15, 2002 to November 8, 2002, pursuant to the rule that an order of
reinstatement is immediately executory even pending appeal.7
Factual Antecedents
This case stemmed from a complaint for illegal dismissal filed by the
respondents against Wenphil, docketed as NLRC NCR Case No. 3003-00993-00.
On December 8, 2000, LA Geobel A. Bartolabac ruled8 that the
respondents had been illegally dismissed by Wenphil. According to the
LA, the allegation of serious misconduct against the respondents had
no factual and legal basis.9 Consequently, LA Bartolabac ordered
Wenphil to immediately reinstate the respondents to their respective
positions or to equivalent ones, whether actuall or in the payroll. Also,
the LA ordered Wenphil to pay the respondents their backwages from
February 3, 2000 until the date of their actual reinstatement.10

DECISION

Because of the unfavorable LA decision, Wenphil appealed to the

NLRC on April 16, 200111. In the meantime, the respondents moved
for the immediate execution of the LAs December 8, 2000 decision. 12

We resolve this petition for review on certiorari1 under Rule 45 of the

Rules of Court, challenging the August 31, 2012 decision2 and the June
20, 2013 resolution3 (assailed CA rulings) of the Court of Appeals (CA)
in CA-G.R. SP No. 117366.

On October 29, 2001, Wenphil and the respondents entered into a

compromise agreement13 before LA Bartolabac. They agreed to the
respondents payroll reinstatement while Wenphils appeal with the
NLRC was ongoing. Wenphil also agreed to pay the accumulated
salaries of the respondents for the payroll period from April 5, 2001
until October 15, 2001.14 As for the remaining payroll period starting

BRION, J.:

October 16, 2001, Wenphil committed itself to credit the respective

salaries of the respondents to their ATM payroll accounts until such
time that the questioned decision of LA Bartolabac is either modified,
amended or reversed by the Honorable National Labor Relations
Commission.15
On January 30, 2002, the NLRC issued a resolution16 affirming LA
Bartolabacs decision with modifications. Instead of ordering the
respondents reinstatement, the NLRC directed Wenphil to pay the
respondents their respective separation pay at the rate of one (1)
month salary for every year of service. Also, the NLRC found that
while the respondents had been illegally dismissed, they had not been
illegally suspended. Thus, the period from February 3 to February 28,
2000 during which the respondents were on preventive suspension
was excluded by the NLRC in the computation of the respondents
backwages.17
Subsequently, Wenphil moved for the reconsideration18 of the NLRCs
January 30, 2002 resolution, but the NLRC denied the motion in
another resolution dated September 24, 2002.19
Wenphil thereafter went up to the CA via a petition for certiorari to
question the NLRCs January 30, 2002 and September 24, 2002
resolutions.20 On August 27, 2003, the CA rendered its
decision21 reversing the NLRCs finding that the respondents had been
illegally dismissed. According to the CA, there was enough evidence to
show that the respondents had been guilty of serious misconduct;
thus, their dismissal was for a valid cause.22The respondents moved
for the reconsideration of the CAs decision.23 In a resolution24 dated
February 23, 2004, the CA denied the respondents motion.
On appeal to the Supreme Court (SC) via Rule 45 (docketed as G.R.
No. 16244725 and dated December 27, 2006), the SC denied the
respondents petition for review on certiorari26 and affirmed the CAs
August 27, 2003 decision and February 23, 2004 resolution. The
respondents did not file any motion for reconsideration to question
the SCs decision; thus, the decision became final and executory on
February 15, 2007.27

The Labor Arbitration Rulings

Sometime after the SCs decision in G.R. No. 162447 became final and
executory, the respondents filed with LA Bartolabac a motion for
computation and issuance of writ of execution.28 The respondents
asserted in this motion that although the CAs ruling on the absence of
illegal dismissal (as affirmed by the SC) was adverse to them, under
the law and settled jurisprudence, they were still entitled to backwages
from the time of their dismissal until the NLRCs decision finding
them to be illegally dismissed was reversed with finality.29
LA Bartolabac granted the respondents motion and, in an order dated
November 16, 2007,30 directed Wenphil to pay each complainant their
salaries on reinstatement covering the period from February 15, 2002
(the date Wenphil last paid the respondents respective salaries) to
November 8, 2002 (since the NLRCs decision finding the respondents
illegally dismissed became final and executory on February 28, 2002).
Both parties appealed to the NLRC to question LA Bartolabacs
November 16, 2007 order.31 Wenphil argued that the respondents
were no longer entitled to payment of backwages in view of the
compromise agreement they executed on October 29, 2001. According
to Wenphil, the compromise agreement provided that Wenphils
obligation to pay the respondents backwages should cease as soon as
LA Bartolabacs decision was "modified, amended or reversed" by the
NLRC. Since the NLRC modified the LAs ruling by ordering the
payment of separation pay in lieu of reinstatement, then the
respondents, under the terms of the compromise agreement, were
entitled to backwages only up to the finality of the NLRC decision. 32
The respondents questioned in their appeal the determined period for
the computation of their backwages; they posited that the period for
payment should end, not on November 8, 2002, but on February 14,
2007, since the SCs decision which upheld the CAs ruling became
final and executory on February 15, 2007.33

The NLRC denied the parties respective appeals in its decision dated
March 26, 201034 and affirmed in toto the LAs order. Both parties
moved for the reconsideration of the NLRCs decision but the NLRC
denied their respective motions in the resolution of September 15,
2010.35
The CAs Ruling
In its decision dated August 31, 2012,36 the CA reversed the NLRC
rulings and prescribed a different computation period.
The CA ruled that the NLRC committed grave abuse of discretion
when it affirmed the LAs computed period which was from February
15, 2002 to November 8, 2002. In arriving at this conclusion, the CA
cited the case of Pfizer v. Velasco37 where this Court ruled 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
dismissed employees wages during the period of appeal until reversal
by the higher court.38 The CA construed this "higher court" to be the
CA, not the SC.
The CA reasoned out that it was a "higher court" than the NLRC when
it reversed the NLRCs rulings; thus, the period for computation
should end when it promulgated its decision reversing that of the
NLRC, and not on the date when the SC affirmed its decision.
The CA likewise held that the compromise agreement did not contain
any waiver of rights for any award the respondents might have
received when the NLRC changed or modified the LAs award.39
The Petition
In its petition for review with this Court, Wenphil maintained that the
respondents were no longer entitled to payment of backwages in view
of the modification of the LAs ruling by the NLRC pursuant with their
October 29, 2001 compromise agreement.

Wenphil argued that the CA utterly disregarded the terms of the

parties compromise agreement whose terms were very clear; the
agreement reads:
3. That for the payroll period from October 16-31 and thereafter, their
[respondents] salaries (net of withholding tax, SSS, Philhealth and
Pag-ibig) shall be credited every 10th and 25th of the succeeding
months through their respective ATM employees account until such
time that the questioned decision of the Honorable Labor Arbiter
Geobel Bartolabac is modified, amended or reversed by the Honorable
Labor Relations Commission.40 [emphasis ours]
It was Wenphils assertion that since the NLRCs decision partly
changed the decision of LA Bartolabac by ordering payment of
separation pay in lieu of reinstatement, the NLRC decision was a
"modification" that should operate to remove Wenphils obligation to
pay the respondents backwages for the period of the CAs reversal of
the NLRCs illegal dismissal ruling.41 According to Wenphil, the words
of the compromise agreement left no room for interpretation as to the
parties intentions;42 as a valid agreement between the parties, it must
be given effect and respected by the court.
Wenphil also contended that the CAs cited Pfizer case cannot apply to
the present case since there was no compromise agreement in Pfizer
where the dismissed employee waived her entitlement to backwages.43
Finally, Wenphil claimed that the reliefs of reinstatement and
backwages are only available to illegally dismissed employees. A ruling
that the respondents were still entitled to reinstatement pay
notwithstanding the validity of their dismissal, would amount to the
courts tolerance of an unjust and equitable situation.44
The Courts Ruling
We resolve to DENY the petition. An order of reinstatement is
immediately executory even pending appeal. The employer has the
obligation to reinstate and pay the wages of the dismissed employee
during the period of appeal until reversal by the higher court.

Under Article 223 of the Labor Code, "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."
The Court discussed reason behind this legal policy in Aris v.
NLRC,45 where it explained:
In authorizing execution pending appeal of the reinstatement aspect
of a decision of the Labor Arbiter reinstating a dismissed or separated
employee, the 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. These provisions are the
quintessence of the aspirations of the workingman for recognition of
his role in the social and economic life of the nation, for the protection
of his rights, and the promotion of his welfare 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.
[emphasis ours]
Since the decision is immediately executory, it is the duty of the
employer to comply with the order of reinstatement, which can be
done either actually or through payroll reinstatement. As provided
under Article 223 of the Labor Code, this immediately executory
nature of an order of reinstatement is not affected by the existence of
an ongoing appeal. The employer has the duty to reinstate the
employee in the interim period until a reversal is decreed by a higher
court or tribunal.

In the case of payroll reinstatement, even if the employers appeal

turns the tide in its favor, the reinstated employee has no duty to
return or reimburse the salary he received during the period that the
lower court or tribunals governing decision was for the employees
illegal dismissal.
Otherwise, the situation would run counter to the immediately
executory nature of an order of reinstatement. The case of Garcia v.
Philippine Airlines46 is enlightening on this point:
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.1wphi1 Notably, the option of payroll reinstatement
belongs to the employer, even if the employee is able and raring to
return to work.
We see the situation discussed above to be present in the case before
us as Wenphil observed the mandate of Article 223 to immediately
comply with the order of reinstatement by the LA. On October 29,
2001, while Wenphils appeal with the NLRC was pending, it entered
into a compromise agreement with the respondents. In this
agreement, Wenphil committed to reinstate the respondents in its
payroll. However, the commitment came with a condition: Wenphil
stipulated that its obligation to pay the wages due to the respondents
would cease if the decision of the LA would be "modified, amended or
reversed" by the NLRC.47
Thus, when the NLRC rendered its decision on the appeal affirming
the LAs finding that the respondents were illegally dismissed, but

modifying the award of reinstatement to payment of separation pay,

Wenphil stopped paying the respondents wages.
The reinstatement salaries due to the respondents were, by their
nature, payment of unworked backwages. These were salaries due to
the respondents because they had been prevented from working
despite the LA and the NLRC findings that they had been illegally
dismissed.
We point out that reinstatement and backwages are two separate
reliefs available to an illegally dismissed employee. The normal
consequences of a finding that an employee has been illegally
dismissed are: first, that the employee becomes entitled to
reinstatement to his former position without loss of seniority rights;
and second, the payment of backwages covers the period running from
his illegal dismissal up to his actual reinstatement.48 These two reliefs
are not inconsistent with one another and the labor arbiter can award
both simultaneously.
Moreover, the relief of separation pay may be granted in lieu of
reinstatement but it cannot be a substitute for the payment of
backwages. In instances where reinstatement is no longer feasible
because of strained relations between the employee and the employer,
separation pay should be granted. In effect, an illegally dismissed
employee should be entitled to either reinstatement if viable, or
separation pay if reinstatement is no longer be viable, plus backwages
in either instance.49 The rationale for such policy of distinction was
vividly explained in Santos v. NLRC under these terms:50
Though the grant of reinstatement commonly carries with it an award
of backwages, the inappropriateness or non-availability of one does
not carry with it the inappropriateness or non-availability of the other.
Separation pay was awarded in favor of petitioner Lydia Santos
because the NLRC found that her reinstatement was no longer feasible
or appropriate. As the term suggests, separation pay is the amount
that an employee receives at the time of his severance from the service
and, as correctly noted by the Solicitor General in his Comment, is
designed to provide the employee with "the wherewithal during the
period that he is looking for another employment." In the instant case,

the grant of separation pay was a substitute for immediate and

continued re-employment with the private respondent Bank. The
grant of separation pay did not redress the injury that is intended to
be relieved by the second remedy of backwages, that is, the loss of
earnings that would have accrued to the dismissed employee during
the period between dismissal and reinstatement. Put a little
differently, payment of backwages is a form of relief that restores the
income that was lost by reason of unlawful dismissal; separation pay,
in contrast, is oriented towards the immediate future, the transitional
period the dismissed employee must undergo before locating a
replacement job. It was grievous error amounting to grave abuse of
discretion on the part of the NLRC to have considered an award of
separation pay as equivalent to the aggregate relief constituted by
reinstatement plus payment of backwages under Article 280 of the
Labor Code. The grant of separation pay was a proper substitute only
for reinstatement; it could not be an adequate substitute both for
reinstatement and for backwages. In effect, the NLRC in its assailed
decision failed to give to petitioner the full relief to which she was
entitled under the statute. [emphasis ours]
Apparently, when the NLRC changed the LAs decision (specifically,
the order to award separation pay in lieu of reinstatement), Wenphil
read this to mean to be the "modification" envisioned in the
compromise agreement, Wenphil likewise effectively concluded that
separation pay and backwages are the same or are interchangeable
reliefs. This conclusion can be deduced from Wenphils insistence not
to pay the respondents remaining backwages under its erroneous
reasoning that this was the effect of the NLRCs order to Wenphil to
pay separation pay in lieu of reinstatement.
We emphasize that the basis for the payment of backwages is different
from that of the award of separation pay. Separation pay is granted
where reinstatement is no longer advisable because of strained
relations between the employee and the employer. Backwages
represent compensation that should have been earned but were not
collected because of the unjust dismissal. The basis for computing
separation pay is usually the length of the employees past service,
while that for backwages is the actual period when the employee was
unlawfully prevented from working.51

Had Wenphil really wanted to put a stop to the running of the period
for the payment of the respondents backwages, then it should have
immediately complied with the NLRCs order to award the employees
their separation pay in lieu of reinstatement. This action would have
immediately severed the employer-employee relationship. However,
the records are bereft of any evidence that Wenphil actually paid the
respondents separation pay. Thus, the employer-employee
relationship between Wenphil and the respondents never ceased and
the employment status remained pending and uncertain until the CA
actually rendered its decision that the respondents had not been
illegally dismissed. In the context of the parties agreement, it was only
at this point that the payment of backwages should have stopped.
A compromise agreement should not be contrary to law, morals, good
customs and public policy.
While it is true that a compromise agreement is binding between the
parties and becomes the law between them,52it is also a rule that to be
valid, a compromise agreement must not be contrary to law, morals,
good customs and public policy.53
In the present case, the parties compromise agreement simply
provided that Wenphils obligation to pay the respondents backwages
shall end the moment the NLRC modifies, amends or reverses the
illegal dismissal decision of LA Bartolabac. On its face, there is
nothing invalid with such stipulation. Indeed, had the NLRC reversed
the LA, the obligation to pay backwages would have stopped. The
NLRC, however, did not decree a reversal of the finding of illegal
dismissal. In fact, it affirmed the illegal dismissal conclusion,
confining itself merely to a modification of the consequences of the
illegal dismissal from reinstatement to the payment of separation
pay.
This "modification" of course we cannot accept; the option under the
legal policy is solely limited to a ruling that the respondents had not
been illegally dismissed. Otherwise, we would be violating the Labor
Codes policy entitling illegally dismissed employees to their right to
backwages even during the period of appeal. As we held in the case of
Garcia v. Philippine Airlines:54

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. 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. [emphasis ours]
This ruling embodies a principle and policy of the law that cannot be
watered down by any lesser agreement except perhaps when
backwages are already earned entitlements that the employee chooses
to surrender for a valuable consideration (and even then, the
consideration must at least be equitable). This legal policy
emphasizes, too, the rule that separation pay cannot be a substitute
for backwages but only for reinstatement. The award of separation pay
is not inconsistent with the payment of backwages. Thus, until a
higher courts or tribunals reversal of the finding that an employee
had been illegally dismissed, the employee would be entitled to receive
his reinstatement salary or backwages during the period of appeal
until such reversal. This is in line with the Labor Codes policy that an
order of reinstatement, which can either be actual or through the
payroll, is immediately executory and is not affected by the period of
appeal.
Period for Computation of Backwages
The records show that the inconsistency between the labor arbitration
rulings and the CAs ruling was on the period for the computation of
such backwages and not on whether the respondents were still entitled
to such backwages during the period of appeal until the reversal of the
finding of illegal dismissal.
According to the LA, whose ruling the NLRC affirmed, the period for
computation should be from February 15, 2002 until November 8,
2002 since the NLRCs decision which affirmed the LAs finding of
illegal dismissal became final and executory on November 8, 2002.

The LA started the counting of the period on February 15, 2002 since
that was the day when Wenphil last paid the respondents backwages.
On the other hand, the CA, in setting aside the NLRCs rulings, relied
on the case of Pfizer v. Velasco where we ruled that the backwages of
the dismissed employee should be granted during the period of appeal
until reversal by a higher court. Since the first CA decision which
found that the respondents had not been illegally dismissed was
promulgated on August 27, 2003, then the reversal by the higher court
was effectively made on August 27, 2003.

WHEREFORE, in light of these considerations, we hereby DENY the

petition. The Court of Appeals' decision dated August 31, 2012 and
resolution dated June 20, 2013, which annulled and set aside the
March 26, 2010 decision and September 15, 2010 resolution of the
NLRC, are hereby AFFIRMED with MODIFICATION. The period for
the computation of backwages of respondents Almer R. Abing and
Anabelle M. Tuazon should be from February 16, 2002 until August
27, 2003, when the Court of Appeals promulgated its decision
reversing the NLRC' s finding of illegal dismissal. No costs.
SO ORDERED.

As against this view, the respondents argued that the period for
payment of their backwages should end on February 14, 2007 since
the SC decision in G.R. No. 162447 which affirmed the CAs findings
that the respondents had not been legally dismissed became final and
executory on February 15, 2007.
Among these views, the commanding one is the rule in Pfizer, which
merely echoes the rulings we made in the cases of Roquero v.
Philippine Airlines55 and Garcia v. Philippine Airlines56 that the period
for computing the backwages due to the respondents during the
period of appeal should end on the date that a higher court reversed
the labor arbitration ruling of illegal dismissal. In this case, the higher
court which first reversed the NLRCs ruling was not the SC but rather
the CA. In this light, the CA was correct when it found that that the
period of computation should end on August 27, 2003. The date when
the SCs decision became final and executory need not matter as the
rule in Roquero, Garcia and Pfizer merely referred to the date of
reversal, not the date of the ultimate finality of such reversal.
As a last minor detail, we do not agree with the CA that the date of
computation should start on February 15, 2002. Rather, it should be
on February 16, 2002. The respondents themselves admitted in their
motion for computation and issuance of writ of execution that the last
date when they were paid their backwages was on February 15, 2002.
To start the computation on the same date would result to a
duplication of wages for this day; thus, computation should start on
the following date - February 16, 2002.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 184007

February 16, 2011

PAQUITO V. ANDO, Petitioner,

vs.
ANDRESITO Y. CAMPO, ET AL., Respondents.
Labor Law; Judgments; Execution of Judgments; Jurisdiction; The
Court has long recognized that regular courts have no jurisdiction to
hear and decide questions which arise from and are incidental to the
enforcement of decisions, orders, or awards rendered in labor cases by
appropriate officers and tribunals of the Department of Labor and
Employment.The Court has long recognized that regular courts have
no jurisdiction to hear and decide questions which arise from and are
incidental to the enforcement of decisions, orders, or awards rendered
in labor cases by appropriate officers and tribunals of the Department
of Labor and Employment. To hold otherwise is to sanction splitting
of jurisdiction which is obnoxious to the orderly administration of
justice. Thus, it is, first and foremost, the NLRC Manual on the
Execution of Judgment that governs any question on the execution of
a judgment of that body. Petitioner need not look further than that.
The Rules of Court apply only by analogy or in a suppletory character.

Same; Same; Same; Third Party Claims; Where the property belongs
to petitioner and his wife, and not to the corporation of which the
petitioner is president, it can be said that the property belongs to the
conjugal partnership, a third party, or, at the very least, the Court can
consider that petitioners wife is a third party within contemplation of
the law.There is no doubt in our mind that petitionerscomplaint is a
third-party claim within the cognizance of the NLRC. Petitioner may
indeed be considered a third party in relation to the property subject
of the execution vis--vis the Labor Arbiters decision. There is no
question that the property belongs to petitioner and his wife, and not
to the corporation. It can be said that the property belongs to the
conjugal partnership, not to petitioner alone. Thus, the property
belongs to a third party, i.e., the conjugal partnership. At the very
least, the Court can consider that petitioners wife is a third party
within contemplation of the law.
Same; Same; Same; Same; Due Process; Even if petitioner is
considered as an agent of the corporationand, therefore, not a
stranger to the casesince the property was registered not only in the
name of petitioner but also of his wife, she stands to lose the property
subject of execution without ever being a party to the case,
tantamount to deprivation of property without due process.The TCT
of the property bears out that, indeed, it belongs to petitioner and his
wife. Thus, even if we consider petitioner as an agent of the
corporationand, therefore, not a stranger to the casesuch that the
provision on third-party claims will not apply to him, the property was
registered not only in the name of petitioner but also of his wife. She
stands to lose the property subject of execution without ever being a
party to the case. This will be tantamount to deprivation of property
without due process.
Same; Same; Same; Same; Same; The power of the National Labor
Relations Commission (NLRC), or the courts, to execute its judgment
extends only to properties unquestionably belonging to the judgment
debtor alonea sheriff, therefore, has no authority to attach the
property of any person except that of the judgment debtor.The
power of the NLRC, or the courts, to execute its judgment extends
only to properties unquestionably belonging to the judgment debtor
alone. A sheriff, therefore, has no authority to attach the property of
any person except that of the judgment debtor. Likewise, there is no

showing that the sheriff ever tried to execute on the properties of the
corporation. Ando vs. Campo, 643 SCRA 513, G.R. No. 184007
February 16, 2011
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari 1 under Rule 45
of the Rules of Court. Petitioner Paquito V. Ando (petitioner) is
assailing the Decision2 dated February 21, 2008 and the
Resolution3 dated July 25, 2008 of the Court of Appeals (CA) in CAG.R. CEB-SP. No. 02370.
Petitioner was the president of Premier Allied and Contracting
Services, Inc. (PACSI), an independent labor contractor. Respondents
were hired by PACSI as pilers or haulers tasked to manually carry bags
of sugar from the warehouse of Victorias Milling Company and load
them on trucks.4 In June 1998, respondents were dismissed from
employment. They filed a case for illegal dismissal and some money
claims with the National Labor Relations Commission (NLRC),
Regional Arbitration Branch No. VI, Bacolod City.5
On June 14, 2001, Labor Arbiter Phibun D. Pura (Labor Arbiter)
promulgated a decision, ruling in respondents favor.6 PACSI and
petitioner were directed to pay a total of P422,702.28, representing
respondents separation pay and the award of attorneys fees. 7
Petitioner and PACSI appealed to the NLRC. In a decision8 dated
October 20, 2004, the NLRC ruled that petitioner failed to perfect his
appeal because he did not pay the supersedeas bond. It also affirmed
the Labor Arbiters decision with modification of the award for
separation pay to four other employees who were similarly situated.
Upon finality of the decision, respondents moved for its execution. 9

To answer for the monetary award, NLRC Acting Sheriff Romeo

Pasustento issued a Notice of Sale on Execution of Personal
Property10 over the property covered by Transfer Certificate of Title
(TCT) No. T-140167 in the name of "Paquito V. Ando x x x married to
Erlinda S. Ando."
This prompted petitioner to file an action for prohibition and damages
with prayer for the issuance of a temporary restraining order (TRO)
before the Regional Trial Court (RTC), Branch 50, Bacolod City.
Petitioner claimed that the property belonged to him and his wife, not
to the corporation, and, hence, could not be subject of the execution
sale. Since it is the corporation that was the judgment debtor,
execution should be made on the latters properties.11
On December 27, 2006, the RTC issued an Order12 denying the prayer
for a TRO, holding that the trial court had no jurisdiction to try and
decide the case. The RTC ruled that, pursuant to the NLRC Manual on
the Execution of Judgment, petitioners remedy was to file a thirdparty claim with the NLRC Sheriff. Despite lack of jurisdiction,
however, the RTC went on to decide the merits of the case.
Petitioner did not file a motion for reconsideration of the RTC Order.
Instead, he filed a petition for certiorari under Rule 65 13 before the CA.
He contended that the RTC acted without or in excess of jurisdiction
or with grave abuse of discretion amounting to lack or excess of
jurisdiction in issuing the Order. Petitioner argued that the writ of
execution was issued improvidently or without authority since the
property to be levied belonged to him in his personal capacity and
his wife. The RTC, respondent contended, could stay the execution of
a judgment if the same was unjust.14 He also contended that, pursuant
to a ruling of this Court, a third party who is not a judgment creditor
may choose between filing a third-party claim with the NLRC sheriff
or filing a separate action with the courts.15
In the Decision now assailed before this Court, the CA affirmed the
RTC Order in so far as it dismissed the complaint on the ground that it
had no jurisdiction over the case, and nullified all other
pronouncements in the same Order. Petitioner moved for
reconsideration, but the motion was denied.lawph!l

Petitioner then filed the present petition seeking the nullification of

the CA Decision. He argues that he was never sued in his personal
capacity, but in his representative capacity as president of PACSI.
Neither was there any indication in the body of the Decision that he
was solidarily liable with the corporation.16 He also concedes that the
Labor Arbiters decision has become final. Hence, he is not seeking to
stop the execution of the judgment against the properties of PACSI.
He also avers, however, that there is no evidence that the sheriff ever
implemented the writ of execution against the properties of PACSI. 17
Petitioner also raises anew his argument that he can choose between
filing a third-party claim with the sheriff of the NLRC or filing a
separate action.18 He maintains that this special civil action is purely
civil in nature since it "involves the manner in which the writ of
execution in a labor case will be implemented against the property of
petitioner which is not a corporate property of PACSI."19 What he is
seeking to be restrained, petitioner maintains, is not the Decision
itself but the manner of its execution.20 Further, he claims that the
property levied has been constituted as a family home within the
contemplation of the Family Code.21
The petition is meritorious.
Initially, we must state that the CA did not, in fact, err in upholding
the RTCs lack of jurisdiction to restrain the implementation of the
writ of execution issued by the Labor Arbiter.
The Court has long recognized that regular courts have no jurisdiction
to hear and decide questions which arise from and are incidental to
the enforcement of decisions, orders, or awards rendered in labor
cases by appropriate officers and tribunals of the Department of Labor
and Employment. To hold otherwise is to sanction splitting of
jurisdiction which is obnoxious to the orderly administration of
justice.22
Thus, it is, first and foremost, the NLRC Manual on the Execution of
Judgment that governs any question on the execution of a judgment of
that body. Petitioner need not look further than that. The Rules of
Court apply only by analogy or in a suppletory character.23

Consider the provision in Section 16, Rule 39 of the Rules of Court on

third-party claims:
SEC. 16. Proceedings where property claimed by third person.If the
property levied on is claimed by any person other than the judgment
obligor or his agent, and such person makes an affidavit of his title
thereto or right to the possession thereof, stating the grounds of such
right or title, and serves the same upon the officer making the levy and
a copy thereof upon the judgment obligee, the officer shall not be
bound to keep the property, unless such judgment obligee, on demand
of the officer, files a bond approved by the court to indemnify the
third-party claimant in a sum not less than the value of the property
levied on. In case of disagreement as to such value, the same shall be
determined by the court issuing the writ of execution. No claim for
damages for the taking or keeping of the property may be enforced
against the bond unless the action therefor is filed within one hundred
twenty (120) days from the date of the filing of the bond.
The officer shall not be liable for damages for the taking or keeping of
the property, to any third-party claimant if such bond is filed. Nothing
herein contained shall prevent such claimant or any third person from
vindicating his claim to the property in a separate action, or prevent
the judgment obligee from claiming damages in the same or a separate
action against a third-party claimant who filed a frivolous or plainly
spurious claim.
When the writ of execution is issued in favor of the Republic of the
Philippines, or any officer duly representing it, the filing of such bond
shall not be required, and in case the sheriff or levying officer is sued
for damages as a result of the levy, he shall be represented by the
Solicitor General and if held liable therefor, the actual damages
adjudged by the court shall be paid by the National Treasurer out of
such funds as may be appropriated for the purpose.
On the other hand, the NLRC Manual on the Execution of Judgment
deals specifically with third-party claims in cases brought before that
body. It defines a third-party claim as one where a person, not a party
to the case, asserts title to or right to the possession of the property

levied upon.24 It also sets out the procedure for the filing of a thirdparty claim, to wit:
SECTION 2. Proceedings. If property levied upon be claimed by any
person other than the losing party or his agent, such person shall
make an affidavit of his title thereto or right to the possession thereof,
stating the grounds of such right or title and shall file the same with
the sheriff and copies thereof served upon the Labor Arbiter or proper
officer issuing the writ and upon the prevailing party. Upon receipt of
the third party claim, all proceedings with respect to the execution of
the property subject of the third party claim shall automatically be
suspended and the Labor Arbiter or proper officer issuing the writ
shall conduct a hearing with due notice to all parties concerned and
resolve the validity of the claim within ten (10) working days from
receipt thereof and his decision is appealable to the Commission
within ten (10) working days from notice, and the Commission shall
resolve the appeal within same period.
There is no doubt in our mind that petitioners complaint is a thirdparty claim within the cognizance of the NLRC. Petitioner may indeed
be considered a "third party" in relation to the property subject of the
execution vis--vis the Labor Arbiters decision. There is no question
that the property belongs to petitioner and his wife, and not to the
corporation. It can be said that the property belongs to the conjugal
partnership, not to petitioner alone. Thus, the property belongs to a
third party, i.e., the conjugal partnership. At the very least, the Court
can consider that petitioners wife is a third party within
contemplation of the law.

and Unfair Labor Practice. Considering the factual setting, it is then

logical to conclude that the subject matter of the third party claim is
but an incident of the labor case, a matter beyond the jurisdiction of
regional trial courts.
xxxx
x x x. Whatever irregularities attended the issuance an execution of
the alias writ of execution should be referred to the same
administrative tribunal which rendered the decision. This is because
any court which issued a writ of execution has the inherent power, for
the advancement of justice, to correct errors of its ministerial officers
and to control its own processes.
The broad powers granted to the Labor Arbiter and to the National
Labor Relations Commission by Articles 217, 218 and 224 of the Labor
Code can only be interpreted as vesting in them jurisdiction over
incidents arising from, in connection with or relating to labor
disputes, as the controversy under consideration, to the exclusion of
the regular courts.26
There is no denying that the present controversy arose from the
complaint for illegal dismissal. The subject matter of petitioners
complaint is the execution of the NLRC decision. Execution is an
essential part of the proceedings before the NLRC. Jurisdiction, once
acquired, continues until the case is finally terminated,27 and there can
be no end to the controversy without the full and proper
implementation of the commissions directives.

The Courts pronouncements in Deltaventures Resources, Inc. v. Hon.

Cabato25 are instructive:

Further underscoring the RTCs lack of jurisdiction over petitioners

complaint is Article 254 of the Labor Code, to wit:

Ostensibly the complaint before the trial court was for the recovery of
possession and injunction, but in essence it was an action challenging
the legality or propriety of the levy vis-a-vis the alias writ of execution,
including the acts performed by the Labor Arbiter and the Deputy
Sheriff implementing the writ. The complaint was in effect a motion to
quash the writ of execution of a decision rendered on a case properly
within the jurisdiction of the Labor Arbiter, to wit: Illegal Dismissal

ART. 254. INJUNCTION PROHIBITED. No temporary or

permanent injunction or restraining order in any case involving or
growing out of labor disputes shall be issued by any court or other
entity, except as otherwise provided in Articles 218 and 264 of this
Code.

That said, however, we resolve to put an end to the controversy right

now, considering the length of time that has passed since the levy on
the property was made.
Petitioner claims that the property sought to be levied does not belong
to PACSI, the judgment debtor, but to him and his wife. Since he was
sued in a representative capacity, and not in his personal capacity, the
property could not be made to answer for the judgment obligation of
the corporation.
The TCT28 of the property bears out that, indeed, it belongs to
petitioner and his wife. Thus, even if we consider petitioner as an
agent of the corporation and, therefore, not a stranger to the case
such that the provision on third-party claims will not apply to him, the
property was registered not only in the name of petitioner but also of
his wife. She stands to lose the property subject of execution without
ever being a party to the case. This will be tantamount to deprivation
of property without due process.
Moreover, the power of the NLRC, or the courts, to execute its
judgment extends only to properties unquestionably belonging to the
judgment debtor alone.29 A sheriff, therefore, has no authority to
attach the property of any person except that of the judgment
debtor.30 Likewise, there is no showing that the sheriff ever tried to
execute on the properties of the corporation.
In sum, while petitioner availed himself of the wrong remedy to
vindicate his rights, nonetheless, justice demands that this Court look
beyond his procedural missteps and grant the petition.

WHEREFORE, the foregoing premises considered, the petition is

GRANTED. The Decision dated February 21, 2008 and the Resolution
dated July 25, 2008 of the Court of Appeals in CA-G.R. CEB-SP. No.
02370 are hereby REVERSED and SET ASIDE, and a new one is
entered declaring NULL and VOID (1) the Order of the Regional Trial
Court of Negros Occidental dated December 27, 2006 in Civil Case No.
06-12927; and (2) the Notice of Sale on Execution of Personal
Property dated December 4, 2006 over the property covered by
Transfer Certificate of Title No. T-140167, issued by the Acting Sheriff
of the National Labor Relations Commission.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SPECIAL SECOND DIVISION
G.R. No. 180147

January 14, 2015

SARA LEE PHILIPPINES, INC., Petitioner,

vs.
EMILINDA D. MACATLANG, ET AL.,1 Respondents.
x-----------------------x
G.R. No. 180148
ARIS PHILIPPINES, INC., Petitioner,
vs.
EMILINDA D. MACATLANG, ET AL., Respondents.
x-----------------------x
G.R. No. 180149
SARA LEE CORPORATION, Petitioner,
vs.
EMILINDA D. MACATLANG, ET AL., Respondents.
x-----------------------x
G.R. No. 180150

CESAR C. CRUZ, Petitioner,

vs.
EMILINDA D. MACATLANG, ET AL., Respondents.
x-----------------------x
G.R. No. 180319
FASHION ACCESSORIES PHILS., INC., Petitioner,
vs.
EMILINDA D. MACATLANG, ET AL., Respondents.
x-----------------------x
G.R. No. 180685
EMILINDA D. MACA TLANG, ET AL., Petitioners,
vs.
NLRC, ARIS PHILIPPINES, INC., FASHION ACCESSORIES
PHILS., INC., SARA LEE CORPORATION, SARA LEE
PHILIPPINES, INC., COLLIN BEAL and ATTY. CESAR C.
CRUZ, Respondents.
Remedial Law; Civil Procedure; Judgments; Confession of Judgment;
Words and Phrases; A confession of judgment is an acknowledgment
that a debt is justly due and cuts off all defenses and right of appeal.
A confession of judgment is an acknowledgment that a debt is justly
due and cuts off all defenses and right of appeal. It is used as a
shortcut to a judgment in a case where the defendant concedes
liability. It is seen as the written authority of the debtor and a
direction for entry of judgment against the debtor. The Corporations
cite the case of Republic of the Philippines v. Bisaya Land
Transportation Co., 81 SCRA 9 (1978), to outline the distinction
between a compromise agreement/judgment on consent and a
confession of judgment/judgment by confession, thus: x x x a motion
for judgment on consent is not to be equated with a judgment by
confession. The former is one the provisions and terms of which are
settled and a agreed upon by the parties to the action, and which is
entered in the record by the consent and sanction of the court. Hence,

there must be an unqualified agreement among the parties to be

bound by the judgment on consent before said judgment may be
entered. The court does not have the power to supply terms,
provisions, or essential details not previously agreed to by the parties
x x x. On the other hand, a judgment by confession is not a plea but an
affirmative and voluntary act of the defendant himself. Here, the court
exercises a certain amount of supervision over the entry of judgment,
as well as equitable jurisdiction over their subsequent status.
Labor Law; Compromise Agreements; Article 227 of the Labor Code of
the Philippines authorizes compromise agreements voluntarily agreed
upon by the parties, in conformity with the basic policy of the State to
promote and emphasize the primacy of free collective bargaining and
negotiations, including voluntary arbitration, mediation and
conciliation, as modes of settling labor or industrial disputes.A
compromise is a contract whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one already
commenced. It is an agreement between two or more persons, who,
for preventing or putting an end to a lawsuit, adjust their difficulties
by mutual consent in the manner which they agree on, and which
everyone of them prefers to the hope of gaining, balanced by the
danger of losing. A compromise must not be contrary to law, morals,
good customs and public policy; and must have been freely and
intelligently executed by and between the parties. Article 227 of the
Labor Code of the Philippines authorizes compromise agreements
voluntarily agreed upon by the parties, in conformity with the basic
policy of the State to promote and emphasize the primacy of free
collective bargaining and negotiations, including voluntary
arbitration, mediation and conciliation, as modes of settling labor or
industrial disputes.
Same; Appeal Bonds; The underlying purpose of the appeal bond is to
ensure that the employer has properties on which he or she can
execute upon in the event of a final, providential award.In our
Decision, the appeal bond was set at P725 Million after taking into
consideration the interests of all parties. To reiterate, the underlying
purpose of the appeal bond is to ensure that the employer has
properties on which he or she can execute upon in the event of a final,
providential award. Thus, nonpayment or woefully insufficient
payment of the appeal bond by the employer frustrates these ends. As

a matter of fact, the appeal bond is valid and effective from the date of
posting until the case is terminated or the award is satisfied. Our
Decision highlights the importance of an appeal bond such that said
amount should be the base amount for negotiation between the
parties. As it is, the P342,284,800.00 compromise is still measly
compared to the P725 Million bond we set in this case, as it only
accounts to approximately 50% of the reduced appeal bond.
Same; Compromise Agreements; Accepting an outrageously low
amount of consideration as compromise defeats the complainants
legitimate claim.The complainants filed a motion for
reconsideration asking this Court to modify its Decision on the ground
that theparties have entered into a compromise agreement. The
complainants justified their acquiescence to the compromise on the
possibility that it will take another decade before the case may be
resolved and attained finality. We beg to disagree. In our Decision, we
have already directed the NLRC to act with dispatch in resolving the
merits of the case upon receipt of the cash or surety bond in the
amount of P725 Million within 10 days from receipt of the Decision. If
indeed the parties want an immediate and expeditious resolution of
the case, then the NLRC should be unhindered with technicalities to
dispose of the case. Accepting an outrageously low amount of
consideration as compromise defeats the complainants legitimate
claim. x x x In fine, we will not hesitate to strike down a compromise
agreement which is unconscionable and against public policy. Sara
Lee Philippines, Inc. vs. Macatlang, 745 SCRA 687, G.R. No. 180685
January 14, 2015
RESOLUTION
PEREZ, J.:
This treats of the 1) Motion for Reconsideration with Urgent Petition
for the Courts Approval of the Pending "Motion for Leave of Court to
File and Admit Herein Statement and Confession of Judgment to
Buy Peace and/or Secure against any Possible Contingent Liability by
Sara Lee Corporation" filed by Sara Lee Philippines Inc. (SLPI),Aris
Philippines Inc. (Aris), Sara Lee Corporation (SLC) and Cesar C. Cruz,
2) Motion for Reconsideration filed by Fashion Accessories Phils. Inc.

(FAPI), and 3) Manifestation of Conformity to the Motion for Leave of

Court to File and Admit Confession of Judgment to Buy Peace
and/or to Secure against any Possible Contingent Liability by
Petitioner SLC.
In the Decision dated 4 June 2014, this Court directed SLPI, Aris,
SLC, Cesar Cruz, and FAPI, collectively known as the Corporations, to
post P725 Million, in cash or surety bond, within 10 days from the
receipt of the Decision. The Court further nullified the Resolution of
the National Labor Relations Commission (NLRC) dated 19 December
2006 for being premature.
The Motion for Reconsideration is anchored on the following grounds:
A. The Court failed to consider the "Motion for Leave of Court
to file and Admit Herein Statement and Confession of
Judgment to Buy Peace and/or to Secure Against any Possible
Contingent Liability by Petitioner Sara Lee Corporation"
(hereafter the "compromise agreement") filed by petitioner
Sara Lee Corporation on June 23, 2014 before receipt of the
Decision of June 04, 2014 on July 31, 2014 with the conformity
of the respondents in their "Manifestation and Conformity to
the Petitioners Motion for Leave to File and Admit Statement
of Confession of Judgment" dated July 04, 2014 which could
have terminated the present cases and avoid delays with its
remand for further proceedings below.
B. The Court did not duly rule on the violations of the rights of
due process of Petitioner SLPI as shown by the following:
1. The Labor Arbiter has never acquired jurisdiction
over Petitioner SLPI which was never impleaded as a
party respondent and was never validly served with
summons which fact was specifically mentioned in
NLRCs Resolution of December 19, 2006; and
2. There is no employer-employee relationships
between Petitioner SLPI and the respondents.

C. The Court did not duly rule on the violations of the rights of
due process of Petitioner SLC because of the following:
1. The Labor Arbiter has never acquired jurisdiction
over Petitioner SLC which was never impleaded as a
party respondent and was never validly served with
summons which fact was specifically raised by the
Court as an issue in page 12 of the Decision of June 04,
2014 but remained unresolved; and
2. There is no employer-employee relationship between
Petitioner SLC and the respondents.
D. The Court did not duly rule on the violations of the rights of
due process of Petitioner Cesar C. Cruz as shown by the
following:
1. The Labor Arbiter has never acquired jurisdiction
over Petitioner Cesar C. Cruz who was never impleaded
as a party respondent and was never validly served with
summons; and
2. There is no employer-employee relationship between
petitioner Cesar C. Cruz and the respondents.
E. There was no legal impediment for the NLRC to issue its
Resolution of December 19, 2006 vacating the Labor Arbiters
Decision and remanding the case to the Labor Arbiter for
further proceeding as no Temporary Restraining Order (TRO)
or Writ of Preliminary Injunction was issued by the Court of
Appeals and the rule on judicial courtesy remains the
exception rather than the rule.

F. The Court did not duly rule on the applicability of the final
and executory Decision of Fullido, et al., v. Aris Philippines,
Inc. and Cesar C. Cruz (G.R. No. 185948) with respect to the
present consolidated cases considering the identical facts and
issues involved plus the fact that the Court in Fullido sustained
the findings and decisions of three (3) other tribunals, i.e., the
Court of Appeals, the NLRC and the Labor Arbiter.
G. The Court failed to consider the prescription of the
complaints for money claims filed by the respondents against
the Petitioners under Article 291 of the Labor Code due to the
lapse of three (3) years and four (4) months when Petitioners
were impleaded as respondents only through the amendment
of complaints by the complainants, the respondents herein.
H. The Court also did not consider that the Complaints filed by
the respondents are barred by res judicata because of the final
and executory decision rendered by the Voluntary Arbitrator
on the identical facts and issues in the case filed by the labor
union representing the respondents against Petitioner API.
I. Contrary to the Decision of June 04, 2014, the Abelardo
petition (CA GR SP No. 95919, Pacita S. Abelardo v. NLRC,
Aris, Philippines, Inc.) was filed earlier than the Macatlang
petition (CA GR SP No. 96363) as shown by the lower docket
number, thus, the Macatlang petition should be the one
dismissed for forum shopping.
J. In fixing the bond to PhP725 Million which is 25% of the
monetary award, the Court failed to consider the En Banc
Decision in McBurnie v. Ganzon, 707 SCRA 646, 693 (2013)
which required only the posting of a bond equivalent to ten
percent (10%) of the monetary award.2 We briefly revisit the
factual milieu of this case.
Aris permanently ceased operations on 9 October 1995 displacing
5,984 rank-and-file employees. On 26 October 1995, FAPI was
incorporated prompting former Aris employees to file a case for illegal
dismissal on the allegations that FAPI was a continuing business of

Aris. SLC, SLP and Cesar Cruz were impleaded as defendants being
major stockholders of FAPI and officers of Aris, respectively.
On 30 October 2004, the Labor Arbiter found the dismissal of 5,984
Aris employees illegal and awarded them monetary benefits
amounting to P3,453,664,710.86. The judgment award is composed of
separation pay of one month for every year of service, backwages,
moral and exemplary damages and attorneys fees.
The Corporations filed a Notice of Appeal with Motion to Reduce
Appeal Bond. They posted a P4.5 Million bond. The NLRC granted the
reduction of the appeal bond and ordered the Corporations to post an
additional P4.5 Million bond.
The 5,984 former Aris employees, represented by Emilinda Macatlang
(Macatlang petition), filed a petition for review before the Court of
Appeals insisting that the appeal was not perfected due to failure of
the Corporations to post the correct amount of the bond which is
equivalent to the judgment award.
While the case was pending before the appellate court, the NLRC
prematurely issued an order setting aside the decision of the Labor
Arbiter for being procedurally infirmed.
The Court of Appeals, on 26 March 2007, ordered the Corporations to
post an additional appeal bond of P1 Billion.
In our Decision dated 4 June 2014, we modified the Court of Appeals
Decision, to wit:
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. SP No.
96363 dated 26 March 2007 is MODIFIED. The Corporations are
directed to post P725 Million, in cash or surety bond, within TEN (10)
days from the receipt of this DECISION. The Resolution of the NLRC
dated 19 December 2006 is VACATED for being premature and the
NLRC is DIRECTED to act with dispatch to resolve the merits of the
case upon perfection of the appeal.3

We also resolved the procedural issue of forum-shopping by holding

that the 411 petitioners of the Pacita Abelardo petition (Abelardo
petition) are not representative of the interest of all petitioners in
Macatlang petition. The number is barely sufficient to comprise the
majority of petitioners in Macatlang petition and it would be the
height of injustice to dismiss the Macatlang petition which evidently
enjoys the support of an overwhelming majority due to the mistake
committed by petitioners in the Abelardo petition.
The Motion for Reconsideration has no merit.
The Corporations score this Court for failing to consider the ruling in
McBurnie v. Ganzon4 which purportedly required only the posting of a
bond equivalent to 10% of the monetary award. The Corporations
gravely misappreciated the ruling in McBurnie. The 10% requirement
pertains to the reasonable amount which the NLRC would accept as
the minimum of the bond that should accompany the motion to
reduce bond in order to suspend the period to perfect an appeal under
the NLRC rules. The 10% is based on the judgment award and should
in no case be construed as the minimum amount of bond to be posted
in order to perfect appeal. There is no room for a different
interpretation when McBurnie made it clear that the percentage of
bond set is provisional, thus:
The foregoing shall not be misconstrued to unduly hinder the NLRCs
exercise of its discretion, given that the percentage of bond that is set
by this guideline shall be merely provisional. The NLRC retains its
authority and duty to resolve the motion and determine the final
amount of bond that shall be posted by the appellant, still in
accordance with the standards of "meritorious grounds" and
"reasonable amount." Should the NLRC, after considering the
motions merit, determine that a greater amount or the full amount of
the bond needs to be posted by the appellant, then the party shall
comply accordingly. The appellant shall be given a period of 10 days
from notice of the NLRC order within which to perfect the appeal by
posting the required appeal bond.
The Corporations argue that there was no legal impediment for the
NRLC to issue its 19 December 2006 Resolution vacating the Labor

Arbiters Decision as no TRO or injunction was issued by the Court of

Appeals. The Corporations assert that the rule on judicial courtesy
remains the exception rather than the rule.
We do not agree. In the recent case of Trajano v. Uniwide Sales
Warehouse Club,5 this Court gave a brief discourse on judicial
courtesy, which concept was first introduced in Eternal Gardens
Memorial Park Corp. v. Court of Appeals,6 to wit:
x x x [t]he principle of judicial courtesy to justify the suspension of the
proceedings before the lower court even without an injunctive writ or
order from the higher court. In that case, we pronounced that "[d]ue
respect for the Supreme Court and practical and ethical considerations
should have prompted the appellate court to wait for the final
determination of the petition [for certiorari] before taking cognizance
of the case and trying to render moot exactly what was before this
[C]ourt." We subsequently reiterated the concept of judicial courtesy
in Joy Mart Consolidated Corp. v. Court of Appeals.
We, however, have qualified and limited the application of judicial
courtesy in Go v. Abrogar and Republic v. Sandiganbayan. In these
cases, we expressly delimited the application of judicial courtesy to
maintain the efficacy of Section 7, Rule 65 of the Rules of Court, and
held that the principle of judicial courtesy applies only "if there is a
strong probability that the issues before the higher court would be
rendered moot and moribund as a result of the continuation of the
proceedings in the lower court." Through these cases, we clarified that
the principle of judicial courtesy remains to be the exception rather
than the rule.7

The Corporations argument is specious. Judicial courtesy indeed

applies if there is a strong probability that the issues before the higher
court would be rendered moot as a result of the continuation of the
proceedings in the lower court. This is the exception contemplated in
the aforesaid ruling and it obtains in this case. The 19 December 2006
ruling of the NLRC would moot the appeal filed before the higher
courts because the issue involves the appeal bond which is an
indispensable requirement to the perfection of the appeal before the
NLRC. Unless this issue is resolved, the NLRC should be precluded
from ruling on the merits on the case. This is the essence of judicial
courtesy.
The other grounds raised by the Corporations in this Motion for
Reconsideration such as the denial of due process due to invalid
service of summons on SLPI, SLC and Cesar Cruz; prescription, res
judicata, and the applicability of the Fulido case8 with the instant case
were all raised and resolved by the Labor Arbiter in favor of former
Aris employees in its Decision dated 30 October 2004. That same
decision was appealed by the Corporations before the NLRC. The
perfection of said appeal through the posting of a partial bond was put
into question and that is precisely the main issue brought before the
appellate court and before us.
By urging this Court to make a definitive ruling on these issues
petitioners would have us rule on the merits, which at this point this
Court cannot do as the labor proceedings remain incomplete. If at all,
the stage that has been passed is the proceedings before the Labor
Arbiter. And, without the NLRC stage, the Labor Arbiters decision is
final and executory. It is obvious that petitioners do not want either of
the two options now open to them: a) allow the finality of the adverse
judgment in the amount of P3,453,664,710.86, or b) file the P750
Million bond for the review by the NLRC of the P3,453,664,710.86
decision of the Labor Arbiter. They would want their liability finally
reduced to just half of the amount of the required appeal bond,
or P350 million. The injustice to the employees is patent.
Now we proceed to tackle the Motion filed by the parties to Admit
Confession of Judgment.

The Corporations entered into a compromise with some of the former

Aris employees which they designate as Confession of Judgment. The
Corporations reason that a resort to judgment by confession is the
acceptable alternative to a compromise agreement because of the
impossibility to obtain the consent to a compromise of all the 5,984
complainants.

Even if we dismiss the Corporations choice of designation as pure

semantics and consider the agreement they entered into with the
complainants as a form of a compromise agreement, we still could not
approve the same.

A confession of judgment is an acknowledgment that a debt is justly

due and cuts off all defenses and right of appeal. It is used as a
shortcut to a judgment in a case where the defendant concedes
liability. It is seen as the written authority of the debtor and a
direction for entry of judgment against the debtor.9

A compromise is a contract whereby the parties, by making reciprocal

concessions, avoid a litigation or put an end to one already
commenced. It is an agreement between two or more persons, who,
for preventing or putting an end to a lawsuit, adjust their difficulties
by mutual consent in the manner which they agree on, and which
everyone of them prefers to the hope of gaining, balanced by the
danger of losing.12

The Corporations cite the case of Republic of the Philippines v. Bisaya

Land Transportation Co.10 to outline the distinction between a
compromise agreement/judgment on consent and a confession of
judgment/judgment by confession, thus:
x x x a motion for judgment on consent is not to be equated with a
judgment by confession. The former is one the provisions and terms of
which are settled and a agreed upon by the parties to the action, and
which is entered in the record by the consent and sanction of the
court, Hence, there must be an unqualified agreement among the
parties to be bound by the judgment on consent before said judgment
may be entered. The court does not have the power to supply terms,
provisions, or essential details not previously agreed to by the parties
x x x. On the other hand, a judgment by confession is not a plea but an
affirmative and voluntary act of the defendant himself. Here, the court
exercises a certain amount of supervision over the entry of judgment,
as well as equitable jurisdiction over their subsequent status.11
In the same breadth, the Corporations also acknowledge that a
compromise agreement and a judgment by confession stand upon the
same footing in that both may not be executed by counsel without
knowledge and authority of the client. If we were to rely on the
Corporations submission that all 5,984 complainants SPAs could not
be obtained, then the Confession of Judgment is void.

We elucidate.

A compromise must not be contrary to law, morals, good customs and

public policy; and must have been freely and intelligently executed by
and between the parties.13
Article 227 of the Labor Code of the Philippines authorizes
compromise agreements voluntarily agreed upon by the parties, in
conformity with the basic policy of the State "to promote and
emphasize the primacy of free collective bargaining and negotiations,
including voluntary arbitration, mediation and conciliation, as modes
of settling labor or industrial disputes."14 The provision reads:
ART. 227 Compromise Agreements. Any compromise settlement,
including those involving labor standard laws, voluntarily agreed upon
by the parties with the assistance of the Bureau or the regional office
of the Department of Labor, shall be final and binding upon the
parties. The National Labor Relations Commission or any court shall
not assume jurisdiction over issues involved therein except in case of
noncompliance thereof or if there is prima facie evidence that the
settlement was obtained through fraud, misrepresentation, or
coercion.
A compromise agreement is valid as long as the consideration is
reasonable and the employee signed the waiver voluntarily, with a full
understanding of what he was entering into.15

The compromise agreement which the Corporations deem as

Confession of Judgment is reproduced in full below:
CONFESSION OF JUDGMENT
The undersigned counsel, by virtue of the special authority granted by
HILLSHIRE earlier attached as Annex "B" and made an integral part
hereof seeks the approval of this Honorable Court of this Judgment by
Confession under the following terms and conditions, to wit:
1. HILLSHIRE will pay to the 5,984 respondents
(complainants) the total amount of THREE HUNDRED
FORTY TWO MILLION TWO HUNDRED EIGHTY-FOUR
THOUSAND AND EIGHT HUNDRED PESOS
(PhP342,284,800.00) or at FIFTY SEVEN THOUSAND TWO
HUNDRED PESOS (PhP57,200.00) for each respondent
(complainant) inclusive of the attorneys fees of EIGHT
THOUSAND FIVE HUNDRED EIGHTY PESOS
(PhP8,580.00) which each respondent (complainant) will
actually pay to their counsel of record as the total
consideration for the dismissal with prejudice of all the
pending cases before this Honorable Court and all the cases
pending before the National Labor Relations Commission
against all the petitioners.
2. The above agreed amount of THREE HUNDRED FORTY
TWO MILLION TWO HUNDRED EIGHTY-FOUR
THOUSAND AND EIGHT HUNDRED PESOS
(PhP342,284,800.00) shall be distributed as follows:
2.1 FORTY EIGHT THOUSAND SIX [HUNDRED]
TWENTY PESOS (PhP48,620.00) to each respondent
(complainant), and

2.2 EIGHT THOUSAND FIVE HUNDRED EIGHTY

PESOS (PhP8,580.00) to the lawyer of each
respondent (complainant) by virtue of the Special
Power of Attorney given by each respondent
(complainant) to lead Emilinda D. Macatlang who gave
SPA to Atty. Alex Tan.
3. HILLSHIRE will deposit the amount of THREE HUNDRED
FORTY TWO MILLION TWO HUNDRED EIGHTY-FOUR
THOUSAND AND EIGHT HUNDRED PESOS
(PhP342,284,800.00) with a local bank duly licensed by the
Bangko Sentral ng Pilipinas (BSP) within sixty (60) days from
the date of the issuance of a Certificate of Finality and/or Entry
of Judgment of the Decision of this Honorable Court on this
Confession of Judgment.
4. The amount of FORTY EIGHT THOUSAND SIX HUNDRED
TWENTY PESOS (PhP48,620.00) shall be paid directly to each
respondent (complainant) and the corresponding attorneys
fees of EIGHT THOUSAND FIVE HUNDRED EIGHTY PESOS
(PhP8,580.00) shall be paid to their lawyers (duly authorized
by an SPA) by the bank through a managers check.
5. The total deposit of THREE HUNDRED FORTY TWO
MILLION TWO HUNDRED EIGHTY FOUR THOUSAND
EIGHT HUNDRED PESOS (PhP342,284,800.00) must be
claimed by the respondents (complainants) from the
depository bank within two (2) years from the date of the
Certificate of Finality or Entry of Judgment issued by this
Honorable Court.
6. Any balance of the deposited amount which remains
unclaimed by the respondents (complainants) within the two
(2) year period referred to above shall automatically revert and
be returned to and may be withdrawn by HILLSHIRE and/or
its attorney-in-fact, without the necessity of any prior Order or
permission from this Honorable Court.

7. Thereafter, upon expiration of the two (2) year period

referred to above, HILLSHIREs obligation to make any
payment to the respondents (Complainants) shall ipso facto
cease, expire and terminate and the judgment by confession
shall be considered satisfied, fulfilled and terminated.
8. The bank to which the amount of the confessed judgment
(PhP342,284,800.00) is deposited shall be authorized by
HILLSHIRE through the undersigned attorney to pay to
individual respondents (complainants) listed in the original
Decision dated October 30, 2004 of the Labor Arbiter and/or
their lawyers the above agreed amounts subject to the
following conditions:
8.1 Complainants shall personally claim the payment to
them from the bank upon presentation of any
recognized government IDs such as Drivers License,
Senior Citizens Card, Voters ID, SSS ID, Unified
Multipurpose Identification Card, Postal ID, Passport,
or Certification Under Oath by the Barangay Chairman
as to the identity of the respondent (complainant), or
8.2 By the duly authorized representative of respondent
(complainant) evidenced by a duly notarized Special
Power of Attorney in case the respondent
(complainant) cannot personally claim his/her
payment due to sickness or physical disability.
9. The lead complainant, Ms. Emilinda D. Macatlang, and Atty.
Alex Tan shall take adequate steps to inform all the
respondents (complainants) by personal notice or media
announcement of this confession of judgment upon receipt of
the Decision of this Honorable Court.
10. All fully paid respondents (complainants) shall execute a
Waiver, Release and Quitclaim.
11. Upon the approval of this Confession of Judgment by this
Honorable Court, all cases pending before this Honorable

Court and the NLRC shall automatically be considered

dismissed, terminated and of no force and effect.
Petitioners invite the attention of this Honorable Court that the above
monetary consideration for both the respondents (complainants) and
their counsel under the above terms and conditions have been agreed
upon with Atty. Alex Tan before the filing of this confession of
judgment.
To reiterate, this confession of judgment is made by HILLSHIRE for
the purpose of buying peace and/or to secure to the said petitioner
and the other Petitioners against any possible contingent liability
which may accrue to them as a consequence of their having been made
Respondents in the Complaints filed by the Complainants before the
NLRC.16
A review of the compromise agreement shows a gross disparity
between the amount offered by the Corporations compared to the
judgment award. The judgment award is P3,453,664,710.86 or each
employee is slated to receive P577,149.85. On the other hand,
the P342,284,800.00 compromise is to be distributed among 5,984
employees which would translate to only P57,200.00 per employee.
From this amount, P8,580.00 as attorneys fees will be deducted,
leaving each employee with a measly P48,620.00. In fact, the
compromised amount roughly comprises only 10% of the judgment
award.
In our Decision, the appeal bond was set at P725 Million after taking
into consideration the interests of all parties. To reiterate, the
underlying purpose of the appeal bond is to ensure that the employer
has properties on which he or she can execute upon in the event of a
final, providential award. Thus, non-payment or woefully insufficient
payment of the appeal bond by the employer frustrates these
ends.17 As a matter of fact, the appeal bond is valid and effective from
the date of posting until the case is terminated or the award is
satisfied.18 Our Decision highlights the importance of an appeal bond
such that said amount should be the base amount for negotiation
between the parties. As it is, the P342,284,800.00 compromise is still

measly compared to the P725 Million bond we set in this case, as it

only accounts to approximately 50% of the reduced appeal bond.
In Arellano v. Powertech Corporation,19 we voided the P150,000.00
compromise for the P2.5 Million judgment on appeal to the NLRC. We
note that the compromise is a mere 6% of the contingent sum that
may be received by petitioners and the minuscule amount is certainly
questionable because it does not represent a true and fair amount
which a reasonable agent may bargain for his principal. 20
In Mindoro Lumber and Hardware v. Bacay,21 we found that the
private respondents individual claims, ranging from P6,744.20
to P242,626.90, are grossly disproportionate to what each of them
actually received under the Sama-samang Salaysay sa Pag-uurong ng
Sakdal. The amount of the settlement is indubitably unconscionable;
hence, ineffective to bar the workers from claiming the full measure of
their legal rights.22
The complainants filed a motion for reconsideration asking this Court
to modify its Decision on the ground that the parties have entered into
a compromise agreement. The complainants justified their
acquiescence to the compromise on the possibility that it will take
another decade before the case may be resolved and attained finality.
We beg to disagree.
In our Decision, we have already directed the NLRC to act with
dispatch in resolving the merits of the case upon receipt of the cash or
surety bond in the amount of P725 Million within 10 days from receipt
of the Decision. If indeed the parties want an immediate and
expeditious resolution of the case, then the NLRC should be
unhindered with technicalities to dispose of the case. Accepting an
outrageously low amount of consideration as compromise defeats the
complainants legitimate claim.

In Unicane Workers Union-CLUP v. NLRC,23 we held

the P100,000.00 amount in the quit claim is unconscionable because
the complainants had been awarded by the labor arbiter more than P2
million. It should have been aware that had petitioners pursued their
case, they would have been assured of getting said amount, since,
absent a perfected appeal, complainants were already entitled to said
amount by virtue of a final judgment. We proceeded to state that:
Not all quitclaims are per se invalid as against public
policy.1wphi1 But, where there is clear proof that the waiver was
wrangled from an unsuspecting or gullible person, or the terms of
settlement are unconscionable on its face, then the law will step in to
annul the questionable transaction.24
In fine, we will not hesitate to strike down a compromise agreement
which is unconscionable and against public policy.
WHEREFORE, the Court DENIES petitioners' Motion for
Reconsideration and Motion for Leave of Court to File and Admit
Herein Statement and Confession of Judgment; and the respondents'
Partial Motion for Reconsideration for their lack of merit. The
directive in the Decision dated 4 June 2014 to the National Labor
Relations Commission to act with dispatch to resolve the merits of the
case upon perfection of the appeal is hereby REITERATED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 167563

March 22, 2010

COLLEGE OF THE IMMACULATE CONCEPTION, Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and ATTY.
MARIUS F. CARLOS, PH.D., Respondents.
Labor Law; Illegal Dismissal; Reinstatement; Refund Doctrine; 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.
Does the subsequent reversal of the LAs findings mean that
respondent should reimburse petitioner all the salaries and benefits
he received pursuant to the immediate execution of the LAs
erroneous decision ordering his reinstatement as Department Dean?
We rule in the negative. In Air Philippines Corporation v. Zamora, 498
SCRA 59 (2006) citing Roquero v. Philippine Airlines, Inc., 401 SCRA
424 (2003) we held that: xxx Hence, 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. 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.
Same; Same; Same; Same; An employer could not validly insist that it
is entitled to reimbursement for the payment of the salaries of a
reinstated employee pursuant to the execution of the Labor Arbiters
decision by simply arguing that the LAs order for reinstatement is
incorrect.It is not disputed at this point that the LA erred in

ordering respondents reinstatement as Dean. The NLRC ruled that

respondent should have been merely reinstated as a full-time law
professor, because the term of his appointment as Dean had long
expired. However, such mistake on the part of the LA cannot, in any
way, alter the fact that during the pendency of the appeal of his
decision, his order for respondents reinstatement as Dean was
immediately executory. Article 223 of the Labor Code explicitly
provides that: Art. 223. Appeal.x x x x x x x 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
therein. Therefore, petitioner could not validly insist that it is entitled
to reimbursement for the payment of the salaries of respondent
pursuant to the execution of the LAs decision by simply arguing that
the LAs order for reinstatement is incorrect. The pertinent law on the
matter is not concerned with the wisdom or propriety of the LAs
order of reinstatement, for if it was, then it should have provided that
the pendency of an appeal should stay its execution. After all, a
decision cannot be deemed irrefragable unless it attains finality.

of respondents basic salary, representation allowance and 13thmonth pay are not supported by the records of the case. Petitioner
even opined that the LA and the respondent connived in drafting the
decision. Aside from the fact that this Court is not the proper forum to
consider the merits of petitioners charge of fraud and graft and
corruption against the LA and the respondent, petitioner failed to
overcome the presumption of regularity in the performance of the
LAs official duties in rendering his decision. Petitioner was not able to
show clear and convincing proof to establish partiality, fraud and acts
constituting graft and corruption. Well-entrenched in jurisprudence is
the time-honored principle that the law bestows upon a public official
the presumption of regularity in the discharge of ones official duties
and functions. The Court held that: xxx public respondents have in
their favor the presumption of regularity in the performance of official
duties which petitioners failed to rebut when they did not present
evidence to prove partiality, malice and bad faith. Bad faith can never
be presumed; it must be proved by clear and convincing evidence. x x
x College of the Immaculate Conception vs. National Labor Relation
Commission, 616 SCRA 299, G.R. No. 167563<br/> March 22, 2010

Same; Same; Partiality; Anti-Graft and Corrupt Practices Act;

Presumption of Regularity; Bias and Partiality; Petitioner was not able
to show clear and convincing proof to establish partiality, fraud and
acts constituting graft and corruptionwell-entrenched in
jurisprudence is the time-honored principle that the law bestows upon
a public official the presumption of regularity in the discharge of ones
official duties and functions.Petitioner alleged that the LAs decision
was tainted with fraud and graft and corruption, as the disposi-

Before this Court is a petition for review on certiorari under Rule 45

of the Rules of Court seeking to set aside the Decision1 and
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 83321,
which affirmed the Resolution rendered by the National Labor
Relations Commission (NLRC), Third Division in NLRC NCR CA No.
028096-01.

301

tive portion of the decision cites facts not found in the pleadings and
documents submitted by the parties. Allegedly, the LAs computation

DECISION
PERALTA, J.:

Petitioner College of the Immaculate Conception, through its former

President Rev. Fr. Antonio A. Mangahas, Jr., appointed respondent
Atty. Marius F. Carlos on June 1, 1995 as Acting Dean of the
Department of Business Administration and Accountancy. Thereafter,
in a letter dated May 23, 1996, petitioner informed respondent of his
appointment as Dean of the Department of Business, Economics and
Accountancy effective June 1, 1996 until May 31, 2000. Respondent
served as Dean of said department for the designated term.

In a letter dated May 15, 2000, petitioner reminded respondent that

upon the expiration of his term as Dean, he will be appointed as fulltime professor of Law and Accounting without diminution of his
teaching salary as Dean. As promised, on June 1, 2000, respondent
was given eight (8) teaching loads as full-time professor. Respondent
then requested for the payment of overload pay, arguing that the
regular full time load of a faculty member is only six. Petitioner, in a
letter dated July 3, 2000, denied respondent's claim for overload pay
and explained that pursuant to the Faculty Manual, a full time faculty
member, such as the respondent, is one who teaches at least twentyfour units or eight (8) teaching loads per semester in the College
Department. In the same letter, petitioner requested the respondent
to vacate the Dean's office. Petitioner also directed respondent to
explain why no disciplinary action should be taken against him for
engaging in the practice of law and teaching law in another law school
without prior permission from the petitioner.
In his written reply, respondent admitted that he was teaching at
Araullo University without written permission because it was
unnecessary. As to his law practice, he explained that the only case he
was handling was a petition for Declaration of Nullity of Marriage,
which was referred to him by petitioner's Vice-President for Academic
Affairs. Respondent said that his demotion from Dean of the
Department to a Faculty member was without legal basis and that the
non-renewal of his appointment as Dean was arbitrary, capricious,
unlawful, tainted with abuse of discretion, and injurious to his
integrity and reputation. Further, the subsequent appointment of
other personnel as acting Dean was violative of the law.
Petitioner replied that there was no demotion in position from Dean
to Faculty member, because respondents appointment as Dean was
for a fixed period of four (4) years, from June 1, 1996 to May 31, 2000,
as stated in petitioner's letter dated May 23, 1996.
Petitioner refused to accept respondent's explanation that securing
petitioner's prior written permission to teach elsewhere, or to engage
in any other remunerative occupation, is unnecessary. Thus, in its
letter3 dated July 17, 2000, petitioner gave respondent two options, to
wit:

1. Remain as a full-time professor, but without teaching loads

outside; you may also continue to practice your profession as a
lawyer, provided that any additional cases you wish to handle
should be subject to the prior written approval of the College;
or
2. Become a part-time professor with an initial teaching load of
fifteen (15) units, and with complete freedom to teach
elsewhere and to practice your profession. This means that you
will lose your tenure as a full-time faculty member; moreover,
your teaching loads in subsequent semesters will depend upon
the College's evaluation of your performance and the teaching
loads you will be carrying for that particular semester in other
schools.
Since respondent failed to respond to the aforementioned letter,
petitioner again sent a letter to respondent on September 20, 2000 to
give him another chance to choose between the two foregoing options
and to call his attention to Section 16.8, CHED Memorandum No. 19,
S. 1998, of which provides:
x x x faculty members teaching in more than one school must give
formal notice in their teaching assignment to all schools concerned;
failure to give notices mean automatic withdrawal or cancellation of
his teaching assignment and non-assignment of teaching load for the
succeeding semester.4
Respondent requested for more time to reply, but failed to do so.
Thus, petitioner informed respondent that he will not be assigned any
teaching load for the succeeding semester pursuant to Section
16.8,5 CHED Memorandum No. 19, series of 1998.
In a letter6 dated October 15, 2000, respondent protested the
imposition of sanction against him arising from his part-time teaching
of law in another university. He maintained that teaching in another
university is a benefit he enjoyed since July 1, 1999 as an
administrator and Dean. He further said that his part-time teaching
benefit cannot be withheld despite his alleged demotion as a faculty
member. Even assuming that he violated Section 16.8, CHED

Memorandum No. 19, series of 1998, respondent pointed out that

under the College Faculty Manual, teaching in another school without
permission from the Department Head and the President is
punishable at the first instance by mere censure or oral reprimand.
On October 19, 2000, respondent filed a complaint 7 against petitioner
before Regional Arbitration Branch No. III of San Fernando,
Pampanga, for unfair labor practice, illegal dismissal, with payment of
backwages and damages. Respondent argued that the non-renewal of
his appointment as Dean and his alleged demotion to a faculty
member already constituted constructive dismissal and was but a
prelude to his actual dismissal. Thereafter, his dismissal materialized
when he was deprived of his teaching load.
Petitioner denied dismissing respondent and said it was only
constrained to deprive respondent of his teaching load because he
refused to abide by the mandate of Section 16.8, CHED Memorandum
No. 19, series of 1998.
The Labor Arbiter (LA), in his Decision8 dated February 14, 2001,
ruled that respondent was illegally dismissed. The dispositive portion
of the decision reads:
WHEREFORE, in light of the foregoing, decision is hereby rendered
declaring the employment termination as illegal. Respondents are
hereby ordered to reinstate the complainant to his former position
without loss of seniority rights and other privileges appurtenant
thereto immediately upon receipt of this decision. Further,
respondents are hereby ordered to pay complainant's backwages
which as of the date of this decision has been computed in the amount
of P54,567.00; representation allowance in the amount of P7,092.00;
13th month pay in the amount ofP5,138.25, plus moral and exemplary
damages in the amount of P50,000.00 and P30,000.00, respectively.
SO ORDERED.
On March 19, 2001, the LA then issued a Writ of Execution,9 directing
the Sheriff of the NLRC to implement his Decision dated February 14,
2001. The Petitioner opted to reinstate respondent in its payroll only. 10

Dissatisfied with the Labor Arbiter's finding, petitioner appealed to

the NLRC, which rendered a Decision11 dated August 13, 2003, the
dispositive portion of which reads:
WHEREFORE, premises considered, the Decision dated February 14,
2001 is hereby SET ASIDE and a new one entered DISMISSING the
complaint. However, respondents are hereby ordered to reinstate
complainant as full-time professor of Law and Accountancy without
backwages.
SO ORDERED.
The NLRC ruled that petitioner's non-assignment of teaching load for
the respondent was merely resorted to as a sanction pursuant to
Section 16.8 of CHED Memorandum No. 19, series of 1998. It was
clear that respondent's contract as Dean was only for a period of four
years, from June 1, 1996 to May 31, 2000, afterwhich, he would be
appointed as a full- time professor without diminution of salary as a
dean. Thus, the LA was incorrect when it directed the reinstatement of
the respondent to his former position as a Dean. The NLRC, likewise,
deleted the award of moral and exemplary damages for lack of factual
and legal basis.
Petitioner filed a Motion for Clarification and/or Partial
Reconsideration,12 praying that since the respondent was not illegally
dismissed, then he should be directed to refund the petitioner all the
amounts he received by way of payroll reinstatement. The NLRC, in its
Resolution13 dated January 30, 2004, denied petitioner's motion for
lack of merit.
Undaunted, petitioner filed a petition for certiorari14 with the CA
alleging that the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction when it refused to order the
respondent to return all the monetary benefits he had received on
account of his payroll reinstatement as Dean. The CA, in its Decision
dated August 31, 2004, dismissed the petition and sustained the ruling
of the NLRC. Petitioner filed a motion for reconsideration, which the
CA denied. Hence, the instant petition, which mainly poses the
following issue:

Does the subsequent reversal of the LA's findings mean that

respondent should reimburse petitioner all the salaries and benefits
he received pursuant to the immediate execution of the LA's erroneous
decision ordering his reinstatement as Department Dean?
We rule in the negative. In Air Philippines Corporation v.
Zamora,15 citing Roquero v. Philippine Airlines, Inc.,16 we held that:
x x x Hence, 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. 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.
Petitioner, however, insists that Roquero finds no application to the
case at bar, because here, respondent was ordered reinstated to a
position different from that which he previously held, i.e., the LA
wrongfully ordered his reinstatement as Dean, when he should have
been reinstated only as a full-time faculty member, because this was
the position he held when he filed the complaint for illegal dismissal.
Further, petitioner takes a firm stand that the case of International
Container Terminal Services, Inc v. NLRC17 refers only to a case of a
dismissed employee and is inapplicable here, where it was correctly
found on appeal that the employee was not dismissed at all, but was
only sanctioned for teaching in another university without petitioner's
permission.
It is not disputed at this point that the LA erred in ordering
respondent's reinstatement as Dean. The NLRC ruled that respondent
should have been merely reinstated as a full-time law professor,
because the term of his appointment as Dean had long expired.
However, such mistake on the part of the LA cannot, in any way, alter
the fact that during the pendency of the appeal of his decision, his
order for respondent's reinstatement as Dean was immediately
executory. Article 223 of the Labor Code explicitly provides that:

Art. 223. - Appeal. x x x

xxxx
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 therein. (Emphasis supplied)
Therefore, petitioner could not validly insist that it is entitled to
reimbursement for the payment of the salaries of respondent pursuant
to the execution of the LA's decision by simply arguing that the LA's
order for reinstatement is incorrect. The pertinent law on the matter is
not concerned with the wisdom or propriety of the LA's order of
reinstatement, for if it was, then it should have provided that the
pendency of an appeal should stay its execution. After all, a decision
cannot be deemed irrefragable unless it attains finality.
In Garcia v. Philippine Airlines, Inc.,18 the Court made a very
enlightening discussion on the aspect of reinstatement pending
appeal:
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, while on the other is the recent case of
Genuino v. National Labor Relations Commission. At the core of the
seeming divergence is the application of paragraph 3 of Article 223 of
the Labor Code x x x
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.
(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.
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 [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] 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. (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, the Court did not order the refund of salaries garnished or
received by payroll-reinstated 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.
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.
In the same case, the Court went on to discuss the illogical and unjust
effects of the "refund doctrine" erroneously espoused in Genuino:
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 to Genuino, 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."
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.
xxxx
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. x x x
Thus, the Court resolved the impasse by reaffirming the principle
earlier enunciated in Air Philippines Corporation,that an employee
cannot be compelled to reimburse the salaries and wages he received
during the pendency of his appeal, notwithstanding the reversal by the
NLRC of the LA's order of reinstatement. In this case, there is even
more reason to hold the employee entitled to the salaries he received
pending appeal, because the NLRC did not reverse the LA's order of
reinstatement, but merely declared the correct position to which
respondent is to be reinstated, i.e., that of full-time professor, and not
as Dean.

Petitioner alleged that due to the unreasonable demand of the

respondent that he be reinstated as a Dean, instead of a faculty
member, petitioner was constrained to reinstate him in the payroll
only. Thus, petitioner argued that when the respondent imposed
uncalled conditions for his reinstatement, his claim for reinstatement
pending appeal was effectively nullified. We rule that respondent did
not impose any unreasonable condition on his reinstatement as a
Dean, because he was merely demanding that he be reinstated in the
manner set forth by the LA in the writ of execution. Moreover, it bears
stressing that the manner of immediate reinstatement, pending
appeal, or the promptness thereof is immaterial, as illustrated in the
following two scenarios:
Situation No. 1. (As in the cases of Air Philippines
Corporation and International Container Terminal Services,
Inc.)The LA ruled in favor of the dismissed employee and ordered his
reinstatement. However, the employer did not immediately comply
with the LA's directive. On appeal, the NLRC reversed the LA and
found that there was no illegal dismissal. In this scenario, We ruled
that the employee is entitled to payment of his salaries and allowances
pending appeal.
Situation No. 2. (As in the present case) The LA ruled in favor of the
dismissed employee and ordered the latter's reinstatement. This time,
the employer complied by reinstating the employee in the payroll. On
appeal, the LA's ruling was reversed, finding that there was no case of
illegal dismissal but merely a temporary sanction, akin to a
suspension. Here, We also must rule that the employee cannot be
required to reimburse the salaries he received because if he was not
reinstated in the payroll in the first place, the ruling in situation no. 1
will apply, i.e., the employee is entitled to payment of his salaries and
allowances pending appeal.1avvphi1
Thus, either way we look at it, at the end of the day, the employee gets
his salaries and allowances pending appeal. The only difference lies as
to the time when the employee gets it.
Lastly, petitioner alleged that the LA's decision was tainted with fraud
and graft and corruption, as the dispositive portion of the decision

cites facts not found in the pleadings and documents submitted by the
parties. Allegedly, the LA's computation of respondent's basic salary,
representation allowance and 13th-month pay are not supported by
the records of the case. Petitioner even opined that the LA and the
respondent connived in drafting the decision.

x x x public respondents have in their favor the presumption of

regularity in the performance of official duties which petitioners failed
to rebut when they did not present evidence to prove partiality, malice
and bad faith. Bad faith can never be presumed; it must be proved by
clear and convincing evidence. x x x21

Aside from the fact that this Court is not the proper forum to consider
the merits of petitioner's charge of fraud and graft and corruption
against the LA and the respondent, petitioner failed to overcome the
presumption of regularity in the performance of the LA's official
duties19 in rendering his decision. Petitioner was not able to show clear
and convincing proof to establish partiality, fraud and acts
constituting graft and corruption. Well-entrenched in jurisprudence is
the time-honored principle that the law bestows upon a public official
the presumption of regularity in the discharge of ones official duties
and functions.20 The Court held that:

WHEREFORE, the petition is DENIED. The Decision and Resolution

of the Court of Appeals in CA-G.R. SP No. 83321, dated August 31,
2004 and March 11, 2005, respectively, are AFFIRMED.
SO ORDERED.