Republic of the Philippines WHEREFORE, premises considered, judgment is hereby rendered denying the

SUPREME COURT application for clearance filed by Christian literature Crusade and it (applicant)
Manila is ordered to reinstate Loida del Rosario to her former position/or substantially
equivalent position, with backwages for a period of three (3) years without
FIRST DIVISION deductions from possible earnings elsewhere, and without loss of seniority
rights and other privileges formerly appertaining to her.
G.R. No. 79106 April 10, 1989
SO ORDERED.
CHRISTIAN LITERATURE CRUSADE, petitioner,
vs. On August 9, 1982, a writ of execution was issued by the Labor Arbiter upon
NATIONAL LABOR RELATIONS COMMISSION and LOIDA DEL ROSARIO, motion of del Rosario, there being no appeal (pp. 33-34, Rollo). On August 27,
respondents. 1982, the award of backwages in the amount of THIRTEEN THOUSAND SIX
HUNDRED EIGHTY PESOS (P 13,680.00) computed on the basis of del Rosario's
P 380.00 monthly salary was satisfied. However, on the issue of reinstatement,
Agustin S. Sundiam for petitioner. the Sheriff stated in his return that del Rosario was not reinstated in view of the
"Manifestation and Motion to Hold in Abeyance the Execution of the Decision
The Solicitor General for public respondent. Per Reinstatement of the Complainant Loida del Rosario,' filed by Crusade on
August 31, 1982.
Domingo V. del Rosario for private respondent.
On February 2, 1983, del Rosario filed an "Ex-Parte Motion for the Issuance of
an Alias Writ of Execution" praying therein for reinstatement with payment of
allowances and 13th month pay from 1976, the date of her dismissal, up to
January, 1983, amounting to P 20,072.00.
MEDIALDEA, J.:
On February 28, 1983, an Alias Writ of Execution was issued by the Labor
This is a petition for certiorari with preliminary injunction seeking to nullify Arbiter for del Rosario's reinstatement.
the writ of execution dated June 2, 1987, issued by the Labor Arbiter in NLRC-
NCR-Case No. RBIV-9706-77, entitled "Loida del Rosario vs. Christian Literature
Crusade." On April 13, 1983, a Manifestation and Motion was again filed by del Rosario
alleging that the computation of her backwages should include the allowances
and 13th month pay. On June 7, 1983, the Labor Arbiter resolved the question
The antecedent facts are as follows: in this wise (p. 37, Rollo):

Sometime in January, 1975, private respondent Loida del Rosario (hereinafter
referred to as del Rosario) was hired by petitioner Christian Literature Crusade
(hereinafter referred to as Crusade) as a bookkeeper. Later, on October 4, 1976,
an application for clearance to terminate the services of del Rosario on the
ground of incompetence was filed by Crusade with the Ministry of Labor and
Employment. The application was opposed by del Rosario. On November 20,
1976, del Rosario was placed under preventive suspension.
On March 31, 1982, the Labor Arbiter rendered a decision, the dispositive
portion of which reads (pp. 31-32, Rollo):
It might be noted that the Decision of Hon. Lacandola S. Leano states that
complainant should be paid backwages for a period of three (3) years without
deductions from possible earnings elsewhere and without loss of seniority
rights and other privileges formerly appertaining to her.
The basis of the computation of the backwages of the complainant is the
amount appearing in the complaint which is P 380.00 a month that was in 1976
which is her latest salary. It might be noted that the prevailing minimum wage
during this time is P 260.00 plus P 110.00 monthly allowance, and without loss
of seniority rights and other privileges formerly appertaining to her.

1
The computation, we believe is correct and the Motion for Recomputation of
the Backwages filed by the complainant is hereby denied and let an Alias Writ
of Execution for the reinstatement of the complainant be issued.
On June 9, 1983, the Labor Arbiter issued a second Alias Writ of Execution for
the purpose of reinstatement of del Rosario, which was not satisfied.
The motions for recomputation of her backwages having been denied, del
Rosario appealed to the National Labor Relations Commission (hereinafter
referred to as NLRC) regarding the interpretation of the March 31, 1982
decision of the Labor Arbiter. On August 29, 1986, the NLRC rendered a
decision, the dispositive portion of which reads (pp. 38-39, Rollo):
WHEREFORE, with the above modification, the appealed Order is Affirmed.
Accordingly, let this case be remanded to the Labor Arbiter of origin for
execution of the reinstatement aspect of the 31 March 1982 Decision and
likewise of the award hereto indicated after proper computation.
SO ORDERED.
The modification referred to states (p. 38, Rollo):
The term 'without loss of other privileges formerly
appertaining to her' refers to other benefits that may have accrued to her had
she not been dismissed. Obviously, this includes the decretal allowances,
service incentive leave pay and 13th month pay as sought for in the motion. It
appearing, however, that the amount of P 380.00 set forth in the complaint and
taken as the basis in the determination of complainant's backwages already
covers her monthly allowance, the same should therefore be excluded in this
award. And for purposes of quantifying the other two (2) remaining claims, the
computation must be reckoned from 20 November 1976, the date of her
termination, until 20 November 1979, or for a period of three (3) years as
directed in the subject decision.
On February 9, 1987, del Rosario filed a Partial Motion for Reconsideration
before the NLRC arguing that the latter erred in "holding that the amount of P
380.00 covers the allowance and that her monthly rate was P 260.00 and
prayed for payment of additional backwages based on a computation of P
380.00 monthly rate with corresponding privileges and benefits on the basis of
said monthly rate.
2
Later, a Motion for the Issuance of a Writ of Execution was filed anew by del
Rosario, alleging that based on her computation, she is entitled to backwages
including living allowance and 13th month pay in the total amount P 80,329.15
from September 1, 1982 to March 15, 1987 and prayed for the payment of the
same and reinstatement.
On June 2, 1987, the Labor Arbiter issued a Writ of Execution, the dispositive
portion of which reads (p. 44, Rollo):
NOW, THEREFORE, you are hereby commanded to go to respondent Christian
Literature Crusade's premises at 104 Karuhatan, Valenzuela, Bulacan and
reinstate Loida del Rosario to her former position or a substantially equivalent
position, without loss of seniority rights and other privileges formerly
appertaining to her and collect the amount of EIGHTY FOUR THOUSAND SIX
HUNDRED EIGHTY ONE PESOS and NINETY SIX CENTAVOS (P 84,681.96)
representing her backwages and other benefits aside from the 3 years
deductible backwages as originally ordered and already satisfied, commencing
from the period when the Sheriff was unable to effect reinstatement per
decision dated August 29, 1986, as per official computation of the Research and
Information Unit (attached as Annex "A" of this Writ) and thereafter turn over
said amount to this office for further disposition.
In case you fail to collect said amount in cash, you are directed to cause the
satisfaction of the same from the movable goods and immovable properties of
respondent not exempt from execution.
You are further directed to return this Writ within fifteen (15) days from
compliance thereof together with your corresponding report.
You may collect legal fees from the respondent.
On July 16, 1987, the Motion to Quash Writ of Execution was denied.
Hence, the present petition.
Crusade alleged that on June 17, 1987, the Deputy Sheriff garnished its bank
deposits amounting to more than P 8,000.00. On August 3, 1987, We issued a
temporary restraining order enjoining the NLRC, thru Labor Arbiter Edgardo
M. Madriaga, from releasing the garnished amounts of money to del Rosario.
However, in her comment, del Rosario alleged that the amount of P 7,771.88
has been released to her before the issuance of the temporary restraining
order.
The main issue is whether or not del Rosario is entitled to additional
backwages from September 1, 1982 to March 15, 1987.
Crusade alleges that the questioned writ of execution is null and void for the
following reasons: (1) it does not conform to, but is even violative of the
decisions dated March 31, 1982 and August 29, 1986 which decisions merely
awarded del Rosario "backwages for a period of three (3) years without
deductions from possible earnings elsewhere, without loss of seniority rights
and other privileges formerly appertaining to her; (2) del Rosario's backwages
totalling P l3,680. 00 had already been fully paid in 1982; and (3) it commands
collection from Crusade of P 84,681.96 representing del Rosario's backwages
from September 1, 1982 until March 15, 1987. Unless the subject writ of
execution is declared null and void, NLRC would be allowed to award
backwages to del Rosario for more than the three (3) years maximum, or seven
(7) years and nine (9) months to be more precise, or without any limit for that
matter.
On the other hand, del Rosario argues that the challenged writ of execution is
based on the obstinate refusal of Crusade to reinstate her and not on the
decisions dated March 31, 1982 and August 29, 1986. The power of the NLRC
and/or the Labor Arbiter to grant or extend backwages for refusal of the
employer enjoined to reinstate terminated workers is recognized in this
jurisdiction in the case of TUPAS Local Chapter No. 979 vs. NLRC (G.R. Nos.
60532-33, November 5, 1985,139 SCRA 478).
The petition is impressed with merit.
It is a well-settled rule that the execution of judgment must conform to that
which is ordained or decreed in the dispositive portion of the decision Laingo
vs. Camilo, G.R. No. L-35833, June 29, 1984, 130 SCRA 144; National Steel
Corporation vs. National Labor Relations Commission and Pelagio Remolado,
G.R. No. 74711, September 19, 1988). Where the writ of execution is not in
harmony with and exceeds the judgment which gives it life, the writ has pro
tanto no validity (Mutual Security Insurance Corporation vs. Court of Appeals,
G.R. No. L-47018, September 11, 1987,153 SCRA 678). This is so because once a
judgment has become final and executory or partially executed as in this case, it
may no longer be amended, modified or altered. What remains to be done is
purely the ministerial enforcement or execution of the judgment.
3
In case of defiance or non-compliance with the writ of execution, as in this case,
where Crusade paid del Rosario three (3) years backwages but failed and
refused and still fails and refuses to reinstate her despite several writs of
execution, the remedy is not for the grant in another writ of execution of
continuing backwages up to the time of actual reinstatement. The grant of
additional backwages to serve as damages or as penalty to Crusade for
persistently refusing to reinstate del Rosario has no basis in the decision sought
to be enforced and hence, it may not be resorted to in order to compel
reinstatement. The remedy is provided in the case of D.M. Consunji, Inc. vs.
Pucan, et al., G.R. No. 71413, March 21, 1988, 159 SCRA 107, wherein an alias
writ of execution was likewise issued directing payment of additional
backwages after the prior award of backwages equivalent to five (5) years and
seven (7) months had been fully satisfied. The Court, in nullifying the order for
payment of additional sums, therein held:
To ensure compliance with the court's order, and realizing the stubborn
refusal to reinstate him, petitioner (sic) should have resorted to more drastic
remedies such as the filing of a motion to cite petitioner in contempt. In this
way, prompt compliance could have resulted.
Thus, del Rosario should have filed a motion to cite Crusade in contempt for
refusing to reinstate her despite several writs of execution issued by the Labor
Arbiter.
The case of TUPAS Local Chapter No. 979 vs. NLRC, supra, relied upon by del
Rosario in support of her claim for continuing backwages, is inapplicable to the
case at bar. It should be noted that the Court's departure therein from the usual
equivalent of the three years backwages generally awarded by this Court was
still within its power to do, the reinstatement of the workers therein being by
virtue of a return-to-work order, not by virtue of a final and executory
judgment. In Davao Free Workers Front vs. CIR, G.R. No. L-29356, October
31,1974, 60 SCRA 408, this Court, in departing from the general rule, merely
upheld the trial court's decision, which was not yet final and executory,
awarding the employees therein unlawfully dismissed full backwages without
qualification from dismissal to reinstatement. Likewise, in National Shipyards
and Steel Corporation vs. CIR, G.R. No. L-32724, June 28,1974, 57 SCRA 642,
this Court merely upheld the industrial court's questioned orders and
resolutions in implementation of this Court's long final and executory decision
in a previous case involving exactly the same subject matter. Said orders and
resolutions provided for the employee's reinstatement with backwages until
actually reinstated. In upholding the same, this Court said that the matter of
reinstatement with backwages was long resolved and may no longer be
reopened.
In the case at bar, what became final and executory is the decision of the Labor Republic of the Philippines
Arbiter granting reinstatement and only three (3) years backwages. Thus, as far SUPREME COURT
as this case is concerned, the issue of whether or not del Rosario's backwages Manila
should be limited to three (3) years or continued indefinitely until actual
reinstatement can no longer be raised or reopened. The lengthy discussion EN BANC
made by Crusade that the award of backwages up to the maximum of three (3)
years is not without justification and the corresponding retort of del Rosario
citing TUPAS, supra, where this Court granted backwages without qualification G.R. No. 90501 August 5, 1991
until reinstatement, are, therefore, irrelevant and beside the point.
ARIS (PHIL.) INC., petitioner,
ACCORDINGLY, the petition is hereby GRANTED. The writ of execution dated vs.
June 2, 1987 insofar as it granted additional backwages is hereby SET ASIDE NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER FELIPE
and private respondent Loida del Rosario is hereby ordered to refund to GARDUQUE III, LEODEGARIO DE GUZMAN, LILIA PEREZ, ROBERTO
petitioner Christian Literature Crusade the amount of P 7,771.88. However, the BESTAMONTE, AIDA OPENA, REYNALDO TORIADO, APOLINARIO
writ STANDS insofar as it ordered petitioner to reinstate private respondent to GAGAHINA, RUFINO DE CASTRO, FLORDELIZA RAYOS DEL SOL, STEVE
her former position or a substantially equivalent position. Where reinstatement SANCHO, ESTER CAIRO, MARIETA MAGALAD, and MARY B. NADALA,
is no longer feasible, petitioner is ordered to pay separation pay as provided by respondents.
law.
Cesar C. Cruz & Partners for petitioner.
This decision is immediately executory. Zosimo Morillo for respondent Rayos del Sol.

SO ORDERED. Banzuela, Flores, Miralles, Raneses, Sy & Associates for private respondents.

DAVIDE, JR., J.:

Petitioner assails the constitutionality of the amendment introduced by Section

12 of Republic Act No. 6715 to Article 223 of the Labor Code of the Philippines
(PD No. 442, as amended) allowing execution pending appeal of the
reinstatement aspect of a decision of a labor arbiter reinstating a dismissed or
separated employee and of Section 2 of the NLRC Interim Rules on Appeals
under R.A. No. 6715 implementing the same. It also questions the validity of the
Transitory Provision (Section 17) of the said Interim Rules.

The challenged portion of Section 12 of Republic Act No. 6715, which took
effect on 21 March 1989, reads as follows:

SEC 12. Article 223 of the same code is amended to read as follows:

ART. 223. Appeal.

4
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, in so far 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.
This is a new paragraph ingrafted into the Article.
Sections 2 and 17 of the "NLRC Interim Rules On Appeals Under R.A. No. 6715,
Amending the Labor Code", which the National Labor Relations Commission
(NLRC) promulgated on 8 August 1989, provide as follows:
Section 2. Order of Reinstatement and Effect of Bond. — In so far as the
reinstatement aspect is concerned, the decision of the Labor Arbiter reinstating
a dismissed or separated employee 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 be reinstated in the payroll.
The posting of a bond by the employer shall not stay the execution for
reinstatement.
xxx xxx xxx
Section 17. Transitory provision. — Appeals filed on or after March 21,
1989, but prior to the effectivity of these Interim Rules must conform to the
requirements as herein set forth or as may be directed by the Commission.
The antecedent facts and proceedings which gave rise to this petition are not
disputed:
On 11 April 1988, private respondents, who were employees of petitioner,
aggrieved by management's failure to attend to their complaints concerning
their working surroundings which had become detrimental and hazardous,
requested for a grievance conference. As none was arranged, and believing that
their appeal would be fruitless, they grouped together after the end of their
5
work that day with other employees and marched directly to the management's
office to protest its long silence and inaction on their complaints.
On 12 April 1988, the management issued a memorandum to each of the
private respondents, who were identified by the petitioner's supervisors as the
most active participants in the rally requiring them to explain why they should
not be terminated from the service for their conduct. Despite their explanation,
private respondents were dismissed for violation of company rules and
regulations, more specifically of the provisions on security and public order and
on inciting or participating in illegal strikes or concerted actions.
Private respondents lost no time in filing a complaint for illegal dismissal
against petitioner and Mr. Gavino Bayan with the regional office of the NLRC at
the National Capital Region, Manila, which was docketed therein as NLRC-NCR-
00-0401630-88.
After due trial, Labor Arbiter Felipe Garduque III handed down on 22 June 1989
a decision' the dispositive portion of which reads:
ACCORDINGLY, respondent Aris (Phils.), Inc. is hereby ordered to reinstate
within ten (10) days from receipt hereof, herein complainants Leodegario de
Guzman, Rufino de Castro, Lilia M. Perez, Marieta Magalad, Flordeliza Rayos del
Sol, Reynaldo Toriado, Roberto Besmonte, Apolinario Gagahina, Aidam (sic)
Opena, Steve C. Sancho Ester Cairo, and Mary B. Nadala to their former
respective positions or any substantial equivalent positions if already filled up,
without loss of seniority right and privileges but with limited backwages of six
(6) months except complainant Leodegario de Guzman.
All other claims and prayers are hereby denied for lack of merit.
SO ORDERED.
On 19 July 1989, complainants (herein private respondents) filed a Motion For
Issuance of a Writ of Execution2 pursuant to the above-quoted Section 12 of
R.A. No. 6715.
On 21 July 1989, petitioner filed its Appeal.3
On 26 July 1989, the complainants, except Flor Rayos del Sol, filed a Partial
Appeal.4
On 10 August 1989, complainant Flor Rayos del Sol filed a Partial Appeal.5
On 29 August 1989, petitioner filed an Opposition6 to the motion for execution
alleging that Section 12 of R.A. No. 6715 on execution pending appeal cannot be
applied retroactively to cases pending at the time of its effectivity because it
does not expressly provide that it shall be given retroactive effect7 and to give
retroactive effect to Section 12 thereof to pending cases would not only result
in the imposition of an additional obligation on petitioner but would also dilute
its right to appeal since it would be burdened with the consequences of
reinstatement without the benefit of a final judgment. In their Reply8 filed on 1
September 1989, complainants argued that R.A. No. 6715 is not sought to be
given retroactive effect in this case since the decision to be executed pursuant
to it was rendered after the effectivity of the Act. The said law took effect on 21
March 1989, while the decision was rendered on 22 June 1989.
Petitioner submitted a Rejoinder to the Reply on 5 September 1989.9
On 5 October 1989, the Labor Arbiter issued an Order granting the motion for
execution and the issuance of a partial writ of execution10 as far as
reinstatement of herein complainants is concerned in consonance with the
provision of Section 2 of the rules particularly the last sentence thereof.
In this Order, the Labor Arbiter also made reference to Section 17 of the NLRC
Interim Rules in this wise:
Since Section 17 of the said rules made mention of appeals filed on or after
March 21, 1989, but prior to the effectivity of these interim rules which must
conform with the requirements as therein set forth (Section 9) or as may be
directed by the Commission, it obviously treats of decisions of Labor Arbiters
before March 21,1989. With more reason these interim rules be made to apply
to the instant case since the decision hereof (sic) was rendered thereafter.11
Unable to accept the above Order, petitioner filed the instant petition on 26
October 198912 raising the issues adverted to in the introductory portion of
this decision under the following assignment of errors:
A. THE LABOR ARBITER A QUO AND THE NLRC, IN ORDERING THE
REINSTATEMENT OF THE PRIVATE RESPONDENTS PENDING APPEAL AND IN
PROVIDING FOR SECTION 2 OF THE INTERIM RULES, RESPECTIVELY, ACTED
WITHOUT AND IN EXCESS OF JURISDICTION SINCE THE BASIS FOR SAID
ORDER AND INTERIM RULE, i.e., SECTION 12 OF R.A. 6715 IS VIOLATIVE OF
6
THE CONSTITUTIONAL GUARANTY OF DUE PROCESS IT BEING OPPRESSIVE
AND UNREASONABLE.
B. GRANTING ARGUENDO THAT THE PROVISION IN(SIC) REINSTATEMENT
PENDING APPEAL IS VALID, NONETHELESS, THE LABOR ARBITER A QUO AND
THE NLRC STILL ACTED IN EXCESS AND WITHOUT JURISDICTION IN
RETROACTIVELY APPLYING SAID PROVISION TO PENDING LABOR CASES.
In Our resolution of 7 March 1989, We required the respondents to comment
on the petition.
Respondent NLRC, through the Office of the Solicitor General, filed its Comment
on 20 November 1989.13 Meeting squarely the issues raised by petitioner, it
submits that the provision concerning the mandatory and automatic
reinstatement of an employee whose dismissal is found unjustified by the labor
arbiter is a valid exercise of the police power of the state and the contested
provision "is then a police legislation."
As regards the retroactive application thereof, it maintains that being merely
procedural in nature, it can apply to cases pending at the time of its effectivity
on the theory that no one can claim a vested right in a rule of procedure.
Moreover, such a law is compatible with the constitutional provision on
protection to labor.
On 11 December 1989, private respondents filed a Manifestation14 informing
the Court that they are adopting the Comment filed by the Solicitor General and
stressing that petitioner failed to comply with the requisites for a valid petition
for certiorari under Rule 65 of the Rules of Court.
On 20 December 1989, petitioner filed a Rejoinder15 to the Comment of the
Solicitor General.
In the resolution of 11 January 1990,16 We considered the Comments as
respondents' Answers, gave due course to the petition, and directed that the
case be calendared for deliberation.
In urging Us to declare as unconstitutional that portion of Section 223 of the
Labor Code introduced by Section 12 of R.A. No. 6715, as well as the
implementing provision covered by Section 2 of the NLRC Interim Rules,
allowing immediate execution, even pending appeal, of the reinstatement
aspect of a decision of a labor arbiter reinstating a dismissed or separated
employee, petitioner submits that said portion violates the due process clause
of the Constitution in that it is oppressive and unreasonable. It argues that a
reinstatement pending appeal negates the right of the employer to self-
protection for it has been ruled that an employer cannot be compelled to
continue in employment an employee guilty of acts inimical to the interest of
the employer; the right of an employer to dismiss is consistent with the legal
truism that the law, in protecting the rights of the laborer, authorizes neither
the oppression nor the destruction of the employer. For, social justice should be
implemented not through mistaken sympathy for or misplaced antipathy
against any group, but even-handedly and fairly.17
To clinch its case, petitioner tries to demonstrate the oppressiveness of
reinstatement pending appeal by portraying the following consequences: (a)
the employer would be compelled to hire additional employees or adjust the
duties of other employees simply to have someone watch over the reinstated
employee to prevent the commission of further acts prejudicial to the
employer, (b) reinstatement of an undeserving, if not undesirable, employee
may demoralize the rank and file, and (c) it may encourage and embolden not
only the reinstated employees but also other employees to commit similar, if
not graver infractions.
These rationalizations and portrayals are misplaced and are purely conjectural
which, unfortunately, proceed from a misunderstanding of the nature and
scope of the relief of execution pending appeal.
Execution pending appeal is interlinked with the right to appeal. One cannot be
divorced from the other. The latter may be availed of by the losing party or a
party who is not satisfied with a judgment, while the former may be applied for
by the prevailing party during the pendency of the appeal. The right to appeal,
however, is not a constitutional, natural or inherent right. It is a statutory
privilege of statutory origin18 and, therefore, available only if granted or
provided by statute. The law may then validly provide limitations or
qualifications thereto or relief to the prevailing party in the event an appeal is
interposed by the losing party. Execution pending appeal is one such relief long
recognized in this jurisdiction. The Revised Rules of Court allows execution
pending appeal and the grant thereof is left to the discretion of the court upon
good reasons to be stated in a special order.19
Before its amendment by Section 12 of R.A. No. 6715, Article 223 of the Labor
Code already allowed execution of decisions of the NLRC pending their appeal
to the Secretary of Labor and Employment.
7
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. Thus, in the Article on
Social Justice and Human Rights of the Constitution,20 which principally directs
Congress to give highest priority to the enactment of measures that protect and
enhance the right of all people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by equitably diffusing
wealth and political power for the common good, the State is mandated to
afford full protection to labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment opportunities for all;
to guarantee the rights of all workers to self-organization, collective bargaining
and negotiations, and peaceful concerted activities, including the right to strike
in accordance with law, security of tenure, human conditions of work, and a
living wage, to participate in policy and decision-making processes affecting
their rights and benefits as may be provided by law; and to promote the
principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes. Incidentally, a study of
the Constitutions of various nations readily reveals that it is only our
Constitution which devotes a separate article on Social Justice and Human
Rights. Thus, by no less than its fundamental law, the Philippines has laid down
the strong foundations of a truly just and humane society. This Article
addresses itself to specified areas of concern labor, agrarian and natural
resources reform, urban land reform and housing, health, working women, and
people's organizations and reaches out to the underprivileged sector of society,
for which reason the President of the Constitutional Commission of 1986,
former Associate Justice of this Court Cecilia Muñoz-Palma, aptly describes this
Article as the "heart of the new Charter."21
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.22 Labor is an
indispensable partner for the nation's progress and stability.
If in ordinary civil actions execution of judgment pending appeal is authorized
for reasons the determination of which is merely left to the discretion of the
judge, We find no plausible reason to withhold it in cases of decisions
reinstating dismissed or separated employees. In such cases, the poor
employees had been deprived of their only source of livelihood, their only
means of support for their family their very lifeblood. To Us, this special
circumstance is far better than any other which a judge, in his sound discretion,
may determine. In short, with respect to decisions reinstating employees, the
law itself has determined a sufficiently overwhelming reason for its execution
pending appeal.
The validity of the questioned law is not only supported and sustained by the
foregoing considerations. As contended by the Solicitor General, it is a valid
exercise of the police power of the State. Certainly, if the right of an employer to
freely discharge his employees is subject to regulation by the State, basically in
the exercise of its permanent police power on the theory that the preservation
of the lives of the citizens is a basic duty of the State, that is more vital than the
preservation of corporate profits.23 Then, by and pursuant to the same 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 its family.
The charge then that the challenged law as well as the implementing rule are
unconstitutional is absolutely baseless.1âwphi1 Laws are presumed
constitutional.24 To justify nullification of a law, there must be a clear and
unequivocal breach of the Constitution, not a doubtful and argumentative
implication; a law shall not be declared invalid unless the conflict with the
constitution is clear beyond reasonable doubt.25 In Parades, et al. vs. Executive
Secretary26 We stated:
The reason for this:
... can be traced to the doctrine of separation of powers which enjoins on each
department a proper respect for the acts of the other departments. ... The
theory is that, as the joint act of the legislative and executive authorities, a law
is supposed to have been carefully studied and determined to be constitution
before it was finally enacted. Hence, as long as there is some other basis that
can be used by the courts for its decision, the constitutionality of the challenged
law will not be touched upon and the case will be decided on other available
grounds.28
The issue concerning Section 17 of the NLRC Interim Rules does not deserve a
measure of attention. The reference to it in the Order of the Labor Arbiter of 5
October 1989 was unnecessary since the procedure of the appeal proper is not
involved in this case. Moreover, the questioned interim rules of the NLRC,
promulgated on 8 August 1989, can validly be given retroactive effect. They are
procedural or remedial in character, promulgated pursuant to the authority
vested upon it under Article 218(a) of the Labor Code of the Philippines, as
amended. Settled is the rule that procedural laws may be given retroactive
effect.29 There are no vested rights in rules of procedure.30 A remedial statute
may be made applicable to cases pending at the time of its enactment.31
WHEREFORE, the petition is hereby DISMISSED for lack of merit. Costs against
petitioner.
SO ORDERED.

2. For one thing, it is in accordance with the settled doctrine that between two
possible constructions, one avoiding a finding of unconstitutionality and the
other yielding such a result, the former is to be preferred. That which will save,
not that which will destroy, commends itself for acceptance. After all, the basic
presumption all these years is one of validity. The onerous task of proving
otherwise is on the party seeking to nullify a statute. It must be proved by clear
and convincing evidence that there is an infringement of a constitutional
provision, save in those cases where the challenged act is void on its face.
Absent such a showing, there can be no finding of unconstitutionality. A doubt,
even if well-founded, does not suffice. Justice Malcolm's aphorism is apropos:
To doubt is to sustain.27

8
Republic of the Philippines back wages, and damages against the hotel and its former general manager,
SUPREME COURT Peter Grieder.3 The case was docketed as NLRC-NCR Case No. 00-11-06059-90.
Manila
On 23 December 1991, the Labor Arbiter rendered a decision4 in favor of the
FIRST DIVISION private respondent. The dispositive portion thereof reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

G.R. No. 110027 November 16, 1994 1. Declaring the dismissal of complainant Gina G. Castro by respondents to have
been illegally effected;
MARANAW HOTEL RESORT CORPORATION (CENTURY PARK SHERATON
MANILA), petitioner, 2. Ordering respondents to immediately reinstate complainant to her former
vs. position or substantially equivalent position without loss of seniority rights
NATIONAL LABOR RELATIONS COMMISSION and GINA G. CASTRO, including the payment of backwages in the amount of Eighty-Eight Thousand
respondents. Six Hundred Twenty Pesos (P88,620.00);

Cabochan, Reyes & Capones for petitioner. 3. Respondents are further ordered to pay the amount of Two Thousand Eight
Hundred Pesos (P2,800.00) for unpaid 13th month pay and Nine Thousand One
Malang and Duka Law Offices for private respondent. Hundred Forty-Two Pesos (P9,142.00) as ten (10%) per cent attorney's fees,
which is equivalent to ten (10%) per cent of the awards herein;

DAVIDE, JR., J.:
This special civil action of certiorari raises the issue of whether the National
Labor Relations Commission (NLRC) acted with grave abuse of discretion in
ordering the payroll reinstatement of an employee despite its resolution
reversing the decision of the Labor Arbiter and declaring that there was no
illegal dismissal.
The factual and procedural antecedents in this case are in the main not
disputed.
On 16 June 1990, private respondent Gina G. Castro was hired on a
probationary basis for six months as a guest relations officer of the Century
Park Sheraton Hotel, a five-star hotel located at Malate, Manila, owned by the
petitioner. 1 On 10 November 1990, she was dismissed on the ground of failure
to meet the standards set forth in her probationary employment contract.2 She
then filed on 13 November 1990 with the Arbitration Branch of the National
Capital Region of the NLRC a complaint for illegal dismissal with reinstatement,
4. As to the claims for damages, the same is hereby ordered dismissed for lack
of merit.
SO ORDERED.5
The petitioner received a copy of the decision on 28 January 1992. On
7 February 1992, within the 10-day reglementary period, it filed an appeal6 to
the NLRC alleging therein that the Labor Arbiter committed abuse of discretion
and serious error in his findings of fact and conclusions of law. It also claimed
that the Labor Arbiter erred in ruling that the monthly salary of the private
respondent is P7,000.00 when it should have been P3,403.00. Also, on
7 February 1992, it filed an Omnibus Motion For Extension Of Time To File
Surety Bond And To Reduce Amount Of Bond7 since by reason of the above
error as to the monthly salary, the back salaries should only have been
P40,836.00 and not P88,620.00 and the 13th-month pay should only have been
P1,134.00 and not P2,800.00. Thus, the total amount due the private
respondent should only be P41,970 and not P91,420.00. This motion was not
resolved by the Labor Arbiter.

9
On 17 February 1992, the private respondent filed a motion for the execution of
the decision8 on the ground that the petitioner did not file the memorandum of
appeal and appeal bond and that the order of reinstatement was immediately
executory. This motion was likewise not resolved.
On 14 July 1992, the petitioner filed a surety bond in the amount of
P100,562.009 to answer for the monetary award based on the erroneous
computation by the Labor Arbiter. 10
In its resolution of 25 March 1993, 11 the NLRC (Second Division) reversed the
decision of the Labor Arbiter and dismissed the complaint for lack of merit. It
held that there was no illegal dismissal but rather a failure of the private
respondent to comply with the petitioner's standards for permanent
employment. It then made the following observations:
It appears however that on March 13, 1992, complainant
filed a Motion For Execution Pending Appeal which motion was inadvertently
not acted upon.
Article 223 of the Labor Code provides among others, as
follows:
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 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).
In view of the aforequoted provision, complainant should be
considered on payroll reinstatement, as of the date of the filing of the Motion
For Execution up to the date of the promulgation of this Resolution and thus
pay [sic] her salaries corresponding to that period based on P4,800.00 a
month which was her salary at the time of her dismissal.
and ultimately decreed thus:
10
WHEREFORE, finding the appeal to be impressed with merit, the decision
appealed from is hereby REVERSED and SET ASIDE and a new one entered
dismissing the complaint for lack of merit.
However, respondents are hereby ordered to pay complainant Gina C. Castro
her salaries corresponding to the period March 13, 1992 up to the date of the
promulgation of this Resolution computed at P4,800.00 per month.
SO ORDERED. 12
Its motion for partial reconsideration 13 seeking to delete the portion of the
decision ordering it to pay the private respondent the sum of P4,800.00 per
month from 13 March 1992 up to 25 March 1993 having been denied by the
NLRC for lack of merit, 14 the petitioner filed the instant case raising the sole
issue of whether the NLRC gravely abused its discretion in decreeing the
payroll reinstatement of the private respondent and ordering the petitioner to
pay the private respondent.
It maintains that the filing of the motion for execution pending appeal did not
entitle the private respondent to payroll reinstatement because this is an
option granted to the employer by Article 223 of the Labor Code and the
operative act therefor is the exercise by the employer of such option upon the
service upon it of the writ of execution for the reinstatement of the private
respondent. In the instant case, the motion for execution was not acted upon
and no writ of execution was issued. Hence, there was no occasion for the
petitioner to exercise its option and the NLRC's order was, in effect, an order
for the payment of salary to a party for the period during which she did not
work, which is violative of the rule of "no work, no pay." Moreover, the order is
inconsistent with the ruling that the private respondent was validly dismissed.
We required the respondents to comment on the petition.
In her comment 15 filed on 14 September 1993, the private respondent side-
steps the merits of the issue raised in the petition; instead, she assails the
validity of the NLRC resolution and prays that the same be declared null and
void because the petitioner's appeal to the NLRC was not perfected on time due
to the petitioner's failure to put up the required surety bond within the 10-day
reglementary period. She further asks that the case be remanded to the NLRC
for the execution of the decision of the Labor Arbiter. The petitioner
controverts these claims in its reply. 16
In its Manifestation in Lieu of Comment 17 filed on 12 October 1993, the Office
of the Solicitor General maintains that the assailed resolution of the NLRC is not
in accordance with law. It prays that the NLRC be given a new period within
which to file its comment, which we granted.
In its comment 18 filed on 14 March 1994, the NLRC contends that its
challenged resolution is correct.
It must be stressed that the private respondent did not challenge the resolution
of the NLRC reversing the decision of the Labor Arbiter and dismissing her
complaint for illegal dismissal and it is only in this action that she questioned
the timeliness of the petitioner's appeal to the NLRC. We have ruled that the
issue of the timeliness of an appeal from the decision of the Labor Arbiter to the
NLRC may not be raised for the first time before this Court. 19 The proper step
that the private respondent should have taken was to file with the NLRC a
motion to dismiss the appeal and to remand the records on the ground that the
decision had become final and executory. 20
The sole issue thus presented for our determination is whether or not the NLRC
acted with grave abuse of discretion in holding that the private respondent
should be considered as reinstated in the payroll from the filing of the motion
for execution on 13 March 1992 until the promulgation of its resolution and, as
a necessary consequence, ordering the petitioner to pay the private respondent
her salaries corresponding to the period from 13 March 1992 up to 25 March
1993 when its resolution was promulgated.
We agree with the petitioner that the NLRC acted with grave abuse of
discretion. The petition should thus be granted.
The resolution of the issue is found in the third paragraph of Article 223 of the
Labor Code which reads:
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be
admitted back to work under the 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 supplied).
This paragraph was inserted by Section 12 of R.A. No. 6715, which took effect
on 21 March 1989. In Aris (Phil.) Inc. vs. National Labor Relations Commission,
11
21 we sustained its constitutionality as an exercise of the police power of the
state and further ruled that since appeal is a privilege of statutory origin, the
law may validly prescribe limitations or qualifications thereto or provide relief
to the prevailing party in the event an appeal is interposed by the losing party.
It is clear from Article 223 that if execution pending appeal is granted, the
employee concerned shall be admitted back to work under the terms and
conditions prevailing prior to his dismissal or separation. However, instead of
doing so, the employer is granted the option to merely reinstate the employee
in the payroll. This would simply mean that although not admitted back to
work, the employee would nevertheless be included in the payroll and entitled
to receive her salary and other benefits as if she were in fact working.
It must be stressed, however, that although the reinstatement aspect of the
decision is immediately executory, it does not follow that it is self-executory.
There must be a writ of execution which may be issued motu proprio or on
motion of an interested party. Article 224 of the Labor Code provides:
Art. 224. Execution of decisions, orders or awards. — (a) The Secretary of Labor
and Employment or any Regional Director, the Commission or any Labor
Arbiter, or med-arbiter or voluntary arbitrator may, motu proprio or on motion
of any interested party, issue a writ of execution on a judgment within five (5)
years from the date it becomes final and executory. . . . (emphasis supplied)
The second paragraph of Section 1, Rule VIII of the New Rules of Procedure of
the NLRC also provides:
The Labor Arbiter, POEA Administrator, or the Regional Director, or his duly
authorized hearing officer of origin shall, motu proprio or upon motion of any
interested party, issue a writ of execution on a judgment only within five (5)
years from the date it becomes final and executory . . . . No motion for execution
shall be entertained nor a writ be issued unless the Labor Arbiter is in
possession of the records of the case which shall include an entry of judgment.
(emphasis supplied).
In the instant case, the Labor Arbiter neither issued motu proprio a writ of
execution to enforce the reinstatement aspect of his decision nor acted on the
private respondent's motion for execution filed on 13 March 1992. The NLRC
did not also resolve it prior to the promulgation of its decision more than a year
later or on 23 March 1993. The pleadings before us do not show that the
private respondent had filed a motion to resolve the motion for execution or
that she had, by any other means, called the attention of the NLRC to such
motion for execution. The private respondent may therefore be deemed to have WHEREFORE, the petition is hereby GRANTED. The challenged resolution of
abandoned her motion for execution pending appeal. the National Labor Relations Commission of 25 March 1993 in NLRC-NCR Case
No. 00-11-06059-90 is modified by deleting the portion thereof ordering the
In the absence then of an order for the issuance of a writ of execution 22 on the petitioner to pay the private respondent her salaries corresponding to the
reinstatement aspect of the decision of the Labor Arbiter, the petitioner was period from 13 March 1992 up to the date of the promulgation of the
under no legal obligation to admit back to work the private respondent under resolution. The rest shall stand.
the terms and conditions prevailing prior to her dismissal or, at the petitioner's
option, to merely reinstate her in the payroll. An option is a right of election to No pronouncement as to costs.
exercise a privilege, 23 and the option in Article 223 of the Labor Code is
exclusively granted to the employer. The event that gives rise for its exercise is SO ORDERED.
not the reinstatement decree of a Labor Arbiter, but the writ for its execution
commanding the employer to reinstate the employee, while the final act which
compels the employer to exercise the option is the service upon it of the writ of
execution when, instead of admitting the employee back to his work, the
employer chooses to reinstate the employee in the payroll only. If the employer
does not exercise this option, it must forthwith admit the employee back to
work, otherwise it may be punished for contempt. 24

This option is based on practical considerations. The employer may insist that
the dismissal of the employee was for a just and valid cause and the latter's
presence within its premises is intolerable by any standard; or such presence
would be inimical to its interest or would demoralize the co-employees. Thus,
while payroll reinstatement would in fact be unacceptable because it sanctions
the payment of salaries to one not rendering service, it may still be the lesser
evil compared to the intolerable presence in the workplace of an unwanted
employee.

Since in the instant case no occasion arose for the petitioner to exercise its
option under Article 223 of the Labor Code with respect to the reinstatement
aspect of the decision of the Labor Arbiter, the NLRC acted with grave abuse of
discretion when it ordered that the private respondent should be considered
reinstated in the payroll from the filing of her motion for execution until the
promulgation of its resolution on 25 March 1993. As correctly contended by the
Office of the Solicitor General, the NLRC "arrogated unto itself the right to
choose whether to admit the dismissed employee back to work or to reinstate
her in the payroll, which right properly pertains to the employer." 25 Worse,
the NLRC resolution granted the unresolved motion for execution which had
been effectively abandoned through the private respondent's inaction and
which, for obvious reasons, could no longer be properly resolved in a resolution
finally disposing the appeal. And since the resolution reversed the decision of
the Labor Arbiter and dismissed for lack of merit the private respondent's
complaint for illegal dismissal, the rationale for the order of payroll
reinstatement is beyond us.

12
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 113827 July 5, 1996
PHILIPPINE AIRLINES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ARBITER RAMON VALENTIN
C. REYES, AND STELLAR EMPLOYEES ASSOCIATION, respondents.
ROMERO, J.:p
Not infrequently, a party comes before this Court questioning an order or
resolution issued in relation to a case, but ends up prematurely discussing the
merits of the case itself. This petition illustrates the point.
On different dates between 1988 and 1991, some 150 employees recruited by
Stellar Industrial Services, Inc. (SISI) to work for petitioner Philippine Airlines,
Inc. (PAL) filed several cases against the latter for regularization, illegal
dismissal, reinstatement, back wages and wage differentials. The cases which
involved essentially the same complainants were later grouped into two
consolidated cases: regularization, under Labor Arbiter Jose de Vera, and illegal
dismissal, under Labor Arbiter Ramon Valentin Reyes.
In his decision dated March 31, 1992, Labor Arbiter de Vera declared the
complainants to be regular employees of PAL and ordered the latter to pay
them a total of over 46 million pesos, representing benefits and attorney's fees.
At the time of the filing of instant petition, said decision was still before the
National Labor Relations Commission (NLRC) on appeal.
On December 10, 1992, Labor Arbiter Reyes decided the illegal dismissal case
based on the pleadings and evidence submitted. He declared the dismissal by
PAL of the complainants illegal and ordered PAL to absorb complainants to its
regular force and to reinstate them to their former positions without loss of
13
seniority rights and benefits, as provided in the PAL-PALEA CBA and to pay
them the following as provided likewise in the PAL-PALEA CBA:
P23,863,702.00, representing back wages, 13th month pay and vacation leave;
rice entitlement of complainants; and P2,072,902.20, as attorney's fees. He then
absolved SISI from any liability for lack of legal and factual basis.
This decision was likewise appealed to the NLRC. On April 2, 1993, however,
upon motion of the complainants and pending resolution of the said appeal,
Labor Arbiter Reyes issued a writ of execution directing the reinstatement of
152 complainants either physically or through the payroll, at PAL's option.1
In an attempt to stop said execution, PAL filed on May 6, 1993 before the NLRC
a petition for the issuance of a writ of injunction with prayer for the issuance of
a temporary restraining order in relation to both the regularization and illegal
dismissal cases.
On September 30, 1993, the NLRC, in a Resolution, dismissed PAL's petition for
injunction2 for lack of merit, citing Article 223 of the Labor Code, as amended
by Republic Act No. 6715. The pertinent provision of Article 223 states thus:
Art. 223. Appeal. — . . . .
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be
admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated
in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein.
xxx xxx xxx
PAL's motion for reconsideration of said resolution was also denied by the
NLRC in its resolution dated December 2, 1993.3 The question that thus arises
is simple: Did the NLRC commit grave abuse of discretion in dismissing the
petition for injunction and denying the motion for reconsideration? This is the
only issue that may be raised before this Court at this juncture.
It may be noted here that this is the second time that this petition has been
filed. The first one, filed on January 13, 1994 and docketed as G.R. No. 113172,
was denied in the Court's resolution dated January 24, 1994 "for failure of the
petitioner (PAL) to submit a certification that no other action or proceeding
involving the same issues raised in this case has been filed or is pending before
any court, tribunal or agency pursuant to Circular No. 28-91 dated September
17, 1991." Petitioner refiled the same petition on February 24, 1994, this time
with all the formal requirements and still within a "reasonable time" from
notice of the denial of its motion for reconsideration on January 3, 1994.
In its petition, PAL questioned the application by the NLRC of Article 223 of the
Labor Code, asserting that "this provision does not apply where there is no
'reinstatement' to speak of as in the instant case, where the alleged employer-
employee relationship is contested because the complainants in the case below
never have been employees of the petitioner herein. The above provision of the
law is only applicable where (an) employer-employee relationship is supported
by clear evidence or where it is admitted to be existent."4
This argument is untenable.
The intent of the law in making a reinstatement order immediately executory is
much like a return-to-work order, i.e., to restore the status quo in the
workplace in the meantime that the issues raised and the proofs presented by
the contending parties have not yet been finally resolved.5 It is a legal provision
which is fair to both labor and management because while execution of the
order cannot be stayed by the posting of a bond by the employer, the workers
also cannot demand their physical reinstatement if the employer opts to
reinstate them only in the payroll.
Although PAL is challenging the existence of an employer-employee
relationship between it and the complainants below, it is indisputable that
prior to the filing of these numerous cases before the Labor Arbiter, the said
complainants were working for PAL. In fact, Labor Arbiter de Vera, in his
decision of March 31, 1992, declared complainants to be regular employees of
PAL. So did Labor Arbiter Reyes.6 It is settled that factual findings of quasi-
judicial agencies, such as the NLRC, which have gained expertise on matters
within their jurisdictions are treated by the Supreme Court with respect and
even finality when supported by substantial evidence.7 We do not see any
reason to depart from this policy. Hence, applying Article 223 strictly, which is
the only way it can truly be given effect, PAL, as an employer, is given the choice
of accepting the complainants back or simply reinstating them in its payroll
until the regularization and illegal dismissal cases are determined definitively.
PAL's claim that Article 223 "is only applicable where (an) employer-employee
relationship is supported by clear evidence or where it is admitted to be
14
existent," is irrelevant inasmuch as the Labor Arbiters have declared that the
complainants are employees of petitioner PAL.
Neither can the Court give weight to PAL's allegation that Labor Arbiter Reyes
relied on the unilateral declarations of the complainants in arriving at his
conclusion. PAL submitted its position paper and supporting documents which,
together with those filed by the complainants and SISI, were "thoroughly"
considered by Labor Arbiter Reyes8 who saw no need for a formal trial or
hearing as the case and related matters can be resolved on the basis of the
pleadings and documents submitted. This procedure of dispensing with a
formal trial or hearing at the discretion of the Labor Arbiter once such
pleadings and position papers are submitted is clearly within the powers of his
office, as laid down in Section 4, Rule V of The New Rules of Procedure of the
NLRC which states:
Sec. 4. Determination of Necessity of Hearing. -- Immediately after the
submission by the parties of their position papers/memorandum, the Labor
Arbiter shall motu proprio determine whether there is need for a formal trial or
hearing. At this stage, he may, at his discretion and for the purpose of making
such determination, ask clarificatory questions to further elicit facts or
information, including but not limited to the subpoena of relevant documentary
evidence, if any(,) from any party or witness.
Accordingly, the NLRC was simply applying the law when it dismissed PAL's
petition for injunction and denied the motion for reconsideration thereof. It
committed no abuse of discretion, let alone grave abuse thereof, which may be
corrected by certiorari. This Court cannot touch upon the very merits of the
cases involved, as petitioner would have us do, because not only are they still
pending appeal before the NLRC, but the questioned resolutions themselves are
devoid of any discussion, substantial or otherwise, of the issues raised in the
petition.
WHEREFORE, the instant petition for certiorari with prayer for the issuance of
a writ of preliminary injunction or a temporary restraining order is hereby
DISMISSED, with costs against the petitioner Philippine Airlines, Inc.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 118651 October 16, 1997
PIONEER TEXTURIZING CORP. and/or JULIANO LIM, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, PIONEER TEXTURIZING
WORKERS UNION and LOURDES A. DE JESUS, respondents.
FRANCISCO, J.:
The facts are as follows:
Private respondent Lourdes A. de Jesus is petitioners' reviser/trimmer since
1980. As reviser/trimmer, de Jesus based her assigned work on a paper note
posted by petitioners. The posted paper which contains the corresponding
price for the work to be accomplished by a worker is identified by its P.O.
Number. On August 15, 1992, de Jesus worked on P.O. No. 3853 by trimming
the cloths' ribs. She thereafter submitted tickets corresponding to the work
done to her supervisor. Three days later, de Jesus received from petitioners'
personnel manager a memorandum requiring her to explain why no
disciplinary action should be taken against her for dishonesty and tampering of
official records and documents with the intention of cheating as P.O. No. 3853
allegedly required no trimming. The memorandum also placed her under
preventive suspension for thirty days starting from August 19, 1992. In her
handwritten explanation, de Jesus maintained that she merely committed a
mistake in trimming P.O. No. 3853 as it has the same style and design as P.O.
No. 3824 which has an attached price list for trimming the ribs and admitted
that she may have been negligent in presuming that the same work was to be
done with P.O. No. 3853, but not for dishonesty or tampering. Petitioners'
personnel department, nonetheless, terminated her from employment and sent
her a notice of termination dated September 18, 1992.
15
On September 22, 1992, de Jesus filed a complaint for illegal dismissal against
petitioners. The Labor Arbiter who heard the case noted that de Jesus was
amply accorded procedural due process in her termination from service.
Nevertheless, after observing that de Jesus made some further trimming on P.O.
No. 3853 and that her dismissal was not justified, the Labor Arbiter held
petitioners guilty of illegal dismissal. Petitioners were accordingly ordered to
reinstate de Jesus to her previous position without loss of seniority rights and
with full backwages from the time of her suspension on August 19, 1992.
Dissatisfied with the Labor Arbiter's decision, petitioners appealed to public
respondent National Labor Relations Commission (NLRC). In its July 21, 1994
decision, the NLRC 1 ruled that de Jesus was negligent in presuming that the
ribs of P.O. No. 3853 should likewise be trimmed for having the same style and
design as P.O. No. 3824, thus petitioners cannot be entirely faulted for
dismissing de Jesus. The NLRC declared that the status quo between them
should be maintained and affirmed the Labor Arbiter's order of reinstatement,
but without backwages. The NLRC further "directed petitioner to pay de Jesus
her back salaries from the date she filed her motion for execution on September
21, 1993 up to the date of the promulgation of [the] decision."2 Petitioners filed
their partial motion for reconsideration which the NLRC denied, hence this
petition anchored substantially on the alleged NLRC's error in holding that de
Jesus is entitled to reinstatement and back salaries. On March 6, 1996,
petitioners filed its supplement to the petition amplifying further their
arguments. In a resolution dated February 20, 1995, the Court required
respondents to comment thereon. Private respondent de Jesus and the Office of
the Solicitor General, in behalf of public respondent NLRC, subsequently filed
their comments. Thereafter, petitioners filed two rejoinders [should be replies]
to respondents' respective comments. Respondents in due time filed their
rejoinders.
There are two interrelated and crucial issues, namely: (1) whether or not de
Jesus was illegally dismissed, and (2) whether or not an order for reinstatement
needs a writ of execution.
Petitioners insist that the NLRC gravely abused its discretion in holding that de
Jesus is entitled to reinstatement to her previous position for she was not
illegally dismissed in the first place. In support thereof, petitioners quote
portions of the NLRC decision which stated that "respondents [petitioners
herein] cannot be entirely faulted for dismissing the complainant"3 and that
there was "no illegal dismissal to speak of in the case at bar".4 Petitioners
further add that de Jesus breached the trust reposed in her, hence her dismissal
from service is proper on the basis of loss of confidence, citing as authority the
cases of Ocean Terminal Services, Inc. v. NLRC, 197 SCRA 491; Coca-Cola Bottlers
Phil., Inc. v. NLRC, 172 SCRA 751, and Piedad v. Lanao del Norte Electric
Cooperative,5 154 SCRA 500.
The arguments lack merit.
The entire paragraph which comprises the gist of the NLRC's decision from
where petitioners derived and isolated the aforequoted portions of the NLRC's
observation reads in full as follows:
We cannot fully subscribe to the complainant's claim that she trimmed the
ribs of PO3853 in the light of the sworn statement of her supervisor Rebecca
Madarcos (Rollo, p. 64) that no trimming was necessary because the ribs were
already of the proper length. The complainant herself admitted in her
sinumpaang salaysay (Rollo, p. 45) that "Aking napansin na hindi pantay-
pantay ang lapad ng mga ribs PO3853 — mas maigsi ang nagupit ko sa mga
ribs ng PO3853 kaysa sa mga ribs ng mga nakaraang PO's. The complainant
being an experienced reviser/trimmer for almost twelve (12) years should
have called the attention of her supervisor regarding her observation of
PO3853. It should be noted that complainant was trying to claim as
production output 447 pieces of trimmed ribs of PO3853 which respondents
insists that complainant did not do any. She was therefore negligent in
presuming that the ribs of PO3853 should likewise be trimmed for having the
same style and design as PO3824. Complainant cannot pass on the blame to
her supervisor whom she claimed checked the said tickets prior to the
submission to the Accounting Department. As explained by respondent, what
the supervisor does is merely not the submission of tickets and do some
checking before forwarding the same to the Accounting Department. It was
never disputed that it is the Accounting Department who does the detailed
checking and computation of the tickets as has been the company policy and
practice. Based on the foregoing and considering that respondent cannot be
entirely faulted for dismissing complainant as the complainant herself was
also negligent in the performance of her job, We hereby rule that status quo
between them should be maintained as a matter of course. We thus affirm the
decision of Labor Arbiter reinstating the complainant but without backwages.
The award of backwages in general are granted on grounds of equity for
earnings which a worker or employee has lost due to his illegal dismissal.
(Indophil Acrylic Mfg. Corporation vs. NLRC, G.R. No. 96488 September 27,
1993) There being no illegal dismissal to speak in the case at bar, the award
for backwages should necessarily be deleted.6
We note that the NLRC's decision is quite categorical in finding that de Jesus
was merely negligent in the performance of her duty. Such negligence, the
16
Labor Arbiter delineated, was brought about by the petitioners' plain
improvidence. Thus:
After careful assessment of the allegations and documents available on record,
we are convinced that the penalty of dismissal was not justified.
At the outset, it is remarkable that respondents did not deny nor dispute that
P.O. 3853 has the same style and design as P.O. 3824; that P.O. 3824 was made
as guide for the work done on P.O. 3853; and, most importantly, that the
notation correction on P.O. 3824 was made only after the error was
discovered by respondents' Accounting Department.
Be that as it may, the factual issue in this case is whether or not complainant
trimmed the ribs of P.O. 3853?
Respondents maintained that she did not because the record in Accounting
Department allegedly indicates that no trimming is to be done on P.O. 3853.
Basically, this allegation is unsubstantiated.
It must be emphasized that in termination cases the burden of proof rests
upon the employer.
In the instant case, respondents' mere allegation that P.O. 3853 need not be
trimmed does not satisfy the proof required to warrant complainant's
dismissal.
Now, granting that the Accounting record is correct, we still believe that
complainant did some further trimming on P.O. 3853 based on the following
grounds:
Firstly, Supervisor Rebecca Madarcos who ought to know the work to be
performed because she was in-charged of assigning jobs, reported no
anomally when the tickets were submitted to her.
Incidentally, supervisor Madarcos testimony is suspect because if she could
recall what she ordered the complainant to do seven (7) months ago (to revise
the collars and plackets of shirts) there was no reason for her not to detect the
alleged tampering at the time complainant submitted her tickets, after all, that
was part of her job, if not her main job.
Secondly, she did not exceed her quota, otherwise she could have simply asked
for more.
That her output was remarkably big granting it is true, is well explained in that
the parts she had trimmed were lesser compared to those which she had cut
before.
In this connection, respondents misinterpreted the handwritten explanation of
the complainant dated 20 August 1992, because the letter never admits that
she never trimmed P.O. 3853, on the contrary the following sentence,
Sa katunayan nakapagbawas naman talaga ako na di ko inaasahang inalis na
pala ang presyo ng Sec. 9 P.O. 3853 na ito.
is crystal clear that she did trim the ribs on P.O. 3853.7
Gleaned either from the Labor Arbiter's observations or from the NLRC's
assessment, it distinctly appears that petitioners' accusation of dishonesty and
tampering of official records and documents with intention of cheating against
de Jesus was not substantiated by clear and convincing evidence. Petitioners
simply failed, both before the Labor Arbiter and the NLRC, to discharge the
burden of proof and to validly justify de Jesus' dismissal from service. The law,
in this light, directs the employers, such as herein petitioners, not to terminate
the services of an employee except for a just or authorized cause under the
Label Code.8 Lack of a just cause in the dismissal from service of an employee,
as in this case, renders the dismissal illegal, despite the employer's observance
of procedural due process.9 And while the NLRC stated that "there was no
illegal dismissal to speak of in the case at bar" and that petitioners cannot be
entirely faulted therefor, said statements are inordinate pronouncements
which did not remove the assailed dismissal from the realm of illegality.
Neither can these pronouncements preclude us from holding otherwise.
We also find the imposition of the extreme penalty of dismissal against de Jesus
as certainly harsh and grossly disproportionate to the negligence committed,
especially where said employee holds a faithful and an untarnished twelve-year
service record. While an employer has the inherent right to discipline its
employees, we have always held that this right must always be exercised
humanely, and the penalty it must impose should be commensurate to the
offense involved and to the degree of its infraction.10 The employer should
bear in mind that, in the exercise of such right, what is at stake is not only the
employee's position but her livelihood as well.
17
Equally unmeritorious is petitioners' assertion that the dismissal is justified on
the basis of loss of confidence. While loss of confidence, as correctly argued by
petitioners, is one of the valid grounds for termination of employment, the
same, however, cannot be used as a pretext to vindicate each and every
instance of unwarranted dismissal. To be a valid ground, it must be shown that
the employee concerned is responsible for the misconduct or infraction and
that the nature of his participation therein rendered him absolutely unworthy
of the trust and confidence demanded by his position.11 In this case,
petitioners were unsuccessful in establishing their accusations of dishonesty
and tampering of records with intention of cheating. Indeed, even if petitioners'
allegations against de Jesus were true, they just the same failed to prove that
her position needs the continued and unceasing trust of her employers. The
breach of trust must be related to the performance of the employee's
functions.12 Surely, de Jesus who occupies the position of a reviser/trimmer
does not require the petitioners' perpetual and full confidence. In this regard,
petitioners' reliance on the cases of Ocean Terminal Services, Inc. v. NLRC; Coca-
Cola Bottlers Phil., Inc. v. NLRC; and Piedad v. Lanao del Norte Electric
Cooperative, which when perused involve positions that require the employers'
full trust and confidence, is wholly misplaced. In Ocean Terminal Services, for
instance, the dismissed employee was designated as expediter and canvasser
whose responsibility is mainly to make emergency procurements of tools and
equipments and was entrusted with the necessary cash for buying them. The
case of Coca-Cola Bottlers, on the other hand, involves a sales agent whose job
exposes him to the everyday financial transactions involving the employer's
goods and funds, while that of Piedad concerns a bill collector who essentially
handles the employer's cash collections. Undoubtedly, the position of a
reviser/trimmer could not be equated with that of a canvasser, sales agent, or a
bill collector. Besides, the involved employees in the three aforementioned
cases were clearly proven guilty of infractions unlike private respondent in the
case at bar. Thus, petitioners dependence on these cited cases is inaccurate, to
say the least. More, whether or not de Jesus meets the day's quota of work she,
just the same, is paid the daily minimum wage.13
Corollary to our determination that de Jesus was illegally dismissed is her
imperative entitlement to reinstatement and backwages as mandated by
law.14 Whence, we move to the second issue, i.e., whether or not an order for
reinstatement needs a writ of execution.
Petitioners' theory is that an order for reinstatement is not self-executory. They
stress that there must be a writ of execution which may be issued by the NLRC
or by the Labor Arbiter motu proprio or on motion of an interested party. They
further maintain that even if a writ of execution was issued, a timely appeal
coupled by the posting of appropriate supersedeas bond, which they did in this
case, effectively forestalled and stayed execution of the reinstatement order of
the Labor Arbiter. As supporting authority, petitioners emphatically cite and
bank on the case of Maranaw Hotel Resort Corporation (Century Park Sheraton
Manila) v. NLRC, 238 SCRA 190.
Private respondent de Jesus, for her part, maintains that petitioners should
have reinstated her immediately after the decision of the Labor Arbiter
ordering her reinstatement was promulgated since the law mandates that an
order for reinstatement is immediately executory. An appeal, she says, could
not stay the execution of a reinstatement order for she could either be admitted
back to work or merely reinstated in the payroll without need of a writ of
execution. De Jesus argues that a writ of execution is necessary only for the
enforcement of decisions, orders, or awards which have acquired finality. In
effect, de Jesus is urging the Court to re-examine the ruling laid down in
Maranaw.
Article 223 of the Labor Code, as amended by R.A. No. 6715 which took effect
on March 21, 1989, pertinently provides:
Art. 223. Appeal. — Decision, awards, or orders of the Labor Arbiter are final
and executory unless appealed to the Commission by any or both parties within
ten (10) calendar days from receipt of such decisions, awards, or orders. Such
appeal may be entertained only on any of the following grounds:
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be
admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated
in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein.
xxx xxx xxx
We initially interpreted the aforequoted provision in Inciong v. NLRC.15 The
Court16 made this brief comment:
The decision of the Labor Arbiter in this case was rendered on December 18,
1988, or three (3) months before Article 223 of the Labor Code was amended
18
by Republic Act 6715 (which became law on March 21, 1989), providing that a
decision of the Labor Arbiter ordering the reinstatement of a dismissed or
separated employee shall be immediately executory insofar as the
reinstatement aspect is concerned, and the posting of an appeal bond by the
employer shall not stay such execution. Since this new law contains no
provision giving it retroactive effect (Art. 4, Civil Code), the amendment may
not be applied to this case.
which the Court adopted and applied in Callanta v. NLRC.17 In Zamboanga City
Water District v. Buat,18 the Court construed Article 223 to mean exactly what
it says. We said:
Under the said provision of law, the decision of the Labor Arbiter reinstating a
dismissed or separated employee insofar as the reinstatement aspect is
concerned, shall be immediately executory, even pending appeal. The employer
shall reinstate the employee concerned either by: (a) actually admitting him
back to work under the same terms and conditions prevailing prior to his
dismissal or separation; or (b) at the option of the employer, merely reinstating
him in the payroll. Immediate reinstatement is mandated and is not stayed by
the fact that the employer has appealed, or has posted a cash or surety bond
pending appeal.19
We expressed a similar view a year earlier in Medina v. Consolidated
Broadcasting System (CBS) — DZWX20 and laid down the rule that an employer
who fails to comply with an order of reinstatement makes him liable for the
employee's salaries. Thus:
Petitioners construe the above paragraph to mean that the refusal of
the employer to reinstate an employee as directed in an executory order of
reinstatement would make it liable to pay the latter's salaries. This
interpretation is correct. Under Article 223 of the Labor Code, as amended, an
employer has two options in order for him to comply with an order of
reinstatement, which is immediately executory, even pending appeal. Firstly, he
can admit the dismissed employee back to work under the same terms and
conditions prevailing prior to his dismissal or separation or to a substantially
equivalent position if the former position is already filled up as we have ruled
in Union of Supervisors (RB) NATU vs. Sec. of Labor, 128 SCRA 442 [1984]; and
Pedroso vs. Castro, 141 SCRA 252 [1986]. Secondly, he can reinstate the
employee merely in the payroll. Failing to exercise any of the above options, the
employer can be compelled under pain of contempt, to pay instead the salary of
the employee. This interpretation is more in consonance with the constitutional
protection to labor (Section 3, Art. XIII, 1987 Constitution). The right of a person
to his labor is deemed to be property within the meaning of the constitutional
guaranty that no one shall be deprived of life, liberty, and property without due
process of law. Therefore, he should be protected against any arbitrary and
unjust deprivation of his job (Bondoc vs. People's Bank and Trust Co., Inc., 103
SCRA 599 [1981]). The employee should not be left without any remedy in case
the employer unreasonably delays reinstatement. Therefore, we hold that the
unjustified refusal of the employer to reinstate an illegally dismissed employee
entitles the employee to payment of his salaries . . . .21
The Court, however, deviated from this construction in the case of Maranaw.
Reinterpreting the import of Article 223 in Maranaw, the Court22 declared that
the reinstatement aspect of the Labor Arbiter's decision needs a writ of
execution as it is not self-executory, a declaration the Court recently reiterated
and adopted in Archilles Manufacturing Corp. v. NLRC.23
We note that prior to the enactment of R.A. No. 6715, Article 22324 of the Labor
Code contains no provision dealing with the reinstatement of an illegally
dismissed employee. The amendment introduced by R.A. No. 6715 is an
innovation and a far departure from the old law indicating thereby the
legislature's unequivocal intent to insert a new rule that will govern the
reinstatement aspect of a decision or resolution in any given labor dispute. In
fact, the law as now worded employs the phrase "shall immediately be
executory" without qualification emphasizing the need for prompt compliance.
As a rule, "shall" in a statute commonly denotes an imperative obligation and is
inconsistent with the idea of discretion25 and that the presumption is that the
word "shall", when used in a statute, is mandatory.26 An appeal or posting of
bond, by plain mandate of the law, could not even forestall nor stay the
executory nature of an order of reinstatement. The law, moreover, is
unambiguous and clear. Thus, it must be applied according to its plain and
obvious meaning, according to its express terms. In Globe-Mackay Cable and
Radio Corporation v. NLRC,27 we held that:
Under the principles of statutory construction, if a statute is clear,
plain and free from ambiguity, it must be given its literal meaning and applied
without attempted interpretation. This plain-meaning rule or verba legis
derived from the maxim index animi sermo est (speech is the index of intention)
rests on the valid presumption that the words employed by the legislature in a
statute correctly express its intent or will and preclude the court from
construing it differently. The legislature is presumed to know the meaning of
the words, to have used words advisedly, and to have expressed its intent by
the use of such words as are found in the statute. Verba legis non est
recedendum, or from the words of a statute there should be no departure.28
19
And in conformity with the executory nature of the reinstatement order, Rule V,
Section 16 (3) of the New Rules of Procedure of the NLRC strictly requires the
Labor Arbiter to direct the employer to immediately reinstate the dismissed
employee. Thus:
In case the decision includes an order of reinstatement, the Labor Arbiter shall
direct the employer to immediately reinstate the dismissed or separated
employee even pending appeal. The order of reinstatement shall indicate that
the employee shall either be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or, at the option of the
employer, merely reinstated in the payroll.
In declaring that reinstatement order is not self-executory and needs a writ of
execution, the Court, in Maranaw, adverted to the rule provided under Article
224. We said:
It must be stressed, however, that although the reinstatement aspect of the
decision is immediately executory, it does not follow that it is self-executory.
There must be a writ of execution which may be issued motu proprio or on
motion of an interested party. Article 224 of the Labor Code provides:
Art. 224. Execution of decision, orders or awards. — (a) The Secretary of Labor
and Employment or any Regional Director, the Commission or any Labor
Arbiter, or med-arbitter or voluntary arbitrator may, motu proprio or on
motion of any interested party, issue a writ of execution on a judgment within
five (5) years from the date it becomes final and executory . . . (emphasis
supplied)
The second paragraph of Section 1, Rule VIII of the New Rules of Procedure of
the NLRC also provides:
The Labor Arbiter, POEA Administrator, or the Regional Director, or his duly
authorized hearing officer of origin shall, motu proprio or on motion of any
interested party, issue a writ of execution on a judgment only within five (5)
years from the date it becomes final and executory . . . . No motion for
execution shall be entertained nor a writ he issued unless the Labor Arbiter is
in possession of the records of the case which shall include an entry of
judgment. (emphasis supplied)
xxx xxx xxx
In the absence then of an order for the issuance of a writ of execution on the
reinstatement aspect of the decision of the Labor Arbiter, the petitioner was
under no legal obligation to admit back to work the private respondent under
the terms and conditions prevailing prior to her dismissal or, at the petitioner's
option, to merely reinstate her in the payroll. An option is a right of election to
exercise a privilege, and the option in Article 223 of the Labor Code is
exclusively granted to the employer. The event that gives rise for its exercise is
not the reinstatement decree of a Labor Arbiter, but the writ for its execution
commanding the employer to reinstate the employee, while the final act which
compels the employer to exercise the option is the service upon it of the writ of
execution when, instead of admitting the employee back to his work, the
employer chooses to reinstate the employee in the payroll only. If the employer
does not exercise this option, it must forthwith admit the employee back to
work, otherwise it may be punished for contempt.29
A closer examination, however, shows that the necessity for a writ of execution
under Article 224 applies only to final and executory decisions which are not
within the coverage of Article 223. For comparison, we quote the material
portions of the subject articles:
Art. 223. Appeal. . . .
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be
admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated
in the payroll. The posting of a bond by the employer shall not stay the execution
for reinstatement provided herein.
xxx xxx xxx
Art. 224. Execution of decisions, orders, or awards. — (a) The Secretary of
Labor and Employment or any Regional Director, the Commission or any Labor
Arbiter, or med-arbiter or voluntary arbitrator may, motu propio or on motion
of any interested party, issue a writ of execution on a judgment within five (5)
years from the date it becomes final and executory, requiring a sheriff or a duly
deputized officer to execute or enforce final decisions, orders or awards of the
Secretary of Labor and Employment or regional director, the Commission, the
Labor Arbiter or med-arbiter, or voluntary arbitrators. In any case, it shall be
the duty of the responsible officer to separately furnish immediately the
counsels of record and the parties with copies of said decisions, orders or
20
awards. Failure to comply with the duty prescribed herein shall subject such
responsible officer to appropriate administrative sanctions.
Article 224 states that the need for a writ of execution applies only within five
(5) years from the date a decision, an order or award becomes final and
executory. It can not relate to an award or order of reinstatement still to be
appealed or pending appeal which Article 223 contemplates. The provision of
Article 223 is clear that an award for reinstatement shall be immediately
executory even pending appeal and the posting of a bond by the employer shall
not stay the execution for reinstatement. The legislative intent is quite obvious,
i.e., to make an award of reinstatement immediately enforceable, even pending
appeal. To require the application for and issuance of a writ of execution as
prerequisites for the execution of a reinstatement award would certainly
betray and run counter to the very object and intent of Article 223, i.e., the
immediate execution of a reinstatement order. The reason is simple. An
application for a writ of execution and its issuance could be delayed for
numerous reasons. A mere continuance or postponement of a scheduled
hearing, for instance, or an inaction on the part of the Labor Arbiter or the
NLRC could easily delay the issuance of the writ thereby setting at naught the
strict mandate and noble purpose envisioned by Article 223. In other words, if
the requirements of Article 224 were to govern, as we so declared in Maranaw,
then the executory nature of a reinstatement order or award contemplated by
Article 223 will be unduly circumscribed and rendered ineffectual. In enacting
the law, the legislature is presumed to have ordained a valid and sensible law,
one which operates no further than may be necessary to achieve its specific
purpose. Statutes, as a rule, are to be construed in the light of the purpose to be
achieved and the evil sought to be remedied.30 And where the statute is fairly
susceptible of two or more constructions, that construction should be adopted
which will most tend to give effect to the manifest intent of the lawmaker and
promote the object for which the statute was enacted, and a construction
should be rejected which would tend to render abortive other provisions of the
statute and to defeat the object which the legislator sought to attain by its
enactment.31 In introducing a new rule on the reinstatement aspect of a labor
decision under R.A. No. 6715, Congress should not be considered to be
indulging in mere semantic exercise. On appeal, however, the appellate tribunal
concerned may enjoin or suspend the reinstatement order in the exercise of its
sound discretion.
Furthermore, the rule is that all doubts in the interpretation and implementation
of labor laws should be resolved in favor of labor.32 In ruling that an order or
award for reinstatement does not require a writ of execution the Court is
simply adhering and giving meaning to this rule. Henceforth, we rule that an
award or order for reinstatement is self-executory. After receipt of the decision
or resolution ordering the employee's reinstatement, the employer has the THIRD DIVISION
right to choose whether to re-admit the employee to work under the same
terms and conditions prevailing prior to his dismissal or to reinstate the G.R. No. 152329 April 22, 2003
employee in the payroll. In either instance, the employer has to inform the
employee of his choice. The notification is based on practical considerations for
without notice, the employee has no way of knowing if he has to report for ALEJANDRO ROQUERO, petitioner,
work or not. vs.
PHILIPPINE AIRLINES, INC., respondent.
WHEREFORE, the petition is DENIED and the decision of the Labor Arbiter is
hereby REINSTATED. PUNO, J.:

Costs against petitioner. Brought up on this Petition for Review is the decision of the Court of Appeals
dismissing Alejandro Roquero as an employee of the respondent Philippine
Airlines, Inc.
SO ORDERED.
Roquero, along with Rene Pabayo, were ground equipment mechanics of
respondent Philippine Airlines, Inc. (PAL for brevity). From the evidence on
record, it appears that Roquero and Pabayo were caught red-handed
possessing and using Methampethamine Hydrochloride or shabu in a raid
conducted by PAL security officers and NARCOM personnel.

The two alleged that they did not voluntarily indulge in the said act but were
instigated by a certain Jojie Alipato who was introduced to them by Joseph Ocul,
Manager of the Airport Maintenance Division of PAL. Pabayo alleged that
Alipato often bragged about the drugs he could smuggle inside the company
premises and invited other employees to take the prohibited drugs. Alipato was
unsuccessful, until one day, he was able to persuade Pabayo to join him in
taking the drugs. They met Roquero along the way and he agreed to join them.
Inside the company premises, they locked the door and Alipato lost no time in
preparing the drugs to be used. When they started the procedure of taking the
drugs, armed men entered the room, arrested Roquero and Pabayo and seized
the drugs and the paraphernalia used.1 Roquero and Pabayo were subjected to
a physical examination where the results showed that they were positive of
drugs. They were also brought to the security office of PAL where they executed
written confessions without the benefit of counsel.2

On March 30, 1994, Roquero and Pabayo received a "notice of administrative

charge"3 for violating the PAL Code of Discipline. They were required to answer
the charges and were placed under preventive suspension.

Roquero and Pabayo, in their "reply to notice of administrative charge,"4

assailed their arrest and asserted that they were instigated by PAL to take the

21
drugs. They argued that Alipato was not really a trainee of PAL but was placed
in the premises to instigate the commission of the crime. They based their
argument on the fact that Alipato was not arrested. Moreover, Alipato has no
record of employment with PAL.
In a Memorandum dated July 14, 1994, Roquero and Pabayo were dismissed by
PAL.5 Thus, they filed a case for illegal dismissal.6
In the Labor Arbiter's decision, the dismissal of Roquero and Pabayo was
upheld. The Labor Arbiter found both parties at fault — PAL for applying
means to entice the complainants into committing the infraction and the
complainants for giving in to the temptation and eventually indulging in the
prohibited activity. Nonetheless, the Labor Arbiter awarded separation pay and
attorney's fees to the complainants.7
While the case was on appeal with the National Labor Relations Commission
(NLRC), the complainants were acquitted by the Regional Trial Court (RTC)
Branch 114, Pasay City, in the criminal case which charged them with
"conspiracy for possession and use of a regulated drug in violation of Section
16, Article III of Republic Act 6425," on the ground of instigation.
The NLRC ruled in favor of complainants as it likewise found PAL guilty of
instigation. It ordered reinstatement to their former positions but without
backwages.8 Complainants did not appeal from the decision but filed a motion
for a writ of execution of the order of reinstatement. The Labor Arbiter granted
the motion but PAL refused to execute the said order on the ground that they
have filed a Petition for Review before this Court.9 In accordance with the case
of St. Martin Funeral Home vs. NLRC and Bienvenido Aricayos,10 PAL's petition
was referred to the Court of Appeals.11
During the pendency of the case with the Court of Appeals, PAL, and Pabayo
filed a Motion to Withdraw/Dismiss the case with respect to Pabayo, after they
voluntarily entered into a compromise agreement.12 The motion was granted in
a Resolution promulgated by the Former Thirteenth Division of the Court of
Appeals on January 29, 2002.13
The Court of Appeals later reversed the decision of the NLRC and reinstated the
decision of the Labor Arbiter insofar as it upheld the dismissal of Roquero.
However, it denied the award of separation pay and attorney's fees to Roquero
on the ground that one who has been validly dismissed is not entitled to those
benefits.14
22
The motion for reconsideration by Roquero was denied. In this Petition for
Review on Certiorari under Rule 45, he raises the following issues:
1. Whether or not the instigated employee shall be solely responsible for an
action arising from the instigation perpetrated by the employer;
2. Can the executory nature of the decision, more so the reinstatement aspect of
a labor tribunal's order be halted by a petition having been filed in higher
courts without any restraining order or preliminary injunction having been
ordered in the meantime?
3. Would the employer who refused to reinstate an employee despite a writ
duly issued be held liable to pay the salary of the subject employee from the
time that he was ordered reinstated up to the time that the reversed decision
was handed down?15
I
There is no question that petitioner Roquero is guilty of serious misconduct for
possessing and using shabu. He violated Chapter 2, Article VII, section 4 of the
PAL Code of Discipline which states:
"Any employee who, while on company premises or on duty, takes or is under
the influence of prohibited or controlled drugs, or hallucinogenic substances or
narcotics shall be dismissed."16
Serious misconduct is defined as "the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error in judgment."17 For serious
misconduct to warrant the dismissal of an employee, it (1) must be serious; (2)
must relate to the performance of the employee's duty; and (3) must show that
the employee has become unit to continue working for the employer.18
It is of public knowledge that drugs can damage the mental faculties of the user.
Roquero was tasked with the repair and maintenance of PAL's airplanes. He
cannot discharge that duty if he is a drug user. His failure to do his job can mean
great loss of lives and properties. Hence, even if he was instigated to take drugs
he has no right to be reinstated to his position. He took the drugs fully knowing
that he was on duty and more so that it is prohibited by company rules.
Instigation is only a defense against criminal liability. It cannot be used as a
shield against dismissal from employment especially when the position
involves the safety of human lives.
Petitioner cannot complain he was denied procedural due process. PAL
complied with the twin-notice requirement before dismissing the petitioner.
The twin-notice rule requires (1) the notice which apprises the employee of the
particular acts or omissions for which his dismissal is being sought along with
the opportunity for the employee to air his side, and (2) the subsequent notice
of the employer's decision to dismiss him.19 Both were given by respondent
PAL.
II
Article 223 (3rd paragraph) of the Labor Code 20 as amended by Section 12 of
Republic Act No. 6715,21 and Section 2 of the NLRC Interim Rules on Appeals
under RA No. 6715, Amending the Labor Code,22 provide that an order of
reinstatement by the Labor Arbiter is immediately executory even pending
appeal. The rationale of the law has been explained in Aris (Phil.) Inc. vs. NLRC:23
"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.
xxx xxx xxx
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.
xxx xxx xxx
. . . In short, with respect to decisions reinstating employees, the law itself has
determined a sufficiently overwhelming reason for its execution pending
appeal.
xxx xxx xxx
23
. . . 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."
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.24 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 this Court.
We reiterate the rule that technicalities have no room in labor cases where the
Rules of Court are applied only in a suppletory manner and only to effectuate
the objectives of the Labor Code and not to defeat them.25 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.
IN VIEW WHEREOF, the dismissal of petitioner Roquero is AFFIRMED, but
respondent PAL is ordered to pay the wages to which Roquero is entitled from
the time the reinstatement order was issued until the finality of this decision.
SO ORDERED.
THIRD DIVISION
G.R. No. 159919 August 8, 2007
COMPOSITE ENTERPRISES, INC., petitioner,
vs.
EMILIO M. CAPAROSO and JOEVE QUINDIPAN, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Revised Rules of Court assailing the Resolution1 dated November 18, 2002 of
the Court of Appeals (CA) in CA-G.R. SP No. 73791 which dismissed the Petition
for Certiorari of Composite Enterprises, Inc. (petitioner) and the CA Resolution
dated September 4, 2003 which denied petitioner's Motion for
Reconsideration.2
The facts:
Petitioner is engaged in the distribution and/or supply of confectioneries to
various retail establishments within the Philippines. Emilio Caparoso and Joeve
P. Quindipan (respondents) were employed as its deliverymen until they were
terminated on October 8, 1999.
Respondents filed a complaint for illegal dismissal against petitioner with the
National Labor Relations Commission (NLRC). Petitioner denied that
respondents were illegally dismissed, alleging that they were employed on a
month-to-month basis and that they were terminated as a result of the
expiration of their contracts of employment.
On June 15, 2000, Labor Arbiter Napoleon M. Menese (Labor Arbiter) rendered
a Decision3 in favor of the respondents, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring
complainants to have been illegally dismissed from employment and
consequently, respondent COMPOSITE ENTERPRISES CORPORATION is hereby
ordered to immediately reinstate complainants to their respective former
position without loss of seniority rights and other privileges, with full
24
backwages from the date of dismissal up to the actual date of reinstatement
which, as of this date, amounts to P93,155.36, as above computed.
SO ORDERED.4
On July 6, 2000, petitioner filed its Appeal with the NLRC. It also filed a
Manifestation with Motion manifesting that it cannot reinstate respondents to
their former positions since their previous positions were no longer available.
Accordingly, petitioner moved that it be allowed to pay respondents separation
pay in lieu of reinstatement.5
On November 8, 2000, while petitioner's appeal was pending, respondents filed
with the Labor Arbiter a Motion to Pay Complainants their Salary with Prayer
for Issuance of A Writ of Execution.6
On December 19, 2000, petitioner filed with the NLRC a Motion to Resolve its
motion to be allowed to pay separation pay in lieu of reinstatement.7
On January 26, 2001, the Labor Arbiter issued a Writ of Execution directing the
Sheriff to effect respondent's reinstatement. Consistent with its stand that
physical reinstatement was no longer possible, petitioner reinstated
respondents into its payroll, conditioned on the NLRC's ruling on its motion to
be allowed to pay separation pay in lieu of reinstatement.
On February 21, 2001, respondents filed an Ex-Parte Motion for Recomputation
of Backwages with the Labor Arbiter.
Meanwhile, in a Decision dated May 9, 2001, the NLRC set aside the Decision of
the Labor Arbiter, holding that there was no illegal dismissal since respondents'
contracts of employment were for a fixed period.8
On May 15, 2001, petitioner filed an Ex-Parte Manifestation with the Labor
Arbiter, manifesting that there was no basis to sustain respondents' claim for
reinstatement in view of the NLRC's Decision dated May 9, 2001 finding no
illegal dismissal.
In an Order dated June 14, 2001, the Labor Arbiter directed petitioner to pay
respondents' accrued salaries amounting to P143,355.52, covering the period
from June 26, 2000, the date petitioner received the Labor Arbiter's Decision, to
May 9, 2001, the date of said decision's reversal by the NLRC.9
On July 23, 2001, petitioner filed an Appeal/Petition for Review For Issuance of
Temporary Restraining Order and Preliminary Injunction before the NLRC,
insisting on the payment of separation pay to respondents in lieu of
reinstatement.
In an Order dated June 28, 2002, the NLRC affirmed the Labor Arbiter's Order
dated June 14, 2001, holding that the reversal on appeal of the Labor Arbiter's
Decision dated June 15, 2000 did not affect respondents' entitlement to accrued
salaries pending appeal, pursuant to Article 223 of the Labor Code; that only
respondent's entitlement to backwages was forfeited; and that there was no
merit to petitioner's insistence on paying separation pay to respondents, since
that there was no strong basis for petitioner's contention that reinstatement
was physically impossible due to petitioner's implementation of a
retrenchment program.10
Petitioner filed a Motion for Reconsideration11 but it was denied by the NLRC in
a Resolution dated September 26, 2002.12 Petitioner received said Resolution
on October 7, 2002.13
Four days later, or on October 11, 2002, petitioner filed a Petition for Certiorari
with the CA, docketed as CA-G.R. SP No. 73269.
In a Resolution14 dated October 24, 2002, the CA's Special Sixteenth Division15
dismissed the petition for petitioner's failure to present proof that its General
Manager was duly authorized to sign the petition's Verification and
Certification of Non-Forum Shopping, in violation of Section 5, Rule 7 of the
Revised Rules of Court.16
Within the 60-day reglementary period from date of receipt of the NLRC
Resolution denying the motion for reconsideration, petitioner, instead of filing
a motion for reconsideration with the CA's Special Sixteenth Division, filed on
November 12, 2002, a second Petition for Certiorari, docketed as CA-G.R. SP No.
73791.17
In a Resolution dated November 18, 2002, the CA's Twelfth Division dismissed
the petition for petitioner's failure to attach the required affidavit of service,
pursuant to the last paragraph of Section 3, Rule 46 of the Revised Rules of
Court.18
On November 26, 2002, petitioner filed a Motion for Reconsideration, attaching
the affidavit of service which was omitted in the petition.19
25
In a Resolution20 dated September 4, 2003, the CA denied petitioner's Motion
for Reconsideration, holding that resort to the second petition for certiorari
was no longer available due to res judicata, since the dismissal order dated
October 24, 2002 in the first petition for certiorari had already become final
and executory; that minute resolutions of the court denying due course to
petitions, or dismissing cases summarily for failure to comply with the formal
or substantial requirements laid down therefor by law, were actually
dispositions on the merits constituting res judicata, citing Bernarte v. Court of
Appeals.21
Hence, the present petition.
Petitioner contends that the dismissal of the first petition was not a judgment
on the merits as to constitute res judicata; that Bernarte v. Court of Appeals finds
no application to the instant case; and that the dismissal of the first petition
was not a dismissal with prejudice as provided by Section 5, Rule 7 of the
Revised Rules of Court.
Respondents, on the other hand, contend that petitioner's procedural lapses in
filing the first and second special civil actions for certiorari are irreversible and
there is nothing on record to show that the petitioner at least attempted or
subsequently made a substantial compliance with the formal or substantial
requirements laid down by law; and that petitioner's gross and utter disregard
of the rules cannot justly be rationalized by harking on the policy of liberal
construction.
The petition is impressed with merit.
Contrary to the CA's ruling, failure to comply with the non-forum shopping
requirements in Section 5, Rule 7 of the Revised Rules of Court, does not
automatically warrant the dismissal of the case with prejudice. The second
paragraph of Section 5, Rule 7, is pertinent:
Section 5. Certification against forum shopping. – x x x
Failure to comply with the foregoing requirements shall not be curable by
mere amendment of the complaint or other initiatory pleading but shall
be cause for the dismissal of the case without prejudice, unless otherwise
provided, upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall
constitute indirect contempt of court, without prejudice to the corresponding
administrative and criminal actions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct
contempt, as well as a cause for administrative sanctions. (Emphasis supplied)
The Rule clearly states that the dismissal is without prejudice unless otherwise
stated by the court;22 and the dismissal may be deemed with prejudice only
upon proper motion and hearing. Since the dismissal was without prejudice, it
did not bar petitioner from refiling the petition for so long as it was made
within the 60-day reglementary period for filing the petition for certiorari.
Furthermore, Bernarte v. Court of Appeals finds no application to the instant
case. Bernarte is cast under an entirely different factual milieu. There, the Court
denied the first petition for non-compliance with Section 4 of Circular No. 1-88,
which requires a verified statement of material dates; and the second petition
was filed one year after the dismissal of the first petition. Unlike in Bernarte, the
second petition in the present case was refiled immediately after the first
petition was dismissed and within the 60-day reglementary period.
With respect to the non-attachment of the affidavit of service in the second
petition, it was not fatal to the petition. The registry receipts attached to the
petition clearly show that respondents were served copies of the petition and
its annexes.23 Thus, the demands of substantial justice were satisfied by the
actual receipt of the petition.24
Verily, litigation is not a game of technicalities. While the swift unclogging of
court dockets is a laudable objective, granting substantial justice is an even
more urgent ideal.25 Indeed, on numerous occasions, this Court has relaxed the
rigid application of the rules to afford the parties the opportunity to fully
ventilate their cases on the merits. This is in line with the time-honored
principle that cases should be decided only after giving all parties the chance to
argue their causes and defenses. Technicality and procedural imperfection
should thus not serve as basis of decisions.26 Technicalities should never be
used to defeat the substantive rights of the other party.27 Every party-litigant
must be afforded the amplest opportunity for the proper and just
determination of his cause, free from the constraints of technicalities. 28 In that
way, the ends of justice would be better served.29 For, indeed, the general
objective of procedure is to facilitate the application of justice to the rival
claims of contending parties, bearing always in mind that procedure is not to
hinder but to promote the administration of justice.30
Ordinarily, the case should be remanded to the CA for proper disposition of the
petition for certiorari on the merits;31 but that would further delay the case.
26
Considering that the lone issue raised can be readily resolved in this instance,
the Court deems it more practical and in the greater interest of justice not to
remand the case to the CA but, instead, to resolve this case once and for all.32
Petitioner anchored its Petition for Certiorari before the CA on the ground that
the NLRC gravely abused its discretion in affirming the Order dated June 14,
2001 of the Labor Arbiter which directed petitioner to pay respondents'
accrued salaries. Petitioner insists that the NLRC should have ordered the
payment of separation pay since respondents' reinstatement to their former
positions was physically impossible due to petitioner's implementation of a
retrenchment program.
The Court is not persuaded.
Article 223 (3rd paragraph) of the Labor Code,33 as amended by Section 12 of
Republic Act (R.A.) No. 6715,34 and Section 2 of the NLRC Interim Rules on
Appeals under R.A. No. 6715, Amending the Labor Code,35 provide that an order
of reinstatement by the Labor Arbiter is immediately executory even pending
appeal. The Court explained the rationale of the law in Aris (Phil.) Inc. v.
National Labor Relations Commission:36
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.
xxxx
These duties and responsibilities of the State are imposed not so much to
express sympathy for the workingman as to forcefully and meaningfully
underscore labor as a primary social and economic force, which the
Constitution also expressly affirms with equal intensity. Labor is an
indispensable partner for the nation’s progress and stability.
xxxx
x x x In short, with respect to decisions reinstating employees, the law itself has
determined a sufficiently overwhelming reason for its execution pending
appeal.
xxxx
x x x Then, by and pursuant to the same power (police power), the State may
authorize an immediate implementation, pending appeal, of a decision
reinstating a dismissed or separated employee since that saving act is designed
to stop, although temporarily since the appeal may be decided in favor of the
appellant, a continuing threat or danger to the survival or even the life of the
dismissed or separated employee and his family.37
Reinstatement is the restoration to a state or condition from which one has
been removed or separated.38 The intent of the law in making a reinstatement
order immediately executory is much like a return-to-work order, i.e., to restore
the status quo in the workplace in the meantime that the issues raised and the
proofs presented by the contending parties have not yet been finally resolved. 39
It is a legal provision which is fair to both labor and management because while
execution of the order cannot be stayed by the posting of a bond by the
employer, the workers also cannot demand their physical reinstatement if the
employer opts to reinstate them only in the payroll.40
Payment of separation pay as a substitute for reinstatement is allowed only
under exceptional circumstances, viz: (1) when reasons exist which are not
attributable to the fault or are beyond the control of the employer, such as
when the employer -- who is in severe financial strait, has suffered serious
business losses, and has ceased operations -- implements retrenchment, or
abolishes the position due to the installation of labor-saving devices; (2) when
the illegally dismissed employee has contracted a disease and his reinstatement
will endanger the safety of his co-employees; or, (3) where a strained
relationship exists between the employer and the dismissed
employee.41
As regards retrenchment, it is a management prerogative consistently
recognized and affirmed by this Court. It is, however, subject to faithful
compliance with the substantive and procedural requirements laid down by
law and jurisprudence.42 For retrenchment to be considered valid, the following
substantial requirements must be met: (a) the losses expected should be
substantial and not merely de minimis in extent; (b) the substantial losses
apprehended must be reasonably imminent such as can be perceived
objectively and in good faith by the employer; (c) the retrenchment must be
reasonably necessary and likely to effectively prevent the expected losses; and
(d) the alleged losses, if already incurred, and the expected imminent losses
27
sought to be forestalled, must be proved by sufficient and convincing
evidence.43
In the discharge of these requirements, it is the employer who has the onus, this
being in the nature of an affirmative defense.44 In other words, it is not enough
for a company to merely declare that it has implemented a retrenchment
program. It must produce adequate proof that such is the actual situation to
justify the retrenchment of employees. Normally, the condition of business
losses is shown by audited financial documents like yearly balance sheets,
profit and loss statements and annual income tax returns. The financial
statements must be prepared and signed by independent auditors, failing
which these can be assailed as self-serving documents.45
In this case, petitioner sought to justify the payment of separation pay instead
of reinstatement on the basis of its implementation of a retrenchment program
for "serious and persistent financial difficulties."46 However, petitioner only
submitted as evidence the notice of its intention to implement a retrenchment
program, which it sent to the Department of Labor and Employment on July 25,
2000.47 It did not submit its financial statements duly audited by an
independent external auditor. Its failure to do so seriously casts doubt on its
claim of losses and insistence on the payment of separation pay.
The Court finds that the NLRC did not commit any grave abuse of discretion in
issuing the Order dated June 28, 2002, affirming the Order of the Labor Arbiter
dated June 14, 2001.
WHEREFORE, the petition is GRANTED insofar as the Resolutions of the Court
of Appeals dated November 18, 2002 and September 4, 2003 are concerned,
which are hereby REVERSED and SET ASIDE. However, in the absence of grave
abuse of discretion, the Order dated June 28, 2002 of the National Labor
Relations Commission affirming the Labor Arbiter’s Order dated June 14, 2001
is REINSTATED.
No costs.
SO ORDERED.
SECOND DIVISION
G.R. Nos. 142732-33 December 4, 2007
MARILOU S. GENUINO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CITIBANK, N.A., WILLIAM
FERGUSON, and AZIZ RAJKOTWALA, respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. Nos. 142753-54
CITIBANK, N.A., WILLIAM FERGUSON, and AZIZ RAJKOTWALA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MARILOU GENUINO,
respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks to set aside the
September 30, 1999 Decision1 and March 31, 2000 Resolution2 of the Court of
Appeals (CA) in the consolidated cases docketed as CA-G.R. SP Nos. 51532 and
51533. The appellate court dismissed the parties' petitions involving the
National Labor Relations Commission's (NLRC's) Decision3 and Resolution,4
which held that Marilou S. Genuino was validly dismissed by Citibank, N.A.
(Citibank). The NLRC likewise ordered the payment of salaries from the time
that Genuino was reinstated in the payroll to the date of the NLRC decision.
Upon reconsideration, however, the CA modified its decision and held that
Citibank failed to observe due process in CA-G.R. SP No. 51532; hence, Citibank
should indemnify Genuino in the amount of PhP 5,000. Both parties are now
before this Court assailing portions of the CA's rulings. In G.R. Nos. 142732-33,
Genuino assails the CA's finding that her dismissal was valid. In G.R. Nos.
142753-54, Citibank questions the CA's finding that Citibank violated Genuino's
right to procedural due process and that Genuino has a right to salaries.
28
Citibank is an American banking corporation duly licensed to do business in the
Philippines. William Ferguson was the Manila Country Corporate Officer and
Business Head of the Global Finance Bank of Citibank while Aziz Rajkotwala
was the International Business Manager for the Global Consumer Bank of
Citibank.5
Genuino was employed by Citibank sometime in January 1992 as Treasury
Sales Division Head with the rank of Assistant Vice-President. She received a
monthly compensation of PhP 60,487.96, exclusive of benefits and privileges.6
On August 23, 1993, Citibank sent Genuino a letter charging her with
"knowledge and/or involvement" in transactions "which were irregular or even
fraudulent." In the same letter, Genuino was informed she was under
preventive suspension.7
Genuino wrote Citibank on September 13, 1993 and asked the bank the
following:
a. Confront our client with the factual and legal basis of your charges, and afford
her an opportunity to explain;
b. Substantiate your charge of fraudulent transactions against our client; or if
the same cannot be substantiated;
c. Correct/repair/compensate the damage you have caused our client.8
On September 13, 1993, Citibank, through Victorino P. Vargas, its Country
Senior Human Resources Officer, sent a letter to Genuino, the relevant portions
of which read:
As you are well aware, the bank served you a letter dated August 23, 1993
advising you that ongoing investigations show that you are involved and/or
know of irregular transactions which are at the very least in conflict with the
bank's interest, and, may even be fraudulent in nature.
These transactions are those involving Global Pacific and/or Citibank and the
following bank clients, among others:
1. Norma T. de Jesus
 2. Carmen Intengan/Romeo Neri
3. Mario Mamon
4. Vienna Ochoa/IETI
5. William Samara
6. Roberto Estandarte
7. Rita Browner
8. Ma. Redencion Sumpaico
9. Cesar Bautista
10. Teddy Keng
11. NDC-Guthrie
12. Olivia Sy
In view of the foregoing, you are hereby directed to explain in writing three (3)
days from your receipt hereof why your employment should not be terminated
in view of your involvement in these irregular transactions. You are also
directed to appear in an administrative investigation of the matter which is set
on Tuesday, Sept. 21, 1993 at 2:00 P.M. at the HR Conference Room, 6th Floor,
Citibank Center. You may bring your counsel if you so desire.9
Genuino's counsel replied through a letter dated September 17, 1993,
demanding for a bill of particulars regarding the charges against Genuino.
Citibank's counsel replied on September 20, 1993, as follows:
1.2. [T]he bank has no intention of converting the administrative investigation
of this case to a full blown trial. What it is prepared to do is give your client, as
required by law and Supreme Court decisions, an opportunity to explain her
side on the issue of whether she violated the conflict of interest rule—either in
writing (which could be in the form of a letter-reply to the September 13, 1993
letter to Citibank, N.A.) or in person, in the administrative investigation which
29
is set for tomorrow afternoon vis-à-vis the bank clients/parties mentioned in
the letter of Citibank, N.A.
xxxx
2.2. You will certainly not deny that we have already fully discussed with you
what is meant by the conflict with the bank's interest vis-à-vis the bank
clients/parties named in the September 13, 1993 letter of Citibank to Ms.
Genuino. As we have repeatedly explained to you, what the bank meant by it is
that your client and Mr. Dante Santos, using the facilities of their family
corporations (Torrance and Global) appear to have participated in the
diversion of bank clients' funds from Citibank to, and investment thereof in,
other companies and that they made money in the process, in violation of the
conflict of law rule. It is her side of this issue that Citibank, N.A. is waiting to
receive/hear from Ms. Genuino.10
Genuino did not appear in the administrative investigation held on September
21, 1993. Her lawyers wrote a letter to Citibank's counsel asking "what bank
clients' funds were diverted from the bank and invested in other companies,
the specific amounts involved, the manner by which and the date when such
diversions were purportedly affected." In reply, Citibank's counsel noted
Genuino's failure to appear in the investigation and gave Genuino up to
September 23, 1993 to submit her written explanation. Genuino did not submit
her written explanation.11
On September 27, 1993, Citibank informed Genuino of the result of their
investigation. It found that Genuino with Santos used "facilities of Genuino's
family corporation, namely, Global Pacific, personally and actively participated
in the diversion of bank clients' funds to products of other companies that
yielded interests higher than what Citibank products offered, and that Genuino
and Santos realized substantial financial gains, all in violation of existing
company policy and the Corporation Code, which for your information, carries
a penal sanction."12
Genuino's employment was terminated by Citibank on grounds of (1) serious
misconduct, (2) willful breach of the trust reposed upon her by the bank, and
(3) commission of a crime against the bank.13
On October 15, 1993, Genuino filed before the Labor Arbiter a Complaint14
against Citibank docketed as NLRC Case No. 00-10-06450-93 for illegal
suspension and illegal dismissal with damages and prayer for temporary
restraining order and/or writ of preliminary injunction. The Labor Arbiter
rendered a Decision15 on May 2, 1994, the dispositive portion of which reads:
WHEREFORE, finding the dismissal of the complainant Marilou S. Genuino to be
without just cause and in violation of her right to due process, respondent
CITIBANK, N.A., and any and all persons acting on its behalf or by or under their
authority are hereby ordered to reinstate complainant immediately to her
former position as Treasury Sales Division Head or its equivalent without loss
of seniority rights and other benefits, with backwages from August 23, 1993 up
to April 30, 1994 in the amount of P493,800.00 (P60,000 x 8.23 mos.) subject to
adjustment until reinstated actually or in the payroll.
Respondents are likewise ordered to pay complainant the amount of 1.5 Million
Pesos and P500,000.00 by way of moral and exemplary damages plus 10% of
the total monetary award as attorney's fees.16
Both parties appealed to the NLRC. The NLRC, in its September 3, 1994
Decision in NLRC-NCR Case No. 00-10-06450-93 (CA No. 006947-94), reversed
the Labor Arbiter's decision with the following modification:
WHEREFORE, Judgment is hereby rendered (1) SETTING ASIDE the appealed
decision of the Labor Arbiter; (2) DECLARING the dismissal of the complainant
valid and legal on the ground of serious misconduct and breach of trust and
confidence and consequently DISMISSING the complaint a quo; but (3)
ORDERING the respondent bank 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.
SO ORDERED.17
The parties' motions for reconsideration were denied by the NLRC in a
resolution dated October 28, 1994.18
The Ruling of the Court of Appeals
On December 6, 1994, Genuino filed a petition for certiorari docketed as G.R.
No. 118023 with this Court. Citibank's petition for certiorari, on the other hand,
was docketed as G.R. No. 118667. In the January 27, 1999 Resolution, we
referred these petitions to the CA pursuant to our ruling in St. Martin Funeral
Home v. NLRC.19
30
Genuino's petition before the CA was docketed as CA-G.R. SP No. 51532 while
Citibank's petition was docketed as CA-G.R. SP No. 51533. Genuino prayed for
the reversal of the NLRC's decision insofar as it declared her dismissal valid and
legal. Meanwhile, Citibank questioned the NLRC's order to pay Genuino's
salaries from the date of reinstatement until the date of the NLRC's decision.
The CA promulgated its decision on September 30, 1999, denying due course to
and dismissing both petitions.20 Both parties filed motions for reconsideration
and on March 31, 2000, the appellate court modified its decision and held:
WHEREFORE, save for the MODIFICATION ordering Citibank, N.A. to pay Ms.
Marilou S. Genuino five thousand pesos (P5,000.00) as indemnity for non-
observance of due process in CA-G.R. SP No. 51532, this Court's 30 September
1999 decision is REITERATED and AFFIRMED in all other respects.
SO ORDERED.21
Hence, we have this petition.
The Issue
WHETHER OR NOT THE DISMISSAL OF GENUINO IS FOR A JUST CAUSE AND IN
ACCORDANCE WITH DUE PROCESS
In G.R. Nos. 142732-33, Genuino contends that Citibank failed to observe
procedural due process in terminating her employment. This failure is allegedly
an indication that there were no valid grounds in dismissing her. In G.R. Nos.
142753-54, Citibank questions the ruling that Genuino has a right to
reinstatement under Article 223 of the Labor Code. Citibank contends that the
Labor Arbiter's finding is not supported by evidence; thus, the decision is void.
Since a void decision cannot give rise to any rights, Citibank opines that there
can be no right to payroll reinstatement.
The dismissal was for just cause but lacked due process
We affirm that Genuino was dismissed for just cause but without the
observance of due process.
In a string of cases, 22 we have repeatedly said that the requirement of twin
notices must be met. In the recent case of King of Kings Transport, Inc. v. Mamac,
we explained:
To clarify, the following should be considered in terminating the services of
employees:
(1) The first written notice to be served on the employees should contain the
specific causes or grounds for termination against them, and a directive that the
employees are given the opportunity to submit their written explanation within
a reasonable period. "Reasonable opportunity" under the Omnibus Rules
means every kind of assistance that management must accord to the employees
to enable them to prepare adequately for their defense. This should be
construed as a period of at least five (5) calendar days from receipt of the
notice to give the employees an opportunity to study the accusation against
them, consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint. Moreover, in order to
enable the employees to intelligently prepare their explanation and defenses,
the notice should contain a detailed narration of the facts and circumstances
that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically
mention which company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct a
hearing or conference wherein the employees will be given the opportunity
to: (1) explain and clarify their defenses to the charge against them; (2) present
evidence in support of their defenses; and (3) rebut the evidence presented
against them by the management. During the hearing or conference, the
employees are given the chance to defend themselves personally, with the
assistance of a representative or counsel of their choice. Moreover, this
conference or hearing could be used by the parties as an opportunity to come to
an amicable settlement.
(3) After determining that termination of employment is justified, the
employers shall serve the employees a written notice of termination
indicating that: (1) all circumstances involving the charge against the
employees have been considered; and (2) grounds have been established to
justify the severance of their employment.23
The Labor Arbiter found that Citibank failed to adequately notify Genuino of the
charges against her. On the contrary, the NLRC held that "the function of a
'notice to explain' is only to state the basic facts of the employer's charges,
which x x x the letters of September 13 and 17, 1993 in question have fully
served."24
31
We agree with the CA that the dismissal was valid and legal, and with its
modification of the NLRC ruling that PhP 5,000 is due Genuino for failure of
Citibank to observe due process.
The Implementing Rules and Regulations of the Labor Code provide that any
employer seeking to dismiss a worker shall furnish the latter a written notice
stating the particular acts or omissions constituting the grounds for dismissal.25
The purpose of this notice is to sufficiently apprise the employee of the acts
complained of and enable him/her to prepare his/her defense.
In this case, the letters dated August 23, September 13 and 20, 1993 sent by
Citibank did not identify the particular acts or omissions allegedly committed
by Genuino. The August 23, 1993 letter charged Genuino with having "some
knowledge and/or involvement" in some transactions "which have the
appearance of being irregular at the least and may even be fraudulent." The
September 13, 1993 letter, on the other hand, mentioned "irregular
transactions" involving Global Pacific and/or Citibank and 12 bank clients.
Lastly, the September 20, 1993 letter stated that Genuino and "Mr. Dante
Santos, using the facilities of their family corporations (Torrance and Global)
appear to have participated in the diversion of bank clients' funds from
Citibank to, and investment thereof in, other companies and that they made
money in the process, in violation of the conflict of law rule [sic]." The extent of
Genuino's alleged knowledge and participation in the diversion of bank's
clients' funds, manner of diversion, and amounts involved; the acts attributed
to Genuino that conflicted with the bank's interests; and the circumstances
surrounding the alleged irregular transactions, were not specified in the
notices/letters.
While the bank gave Genuino an opportunity to deny the truth of the
allegations in writing and participate in the administrative investigation, the
fact remains that the charges were too general to enable Genuino to
intelligently and adequately prepare her defense.
The two-notice requirement of the Labor Code is an essential part of due
process. The first notice informing the employee of the charges should neither
be pro-forma nor vague. It should set out clearly what the employee is being
held liable for. The employee should be afforded ample opportunity to be heard
and not mere opportunity. As explained in King of Kings Transport, Inc., ample
opportunity to be heard is especially accorded the employees sought to be
dismissed after they are specifically informed of the charges in order to give
them an opportunity to refute such accusations leveled against them. Since the
notice of charges given to Genuino is inadequate, the dismissal could not be in
accordance with due process.
While we hold that Citibank failed to observe procedural due process, we
nevertheless find Genuino's dismissal justified.
Citibank maintains that Genuino was aware of the bank's Corporate Policy
Manual specifically Chapter 3 on "Principles and Policies" with regard to
avoiding conflicts of interest. She had even submitted a Conflict of Interest
Survey to Citibank. In that survey, she denied any knowledge of engaging in
transactions in conflict with Citibank's interests. Citibank, for its part,
submitted evidence showing 99% ownership of Global stocks by Genuino and
Santos. In July 1993, Citibank discovered that Genuino and Santos were
instrumental in the withdrawal by bank depositors of PhP 120 million of
investments in Citibank. This amount was subsequently invested in another
foreign bank, Internationale Nederlanden Bank, N.V., under the control of
Global and Torrance, another corporation controlled by Genuino and Santos. 26
Citibank also filed two criminal complaints against Genuino and Santos for
violations of the conflict of interest rule provided in Sec. 31 in relation to Sec.
14427 of the Corporation Code.28
We note also that during the proceedings before the Labor Arbiter, Citibank
presented the following affidavits, with supporting documentary evidence
against Genuino:
1) Vic Lim, an officer of Citibank who investigated the anomalies of Genuino
and Santos, concluded that Genuino and Santos realized substantial financial
gains out of the transfer of monies as supported by the following documents:
1) [S]ome of the Term Investment Applications (TIA), Applications for Money
Transfer, all filled up in the handwriting of Ms. Marilou Genuino. These
documents cover/show the transfer of the monies of the Citibank clients from
their money placements/deposits with Citibank, N.A. to Global and/or
Torrance.
2) [S]ome of the checks that were drawn by Global and Torrance against their
Citibank accounts in favor of the other companies by which Global and
Torrance transferred the monies of the bank clients to the other companies.
3) [S]ome of the checks drawn by the other companies in favor of Global or
Torrance by which the other companies remitted back to Global and/or
Torrance the monies of the bank clients concerned.
4) [S]ome of the checks drawn by Global and Torrance against their Citibank
accounts in favor of Mr. Dante Santos and Ms. Marilou Genuino, covering the
32
shares of the latter in the spreads or margins Global and Torrance had derived
from the investments of the monies of the Citibank clients in the other
companies.
5) [S]ome of the checks drawn by Torrance and Global in favor of Citibank
clients by which Global and Torrance remitted back to said bank clients their
principal investments (or portions thereof) and the rates of interests realized
from their investment placed with the other companies less the spreads made
by Global and/or Torrance, Mr. Dante L. Santos and Ms. Marilou Genuino.29
In Lim's Reply-Affidavit with attached supporting documents, he stated that out
of the competing money placement activities, Genuino and Santos derived
financial gains amounting to PhP 2,027,098.08 and PhP 2,134,863.80,
respectively.30
2) Marilyn Bautista, a Treasury Sales Specialist in the Treasury Department of
the Global Consumer Bank of Citibank and whose superiors were Genuino and
Santos, stated that:
Based on documents that have subsequently come to my knowledge, I realized
that the two (Genuino and Dante L. Santos), with the active cooperation of
Redencion Sumpaico (the Accountant of Global) had … brokered for their own
benefits and/or of Global the sale of the financial products of Citibank called
"Mortgage Backed Securities" or MBS and in the process made money at the
expense of the (Citibank) investors and the bank.31
3) Patrick Cheng attested to other transactions from which Genuino, Santos,
and Global brokered the Mortgage Backed Securities (MBS), namely:
ICC/Nemesio and Olivia Sy transaction, San Miguel Corporation/ICC,
CIPI/Asiatrust, FAPE, PERAA and Union Bank, and NDC-Guthrie transactions.32
In her defense, Genuino asserts that Citibank has no evidence of any wrongful
act or omission imputable to her. According to her, she did not try to conceal
from the bank her participation in Global and she even disclosed the
information when Global designated Citibank as its depositary. She avers there
was no conflict of interest because Global was not engaged in Citibank's
accepting deposits and granting loans, nor in money placement activities that
compete with Citibank's activities; and neither does Citibank invest in the
outlets used by Global. She claims that the controversy between Santos and
Global had already been amicably resolved in a Compromise Agreement
between the two parties.33
Genuino further asserts that the letter of termination did not indicate what
existing company policy had been violated, and what acts constituted serious
misconduct or willful breach of the trust reposed by the bank. She claims that
Lim's testimony that the checks issued by Global in her name were profits was
malicious, hearsay, and lacked factual basis. She also posits that as to the
withdrawals of clients, she could not possibly dictate on the depositors. She
pointed out that the depositors even sent Citibank a letter dated August 25,
1993 informing the bank that the withdrawals were made upon their express
instructions. Genuino avers the bank's loss of confidence should have to be
proven by substantial evidence, setting out the facts upon which loss of
confidence in the employee may be made to rest.34
Contrary to the Labor Arbiter's finding, the NLRC found the following facts
supported by the records:
a) Respondent bank has a conflict of interest rule, embodied in Chapter 3 of its
Corporate Policy Manual, prohibiting the officers of the bank from engaging in
business activities, situations or circumstances that are in conflict with the
interest of the bank.
b) Complainant was familiar with said conflict of interest rule of the bank and
of her duty to disclose to the bank in writing any personal circumstances which
conflicts or appears to be in conflict with Citibank's interest.
c) Complainant is a substantial stockholder of Global Pacific, but she did not
disclose fact to the bank.
d) Global Pacific is engaged in money placement business like Citibank, N.A.;
that in carrying out its said money placement business, it used funds belonging
to Citibank clients which were withdrawn from Citibank with participation of
complainant and Dante L. Santos. In one transaction of this nature,
P120,000,000.00 belonging to Citibank clients was withdrawn from Citibank,
N.A. and placed in another foreign bank, under the control of Global Pacific. Said
big investment money was returned to Citibank, N.A. only when Citibank, N.A.
filed an injunction suit.
e) Global Pacific also engaged in the brokering of the ABS or MBS, another
financial product of Citibank. It was the duty of complainant Genuino and Dante
L. Santos to sell said product on behalf of Citibank, N.A. and for Citibank N.A.'s
benefit. In the brokering of the ABS or MBS, Global Pacific made substantial
profits which otherwise would have gone to Citibank, N.A. if only they brokered
the ABS or MBS for and on behalf of Citibank, N.A.
33
Art. 282(c) of the Labor Code provides that an employer may terminate an
employment for fraud or willful breach by the employee of the trust reposed in
him/her by his/her employer or duly authorized representative. In order to
constitute as just cause for dismissal, loss of confidence should relate to acts
inimical to the interests of the employer.35 Also, the act complained of should
have arisen from the performance of the employee's duties.36 For loss of trust
and confidence to be a valid ground for an employee's dismissal, it must be
substantial and not arbitrary, and must be founded on clearly established facts
sufficient to warrant the employee's separation from work.37 We also held that:
[L]oss of confidence is a valid ground for dismissing an employee and proof
beyond reasonable doubt of the employee's misconduct is not required. It is
sufficient if there is some basis for such loss of confidence or if the employer
has reasonable ground to believe or to entertain the moral conviction that the
employee concerned is responsible for the misconduct and that the nature of
his participation therein rendered him unworthy of the trust and confidence
demanded by his position.38
As Assistant Vice-President of Citibank's Treasury Department, Genuino was
tasked to solicit investments, and peso and dollar deposits for, and keep them
in Citibank; and to sell and/or push for the sale of Citibank's financial products,
such as the MBS, for the account and benefit of Citibank.39 She held a position of
trust and confidence. There is no way she could deny any knowledge of the
bank's policies nor her understanding of these policies as reflected in the
survey done by the bank. She could not likewise feign ignorance of the
businesses of Citibank, and of Global and Torrance. Assuming that Citibank did
not engage in the same securities dealt with by Global and Torrance;
nevertheless, it is to the interests of Citibank to retain its clients and continue
investing in Citibank. Curiously, Genuino did not even dissuade the depositors
from withdrawing their monies from Citibank, and was even instrumental in
the transfers of monies from Citibank to a competing bank through Global and
Torrance, the corporations under Genuino's control.
All the pieces of evidence compel us to conclude that Genuino did not have her
employer's interest. The letter of the bank's clients which attested that the
withdrawals from Citibank were made upon their instructions is of no import.
It did not explain why they preferred to invest in Global and Torrance, nor did it
mention that Genuino tried to dissuade them from withdrawing their deposits.
Genuino herself admitted her relationship with some of the depositors in her
affidavit, to wit:
6. Contrary to the allegations of Mr. Lim in par. 6.1 up to 8.1
concerning the alleged scheme employed in the questioned transactions,
insinuating an "in" and "out" movement of funds of the seven (7) depositors,
the truth is that after said "depositors" instructed/authorized us to effect
the withdrawal of their respective monies from Citibank to attain the
common goal of higher yields utilizing Global as the vehicle for bulk
purchases of securities or papers not dealt with/offered by Citibank, said
pooled investment remained with Global, and were managed through Global
for over a year until the controversy arose;
10. The seven (7) "depositors" mentioned in Mr. Lim's Affidavits
are the long-time friends of affiant Genuino who had formed a loosely
constituted investment group for purposes of realizing higher yields derivable
from pooled investments, and as the advisor of the group she had in effect
chosen Citibank as the initial repository of their respective monies prior to the
implementation of plans for pooled investments under Global. Hence, she had
known and dealt with said "depositors" before they became substantial
depositors of Citibank. She did not come across them because of Citibank.40
(Emphasis supplied.)
All told, Citibank had valid grounds to dismiss Genuino on ground of
loss of confidence.
In view of Citibank's failure to observe due process, however, nominal
damages are in order but the amount is hereby raised to PhP 30,000 pursuant
to Agabon v. NLRC. The NLRC's order for payroll reinstatement is set aside.
In Agabon, we explained:
The violation of the petitioners' right to statutory due process by the
private respondent warrants the payment of indemnity in the form of nominal
damages. The amount of such damages is addressed to the sound discretion of
the court, taking into account the relevant circumstances. Considering the
prevailing circumstances in the case at bar, we deem it proper to fix it at
P30,000.00. We believe this form of damages would serve to deter employers
from future violations of the statutory due process rights of employees. At the
very least, it provides a vindication or recognition of this fundamental right
granted to the latter under the Labor Code and its Implementing Rules.41
Thus, the award of PhP 5,000 to Genuino as indemnity for non-observance of
due process under the CA's March 31, 2000 Resolution in CA-G.R. SP No. 51532
is increased to PhP 30,000.
34
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:
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.
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.42 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.
WHEREFORE, the petitions of Genuino in G.R. Nos. 142732-33 are DENIED
for lack of merit. The petitions of Citibank in G.R. Nos. 142753-54 are
GRANTED. The September 30, 1999 Decision and March 31, 2000 Resolution in
CA-G.R. SP Nos. 51532 and 51533 are AFFIRMED with MODIFICATION that
Genuino is entitled to PhP 30,000 as indemnity for non-observance of due
process. Item (3) in the dispositive portion of the September 3, 1994 Decision
of the NLRC in NLRC-NCR Case No. 00-10-06450-93 (CA No. 006947-94) is
DELETED and SET ASIDE, and said NLRC decision is MODIFIED as follows:
WHEREFORE, Judgment is hereby rendered (1) SETTING ASIDE the appealed Republic of the Philippines
decision of the Labor Arbiter; (2) DECLARING the dismissal of the complainant SUPREME COURT
valid and legal on the ground of serious misconduct and breach of trust and Manila
confidence and consequently DISMISSING the complaint a quo; but (3)
ORDERING the respondent bank to pay the complainant nominal damages EN BANC
in the amount of PhP 30,000.
G.R. No. 164856 January 20, 2009
SO ORDERED.
JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners,
vs.
PHILIPPINE AIRLINES, INC., Respondent.

DECISION

CARPIO MORALES, J.:

Petitioners Juanito A. Garcia and Alberto J. Dumago assail the December 5, 2003
Decision and April 16, 2004 Resolution of the Court of Appeals1 in CA-G.R. SP
No. 69540 which granted the petition for certiorari of respondent, Philippine
Airlines, Inc. (PAL), and denied petitioners’ Motion for Reconsideration,
respectively. The dispositive portion of the assailed Decision reads:

WHEREFORE, premises considered and in view of the foregoing, the instant

petition is hereby GIVEN DUE COURSE. The assailed November 26, 2001
Resolution as well as the January 28, 2002 Resolution of public respondent
National Labor Relations Commission [NLRC] is hereby ANNULLED and SET
ASIDE for having been issued with grave abuse of discretion amounting to lack
or excess of jurisdiction. Consequently, the Writ of Execution and the Notice of
Garnishment issued by the Labor Arbiter are hereby likewise ANNULLED and
SET ASIDE.

SO ORDERED.2

The case stemmed from the administrative charge filed by PAL against its
employees-herein petitioners3 after they were allegedly caught in the act of
sniffing shabu when a team of company security personnel and law enforcers
raided the PAL Technical Center’s Toolroom Section on July 24, 1995.

After due notice, PAL dismissed petitioners on October 9, 1995 for

transgressing the PAL Code of Discipline,4 prompting them to file a complaint
for illegal dismissal and damages which was, by Decision of January 11, 1999,5

35
resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter alia,
immediately comply with the reinstatement aspect of the decision.
Prior to the promulgation of the Labor Arbiter’s decision, the Securities and
Exchange Commission (SEC) placed PAL (hereafter referred to as respondent),
which was suffering from severe financial losses, under an Interim
Rehabilitation Receiver, who was subsequently replaced by a Permanent
Rehabilitation Receiver on June 7, 1999.
From the Labor Arbiter’s decision, respondent appealed to the NLRC which, by
Resolution of January 31, 2000, reversed said decision and dismissed
petitioners’ complaint for lack of merit.6
Petitioners’ Motion for Reconsideration was denied by Resolution of April 28,
2000 and Entry of Judgment was issued on July 13, 2000.7
Subsequently or on October 5, 2000, the Labor Arbiter issued a Writ of
Execution (Writ) respecting the reinstatement aspect of his January 11, 1999
Decision, and on October 25, 2000, he issued a Notice of Garnishment (Notice).
Respondent thereupon moved to quash the Writ and to lift the Notice while
petitioners moved to release the garnished amount.
In a related move, respondent filed an Urgent Petition for Injunction with the
NLRC which, by Resolutions of November 26, 2001 and January 28, 2002,
affirmed the validity of the Writ and the Notice issued by the Labor Arbiter but
suspended and referred the action to the Rehabilitation Receiver for
appropriate action.
Respondent elevated the matter to the appellate court which issued the herein
challenged Decision and Resolution nullifying the NLRC Resolutions on two
grounds, essentially espousing that: (1) a subsequent finding of a valid
dismissal removes the basis for implementing the reinstatement aspect of a
labor arbiter’s decision (the first ground), and (2) the impossibility to comply
with the reinstatement order due to corporate rehabilitation provides a
reasonable justification for the failure to exercise the options under Article 223
of the Labor Code (the second ground).
By Decision of August 29, 2007, this Court PARTIALLY GRANTED the present
petition and effectively reinstated the NLRC Resolutions insofar as it suspended
the proceedings, viz:
36
Since petitioners’ claim against PAL is a money claim for their wages during the
pendency of PAL’s appeal to the NLRC, the same should have been suspended
pending the rehabilitation proceedings. The Labor Arbiter, the NLRC, as well as
the Court of Appeals should have abstained from resolving petitioners’ case for
illegal dismissal and should instead have directed them to lodge their claim
before PAL’s receiver.
However, to still require petitioners at this time to re-file their labor claim
against PAL under peculiar circumstances of the case– that their dismissal was
eventually held valid with only the matter of reinstatement pending appeal
being the issue– this Court deems it legally expedient to suspend the
proceedings in this case.
WHEREFORE, the instant petition is PARTIALLY GRANTED in that the instant
proceedings herein are SUSPENDED until further notice from this Court.
Accordingly, respondent Philippine Airlines, Inc. is hereby DIRECTED to
quarterly update the Court as to the status of its ongoing rehabilitation. No
costs.
SO ORDERED.8 (Italics in the original; underscoring supplied)
By Manifestation and Compliance of October 30, 2007, respondent informed
the Court that the SEC, by Order of September 28, 2007, granted its request to
exit from rehabilitation proceedings.9
In view of the termination of the rehabilitation proceedings, the Court now
proceeds to resolve the remaining issue for consideration, which is whether
petitioners may collect their wages during the period between the Labor
Arbiter’s order of reinstatement pending appeal and the NLRC decision
overturning that of the Labor Arbiter, now that respondent has exited from
rehabilitation proceedings.
Amplification of the First Ground
The appellate court counted on as its first ground the view that a subsequent
finding of a valid dismissal removes the basis for implementing the
reinstatement aspect of a labor arbiter’s decision.
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,10 while on the other is the
recent case of Genuino v. National Labor Relations Commission.11 At the core of
the seeming divergence is the application of paragraph 3 of Article 223 of the
Labor Code which reads:
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, pending appeal. The employee shall either be
admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated
in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein. (Emphasis and underscoring
supplied)
The view as maintained in a number of cases is that:
x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed
on appeal, it is obligatory on the part of the employer to reinstate and pay
the wages of the dismissed employee during the period of appeal until
reversal by the higher court. On the other hand, if the employee has been
reinstated during the appeal period and such reinstatement order is reversed
with finality, the employee is not required to reimburse whatever salary he
received for he is entitled to such, more so if he actually rendered services
during the period.12 (Emphasis in the original; italics and underscoring
supplied)
In other words, a dismissed employee whose case was favorably decided by the
Labor Arbiter is entitled to receive wages pending appeal upon reinstatement,
which is immediately executory. Unless there is a restraining order, it is
ministerial upon the Labor Arbiter to implement the order of reinstatement
and it is mandatory on the employer to comply therewith.13
The opposite view is articulated in Genuino which states:
If the decision of the labor arbiter is later reversed on appeal upon the finding
that the ground for dismissal is valid, then the employer has the right to
require the dismissed employee on payroll reinstatement to refund the
salaries s/he received while the case was pending appeal, or it can be
deducted from the accrued benefits that the dismissed employee was entitled
to receive from his/her employer under existing laws, collective bargaining
agreement provisions, and company practices. However, if the employee was
reinstated to work during the pendency of the appeal, then the employee is
37
entitled to the compensation received for actual services rendered without
need of refund.
Considering that Genuino was not reinstated to work or placed on payroll
reinstatement, and her dismissal is based on a just cause, then she is not
entitled to be paid the salaries stated in item no. 3 of the fallo of the September
3, 1994 NLRC Decision.14 (Emphasis, italics and underscoring supplied)
It has thus been advanced that there is no point in releasing the wages to
petitioners since their dismissal was found to be valid, and to do so would
constitute unjust enrichment.
Prior to Genuino, there had been no known similar case containing a dispositive
portion where the employee was required to refund the salaries received on
payroll reinstatement. In fact, in a catena of cases,15 the Court did not order the
refund of salaries garnished or received by 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.
x x x [T]he law itself has laid down a compassionate policy which, once more,
vivifies and enhances the provisions of the 1987 Constitution on labor and the
working man.
xxxx
These duties and responsibilities of the State are imposed not so much to
express sympathy for the workingman as to forcefully and meaningfully
underscore labor as a primary social and economic force, which the
Constitution also expressly affirms with equal intensity. Labor is an
indispensable partner for the nation's progress and stability.
xxxx
x x x In short, with respect to decisions reinstating employees, the law itself has
determined a sufficiently overwhelming reason for its execution pending
appeal.
xxxx
x x x Then, by and pursuant to the same power (police power), the State may
authorize an immediate implementation, pending appeal, of a decision
reinstating a dismissed or separated employee since that saving act is designed
to stop, although temporarily since the appeal may be decided in favor of the
appellant, a continuing threat or danger to the survival or even the life of the
dismissed or separated employee and his family.16
The social justice principles of labor law outweigh or render inapplicable the
civil law doctrine of unjust enrichment espoused by Justice Presbitero Velasco,
Jr. in his Separate Opinion. The constitutional and statutory precepts portray
the otherwise "unjust" situation as a condition affording full protection to labor.
Even outside the theoretical trappings of the discussion and into the mundane
realities of human experience, the "refund doctrine" easily demonstrates how a
favorable decision by the Labor Arbiter could harm, more than help, a
dismissed employee. The employee, to make both ends meet, would necessarily
have to use up the salaries received during the pendency of the appeal, only to
end up having to refund the sum in case of a final unfavorable decision. It is
mirage of a stop-gap leading the employee to a risky cliff of insolvency.
Advisably, the sum is better left unspent. It becomes more logical and practical
for the employee to refuse payroll reinstatement and simply find work
elsewhere in the interim, if any is available. Notably, the option of payroll
reinstatement belongs to the employer, even if the employee is able and raring
to return to work. Prior 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."17
In playing down the stray posture in Genuino requiring the dismissed employee
on payroll reinstatement to refund the salaries in case a final decision upholds
the validity of the dismissal, the Court realigns the proper course of the
38
prevailing doctrine on reinstatement pending appeal vis-à-vis the effect of a
reversal on appeal.
Respondent insists that with the reversal of the Labor Arbiter’s Decision, there
is no more basis to enforce the reinstatement aspect of the said decision. In his
Separate Opinion, Justice Presbitero Velasco, Jr. supports this argument and
finds the prevailing doctrine in Air Philippines and allied cases inapplicable
because, unlike the present case, the writ of execution therein was secured
prior to the reversal of the Labor Arbiter’s decision.
The proposition is tenuous. First, the matter is treated as a mere race against
time. The discussion stopped there without considering the cause of the delay.
Second, it requires the issuance of a writ of execution despite the immediately
executory nature of the reinstatement aspect of the decision. In Pioneer
Texturing Corp. v. NLRC,18 which was cited in Panuncillo v. CAP Philippines,
Inc.,19 the Court observed:
x x x The provision of Article 223 is clear that an award [by the Labor Arbiter]
for reinstatement shall be immediately executory even pending appeal and the
posting of a bond by the employer shall not stay the execution for
reinstatement. The legislative intent is quite obvious, i.e., to make an award of
reinstatement immediately enforceable, even pending appeal. To require the
application for and issuance of a writ of execution as prerequisites for the
execution of a reinstatement award would certainly betray and run counter to
the very object and intent of Article 223, i.e., the immediate execution of a
reinstatement order. The reason is simple. An application for a writ of
execution and its issuance could be delayed for numerous reasons. A mere
continuance or postponement of a scheduled hearing, for instance, or an
inaction on the part of the Labor Arbiter or the NLRC could easily delay the
issuance of the writ thereby setting at naught the strict mandate and noble
purpose envisioned by Article 223. In other words, if the requirements of
Article 224 [including the issuance of a writ of execution] were to govern, as we
so declared in Maranaw, then the executory nature of a reinstatement order or
award contemplated by Article 223 will be unduly circumscribed and rendered
ineffectual. In enacting the law, the legislature is presumed to have ordained a
valid and sensible law, one which operates no further than may be necessary to
achieve its specific purpose. Statutes, as a rule, are to be construed in the light
of the purpose to be achieved and the evil sought to be remedied. x x x In
introducing a new rule on the reinstatement aspect of a labor decision under
Republic Act No. 6715, Congress should not be considered to be indulging in
mere semantic exercise. x x x20 (Italics in the original; emphasis and
underscoring supplied)
The Court reaffirms the prevailing principle that even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the
part of the employer to reinstate and pay the wages of the dismissed employee
during the period of appeal until reversal by the higher court.21 It settles the
view that the Labor Arbiter's order of reinstatement is immediately executory
and the employer has to either re-admit them to work under the same terms
and conditions prevailing prior to their dismissal, or to reinstate them in the
payroll, and that failing to exercise the options in the alternative, employer
must pay the employee’s salaries.22
Amplification of the Second Ground
The remaining issue, nonetheless, is resolved in the negative on the strength of
the second ground relied upon by the appellate court in the assailed issuances.
The Court sustains the appellate court’s finding that the peculiar predicament
of a corporate rehabilitation rendered it impossible for respondent to exercise
its option under the circumstances.
The spirit of the rule on reinstatement pending appeal animates the
proceedings once the Labor Arbiter issues the decision containing an order of
reinstatement. The immediacy of its execution needs no further elaboration.
Reinstatement pending appeal necessitates its immediate execution during the
pendency of the appeal, if the law is to serve its noble purpose. At the same
time, any attempt on the part of the employer to evade or delay its execution, as
observed in Panuncillo and as what actually transpired in Kimberly,23
Composite,24 Air Philippines,25 and Roquero,26 should not be countenanced.
After the labor arbiter’s decision is reversed by a higher tribunal, the
employee may be barred from collecting the accrued wages, if it is shown
that the delay in enforcing the reinstatement pending appeal was without
fault on the part of the employer.
The test is two-fold: (1) there must be actual delay or the fact that the order of
reinstatement pending appeal was not executed prior to its reversal; and (2)
the delay must not be due to the employer’s unjustified act or omission. If the
delay is due to the employer’s unjustified refusal, the employer may still be
required to pay the salaries notwithstanding the reversal of the Labor Arbiter’s
decision.
In Genuino, there was no showing that the employer refused to reinstate the
employee, who was the Treasury Sales Division Head, during the short span of
four months or from the promulgation on May 2, 1994 of the Labor Arbiter’s
39
Decision up to the promulgation on September 3, 1994 of the NLRC Decision.
Notably, the former NLRC Rules of Procedure did not lay down a mechanism to
promptly effectuate the self-executory order of reinstatement, making it
difficult to establish that the employer actually refused to comply.
In a situation like that in International Container Terminal Services, Inc. v.
NLRC27 where it was alleged that the employer was willing to comply with the
order and that the employee opted not to pursue the execution of the order, the
Court upheld the self-executory nature of the reinstatement order and ruled
that the salary automatically accrued from notice of the Labor Arbiter's order of
reinstatement until its ultimate reversal by the NLRC. It was later discovered
that the employee indeed moved for the issuance of a writ but was not acted
upon by the Labor Arbiter. In that scenario where the delay was caused by the
Labor Arbiter, it was ruled that the inaction of the Labor Arbiter who failed to
act upon the employee’s motion for the issuance of a writ of execution may no
longer adversely affect the cause of the dismissed employee in view of the self-
executory nature of the order of reinstatement.28
The new NLRC Rules of Procedure, which took effect on January 7, 2006, now
require the employer to submit a report of compliance within 10 calendar days
from receipt of the Labor Arbiter’s decision,29 disobedience to which clearly
denotes a refusal to reinstate. The employee need not file a motion for the
issuance of the writ of execution since the Labor Arbiter shall thereafter motu
proprio issue the writ. With the new rules in place, there is hardly any
difficulty in determining the employer’s intransigence in immediately
complying with the order.
In the case at bar, petitioners exerted efforts30 to execute the Labor Arbiter’s
order of reinstatement until they were able to secure a writ of execution, albeit
issued on October 5, 2000 after the reversal by the NLRC of the Labor Arbiter’s
decision. Technically, there was still actual delay which brings to the question
of whether the delay was due to respondent’s unjustified act or omission.
It is apparent that there was inaction on the part of respondent to reinstate
them, but whether such omission was justified depends on the onset of the
exigency of corporate rehabilitation.
It is settled that upon appointment by the SEC of a rehabilitation receiver, all
actions for claims before any court, tribunal or board against the corporation
shall ipso jure be suspended.31 As stated early on, during the pendency of
petitioners’ complaint before the Labor Arbiter, the SEC placed respondent
under an Interim Rehabilitation Receiver. After the Labor Arbiter rendered his
decision, the SEC replaced the Interim Rehabilitation Receiver with a WHEREFORE, the petition is PARTIALLY DENIED. Insofar as the Court of
Permanent Rehabilitation Receiver. Appeals Decision of December 5, 2003 and Resolution of April 16, 2004
annulling the NLRC Resolutions affirming the validity of the Writ of Execution
Case law recognizes that unless there is a restraining order, the implementation and the Notice of Garnishment are concerned, the Court finds no reversible
of the order of reinstatement is ministerial and mandatory.32 This injunction or error.
suspension of claims by legislative fiat33 partakes of the nature of a restraining
order that constitutes a legal justification for respondent’s non-compliance SO ORDERED.
with the reinstatement order. Respondent’s failure to exercise the alternative
options of actual reinstatement and payroll reinstatement was thus justified.
Such being the case, respondent’s obligation to pay the salaries pending appeal,
as the normal effect of the non-exercise of the options, did not attach.

While reinstatement pending appeal aims to avert the continuing threat or

danger to the survival or even the life of the dismissed employee and his family,
it does not contemplate the period when the employer-corporation itself is
similarly in a judicially monitored state of being resuscitated in order to survive.

The parallelism between a judicial order of corporation rehabilitation as a

justification for the non-exercise of its options, on the one hand, and a claim of
actual and imminent substantial losses as ground for retrenchment, on the
other hand, stops at the red line on the financial statements. Beyond the
analogous condition of financial gloom, as discussed by Justice Leonardo
Quisumbing in his Separate Opinion, are more salient distinctions. Unlike the
ground of substantial losses contemplated in a retrenchment case, the state of
corporate rehabilitation was judicially pre-determined by a competent court
and not formulated for the first time in this case by respondent.

More importantly, there are legal effects arising from a judicial order placing a
corporation under rehabilitation. Respondent was, during the period material
to the case, effectively deprived of the alternative choices under Article 223 of
the Labor Code, not only by virtue of the statutory injunction but also in view of
the interim relinquishment of management control to give way to the full
exercise of the powers of the rehabilitation receiver. Had there been no need to
rehabilitate, respondent may have opted for actual physical reinstatement
pending appeal to optimize the utilization of resources. Then again, though the
management may think this wise, the rehabilitation receiver may decide
otherwise, not to mention the subsistence of the injunction on claims.

In sum, the obligation to pay the employee’s salaries upon the employer’s
failure to exercise the alternative options under Article 223 of the Labor Code is
not a hard and fast rule, considering the inherent constraints of corporate
rehabilitation.

40
SUPREME
Manila
SECOND DIVISION
G.R. No. 177026 January 30, 2009
LUNESA O. LANSANGAN AND ROCITA CENDAñA,
vs.
AMKOR TECHNOLOGY PHILIPPINES, INC., Respondent.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CARPIO MORALES, J.:
An anonymous e-mail was sent to the General Manager of Amkor Technology
Philippines (respondent) detailing allegations of malfeasance on the part of its
supervisory employees Lunesa Lansangan and Rosita Cendaña (petitioners) for
"stealing company time."1 Respondent thus investigated the matter, requiring
petitioners to submit their written explanation. In handwritten letters,
petitioners admitted their wrongdoing.2 Respondent thereupon terminated
petitioners for "extremely serious offenses" as defined in its Code of Discipline,3
prompting petitioners to file a complaint for illegal dismissal against it.4
Labor Arbiter Arthur L. Amansec, by Decision of October 20, 2004,5 dismissed
petitioners’ complaint, he having found them guilty of
"[s]wiping another employees’ [sic] I.D. card or requesting another employee to
swipe one’s I.D. card to gain personal advantage and/or in the interest of
cheating", an offense of dishonesty punishable as a serious form of misconduct
and fraud or breach of trust under Article 282 of the Labor Code:
xxxx
which allows the dismissal of an employee for a valid cause. (Emphasis and
underscoring supplied)
COURT The Arbiter, however, ordered the reinstatement of petitioners to their former
positions without backwages "as a measure of equitable and compassionate
relief" owing mainly to petitioners’ prior unblemished employment records,
show of remorse, harshness of the penalty and defective attendance monitoring
system of respondent.6
Respondent assailed the reinstatement aspect of the Arbiter’s order before the
National Labor Relations Commission (NLRC).
Petitioners,
In the meantime, petitioners, without appealing the Arbiter’s finding them
guilty of "dishonesty as a form of serious misconduct and fraud or breach of
trust," moved for the issuance of a "writ of reinstatement."7
After a series of oppositions, motions and orders,8 the Arbiter issued an alias
writ of execution following which respondent’s bank account at Equitable-PCI
Bank was garnished. Respondent thereupon moved for the quashal of the alias
writ of execution and lifting of the notice of garnishment, which the Arbiter
denied by Order of January 26, 2005, drawing respondent to appeal to the
NLRC.
After consolidating respondent’s appeal from the Labor Arbiter’s order of
reinstatement and subsequent appeal/order denying the quashal of the alias
writ of execution and lifting of the notice of garnishment, the NLRC, by
Resolution of June 30, 2005,9 granted respondent’s appeals by deleting the
reinstatement aspect of the Arbiter’s decision and setting aside the Arbiter’s
Alias Writ of Execution and Notice of Garnishment. Thus the NLRC disposed as
follows:
ACCORDINGLY, the appeal is hereby GRANTED. The Labor Arbiter’s Decision
dated October 20, 2004 is hereby MODIFIED by DELETING the portion that
ruled for appelle[e]s’ reinstatement. Consequently, the Writ of Execution dated
November 19, 2004, the subsequent Alias Writ of Execution dated January 26,
2005, and the Notice of Garnishment dated January 14, 2005 served upon
Equitable PCI Bank by Sheriff Agripina Sangel are hereby ordered to be SET
ASIDE.
SO ORDERED. (Underscoring supplied)
Petitioners’ motion for reconsideration of the NLRC Resolution having been
denied, they filed a petition for certiorari before the Court of Appeals which, by
Decision10 of September 19, 2006, while affirming the finding that petitioners
were guilty of misconduct and the like, ordered respondent to "pay petitioners
41
their corresponding backwages without qualification and deduction for the
period covering October 20, 2004 (date of the Arbiter’s decision) up to June 30,
2005 (date of the NLRC Decision)," citing Article 223 of the Labor Code and
Roquero v. Philippine Airlines.11
Both parties’ filed their respective motions for partial reconsideration which
were denied.12 Only petitioners have come to this Court via the present petition
for review,13 contending that:
I
WITH ALL DUE RESPECT, THE ORDER OF THE HONORABLE COURT OF
APPEALS LIMITING THE PAYMENT OF BACKWAGES [TO] THE PETITIONERS
FROM OCTOBER 20, 2004 (ARBITER DECISION) UP TO JUNE 30, 2005 (NLRC
DECISION) ONLY IS CONTRARY TO THE CASE OF ALEJANDRO ROQUERO VS.
PHILIPPINE AIRLINES, INC.[,] G.R. NO. 152329, APRIL [22,] 2003 [AND]
II
. . . THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN CONCLUDING THAT THE PETITIONERS COMMITTED SERIOUS
MISCONDUCT, FRAUD, DISHONESTY AND BREACH OF TRUST. BUT EVEN
ASSUMING THAT THE PETITIONERS COMMITTED THE SWIPING IN OF
IDENTIFICATION CARD, THE PENALTY OF DISMISSAL IS TOO SEVERE, HARSH
AND CONTRARY TO ARTICLE 282 OF THE LABOR CODE OF THE PHILIPPINES
AND EXISTING JURISPRUDENCE.14
Since respondent did not appeal from the appellate court’s decision, the said
court’s order for it to pay backwages to petitioners for the therein specified
period has become final.
Petitioners highlight the Court’s ruling in Roquero v. Philippine Airlines 15
where the therein employer was ordered to pay the wages to which the therein
employee was entitled from the time the reinstatement order was issued until
the finality of this Court’s decision16 in favor of the therein employee. Thus,
petitioners contend that the payment of backwages should not be computed
only up to the promulgation by the NLRC of its decision.
In its Comment,17 respondent asserts that, inter alia, petitioners’ reliance on
Roquero is misplaced in view of the glaring factual differences between said
case and the present case.
42
The petition fails.
The decision of the Arbiter finding that petitioners committed "dishonesty as a
form of serious misconduct and fraud, or breach of trust" had become final,
petitioners not having appealed the same before the NLRC as in fact they even
moved for the execution of the reinstatement aspect of the decision. It bears
recalling that it was only respondent which assailed the Arbiter’s decision to
the NLRC – to solely question the propriety of the order for reinstatement, and
it succeeded.1avvphil.zw+
Roquero, as well as Article 22318 of the Labor Code on which the appellate
court also relied, finds no application in the present case. Article 223 concerns
itself with an interim relief, granted to a dismissed or separated employee
while the case for illegal dismissal is pending appeal, as what happened in
Roquero. It does not apply where there is no finding of illegal dismissal, as in
the present case.
The Arbiter found petitioners’ dismissal to be valid. Such finding had, as stated
earlier, become final, petitioners not having appealed it. Following Article 279
which provides:
xxxx
In cases of regular employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his
full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement (Emphasis, underscoring
and italics supplied),
petitioners are not entitled to full backwages as their dismissal was not found
to be illegal. Agabon v. NLRC19 so states –– payment of backwages and other
benefits is justified only if the employee was unjustly dismissed.
WHEREFORE, the petition is DENIED.
No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SPECIAL SECOND DIVISION
G.R. No. 155109 March 14, 2012
C. ALCANTARA & SONS, INC., Petitioner,
vs.
COURT OF APPEALS, LABOR ARBITER ANTONIO M. VILLANUEVA, LABOR
ARBITER ARTURO L. GAMOLO, SHERIFF OF NLRC RAB-XI-DAVAO CITY,
NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL),
FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO, EDGAR
MONDAY, EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY,
MATROIL DELOS SANTOS, BONERME MATURAN, RAUL CANTIGA,
EDUARDO CAMPUSO, RUDY ANADON, GILBERTO GABRONINO, BONIFACIO
SALVADOR, CIRILO MINO, ROBERTO ABONADO, WARLITO MONTE, PEDRO
ESQUIERDO, ALFREDO TROPICO, DANILO MEJOS, HECTOR ESTUITA,
BARTOLOME CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS,
ALEJANDRO HARDER, EDUARDO LARENA, JAIME MONTEDERAMOS,
ERMELANDO BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA,
TEDDY SUELO, JOSE AMOYLIN, TRANQUILINO ORALLO, CARLOS BALDOS,
MANOLITO SABELLANO, CARMELITO TOBIAS, PRIMITIVO GARCIA,
JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO INGHUG, RICARDO
ALTO, EPIFANIO JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA,
ROBERTO ANDRADE, ALFREDO LESULA, JULIO ANINO, BENITO
MAGPUSAO, PEDRO AQUINO, EDDIE MANSANADES, ROMEO ARANETA,
ARGUILLAO MANTICA, CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO
ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO MELARGO,
JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO
MONTENEGRO, CARLITO BURILLO, LEO MORA, PABLO BUTIL, ARMANDO
GUCILA, JEREMIAH CAGARA, MARIO NAMOC, CARLITO CAL, GERWINO
NATIVIDAD, ROLANDO CAPUYAN, EDGARDO ORDIZ, LEONARDO CASURRA,
PATROCINIO ORTEGA, FILEMON CESAR, MARIO PATAN, ROMEO
COMPRADO, JESUS PATOC, RAMON CONSTANTINO, ALBERTO PIELAGO,
SAMUEL DELA LLANA, NICASIO PLAZA, ROSALDO DAGONDON, TITO
GUADES, BONIFACIO DINAGUDOS, PROCOPIO RAMOS, JOSE EBORAN,
ROSENDO SAJOL, FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR
ENDAYA, MARIO SALVALEON, ERNESTO ESTILO, BONIFACIO SIGUE,
VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO, ALEX TAUTO-AN,
SATURNINO YAGON, CLAUDIO TIROL, SULPECIO GAGNI, JOSE TOLERO,
43
FERVIE GALVEZ, ALFREDO TORALBA and EDUARDO GENELSA,
Respondents.
x-----------------------x
G.R. No. 155135
NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL),
FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO, EDGAR
MONDAY, EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY,
MATROIL DELOS SANTOS, BONERME MATURAN, RAUL CANTIGA,
EDUARDO CAMPUSO, RUDY ANADON, GILBERTO GABRONINO, BONIFACIO
SALVADOR, CIRILO MINO, ROBERTO ABONADO, WARLITO MONTE, PEDRO
ESQUIERDO, ALFREDO TROPICO, DANILO MEJOS, HECTOR ESTUITA,
BARTOLOME CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS,
ALEJANDRO HARDER, EDUARDO LARENA, JAIME MONTEDERAMOS,
ERMELANDO BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA,
TEDDY SUELO, JOSE AMOYLIN, TRANQUILINO ORALLO, CARLOS BALDOS,
MANOLITO SABELLANO, CARMELITO TOBIAS, PRIMITIVO GARCIA,
JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO INGHUG, RICARDO
ALTO, EPIFANIO JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA,
ROBERTO ANDRADE, ALFREDO LESULA, JULIO ANINO, BENITO
MAGPUSAO, PEDRO AQUINO, EDDIE MANSANADES, ROMEO ARANETA,
ARGUILLAO MANTICA, CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO
ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO MELARGO,
JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO
MONTENEGRO, CARLITO BURILLO, LEO MORA, PABLO BUTIL, ARMANDO
GUCILA, JEREMIAH CAGARA, MARIO NAMOC, CARLITO CAL, GERWINO
NATIVIDAD, ROLANDO CAPUYAN, JUANITO NISNISAN, AURELIO CARIN,
PRIMO OPLIMO, ANGELITO CASTANEDA, EDGARDO ORDIZ, LEONARDO
CASURRA, PATROCINIO ORTEGA, FILEMON CESAR, MARIO PATAN, ROMEO
COMPRADO, JESUS PATOC, RAMON CONSTANTINO, MANUEL PIAPE, ROY
CONSTANTINO, ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO
PLAZA, ROSALDO DAGONDON, TITO GUADES, BONIFACIO DINAGUDOS,
PROCOPIO RAMOS, JOSE EBORAN, ROSENDO SAJOL, FRANCISCO
EMPUERTO, PATRICIO SALOMON, NESTOR ENDAYA, MARIO SALVALEON,
ERNESTO ESTILO, BONIFACIO SIGUE, VICENTE FABROA, JAIME SUCUAHI,
CELSO HUISO, ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO TIROL,
SULPECIO GAGNI, JOSE TOLERO, FERVIE GALVEZ, ALFREDO TORALBA and
EDUARDO GENELSA, Petitioners,
vs.
C. ALCANTARA & SONS, INC., EDITHA I. ALCANTARA, ATTY. NELIA A.
CLAUDIO, CORNELIO E. CAGUIAT, JESUS S. DELA CRUZ, ROLANDO Z.
ANDRES and JOSE MA. MANUEL YRASUEGUI, Respondents.
x-----------------------x
G.R. No. 179220
NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), AND ITS
MEMBERS whose names are listed below, Petitioners,
vs.
C. ALCANTARA & SONS, INC., Respondent.
RESOLUTION
PERALTA, J.:
For resolution are the (1) Motion for Partial Reconsideration1 filed by C.
Alcantara & Sons, Inc. (CASI) and (2) Motion for Reconsideration2 filed by
Nagkahiusang Mamumuo sa Alsons-SPFL (the Union) and the Union officers3
and their striking members4 of the Court’s Decision5 dated September 29,
2010. In a Resolution6 dated December 13, 2010, the parties were required to
submit their respective Comments. After several motions for extension, the
parties submitted the required comments. Hence, this resolution.
For a proper perspective, we state briefly the facts of the case.
The negotiation between CASI and the Union on the economic provisions of the
Collective Bargaining Agreement (CBA) ended in a deadlock prompting the
Union to stage a strike,7 but the strike was later declared by the Labor Arbiter
(LA) to be illegal having been staged in violation of the CBA’s no strike-no
lockout provision.8 Consequently, the Union officers were deemed to have
forfeited their employment with the company and made them liable for actual
damages plus interest and attorney’s fees, while the Union members were
ordered to be reinstated without backwages there being no proof that they
actually committed illegal acts during the strike.9
Notwithstanding the provision of the Labor Code mandating that the
reinstatement aspect of the decision be immediately executory, the LA refused
to reinstate the dismissed Union members. On November 8, 1999, the NLRC
affirmed the LA decision insofar as it declared the strike illegal and ordered the
Union officers dismissed from employment and liable for damages but modified
the same by considering the Union members to have been validly dismissed
from employment for committing prohibited and illegal acts.10
44
On petition for certiorari, the Court of Appeals (CA) annulled the NLRC decision
and reinstated that of the LA. Aggrieved, CASI, the Union and the Union officers
and members elevated the matter to this Court. The cases were docketed as
G.R. Nos. 155109 and 155135.11
During the pendency of the cases, the affected Union members (who were
ordered reinstated) filed with the LA a motion for reinstatement pending
appeal and the computation of their backwages. Instead of reinstating the
Union members, the LA awarded separation pay and other benefits.12 On
appeal, the NLRC denied the Union members’ claim for separation pay, accrued
wages and other benefits.13 When elevated to the CA, the appellate court held
that reinstatement pending appeal applies only to illegal dismissal cases under
Article 223 of the Labor Code and not to cases under Article 263.14 Hence, the
petition by the Union and its officers and members in G.R. No. 179220.
G.R. Nos. 155109, 155135, and 179220 were consolidated. On September 29,
2010, the Court rendered a decision the dispositive portion of which reads:
WHEREFORE, the Court DENIES the petition of the Nagkahiusang Mamumuo sa
Alsons-SPFL and its officers and members in G.R. No. 155135 for lack of merit,
and REVERSES and SETS ASIDE the decision of the Court of Appeals in CA-G.R.
SP 59604 dated March 20, 2002. The Court, on the other hand, GRANTS the
petition of C. Alcantara & Sons, Inc. in G.R. 155109 and REINSTATES the
decision of the National Labor Relations Commission in NLRC CA M-004996-99
dated November 8, 1999.
Further, the Court PARTIALLY GRANTS the petition of the Nagkahiusang
Mamumuo sa Alsons-SPFL and their dismissed members in G.R. No. 179220
and ORDERS C. Alcantara & Sons, Inc. to pay the terminated Union members
backwages for four (4) months and nine (9) days and separation pays
equivalent to one-half month salary for every year of service to the company up
to the date of their termination, with interest of 12% per annum from the time
this decision becomes final and executory until such backwages and separation
pays are paid. The Court DENIES all other claims.
SO ORDERED.15
The Court agreed with the CA on the illegality of the strike as well as the
termination of the Union officers, but disagreed with the CA insofar as it
affirmed the reinstatement of the Union members. The Court, instead, sustained
the dismissal not only of the Union officers but also the Union members who,
during the illegal strike, committed prohibited acts by threatening, coercing,
and intimidating non-striking employees, officers, suppliers and customers;
obstructing the free ingress to and egress from the company premises; and
resisting and defying the implementation of the writ of preliminary injunction
issued against the strikers.16
The Court further held that the terminated Union members, who were ordered
reinstated by the LA, should have been immediately reinstated due to the
immediate executory nature of the reinstatement aspect of the LA decision. In
view, however, of CASI’s failure to reinstate the dismissed employees, the Court
ordered CASI to pay the terminated Union members their accrued backwages
from the date of the LA decision until the eventual reversal by the NLRC of the
order of reinstatement.17 In addition to the accrued backwages, the Court
awarded separation pay as a form of financial assistance to the Union members
equivalent to one-half month salary for every year of service to the company up
to the date of their termination.18
Not satisfied, CASI filed a Motion for Partial Reconsideration of the above
decision based on the following grounds:
I.
IT IS RESPECTFULLY SUBMITTED THAT A PRECEDENT SETTING RULING OF
THIS HONORABLE COURT IN ESCARIO V. NLRC [G.R. No. 160302, 27
SEPTEMBER 2010] – PARTICULARLY ON THE PROPER APPLICATION OF
ARTICLES 264 AND 279 OF THE LABOR CODE – SUPPORTS THE AFFIRMATION
AND NOT THE REVERSAL OF THE FINDINGS OF THE COURT OF APPEALS
["CA"], AND NEGATES THE ENTITLEMENT TO ACCRUED WAGES OF THE
UNION MEMBERS WHO COMMITTED ILLEGAL ACTS DURING THE ILLEGAL
STRIKE, NOTWITHSTANDING THAT THE LABOR ARBITER AWARDED THE
SAME.
II.
IT IS RESPECTFULY SUBMITTED THAT THIS HONORABLE COURT ERRED
WHEN IT RESOLVED TO GRANT SEPARATION PAY TO THE UNION MEMBERS
WHO COMMITTED ILLEGAL ACTS DURING THE ILLEGAL STRIKE
CONSIDERING THAT JURISPRUDENCE CITED TO JUSTIFY THE GRANT OF
SEPARATION PAY DO NOT APPLY TO THE PRESENT CASE AS IT APPLIES ONLY
TO DISMISSALS FOR A JUST CAUSE.19
The Union, its officers and members likewise filed their separate motion for
reconsideration assailing the Court’s conclusions that: (1) the strike is illegal;
45
(2) that the officers of the Union and its appointed shop stewards automatically
forfeited their employment status when they participated in the strike; (3) that
the Union members committed illegal acts during the strike and are deemed to
have lost their employment status; and (4) that CASI is entitled to actual
damages and attorney’s fees.20 They also fault the Court in not finding that: (1)
CASI and its officers are guilty of acts of unfair labor practice or violation of
Article 248 of the Labor Code; (2) the lockout declared by the company is
illegal; (3) CASI and its officers committed acts of discrimination; (4) CASI and
its officers violated Article 254 of the Labor Code; and (5) CASI and its officers
are liable for actual, moral, and exemplary damages to the Union, its officers
and members.21
Simply stated, CASI only questions the propriety of the award of backwages and
separation pay, while the Union, its officers and members seek the reversal of
the Court’s conclusions on the illegality of the strike, the validity of the
termination of the Union officers and members, and the award of actual
damages and attorney’s fees as well as the denial of their counterclaims against
CASI.
After a careful review of the records of the case, we find it necessary to
reconsider the Court’s September 29, 2010 decision, but only as to the award of
separation pay.
The LA, the NLRC, the CA and the Court are one in saying that the strike staged
by the Union, participated in by the Union officers and members, is illegal being
in violation of the no strike-no lockout provision of the CBA which enjoined
both the Union and the company from resorting to the use of economic
weapons available to them under the law and to instead take recourse to
voluntary arbitration in settling their disputes.22 We, therefore, find no reason
to depart from such conclusion.
Article 264 (a) of the Labor Code lays down the liabilities of the Union officers
and members participating in illegal strikes and/or committing illegal acts, to
wit:
ART. 264. PROHIBITED ACTIVITIES
(a) x x x
Any worker whose employment has been terminated as a consequence of an
unlawful lockout shall be entitled to reinstatement with full backwages. Any
Union officer who knowingly participates in an illegal strike and any worker or
Union officer who knowingly participates in the commission of illegal acts
during a strike may be declared to have lost his employment status: Provided,
That mere participation of a worker in a lawful strike shall not constitute
sufficient ground for termination of his employment, even if a replacement had
been hired by the employer during such lawful strike.
Thus, the above-quoted provision sanctions the dismissal of a Union officer
who knowingly participates in an illegal strike or who knowingly participates
in the commission of illegal acts during a lawful strike.23 In this case, the Union
officers were in clear breach of the above provision of law when they
knowingly participated in the illegal strike.24
As to the Union members, the same provision of law provides that a member is
liable when he knowingly participates in the commission of illegal acts during a
strike. We find no reason to reverse the conclusion of the Court that CASI
presented substantial evidence to show that the striking Union members
committed the following prohibited acts:
a. They threatened, coerced, and intimidated non-striking employees, officers,
suppliers and customers;
b. They obstructed the free ingress to and egress from the company premises;
and
c. They resisted and defied the implementation of the writ of preliminary
injunction issued against the strikers.25
The commission of the above prohibited acts by the striking Union members
warrants their dismissal from employment.
As clearly narrated earlier, the LA found the strike illegal and sustained the
dismissal of the Union officers, but ordered the reinstatement of the striking
Union members for lack of evidence showing that they committed illegal acts
during the illegal strike. This decision, however, was later reversed by the
NLRC. Pursuant to Article 22326 of the Labor Code and well-established
jurisprudence,27 the decision of the LA reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately
be executory, pending appeal.28 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 employee, merely reinstated in the
payroll.29 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.30 If the employer fails to exercise the option of re-admitting
the employee to work or to reinstate him in the payroll, the employer must pay
46
the employee’s salaries during the period between the LA’s order of
reinstatement pending appeal and the resolution of the higher court
overturning that of the LA.31 In this case, CASI is liable to pay the striking
Union members their accrued wages for four months and nine days, which is
the period from the notice of the LA’s order of reinstatement until the reversal
thereof by the NLRC.32
Citing Escario v. National Labor Relations Commission (Third Division),33 CASI
claims that the award of the four-month accrued salaries to the Union members
is not sanctioned by jurisprudence. In Escario, the Court categorically stated
that the strikers were not entitled to their wages during the period of the strike
(even if the strike might be legal), because they performed no work during the
strike. The Court further held that it was neither fair nor just that the dismissed
employees should litigate against their employer on the latter’s time.34 In this
case, however, the four-month accrued salaries awarded to the Union members
are not the backwages referred to in Escario. To be sure, the awards were not
given as their salaries during the period of the strike. Rather, they constitute
the employer’s liability to the employees for its failure to exercise the option of
actual reinstatement or payroll reinstatement following the LA’s decision to
reinstate the Union members as mandated by Article 223 of the Labor Code
adequately discussed earlier. In other words, such monetary award refers to
the Union members’ accrued salaries by reason of the reinstatement order of
the LA which is self-executory pursuant to Article 223.35 We, therefore, sustain
the award of the four-month accrued salaries.1âwphi1
Finally, as regards the separation pay as a form of financial assistance awarded
by the Court, we find it necessary to reconsider the same and delete the award
pursuant to prevailing jurisprudence.
Separation pay may be given as a form of financial assistance when a worker is
dismissed in cases such as the installation of labor-saving devices, redundancy,
retrenchment to prevent losses, closing or cessation of operation of the
establishment, or in case the employee was found to have been suffering from a
disease such that his continued employment is prohibited by law.36 It is a
statutory right defined as the amount that an employee receives at the time of
his severance from the service and is designed to provide the employee with
the wherewithal during the period that he is looking for another
employment.37 It is oriented towards the immediate future, the transitional
period the dismissed employee must undergo before locating a replacement
job.38 As a general rule, when just causes for terminating the services of an
employee exist, the employee is not entitled to separation pay because
lawbreakers should not benefit from their illegal acts.39 The rule, however, is
subject to exceptions.40 The Court, in Philippine Long Distance Telephone Co.
v. NLRC,41 laid down the guidelines when separation pay in the form of
financial assistance may be allowed, to wit:
We hold that henceforth separation pay shall be allowed as a measure of social
justice only in those instances where the employee is validly dismissed for
causes other than serious misconduct or those reflecting on his moral
character. Where the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like theft or illicit sexual
relations with a fellow worker, the employer may not be required to give the
dismissed employee separation pay, or financial assistance, or whatever other
name it is called, on the ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of
rewarding rather than punishing the erring employee for his offense. And we
do not agree that the punishment is his dismissal only and that the separation
pay has nothing to do with the wrong he has committed x x x.42
We had the occasion to resolve the same issue in Toyota Motor Phils. Corp.
Workers Association (TMPCWA) v. National Labor Relations Commission.43
Following the declaration that the strike staged by the Union members is illegal,
the Union officers and members were considered validly dismissed from
employment for committing illegal acts during the illegal strike. The Court
affirmed the CA’s conclusion that the commission of illegal acts during the
illegal strike constituted serious misconduct.44 Hence, the award of separation
pay to the Union officials and members was not sustained.45
Indeed, we applied social justice and equity considerations in several cases to
justify the award of financial assistance. In Piñero v. National Labor Relations
Commission,46 the Court declared the strike to be illegal for failure to comply
with the procedural requirements. We, likewise, sustained the dismissal of the
Union president for participating in said illegal strike. Considering, however,
that his infraction is not so reprehensible and unscrupulous as to warrant
complete disregard of his long years of service, and considering further that he
has no previous derogatory records, we granted financial assistance to support
him in the twilight of his life after long years of service.47 The same
compassion was also applied in Aparente, Sr. v. NLRC48 where the employee
was declared to have been validly terminated from service after having been
found guilty of driving without a valid driver’s license, which is a clear violation
of the company’s rules and regulations.49 We, likewise, awarded financial
assistance in Salavarria v. Letran College50 to the legally dismissed teacher for
violation of school policy because such infraction neither amounted to serious
misconduct nor reflected that of a morally depraved person.
47
However, in a number of cases cited in Toyota Motor Phils. Corp. Workers
Association (TMPCWA) v. National Labor Relations Commission,51 we
refrained from awarding separation pay or financial assistance to Union
officers and members who were separated from service due to their
participation in or commission of illegal acts during the strike.52 In Pilipino
Telephone Corporation v. Pilipino Telephone Employees Association
(PILTEA),53 the strike was found to be illegal because of procedural infirmities
and for defiance of the Secretary of Labor’s assumption order. Hence, we
upheld the Union officers’ dismissal without granting financial assistance. In
Sukhotai Cuisine and Restaurant v. Court of Appeals,54 and Manila Diamond
Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond Hotel
Employees Union,55 the Union officers and members who participated in and
committed illegal acts during the illegal strike were deemed to have lost their
employment status and were not awarded financial assistance.
In Telefunken Semiconductors Employees Union v. Court of Appeals,56 the
Court held that the strikers’ open and willful defiance of the assumption order
of the Secretary of Labor constitute serious misconduct and reflective of their
moral character, hence, granting of financial assistance to them cannot be
justified. In Chua v. National Labor Relations Commission,57 we disallowed the
award of financial assistance to the dismissed employees for their participation
in the unlawful and violent strike which resulted in multiple deaths and
extensive property damage because it constitutes serious misconduct on their
part.
Here, not only did the Court declare the strike illegal, rather, it also found the
Union officers to have knowingly participated in the illegal strike. Worse, the
Union members committed prohibited acts during the strike. Thus, as we
concluded in Toyota, Telefunken, Chua and the other cases cited above, we
delete the award of separation pay as a form of financial assistance.
WHEREFORE, premises considered, the motion for reconsideration of the
Union, its officers and members are DENIED for lack of merit, while the motion
for partial reconsideration filed by C. Alcantara & Sons, Inc. is PARTLY
GRANTED. The Decision of the Court dated September 29, 2010 is hereby
PARTLY RECONSIDERED by deleting the award of separation pay.
SO ORDERED.
Republic of the Philippines at Iriga City. For his services, petitioner received a monthly salary of
SUPREME COURT ₱29,350.00, exclusive of commissions and allowances. Prior to his dismissal
Manila from CCBPI, petitioner was an employee of good standing with an unblemished
record.
SECOND DIVISION
As Account Specialist, petitioner was tasked mainly with booking customers’
G.R. No. 180972 January 20, 2014 orders and collecting on their accounts;5 petitioner merely books customers’
orders, but does not deliver the product to them; the independent dealer makes
the delivery.6 In effect, petitioner performed the functions of a CCBPI salesman,
JONAS MICHAEL R. GARZA, Petitioner, except that he operates in concentrated or dense areas.7
vs.
COCA-COLA BOTILERS PHILIPPINES, INC. and CHRISTINE BANAL/CALIXTO
MANAIG, Respondents. As a matter of company policy, CCBPI Account Specialists/Salesmen are obliged
to remit all cash sales and credit cash collections to the company office on the
same day that payments are received in cash or check from customers, dealers
DECISION and outlets.8 Thus, before allowing the Account Specialists/Salesmen to work
the following day, the CCBPI Cashier shall first issue a clearance which is given
DEL CASTILLO, J.: to the company security guard stating whether they incurred shortages or have
not remitted collections. If so, the Account Specialist/Salesman concerned is
Unsubstantiated accusations or baseless conclusions of the employer are not allowed to leave the company premises unless his shortages are settled.9
insufficient legal justifications to dismiss an employee. "The unflinching rule in Moreover, shortages are recovered against the monthly salary of the concerned
illegal dismissal cases is that the employer bears the burden of proof."1 employee.10

This Petition for Review on Certiorari2 seeks a review and setting aside of the Petitioner received an October 30, 2003 memorandum11 from his immediate
September 26, 2007 Decision3 and the November 16, 2007 Resolution4 of the supervisor, George C. Macatangay (Macatangay), directing him to explain
Court of Appeals (CA) in CA-G.R. SP Nos. 97915 and 97916. alleged past unliquidated collections and cash shortages, thus:

Factual Antecedents You are directed to explain within twenty four (24) hours upon receiving this x
x x for your shortages for past unliquidated reports and cash shortages.
Respondent Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a manufacturer of
soft drink products, employing salesman and account specialists to sell these For your strict compliance.
products to customers and outlets.
(signed)
Petitioner Jonas Michael R. Garza (petitioner) became a regular employee of GEORGE C. MACATANGAY
CCBPI on December 16, 1997, designated as its Salesman in Iriga City. In 2001, DSS-District 4512
he was promoted to the position of Dealer Development Coordinator and
assigned at Tabaco City. During his stint therein, he was likewise designated as On April 23, 2004, petitioner received another memorandum13 of even date
Acting District Sales Supervisor. from Macatangay directing him –

In 2003, due to changes in CCBPI’s structure and operating systems, the x x x to explain in writing within twenty four hours from receipt hereof why
position of Dealer Development Coordinator was abolished, and petitioner was you should not be charged [with] violation of Rule 005-85 SEC. 10 of CCBPI
designated as Account Specialist and assigned to the CCBPI Naga City Plant and EMPLOYEES’ CODE OF DISCIPLINARY RULES AND REGULATIONS specifically…

48
misappropriation or embezzlement of Company funds, withholding of Company
fund[s], unauthorized retrieval of empties by converting the same to cash for
personal use, unremitted or short remittance of collection, non-issuance or mis-
issuance of invoices.14
Petitioner sought verbal clarification from Macatangay, claiming that the
memorandum did not specify the acts and transactions covered by the charge,
and said that he could not submit a written explanation unless the charges
against him are specified.
Instead of furnishing details, Macatangay issued to petitioner another
memorandum15 dated April 26, 2004, which was for all intents and purposes
identical to the April 23, 2004 memorandum. This time, petitioner confronted
Macatangay and reiterated his request for a detailed account of his alleged
violations, but the latter told him not to worry about the memorandum because
it was just a scheme adopted by local CCBPI management to cover up problems
in the Naga City Plant.16
On May 6, 2004, Macatangay issued another memorandum17 to petitioner,
informing him that he had been placed under preventive suspension for 30
days effective May 12, 2004, and directing him to attend a formal investigation
to be conducted on May 11, 2004 at the Naga City Plant. Macatangay personally
handed the said memorandum to petitioner at the Mother Seton Hospital
where the latter’s wife had just given birth. Petitioner sought a rescheduling of
the investigation, as he had to attend to his wife and the hospital obligations,
and to have time to prepare for the investigation.18 Significantly, the
memorandum included the following paragraph:
Postponement will not be allowed unless prior notice thereof is made at least
two (2) days before the scheduled investigation. Total postponement shall not
exceed two (2) times [sic].19
Instead of rescheduling the investigation as requested, CCBPI through its
Territory Sales Manager, Joselito Seradilla (Seradilla) sent a Notice of
Termination20 dated June 14, 2004, thus:
Reference is [made to] the administrative investigation conducted on you by
Management relative to your alleged violation of Section 10, Rule 005-85 of our
Company’s Employee’s Code of Disciplinary Rules and Regulation[s].
49
After carefully evaluating the records of the investigation and other pertinent
documents, indeed you have misappropriated, embezzled or fail [sic] to remit
company funds amounting to Php105,653.00.
In view of this, it is with much regret to [sic] inform you that your services are
hereby terminated effective upon your receipt of this memo, in accordance with
our Employee’s Code of Disciplinary Rules and Regulations and pertinent
provisions of Article 282 of the Labor Code.
At the same time, formal demand is being made to [pay]/restitute to the
Company the amount of One Hundred Five Thousand Six Hundred and Fifty
Three Pesos (Php105,653.00) within five (5) days from the receipt hereof.
Failure to do so shall constrain us to file necessary charges against you to
protect the interest of the Company.
(signed)
Joselito G. Seradilla
TSM T4 SLA21
After petitioner received the above termination notice on June 15, 2004, he
sought permission from the CCBPI Finance Department to review CCBPI
financial records in order to be apprised of the basis for the finding that he
misappropriated company funds, but his request was denied.22 He was also
denied access to the plant.23
At around 6:30 in the morning of June 15,24 2004, Macatangay visited
petitioner at his residence and told him that he was being summoned to the
CCBPI office by Area Sales Manager Dodie Peniera (ASM Peniera). At the CCBPI
Human Resource Department office, where Peniera, Seradilla, Macatangay, and
Human Resource Manager, Christine Banal (Banal), were present, Peniera
ordered Macatangay to assist petitioner in reconciling the latter’s accounts. At
the same time, Banal directed petitioner to receive two Notices of Investigation
apparently issued on different dates, and affix his signature on the "received"
portion thereof, which he did.25
However, the agreed reconciliation of petitioner’s accounts did not materialize,
as Macatangay became uncooperative and CCBPI denied him access to its
records.26
On August 19, 2004, petitioner filed a Complaint for illegal dismissal against
respondents CCBPI, Banal and CCBPI Naga City Plant Logistics Head Calixto
Manaig with the Naga City Sub-Regional Arbitration Branch No. V of the
National Labor Relations Commission (NLRC), which was docketed as Case No. investigation, CCBPI was compelled to terminate his services, after which the
SUB-RAB V 05-08-0022-A-04. Petitioner prayed for reinstatement, backwages, proper notice was given the Department of Labor and Employment (DOLE).
₱100,000.00 moral damages, ₱100,000.00 exemplary damages, and 10% Finally, they contended that since petitioner was dismissed for just cause, he
attorney’s fees.27 was not entitled to reinstatement, backwages, damages, and attorney’s fees.

In their Position Paper28 and Rejoinder to Complainant’s Supplemental CCBPI relied mainly on the strength of an audit conducted by its Territory
Position Paper,29 respondents for the first time specified in detail the alleged Finance Head, Ronaldo D. Surara (Surara), which concluded that petitioner
violations of petitioner. They claimed that petitioner was guilty of failed to remit cash and credit collections covering the above accounts.31
misappropriation of cash/check collections, kiting of checks, and delayed
remittances covering the following customer accounts: In his Position Paper,32 Supplemental Position Paper,33 and Reply to
Respondents’ Rejoinder to Complainant’s Position Paper,34 petitioner claimed
1avvphi1 essentially that (1) his dismissal was without just cause, and (2) he was denied
due process during the proceedings leading to his dismissal. Relative to his
1. Alice Asanza - P 8,160.00
claim of dismissal without just cause, petitioner contended that:
2. Kathryn Serrano/New Ongto Expressmart
10,645.00
(Supermart) - 1. The charges against him are false; he was not guilty of embezzlement. All his
transactions as Account Specialist are duly accounted for, all cash sales were
3. Ceguera Bakeshop - 2,558.00 remitted to CCBPI and all check payments were remitted and credited to
CCBPI’s account. Nor did he delay the remittance of these cash and check
4. Marlene Yu - 21,826.00 payments, nor used them in kiting operations for his personal benefit;
5. Ofelia Ong - 5,100.00
2. With regard to cash collections covering the Henry Botor and Noe Sabularse
6. Beatriz Orolfo - 312.00 accounts, CCBPI policies and procedures make it impossible for
Salesmen/Account Specialists to commit embezzlement. Each working day,
7. Henry Botor - 8,920.00 they are required to account for their sales/collections and obtain clearance
from the company cashier before they are allowed to leave company premises
8. Noe Sabularse - 16,090.00 at the end of their shift and report for work the next day; in case of a shortage,
the concerned employee is not allowed to leave the company premises until he
9. MCM Fastfood - 1,260.00 settles the shortage. In addition, shortages are deducted against the employee’s
salaries. The fact that he continued to report for work up to June 2004 without
10. Leon Trinidad - 15,186.00
any adverse action from CCBPI proved that the irregularities attributed to him
P – which CCBPI claims were committed against his April and May 2003 accounts
TOTAL – were manufactured and untrue;
90,057.00

Respondents alleged that misappropriation/embezzlement is a violation of
CCBPI’s November 18, 2002 Inter-Office Memorandum30 which defined
misappropriation, non-remittance or delayed remittance of cash/check
collections and specified outright dismissal as punishment for the first offense.
They claimed that petitioner’s total unremitted collections amounted to
₱105,653.00 and for this reason, his dismissal was necessary and proper. They
added that due to petitioner’s failure to attend the scheduled May 11, 2004
3. With respect to the Alice Asanza (Asanza) account, CCBPI’s claim that he
failed to remit the customer’s payment is belied by the customer herself, who
admitted in her sworn statement35 that during a meeting with CCBPI auditors,
she made a mistake in affirming that a delivery of CCBPI products worth
₱8,160.00 was made on January 30, 2004 and that the same was paid for in
cash. She admitted that after consulting her records, delivery of said ₱8,160.00
worth of CCBPI products was in fact made on October 15, 2003, and that up to
now the same remained unpaid. She admitted that she was confused by the

50
CCBPI records which were shown to her, which indicated "Date of Invoice 01-
30-04"; thus she mistakenly assumed that a delivery of ₱8,160.00 worth of
CCBPI products was indeed made on such date, and that the same was paid for
by her, when in fact no such transaction took place;
4. Contrary to CCBPI’s claim, all the concerned CCBPI customers, through their
submitted affidavits and certifications,36 belied claims that petitioner
embezzled their cash or check payments;
5. He could not have committed "kiting" of CCBPI’s checks, as CCBPI claims, for
the simple reason that these checks were made payable to CCBPI specifically,
and were not issued in his name. Thus, even for CCBPI products paid for in
advance through checks ("payment upon order" or "PUO" accounts), there is no
opportunity for embezzlement because the checks are made out to CCBPI;37
6. On the claim of delayed remittances of check payments pertaining to the
Leon Trinidad and MCM Fastfood accounts, petitioner claims that although it
appears that the checks were issued or dated in the name of CCBPI days earlier,
or upon the booking of orders by the petitioner, delivery of its products by the
dealer was made days later. Naturally, the checks would only be released by the
customers to the petitioner upon/after delivery of products by the dealer;
which means that although it would appear that the checks were issued/dated
by customers earlier – upon the booking of the customers’ orders – they were
delivered/handed over to petitioner only upon/after completion of delivery,
which come days after the checks were issued/dated. CCBPI operates through
private independent dealers over whom/which petitioner has no control,
which means that after petitioner books an order, prompt delivery by the
dealer is not guaranteed, and actual delivery could be made days later;38
7. With regard to transactions with Kathryn Serrano (Serrano) of New Ongto
Supermart, what CCBPI claims was a different transaction covering an alleged
unremitted amount of ₱10,645.00 was already paid for by Serrano in check
issued to CCBPI, and the amount has been debited from her account.39 CCBPI
made a mistake in its records, which showed that Serrano paid by check for her
order of CCBPI products worth ₱10,645.00, but which account was recorded by
it as a different sale transaction of ₱10,615.00. These two transactions are but
one and the same; in fact, CCBPI itself claims in its Rejoinder to Complainant’s
Position Paper that Serrano’s check for ₱10,645.00 was used to pay the
₱10,615.00 transaction, which only proves that the ₱10,615.00 transaction was
an erroneous entry;
51
8. With respect to the Marlene Yu, Beatriz Orolfo, Ofelia Ong, and Ceguera
Bakeshop accounts, their own sworn statements and certifications will show
that all their check payments were issued in the name of CCBPI, not the
petitioner. And all the amounts covered by these checks have been duly debited
from their accounts.40
In conclusion, petitioner argued that the evidence showed that he did not
commit the alleged embezzlement; that CCBPI failed to prove just cause for his
dismissal; and that the charges against him were contrived and the evidence
self-serving.
As for his contention that he was denied due process during the proceedings
leading to his dismissal, petitioner claimed that he was not provided ample
opportunity to be heard. The April 23, 2004 written charge against him did not
specify the particular transactions and acts which formed the basis for the
accusations against him, for which reason he was unable to prepare the
required written explanation. He verbally informed Macatangay of this
predicament, but instead of acceding to his lawful request, the latter issued the
April 26, 2004 memorandum which was identical to that issued on April 23.
Petitioner argued that he could not be considered to have ignored the written
charge against him. Nor may it be said that he waived his right to an
investigation, as the evidence showed that he sought a rescheduling of the May
11, 2004 hearing for valid reasons – his wife had just given birth; he had to
attend to her and their newborn child, as well as take care of their financial
obligations to the hospital. CCBPI’s failure and refusal to grant a postponement
of the investigation was thus unreasonable and violative of his rights. Petitioner
added that he waited in vain for CCBPI to furnish him the proper detailed
charges and accusations against him; instead, CCBPI issued the June 14, 2004
Notice of Termination. And immediately after receiving the said notice, he was
called by ASM Peniera to his office where he was ostensibly told that he could
have access to company records in order to reconcile his accounts, but which
never materialized as thereafter he was in fact prohibited from entering the
company premises and denied access to the records.
Ruling of the Labor Arbiter
On March 28, 2005, the Labor Arbiter issued a Decision,41 the decretal portion
of which states:
WHEREFORE, finding merit on [sic] the causes of action set forth by the
complainant, judgment is hereby rendered declaring his termination or
dismissal from employment by the respondents as ILLEGAL and thereby
ORDERING x x x the following:
A. To reinstate the complainant within ten (10) days upon receipt of this
Decision to his former position without loss of seniority rights and other
privileges, and to submit compliance thereto within the same period.
B. To pay backwages, inclusive of allowances and other benefits or his [sic]
monetary equivalent, computed from the date of his respective dismissal up to
the time of his actual reinstatement, whether physically or on payroll, which as
of the date of this decision amounted to ₱282,625.00 computed from June 14,
2004 to this date of decision, at the rate of ₱29,750.00 per month.
C. To pay Attorney’s Fees corresponding to 10% of the total amount of
₱282,625.00 due to the complainant which is equivalent to the sum of
₱28,262.50.
Other than the above, all other claims are hereby ordered DISMISSED for lack of
merit.
SO ORDERED.42
The Labor Arbiter held that CCBPI failed to adduce in evidence the particular
provision in the CCBPI Employee’s Code of Disciplinary Rules and Regulations
which forms the basis of its accusations against petitioner. He added that the
accusation that petitioner embezzled company funds totaling ₱105,653.00 was
couched in general terms; the particulars thereof were not stated with
sufficient clarity. Moreover, the alleged violations were not clearly made known
to petitioner, such that he could not properly refute them. And instead of
allowing a postponement of the investigation as requested by petitioner, he
was summarily dismissed.
The Labor Arbiter further held that CCBPI violated the notice and hearing
requirements, in serving upon petitioner a first notice which failed to correctly
and fully inform him of the charges against him; for unreasonably denying him
an opportunity to be heard during the investigation; and for issuing a second
notice of termination that did not contain clear and sufficient reasons for his
dismissal.
The Labor Arbiter however denied petitioner’s prayer for moral and exemplary
damages, stating that CCBPI and its co-respondents do not appear to be guilty
52
of bad faith, malice or fraud, nor did they act in a manner contrary to morals,
good customs or public policy. However, petitioner was awarded attorney’s
fees, as he was compelled to litigate and thus secure the services of counsel to
protect his interest.
Ruling of the National Labor Relations Commission
Respondents appealed to the NLRC.43 Meanwhile, in May 2005, while the NLRC
appeal was pending, petitioner was reinstated pursuant to Art. 223 of the Labor
Code.44 He was designated as Route Salesman, and was assigned tasks relative
to booking and delivery of CCBPI products, and collection of accounts. In fact,
he was awarded a Certificate of Achievement for exemplary sales
performance.45
On July 31, 2006, the NLRC issued its Decision46 which decreed as follows:
WHEREFORE, as modified, respondents-appellants are ordered to pay
complainant-appellee Jonas Michael R. Garza his full backwages, inclusive of
allowances and other benefits or their monetary equivalent, to be computed
from the time of his illegal dismissal up to the promulgation of this Decision in
the amount of Php760,583.53, separation pay of one (1) month for his every
year of service computed from the time of his employment up to the
promulgation of this Decision in the amount of Php267,750.00 and, ten percent
(10%) attorney’s fees of the total monetary award.
SO ORDERED.47
In affirming the Labor Arbiter’s finding of illegal dismissal, the NLRC held that
CCBPI failed to adduce sufficient evidence of petitioner’s alleged
embezzlement; quite the contrary, the latter’s evidence showed that no
embezzlement took place, as all check payments he received were credited to
CCBPI’s account. With regard to cash payments, the NLRC held that CCBPI’s
documentary evidence consisting of delivery and payment receipts, other than
showing the fact of delivery of products to customers and payment made by
them, do not prove embezzlement on the part of petitioner.
The NLRC likewise held that in dismissing petitioner, CCBPI failed to comply
with the twin requirements of notice and hearing. The first two memorandum-
notices of April 23 and April 26, 2004 requiring an explanation from petitioner
did not indicate the particular transactions covered by the charges against him,
despite clarification sought by him. The May 6, 2004 memorandum of
suspension and investigation, on the other hand, merely reiterated the charges
against petitioner, and did not state the basis for the investigation.
Finally, the NLRC reversed the Labor Arbiter’s order of reinstatement, finding
that relations between the petitioner and CCBPI have been strained.
Petitioner and respondents filed their respective motions for
reconsideration,48 which were denied in an October 27, 2006 Resolution.49
Both thus went up to the CA on certiorari, with petitioner raising only the issue
of reinstatement.
In the meantime, petitioner received a January 16, 2007 Memorandum
informing him that effective January 17, 2007, petitioner may no longer report
for work on account of the NLRC’s October 27, 2006 Resolution.
Ruling of the Court of Appeals
The CA consolidated the two petitions. On September 26, 2007, it issued the
assailed Decision, the dispositive portion of which reads, as follows:
WHEREFORE, premises considered, the assailed Decision dated July 31, 2006
and the Resolution dated October 27, 2006 of the NLRC, Second Division in
NLRC CA No. 044656-05 NLRC-SUB-RAB V Case No. 05-08-00122-04 are
REVERSED AND SET ASIDE. Petitioner CCBPI is hereby ORDERED to pay Jonas
Michael R. Garza the amount of ₱30,000.00 as nominal damages for non-
compliance with statutory due process.
SO ORDERED.50
The CA ruled that petitioner’s dismissal was proper. It paid particular attention
to the Asanza account, saying that CCBPI’s evidence showed that petitioner was
guilty of non-remittance of Asanza’s ₱8,160.00 cash payment which appears to
have been made on January 30, 2004 on an October 15, 2003 delivery. The
payment is evidenced by Official Receipt No. 30320351 issued by petitioner to
Asanza on January 30, 2004, and a January 31, 2004 Route Header Form52
where petitioner specifically indicated that Asanza no longer had payables to
CCBPI. The CA held that from this, CCBPI was able to prove that petitioner was
guilty of non-remittance of the ₱8,160.00 collected from Asanza.
With regard to the manner in which petitioner was dismissed, the CA conceded
that the procedure observed by CCBPI was defective, but since the dismissal
53
was for just cause, the lack of due process did not nullify the dismissal, but
merely entitled petitioner to an award of nominal damages.
Petitioner filed a Motion for Reconsideration, but in the second assailed
November 16, 2007 Resolution, the CA denied the same.
Issues
In this Petition,53 the following issues are raised:
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE
DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION DESPITE
CLEAR AND CONVINCING EVIDENCE THAT PETITIONER WAS ILLEGALLY
DISMISSED;
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT MODIFYING
THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION WITH
[REGARD] TO THE ORDER OF THE HONORABLE COMMISSION FOR PAYMENT
OF SEPARATION PAY IN LIEU OF REINSTATEMENT;
THE HONORABLE COURT OF APPEALS ERRED WHEN IT FAILED TO AWARD
DAMAGES AND ATTORNEY’S FEES TO THE PETITIONER.54
Petitioner’s Arguments
Petitioner prays for the reinstatement of the Labor Arbiter’s Decision, with an
additional prayer for the award of moral and exemplary damages. He argues
that he is innocent of the charges against him, pointing to the fact that all cash
and check payments were remitted to CCBPI or credited to the latter’s account.
He insists that CCBPI’s evidence consisting of the affidavit of its Territory
Finance Head, Surara, is self-serving and without basis. Petitioner directs the
Court’s attention to the fact that company policies make it impossible for him to
embezzle cash and check payments made to him by CCBPI customers, and his
evidence consisting of customers’ affidavits and certifications prove that all
payments are made in the name of and for the account of CCBPI.
With regard to the Asanza account, petitioner claims that the CA erred in
finding him guilty of failure to remit the ₱8,160.00 cash payment made by
Asanza, contending that Asanza herself admitted under oath that no payment
has in fact been made; that his issuance of Official Receipt No. 303203 was
conditioned on Asanza issuing a postdated check later on, which she failed to
do; that Asanza’s account, as indicated in the receipts and invoices, is precisely
an RCS account, or "Regular Charge Sale", which means that deliveries to her
are on a credit – not cash – basis; that the January 31, 2004 Route Header Form
which indicated that Asanza no longer had payables to CCBPI refers to
deliveries made specifically on January 30, 2004, and did not include or refer to
the October 15, 2003 transaction, which to date remains unpaid.
Finally, petitioner contends that he should be reinstated to his former position,
and awarded moral and exemplary damages, as well as attorney’s fees.
Respondents’ Arguments
Respondents, apart from echoing the pronouncements of the CA, flatly submit
that the Petition involves purely questions of fact revolving around CCBPI
customers, who confirmed in their affidavits55 that their cash payments were
not remitted by petitioner to CCBPI.
Our Ruling
The Court grants the Petition.
There is no issue on the manner by which petitioner was dismissed. Since
respondents did not appeal the unanimous findings of the Labor Arbiter, NLRC
and the CA in this regard, their pronouncements on the issue are deemed final
and executory.
The only issue that needs to be resolved, therefore, is whether there is just
cause for petitioner’s dismissal. The sole basis for the CA’s ruling that petitioner
was validly dismissed is that he failed to remit a cash collection of ₱8,160.00
from one of its customers, Asanza. What seems to have escaped the appellate
court’s notice is that in order to be able to come to such a conclusion, an
important issue concerning CCBPI policies and procedures must first be
tackled.
One of CCBPI’s policies requires that, on a daily basis, CCBPI Salesmen/ Account
Specialists must account for their sales/collections and obtain clearance from
the company Cashier before they are allowed to leave company premises at the
end of their shift and report for work the next day. If there is a shortage/failure
to account, the concerned Salesmen/Account Specialist is not allowed to leave
the company premises until he settles the same. In addition, shortages are
deducted from the employee’s salaries. Petitioner made repeated reiterations
54
of this company policy all throughout the proceedings, and not once did
respondents deny or dispute its existence and implementation. In fact,
respondents confirmed existence of this policy when they stated in their
Position Paper,56 that "[a]s a matter of policy, salesmen in respondent’s
company are obliged to remit all cash sales and credit cash collections to the
company office on the same day that said payments are made by various
customers, dealers and outlets."57
It is altogether reasonable to suppose that this policy actually exists, because
undeniably, such policy insured a fool-proof system of accountability within
CCBPI, where shortages are immediately detected, presumably through the
reconciliation of daily orders and deliveries to customers with the daily
collections of CCBPI’s salesmen, and simultaneously accounted for. With such a
policy, no transaction is left unnoticed, and erring salesmen are instantaneously
made to account for their shortages before they can even leave the premises
and come back to work the following day.
Within the context of said policy, it can be said that since petitioner continued
to work for CCBPI until June 2004, this should necessarily mean that he was
clear of daily cash and check accountabilities, including those transactions
covered by the charges against him. If not, the company cashier would not have
issued the required clearance and petitioner would have been required to settle
these shortages as soon as they were incurred. Indeed, he would not have been
allowed to leave company premises until they were settled in accordance with
company policy. And he would not have been allowed to report for work the
following day.
"Where facts are in evidence affording legitimate inferences going to establish
the ultimate fact that the evidence is designed to prove, and the party to be
affected by the proof, with an opportunity to do so, fails to deny or explain
them, they may well be taken as admitted with all the effect of the inferences
afforded."58 If CCBPI expects to proceed with its case against petitioner, it
should have negated this policy, for its existence and application are
inextricably tied to CCBPI’s accusations against petitioner. In the first place, as
petitioner’s employer, upon it lay the burden of proving by convincing evidence
that he was dismissed for cause.59 If petitioner continued to work until June
2004, this meant that he committed no infraction, going by this company policy;
it could also mean that any infraction or shortage/non-remittance incurred by
petitioner has been duly settled. Respondents’ decision to ignore this issue
generates the belief that petitioner is telling the truth, and that the alleged
infractions are fabricated, or have been forgiven. Coupled with Macatangay’s
statement – which remains equally unrefuted – that the charges against
petitioner are a scheme by local CCBPI management to cover up problems in
the Naga City Plant, the conclusion is indeed telling that petitioner is being
wrongfully made to account.
The irregularity attributed to petitioner with regard to the Asanza account
should fail as well. To be sure, Asanza herself confirmed that she did not make
any payment in cash or check of ₱8,160.00 covering the October 15, 2003
delivery for which petitioner is being held to account. This being the case,
petitioner could not be charged with embezzlement/failure to remit for the
simple reason that as regards such October 15, 2003 delivery, there was
nothing to embezzle or remit because no payment thereon has as yet been
made by the customer Asanza. It may appear from Official Receipt No. 303203
issued to Asanza that the October 15 delivery of products to her has been paid;
but as admitted by her, she has not paid for the said delivered products. The
reason for petitioner’s issuance of said official receipt to Asanza is the latter’s
concurrent promise that she would immediately issue the check covering the
said amount, which she nevertheless failed to do.
Although petitioner may be faulted for this act – issuing an official receipt
without receiving the corresponding payment – he could not be accused of
embezzlement or failure to remit as defined and punished under CCBPI’s
November 18, 2002 Inter-Office Memorandum, because he received no cash or
check from Asanza. Without receiving anything from her, there was nothing for
petitioner to embezzle or remit, and thus CCBPI had no basis to charge him for
violation of the November 18, 2002 Inter-Office Memorandum which punished
embezzlement and failure/delay in remitting collections.
The Court likewise finds convincing petitioner’s arguments that it was
impossible for him to embezzle/not remit the other customers’ cash and check
payments, not only because of the existence of the abovementioned policy, but
likewise due to the sworn avowals of these customers that all their check
payments have been issued in CCBPI’s name and have been duly debited from
their accounts. Certainly, petitioner could not have encashed check payments
because they were issued in the name of CCBPI; for the same reason, he could
not have engaged in kiting operations. Quite certainly, he would have easily
been found out.
Regarding the claim that petitioner delayed the remittance of check payments
covering PUO accounts, the Court finds petitioner’s explanation to be
satisfactory. Suffice it to state that in selling its products, CCBPI, like other
manufacturers, operates through independent dealer-businessmen, whose
delivery schedules are beyond CCBPI’s control. Thus, if a CCBPI salesman places
a customer’s order with the independent dealer, this does not mean that the
latter would immediately deliver the product; it could do so later. Meanwhile,
55
the customer would write and date his/her check to coincide with the date of
the order, expecting that delivery would be made the very same day. But actual
delivery could be made days later; naturally, the customer would release the
check – which is dated days earlier – to the CCBPI salesmen (including
petitioner) only after the delivery is completed. As correctly argued by
petitioner, this constitutes a cogent explanation for his apparent late
remittance of PUO or "date of order=date of check" checks.
In a bid to further pin down petitioner, respondents rely heavily on CCBPI
customers’ affidavits60 which state that their cash payments were not remitted
by petitioner to CCBPI. How these customers came to the knowledge and
conclusion that petitioner did not remit their cash payments to CCBPI is beyond
the Court. If there should be actual knowledge of petitioner’s embezzlement, it
could only come from respondents; it is not for the CCBPI customers to prove,
for the benefit of respondents, that petitioner embezzled their cash payments.
They have gained no knowledge superior to that of respondents regarding this
fact, and offhand are not adequately equipped with the means to come to such a
conclusion. Thus, for respondents to even present their sworn statements to
such effect is truly beyond comprehension.
As earlier stated, the burden is on the employer to prove that the termination
was for valid cause.1âwphi1 Unsubstantiated accusations or baseless
conclusions of the employer are insufficient legal justifications to dismiss an
employee. "The unflinching rule in illegal dismissal cases is that the employer
bears the burden of proof."61
It may also be said that CCBPI’s subsequent award of a Certificate of
Achievement to petitioner for his exemplary sales performance, while the NLRC
appeal was pending, constitutes recognition of petitioner’s abilities and
accomplishments in CCBPI. It indicates that he is a responsible, trustworthy
and hardworking employee of CCBPI. It constitutes adequate proof weighing in
his favor.
Having thus seen that petitioner is innocent of the charges leveled against him,
the Court must order his reinstatement. As a matter of course, the NLRC and CA
pronouncements inconsistent with this declaration are necessarily rendered
null and void. However, no moral and exemplary damages are forthcoming.
Petitioner’s failure to appeal the Labor Arbiter’s ruling denying his claims for
these damages rendered such pronouncement final and executory; he may no
longer obtain a modification or reversal of the Decision on the issue. A party
who did not appeal from the decision cannot seek any relief other than what is
provided in the judgment appealed from.62
Finally, consistent with the Court’s pronouncement in Nacar v. Gallery Republic of the Philippines
Frames,63 the awards herein are subject to interest at the rate of six percent SUPREME COURT
(6%) per annum, to be computed from the finality of the Decision in this case Manila
until the total award is fully paid.
FIRST DIVISION
WHEREFORE, the Petition is GRANTED. The September 26, 2007 Decision and
November 16, 2007 Resolution of the Court of Appeals in CA-G.R. SP Nos. G.R. No. 108878 September 20, 1994
97915 and 97916 are ANNULLED and SET ASIDE. The July 31, 2006 Decision of OLIVIA SEVILLA, petitioner,
the National Labor Relations Commission is REINSTATED, with the vs.
modification that petitioner Jonas Michael R. Garza is ORDERED reinstated to NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD DIVISION AND
his former position as Account Specialist or its equivalent, without loss of BALAGTAS CREDIT COOPERATIVE AND COMMUNITY DEVELOPMENT INC.,
seniority, rank, emolument and privileges, and with full backwages from the respondents.
date of his illegal dismissal up to his actual reinstatement. Banjamin C. Sebastian for petitioner.
Antonio R. Roque for private respondent.
In addition, the awards in petitioner’s favor shall earn interest at the rate of six
percent (6%) per annum on outstanding balance from finality of this Decision QUIASON, J.:
until full payment thereof. This is a petition for certiorari under Rule 65 of the Revised Rules of Court to
nullify the Resolution dated October 30, 1992 of the National Labor Relations
Commission (NLRC) in NLRC Case No. L-000658, which affirmed the Order of
The computation division of the NLRC-SUB-RAB-Branch No. V is hereby the Labor Arbiter in NLRC Case No. RAB-III-12-0721-88 denying petitioner's
ORDERED to immediately update and compute the awards as herein granted, motion for her reinstatement and the payment of her back wages.
excluding therefrom the period during which petitioner was actually reinstated
and compensated, after which respondent Coca-Cola Bottlers Philippines, Inc. is
ORDERED to immediately pay the petitioner Jonas Michael R. Garza these I
amounts
Petitioner was employed as general manager/accountant of private
SO ORDERED. respondent, a nonstock, nonprofit cooperative. When she was separated from
work, she filed a complaint for illegal dismissal with the NLRC, Regional
Arbitration Branch III of San Fernando, Pampanga (Case No. RAB-III-12-0721-
88). A decision was rendered by Labor Arbiter Oswald Lorenzo ruling that the
dismissal of petitioner was illegal and ordering her reinstatement with full back
salaries and other benefits.

Private respondent appealed the decision of the Labor Arbiter to the NLRC
(NLRC Case No. L-000658). During the pendency of the appeal, two events
having bearing on the Labor Arbiter's decision, occurred. The first event was
the issuance by the Labor Arbiter of an order for the immediate reinstatement
of petitioner, which was implemented on September 18, 1989. The second
event was the holding by the members of private respondent of their annual
general meeting on January 31, 1990, and the reorganizational meeting of the
Board of Directors of private respondent on February 5, 1990. At that
reorganizational meeting, on Board of Directors resolved to declare the term of
office of petitioner as general manager/accountant terminated and to select her
successor.

56
On March 13, 1990, the NLRC (Third Division), oblivious of the second
dismissal of petitioner, affirmed the decision of Labor Arbiter Lorenzo, except
for the award of exemplary damages which was deleted. Its motion for
reconsideration having been denied, private respondent filed a petition for
certiorari before us to set aside the NLRC resolution (G.R. No. 96341). When
asked to comment, petitioner informed us of her second dismissal. In our
Resolution dated July 8, 1991, we dismissed the petition of private respondent.
On July 3, 1991, petitioner filed her first motion for the issuance of a writ of
execution to implement the decision of Labor Arbiter Lorenzo. On February 16,
1992, petitioner filed a second motion for the issuance of the same writ. As no
action was taken on the two motions, petitioner filed a third motion for
issuance of the writ of execution.
On July 18, 1992, Labor Arbiter Ariel C. Santos issued an order, dismissing
petitioner's third motion for reinstatement "for lack of merit."
From the Labor Arbiter, petitioner went directly to us by filing a petition for
certiorari (G.R. No. 109516). On July 22, 1992, we resolved "to DENY the
petition for certiorari for being premature. The petition should have been filed
in the National Labor Relations Commission." We also denied petitioner's
motion for reconsideration.
Meanwhile, on July 3, 1992, petitioner filed an appeal with the NLRC, seeking
the reversal of the order dated June 18, 1992 of Labor Arbiter Santos in NLRC
Case No. RAB-III-12-0721-88. The appeal was docketed as CA
L-000658.
On October 30, 1992, the NLRC rendered a decision sustaining the order
appealed from, holding:
Complainant's second dismissal may be treated in a separate action. While it
would appear that her dismissal after reinstatement was questionable and
which may be the subject of contempt, this should have been raised by
complainant when respondent's Motion for Reconsideration of the Labor
Arbiter's Decision was pending before the Commission. Complainant was
terminated for the second time on February 5, 1990. Yet, during the pendency
of respondent's Motion for Reconsideration and which was resolved in
November 1990, complainant failed to raise this fact and remained silent on the
matter. Hence, we cannot presume that the second dismissal is a continuation
of the first or is an attempt to circumvent the Resolution of the Commission or
RA 6715 (Rollo, pp. 63-64).
57
Failing to secure a reconsideration of the decision of the NLRC, petition filed the
instant petition.
II
We dismiss the petition.
In her petition for certiorari, petitioner asserts that the NLRC: (1) violated
Section 12 of R.A. No. 6715; (2) violated the Resolution of the Supreme Court,
which dismissed the petition for certiorari filed by the private respondent; (3)
failed to resolve the issue of her claim for back salaries from petitioner's second
dismissal; and (4) dismissed petitioner's appeal on mere technicality.
Petitioner's contentions are without merit.
It is undisputed that petitioner was actually reinstated to her former position in
compliance with the Labor Arbiter's order. It is therefore clear that her second
dismissal was separate and distinct from the first.
The NLRC cannot be said to have disregarded, much less violated, our
Resolution in G.R. No. 96341 when it denied petitioner's motions for the
issuance of a writ of execution. The said Resolution referred to the decision of
the NLRC on the first dismissal.
Labor Arbiter Santos was correct in denying the third motion for reinstatement
filed by petitioner because what she should have filed was a new complaint
based on the second dismissal. The second dismissal gave rise to a new cause of
action. Inasmuch as no new complaint was filed, the Labor Arbiter could not
have ruled on the legality of the second dismissal.
WHEREFORE, the petition for certiorari is DISMISSED for failure to show grave
abuse of discretion on the part of public respondent.
SO ORDERED.