VOL.
515, FEBRUARY 9, 2007 PETITION 323
Panuncillo vs. CAP Philippines, Inc.
G.R. No. 161305. February 9, 2007.*
MILAGROS PANUNCILLO, petitioner, vs. CAP PHILIPPINES, INC., respondent.
Labor Law; Management Prerogatives; To allow her to continue with her employment puts
respondent under the risk of being embroiled in unnecessary lawsuits from customers similarly
situated as Josefina, et al. Clearly, respondent exercised its management prerogative when it
dismissed petitioner.By petitioners repeated violation of Section 8.4 of respondents Code of
Discipline, she violated the trust and confidence of respondent and its customers. To allow her to
continue with her employment puts respondent under the risk of being embroiled in unnecessary
lawsuits from customers similarly situated as Josefina, et al. Clearly, respondent exercised its
management prerogative when it dismissed petitioner.
Same; Before terminating the services of an employee, the law requires two written notices: 1)
one to apprise him of the particular acts or omissions for which his dismissal is sought; and 2)
the other to inform him of his employers decision to dismiss him. As to the requirement of
hearing, the essence of due process lies in an opportunity to be heard, and not always and
indispensably in an actual hearing.Before terminating the services of an employee, the law
requires two written notices: (1) one to apprise him of the particular acts or omissions for which
his dismissal is sought; and (2) the other to inform him of his employers decision to dismiss him.
As to the requirement of a hearing, the essence of due process lies in an opportunity to be
heard, and not always and indispensably in an actual hearing.
Same; Parenthetically, when an employee admits the acts complained of, as in petitioners case,
no formal hearing is even necessary.On April 20, 1999, petitioner was informed of the
termination of her services to which she filed a motion for reconsideration. There can thus be no
doubt that petitioner was given ample opportunity to explain her side. Parenthetically, when an
employee admits the acts
_______________
* SECOND DIVISION.
324
324 SUPREME COURT REPORTS ANNOTATED
Panuncillo vs. CAP Philippines, Inc.
complained of, as in petitioners case, no formal hearing is even necessary.
Same; Writs of Execution; If a Labor Arbiter does not issue a writ of execution of the NLRC order
for the reinstatement of an employee even if there is no restraining order, he could probably be
merely observing judicial courtesy, which is advisable if there is a strong probability that the
issues before the higher court would be rendered moot and moribund as a result of the
continuation of the proceedings in the lower court.If a Labor Arbiter does not issue a writ of
execution of the NLRC order for the reinstatement of an employee even if there is no restraining
order, he could probably be merely observing judicial courtesy, which is advisable if there is a
strong probability that the issues before the higher court would be rendered moot and moribund
as a result of the continuation of the proceedings in the lower court. In such a case, it is as if a
temporary restraining order was issued.
Same; Same; If during the pendency of the review no order is issued by the courts enjoining the
execution of a decision of the Labor Arbiter or NLRC which is favorable to an employee, the
Labor Arbiter or the NLRC must exercise extreme prudence and observe judicial courtesy when
the circumstances so warrant if we are to heed the injunction of the Court in Philippine
Geothermal, Inc. v. NLRC [236 SCRA 371 (1994)].While under the sixth paragraph of Article
223 of the Labor Code, the decision of the NLRC becomes final and executory after the lapse of
ten calendar days from receipt thereof by the parties, the adverse party is not precluded from
assailing it via Petition for Certiorari under Rule 65 before the Court of Appeals and then to this
Court via a Petition for Review under Rule 45. If during the pendency of the review no order is
issued by the courts enjoining the execution of a decision of the Labor Arbiter or NLRC which is
favorable to an employee, the Labor Arbiter or the NLRC must exercise extreme prudence and
observe judicial courtesy when the circumstances so warrant if we are to heed the injunction of
the Court in Philippine Geothermal, Inc v. NLRC, 236 SCRA 371 (1994).
for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
325
VOL. 515, FEBRUARY 9, 2007 325
Panuncillo vs. CAP Philippines, Inc.
Dominador A. Almirante for petitioner.
Francisco E. Rodrigo, Jr. for respondent.
CARPIO-MORALES, J.:
Assailed via Petition for Review1 are the Decision dated May 16, 20032 and Resolution dated
November 17, 20033 of the Court of Appeals in CA-G.R. SP No. 74665 which declared valid the
dismissal of Milagros Panuncillo (petitioner) by CAP Philippines, Inc. (respondent).
Petitioner was hired on August 28, 1980 as Office Senior Clerk by respondent. At the time of her
questioned separation from respondent on April 23, 1999, she was receiving a monthly salary of
P16,180.60.
In order to secure the education of her son, petitioner procured an educational plan (the plan)
from respondent which she had fully paid but which she later sold to Josefina Pernes (Josefina)
for P37,000. Before the actual transfer of the plan could be effected, however, petitioner pledged
it for P50,000 to John Chua who, however, sold it to Benito Bonghanoy. Bonghanoy in turn sold
the plan to Gaudioso R. Uy for P60,000.
Having gotten wind of the transactions subsequent to her purchase of the plan, Josefina, by
letter of February 10, 1999,4 informed respondent that petitioner had swindled her but that she
was willing to settle the case amicably as long as petitioner pay the amount involved and the
interest. She expressed her appreciation if [respondent] could help her in anyway.
_______________
1 Rollo, pp. 20-49.
2 Penned by Justice Rodrigo V. Cosico with the concurrence of Justices Juan Q. Enriquez, Jr.
and Hakim S. Abdulwahid; CA Rollo, pp. 253-269.
3 Penned by Justice Rodrigo V. Cosico with the concurrence of Justices Jose L. Sabio, Jr. and
Regalado E. Maambong; Id., at p. 333.
4 Id., at p. 105.
326
326 SUPREME COURT REPORTS ANNOTATED
Panuncillo vs. CAP Philippines, Inc.
Acting on Josefinas letter, the Integrated Internal Audit Operations (IIAO) of respondent required
petitioner to explain in writing why the plan had not been transferred to Josefina and was instead
sold to another. Complying, petitioner proffered the following explanation:
Because of extreme need of money, I was constrained to sell my CAP plan of my son to J.
Pernes last July, 1996, in the amount of Thirty Seven Thousand Pesos (P37,000.) The plan was
not transferred right away because of lacking requirement on the part of the buyer (birth
certificate). The birth certificate came a month later. While waiting for the birth certificate, again
because of extreme need of money, I was tempted to pawned [sic] the plan, believing I can
redeemed [sic] it later when the birth certificate will come.
Last year, I was already pressured by J. Pernes for the transfer of the plan. But before hand, she
already knew the present situation. I was trying to find means to redeemed [sic] the plan but to
no avail. I cannot borrow anymore from my creditors because of outstanding loans which
remains unpaid. As of the present, I am heavily debtladen and I dont know where to run.
I cant blame the person whom I pawned the plan if he had sold it. I cant redeemed [sic] it
anymore. Everybody needs money and besides, I have given them my papers.
I admit, I had defrauded Ms. J. Pernes, but I didnt do it intentionally. At first, I believe I can
redeem the plan hoping I can still borrow from somebody.
With my more than 18 years stay with the company, I dont have the intention of ruining my
image as well as the companys. I think I am just a victim of circumstances. 5 (Emphasis and
italics supplied)
A show-cause memorandum6 dated February 23, 1999 was thereupon sent to petitioner, giving
her 48 hours from receipt thereof to explain why she should not be disciplinarily dealt with.
Petitioner did not comply, however.
_______________ of the family. If I will be terminated, I dont know what will happen to us.
327 ______________
VOL. 515, FEBRUARY 9, 2007 329327
Panuncillo vs. CAP Philippines, Inc. VOL. 515, FEBRUARY 9, 2007 329
The IIAO of respondent thus conducted an investigation on the matter. By Memorandum of April Panuncillo vs. CAP Philippines, Inc.
5, 1999,7 the IIAO recommended that, among other things, administrative action should be taken
against petitioner for violating Section 8.4 of respondents Code of Discipline reading: Sir, I am enclosing the affidavit of Ms. Evelia Casquejo proving that we have already settled the
Committing or dealing any act or conniving with co-employees or anybody to defraud the case.
company or customer/sales associates. x x x x11 (Italics supplied)
In the same memorandum, the IIAO reported other matters bearing on petitioners duties as an Pending resolution of petitioners motion for reconsideration, respondent received a letter dated
employee, to wit: April 28, 199912 from one Gwendolyn N. Dinoro (Gwendolyn) who informed that she had been
OTHERS: paying her quarterly dues through petitioner but found out that none had been remitted to
We also received a copy of demand letter of a certain Evelia Casquejo addressed to Ms. respondent, on
Panuncillo requiring the latter to pay the amount of P54,870.00 for the supposed transfer of the _______________
lapsed plan of Subscriber Corazon Lintag with SFA # 25-67-40-01-00392. Ms. Panuncillo 11 Id., at p. 202.
received the payment of P25,000.00 and P29,870.00 on July 17, 1997 and July 18, 1997 12 Id., at p. 199. The letter reads:
respectively (Exhibits L&M). MR. JAIME B. DIZON
Ms. Panuncillo verbally admitted that she was the one who sold the plan to Ms. Casquejo Senior Vice-President
but with the authorization from Ms. Lintag. However, the transfer was not effected because she Operations Head-CSO
had misappropriated a portion of the money until the plan was terminated. Ms. Casquejo, College Assurance Plan Phils., Inc.
however, did not file a complaint because Ms. Panuncillo executed a Special Power of Attorney Makati, Metro Manila
authorizing the former to receive P68,000 of Ms. Panuncillos retirement pay (Exhibit N). 8 Dear Sir:
(Emphasis in the original; italics supplied) This is [with] reference to my account with the following details:
On April 7, 1999, another show-cause memorandum was sent to petitioner by Renato M. Daquiz ACCOUNT NO.: 60-67-46-01-A0250
(Daquiz), First Vice President of respondent, giving her another 48 hours to explain why she SUBSCRIBER : GWENDOLYN N. DINORO
should not be disciplinarily dealt with in connection with the complaints of Josefina and Evelia NOMINEE : KIMBERLY KATE N. DINORO
Casquejo (Evelia). Complying with the directive, petitioner, by letter of April 10, 1999, on top of I have been paying my quarterly dues in good faith, through your agent, MS. MILA B.
reiterating her admission of having PANUNCILLO. And I have just recently found out that none of my cash payments have been
_______________ remitted to your good office.
7 Id., at pp. 107-109. Due to Ms. Panunicillo[]s non-remittance of my payments to CAP, I am being penalized with
8 Id., at pp. 108-109. interest charges for nonpayment of my quarterly dues. I believe that it is only fair to have the
328 interest charges waived as payments have been made quarterly to Ms. Panuncillo, but were
328 SUPREME COURT REPORTS ANNOTATED never remitted to CAP without my knowledge.
I trust that your good office will do only what is fair, and will do away with interest charges for
Panuncillo vs. CAP Philippines, Inc. non-remittance of my payments to Ms. Panuncillo.
defrauded Josefina, admitted having received from Evelia the payment for a lapsed plan, thus: x x x x (Emphasis supplied)
With regards to [Evelias] case, yes its [sic] true I had received the payment but it was 330
accordingly given to the owner or Subscriber Ms. C. Lintag. The plan was not transferred 330 SUPREME COURT REPORTS ANNOTATED
because it was already forfeited and we, Ms. Lintag, [Evelia] and I already made settlement of Panuncillo vs. CAP Philippines, Inc.
the case.
I think I have violated Sec. 8.4 of the companys Code of Discipline. I admit it is my account of which she (Gwendolyn) was being penalized with interest charges.
wrongdoing. I was only forced to do this because of extreme needs to pay for my debts. I am Acting on petitioners motion for reconsideration, Daquiz, by letter-memorandum of May 5, 1999,
open for whatever disciplinary action that will be sanctioned againts [sic] me. I hope it is not denied the same in this wise:
termination from my job. How can I pay for obligations if that will happen to me. A review of your case was made per your request, and we note that it was not just a single case
As for [Josefina], I have the greatest desire to pay for my indebtedness but my capability at but multiple cases, that of Ms. Casquejo, Ms. Pernes, and newly reported Ms. Dinoro.
the moment is nil. (space) I have been planning to retire early just to pay my obligations. That is Furthermore, the cases happened way back in July 1996 and 1997, and were just discovered
why I had written to you last year inquiring tax exemption when retiring. I have been with the recently. In addition, the misappropriation of money/or act to defraud the company or customer
company for almost 19 years already and I never intend [sic] to smear its name as well as mine . was deliberate and intentional. There were several payments receivedover a period of time.
I was only forced by circumstances. Although it hurts to leave CAP, I will be retiring on April 30, While you plead for your retirement benefit to help you pay some of your obligations, as well as
1999. the need of your family (your husband being jobless and being the breadwinner), these thoughts
x x x x9 (Emphasis and italics supplied) should have crossed your mind before you committed the violations rather than now. To allow
Respondent thereupon terminated the services of petitioner by Memorandum dated April 20, you to retire with benefits, is to tolerate and encourage others to do the same in the future, as it
1999.10 will be a precedent that will surely be invoked in similar situations in the future, as it will be a
Petitioner sought reconsideration of her dismissal, by letter of April 23, 1999 addressed to precedent that will surely be invoked in similar situations in the future. It is also unfair to others
Daquiz, imploring as follows: who do their jobs faithfully and honestly. If we let you have your way, it will appear that we let
. . . Please consider my retirement letter I sent to you. I would like to avail [of] the retirement you scot-free and even reward you with retirementsomeone who deliberately violated trust and
benefit of the company. The proceeds of my retirement could help me pay some of my confidence of the company and customers.
obligations as well as the needs of my family. My husband is jobless and I am the breadwinner Premises considered, the decision to terminate your services for cause stays and the request for
reconsideration is denied. In so deciding, the NLRC held that the transaction between petitioner and Josefina was private
x x x x13 (Emphasis and italics supplied) in character and, therefore, respondent did not suffer any damage, hence, it was error to apply
Petitioner thus filed a complaint14 for illegal dismissal, 13th month pay, service incentive leave Section 8.4 of respondents Code of Discipline.
pay, damages and attorneys fees against respondent. Respondent challenged the NLRC Decision before the appellate court via Petition for
The Labor Arbiter, while finding that the dismissal was for a valid cause, found the same too Certiorari.17 By Decision of May 16, 2003,18 the appellate court reversed the NLRC Decision and
harsh. He thus ordered the held that the dismissal was valid and that respondent complied with the procedural requirements
_______________ of due process before petitioners services were terminated.
13 Id., at p. 203. Hence, the present petition, petitioner faulting the appellate court
14 Id., at pp. 56-57. _______________
331 16 Id., at pp. 46-47.
VOL. 515, FEBRUARY 9, 2007 331 17 Id., at pp. 2-37.
18 Supra note 2.
Panuncillo vs. CAP Philippines, Inc.
333
reinstatement of petitioner to a position one rank lower than her previous position, and disposed VOL. 515, FEBRUARY 9, 2007 333
as follows:
Panuncillo vs. CAP Philippines, Inc.
WHEREFORE, the foregoing considered, judgement [sic] is hereby rendered directing the
respondent to pay complainants 13th Month pay and Service Incentive Leave Pay for 1999 in I
proportionate amount computed as follows: x x x IN REVIEWING THE FINDINGS OF FACT OF THE LABOR ARBITER AND THE
13th Month Pay NATIONAL LABOR RELATIONS COMMISSION THAT RESPONDENT CAP PHILIPPINES,
January 1, 1999 to April 1, 1999 INC., HAS NOT BEEN DEFRAUDED NOR DAMAGED IN THE TRANSACTION/S ENTERED
= 3 months INTO BY PETITIONER RELATING TO HER FULLY PAID EDUCATIONAL PLAN.
= P16,180.60/12 mos. x 3 mos. P4,045.14 II
Service Incentive Leave x x x IN HOLDING THAT RESPONDENT CAP PHILIPPINES, INC. IS THE INSURER OF
= P16,180.60/26 days PETITIONERS FULLY PAID EDUCATIONAL PLAN UNDER THE INSURANCE CODE.
= P622.30 per day x 5 days/12 months. 777.87 III
TOTAL --------------------------------P4,823.01 x x x IN HOLDING THAT PETITIONER WAS DULY AFFORDED DUE PROCESS BEFORE
Plus P482.30 ten (10%) Attorneys Fees or a total aggregate amount of PESOS: FIVE DISMISSAL[,] and maintaining that she
THOUSAND THREE HUNDRED FIVE & 31/100 (P5,305.31). IV
Respondent is likewise, directed to reinstate the complainant to a position one rank lower x x x IS ENTITLED TO HER FULL BACKWAGES FROM THE DATE HER COMPENSATION
without backwages.15 (Italics supplied) WAS WITHHELD FROM HER ON APRIL 20, 1999 PURSUANT TO THE DECISION OF THE
On appeal, the National Labor Relations Commission (NLRC), by Decision of October 29, 2001, NLRC REINSTATING HER TO HER PREVIOUS POSITION WITH FULL BACKWAGES AND
reversed that of the Labor Arbiter, it finding that petitioners dismissal was illegal and accordingly SETTING ASIDE THE DECISION OF THE LABOR ARBITER REINSTATING HER TO A
ordering her reinstatement to her former position. Thus it disposed: POSITION NEXT LOWER IN RANK, UNTIL THE REVERSAL OF THE NLRC DECISION BY
WHEREFORE, the Decision in the main case dated February 18, 2000 of the Labor Arbiter THE HONORABLE COURT OF APPEALS.19 (Emphasis and italics supplied)
declaring the dismissal of the complainant valid, and his Order dated June 26, 2000 declaring The petition is not meritorious.
the Motion to Declare Respondent-appellant in Contempt as prematurely filed and ordering the Whether respondent did not suffer any damage resulting from the transactions entered into by
issuance of an alias writ of execution are hereby SET ASIDE, and a new one is rendered petitioner, particularly that with Josefina, is immaterial. As Lopez v. National Labor Relations
DECLARING the dismissal of the complainant illegal, and ORDERING the respondent, CAP Commission instructs:
PHILIPPINES, INCORPORATED, the following: _______________
_______________ 19 Rollo, p. 26.
15 Id., at pp. 94-95. 334
332 334 SUPREME COURT REPORTS ANNOTATED
332 SUPREME COURT REPORTS ANNOTATED
Panuncillo vs. CAP Philippines, Inc.
Panuncillo vs. CAP Philippines, Inc.
That the [employer] suffered no damage resulting from the acts of [the employee] is
1 1.to reinstate the complainant MILAGROS B. PANUNCILLO to her former position without inconsequential. In Glaxo Wellcome Philippines, Inc. v. Nagkakaisang Empleyado ng Wellcome-
loss of seniority rights and with full backwages from the date her compensation was DFA (NEWDFA), we held that deliberate disregard or disobedience of company rules could not
withheld from her on April 20, 1999 until her actual reinstatement; be countenanced, and any justification that the disobedient employee might put forth would be
2 2.to pay to the same complainant P4,045.14 as 13th month pay, and P777.89 as service deemed inconsequential. The lack of resulting damage was unimportant, because the heart of
incentive leave pay; the charge is the crooked and anarchic attitude of the employee towards his employer. Damage
3 3. to pay to the same complainant moral damages of FIFTY THOUSAND PESOS aggravates the charge but its absence does not mitigate nor negate the employees liability. x x
(P50,000.00), and exemplary damages of another FIFTY THOUSAND PESOS x20 (Italics in the original; underscoring supplied)
(P50,000.00); The transaction with Josefina aside, there was this case of misappropriation by petitioner of the
4 4.to pay attorneys fees equivalent to ten percent (10%) of the total award exclusive of moral amounts given to her by Evelia representing payment for the lapsed plan of Corazon Lintag.
While a settlement of the case between the two may have eventually been forged, that did not
and exemplary damages.
obliterate the misappropriation committed by petitioner against a client of respondent.
Further, the complainants Motion to Declare Respondent in Contempt dated May 3, 2000 is
Additionally, there was still another complaint lodged before respondent by Gwendolyn against
denied and rendered moot by virtue of this Decision.
petitioner for failure to remit the cash payments she had made to her, a complaint she was
All other claims are dismissed for lack of merit. 16 (Italics supplied)
apprised of but on which she was silent.
In fine, by petitioners repeated violation of Section 8.4 of respondents Code of Discipline, she
violated the trust and confidence of respondent and its customers. To allow her to continue with
her employment puts respondent under the risk of being embroiled in unnecessary lawsuits from
customers similarly situated as Josefina, et al. Clearly, respondent exercised its management
prerogative when it dismissed petitioner.
. . . [T]ime and again, this Court has upheld a companys management prerogatives so long as
they are exercised in good faith for the advancement of the employers interest and not for the
purpose
_______________
20 G.R. No. 167385, December 13, 2005, 477 SCRA 596, 602.
335
VOL. 515, FEBRUARY 9, 2007 335
Panuncillo vs. CAP Philippines, Inc.
of defeating or circumventing the rights of the employees under special laws or under valid
agreements.
Deliberate disregard or disobedience of rules by the employees cannot be countenanced.
Whatever maybe the justification behind the violations is immaterial at this point, because the
fact still remains that an infraction of the company rules has been committed.
Under the Labor Code, the employer may terminate an employment on the ground of
serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work. Infractions of company rules and regulations have
been declared to belong to this category and thus are valid causes for termination of
employment by the employer.
xxxx
The employer cannot be compelled to continue the employment of a person who was found
guilty of maliciously committing acts which are detrimental to his interests. It will be highly
prejudicial to the interests of the employer to impose on him the charges that warranted his
dismissal from employment. Indeed, it will demoralize the rank and file if the undeserving, if not
undesirable, remain in the service. It may encourage him to do even worse and will render a
mockery of the rules of discipline that employees are required to observe. This Court was more
emphatic in holding that in protecting the rights of the laborer, it cannot authorize the oppression
or selfdestruction of the employer.21 x x x (Italics supplied)
Petitioner nevertheless argues that she was not afforded due process before her dismissal as
she was merely required to answer a show-cause memorandum dated April 7, 1999 and there
was no actual investigation conducted in which she could have been heard.
Before terminating the services of an employee, the law requires two written notices: (1) one to
apprise him of the particular acts or omissions for which his dismissal is sought; and (2) the
other to inform him of his employers decision to dismiss him. As to the requirement of a hearing,
the essence
_______________
21 San Miguel Corporation v. Ubaldo, G.R. No. 92859, February 1, 1993, 218 SCRA 293, 300-
301.
336
336 SUPREME COURT REPORTS ANNOTATED
Panuncillo vs. CAP Philippines, Inc.
of due process lies in an opportunity to be heard, and not always and indispensably in an actual
hearing.22
When respondent received the letter-complaint of Josefina, petitioner was directed to comment
and explain her side thereon. She did comply, by letter of February 22, 1999 wherein she
admitted that she had defrauded Ms. J. Pernes, but [that she] didnt do it intentionally.
Respondent subsequently sent petitioner a show-cause memorandum giving her 48 hours from
receipt why she should not be disciplinarily sanctioned. Despite the 48-hour deadline, nothing
was heard from her until April 10, 1999 when she complied with the second show-cause
memorandum dated April 7, 1999.
On April 20, 1999, petitioner was informed of the termination of her services to which she filed a
motion for reconsideration.
There can thus be no doubt that petitioner was given ample opportunity to explain her side.
Parenthetically, when an employee admits the acts complained of, as in petitioners case, no
formal hearing is even necessary.23
Finally, petitioner argues that even if the order of reinstatement of the NLRC was reversed on
appeal, it is still obligatory on the part of an employer to reinstate and pay the wages of a
dismissed employee during the period of appeal, citing Roquero v. Philippine Airlines,24 the third
paragraph of
_______________
22 Standard Electric Manufacturing Corporation v. Standard Electric Employees Union-NAFLU-
KMU , G.R. No. 166111, August 25, 2005, 468 SCRA 316, 329.
23 Magos v. National Labor Relations Commission, 360 Phil. 670, 678; 300 SCRA 484, 492
(1998); Pono v. National Labor Relations Commission, 341 Phil. 615, 621; 275 SCRA 611, 618
(1997); Bernardo v. National Labor Relations Commission, 325 Phil. 371, 385; 255 SCRA 108,
118 (1996).
24 449 Phil. 437; 401 SCRA 424 (2003).
337
VOL. 515, FEBRUARY 9, 2007 337
Panuncillo vs. CAP Philippines, Inc.
Article 223 of the Labor Code, and the last paragraph of Section 16, 26 Rule V of the then 1990
25
New Rules of Procedure of the NLRC.
Petitioner adds that respondent made clever moves to frustrate [her] from enjoying the
reinstatement aspect of the decision starting from that of the Labor Arbiter (although to a next
lower rank), [to that] of the NLRC to her previous position without loss of seniority rights until it
was caught up by the decision of the Honorable Court of Appeals reversing the decision of the
NLRC and declaring the dismissal of petitioner as based on valid grounds.
Respondent, on the other hand, maintains that Roquero and the legal provisions cited by
petitioner are not applicable as they speak of reinstatement on order of the Labor Arbiter and not
of the NLRC.
_______________
25 ART. 223. Appeal.x x x x
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending
appeal. The employee shall either be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for
reinstatement provided herein.
x x x x (Italics supplied)
26 SECTION 16. Contents of decisions.x x x x
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.
338
338 SUPREME COURT REPORTS ANNOTATED
Panuncillo vs. CAP Philippines, Inc.
The Labor Arbiter ordered the reinstatement of petitioner to a lower position. The third paragraph
of Article 223 of the Labor Code is clear, howeverthe employee, who is ordered reinstated,
must be accepted back to work under the same terms and conditions prevailing prior to his
dismissal or separation.
Petitioners being demoted to a position one rank lower than her original position is certainly not
in accordance with the said third paragraph provision of Article 223. Besides, the provision
contemplates a finding that the employee was illegally dismissed or there was no just cause for
her dismissal. As priorly stated, in petitioners case, the Labor Arbiter found that there was just
cause for her dismissal, but that dismissal was too harsh, hence, his order for her reinstatement
to a lower position.
The order to reinstate is incompatible with a finding that the dismissal is for a valid cause. Thus
this Court declared in Colgate Palmolive Philippines, Inc. v. Ople:
The order of the respondent Minister to reinstate the employees despite a clear finding of guilt
on their part is not in conformity with law. Reinstatement is simply incompatible with a finding of
guilt. Where the totality of the evidence was sufficient to warrant the dismissal of the employees
the law warrants their dismissal without making any distinction between a first offender and a
habitual delinquent. Under the law, respondent Minister is duly mandated to equally protect and
respect not only the labor or workers side but also the management and/or employers side. The
law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of
the employer. x x x As stated by Us in the case of San Miguel Brewery vs. National Labor Union,
an employer cannot legally be compelled to continue with the employment of a person who
admittedly was guilty of misfeasance or malfeasance towards his employer, and whose
continuance in the service of the
339
VOL. 515, FEBRUARY 9, 2007 339
Panuncillo vs. CAP Philippines, Inc.
latter is patently inimical to his interest. 27 (Emphasis and italics supplied)
The NLRC was thus correct when it ruled that it was erroneous for the Labor Arbiter to order the
reinstatement of petitioner, even to a position one rank lower than that which she formerly held. 28
Now, on petitioners argument that, following the third paragraph of Article 223 of the Labor
Code, the order of the NLRC to reinstate her and to pay her wages was immediately executory
even while the case was on appeal before the higher courts: The third paragraph of Article 223
of the Labor Code directs thatthe 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.
In Roquero, the Labor Arbiter upheld the dismissal of Roquero,along with another employee,
albeit he found both the two and employer Philippine Airlines (PAL) at fault. The Labor Arbiter
thus ordered the payment of separation pay and attorneys fees to the complainant. No order for
reinstatement was issued by the Labor Arbiter, precisely because the dismissal was upheld.
On appeal, the NLRC ruled in favor of Roquero and his cocomplainant as it also found PAL
guilty of instigation. The NLRC thus ordered the reinstatement of Roquero and his
cocomplainant to their former positions, but without backwages.
PAL appealed the NLRC decision via Petition for Review before this Court. Roquero and his co-
complainant did not. They instead filed before the Labor Arbiter a Motion for Execution of the
NLRC order for their reinstatement which the Labor Arbiter granted.
_______________
27 G.R. No. L-73681, June 30, 1988, 163 SCRA 323, 331. Vide GT Printers v. National Labor
Relations Commission, G.R. No. 100749, April 24, 1992, 208 SCRA 321.
28 CA Rollo, p. 46.
340
Acting on PALs Petition for Review, this Court referred it to the Court of Appeals pursuant to St.
Martin Funeral Home v. NLRC.29
The appellate court reversed the NLRC decision and ordered the reinstatement of the decision
of the Labor Arbiter but only insofar as it upheld the dismissal of Roquero.
Back to this Court on Roqueros Petition for Review, the following material issues were raised:
x x x x
1 2.Can the executory nature of the decision, more so the reinstatement aspect of a labor
tribunals 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?
2 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?30
Resolving these issues, this Court held in Roquero:
Article 223 (3rd paragraph) of the Labor Code as amended by Section 12 of Republic Act No.
6715, and Section 2 of the NLRC Interim Rules on Appeals under RA No. 6715, Amending the
Labor Code, 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:
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
_______________
29 356 Phil. 811; 295 SCRA 494 (1998).
30 Supra note 24 at p. 443; pp. 427-428.
341
VOL. 515, FEBRUARY 9, 2007 341
Panuncillo vs. CAP Philippines, Inc.
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 nations progress and stability.
xxxx
The order of reinstatement is immediately executory. The unjustified refusal of the employer to
reinstate a dismissed employee entitles him to payment of his salaries effective from the time the
employer failed to reinstate him despite the issuance of a writ of execution. Unless there is a
restraining order issued, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement. In the case at bar, no restraining order was granted. Thus, it was mandatory on
PAL to actually reinstate Roquero or reinstate him in the payroll. Having failed to do so, PAL
must pay Roquero the salary he is entitled to, as if he was reinstated, from the time of the
decision of the NLRC until the finality of the decision of 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. 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.31
(Italics in the original, emphasis and italics supplied)
In the present case, since the NLRC found petitioners dismissal illegal and ordered her
reinstatement, following the provision of the sixth paragraph of Article 223, viz.:
_______________
31 Id., at pp. 444-446; pp. 429-431.
342
The [National Labor Relations] Commission shall decide all cases within twenty (20) calendar
days from receipt of the answer of the appellee. The decision of the Commission shall be final
and executory after ten (10) calendar days from receipt thereof by the parties. (Emphasis and
italics supplied),
the NLRC decision became final and executory after ten calendar days from receipt of the
decision by the parties for reinstatement.
In view, however, of Article 224 of the Labor Code which 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,
requiring a sheriff or a duly deputized officer to execute or enforce final decisions, orders or
awards of the Secretary of Labor and Employment or regional director, the Commission, the
Labor Arbiter or med-arbiter, or voluntary arbitrators. In any case, it shall be the duty of the
responsible officer to separately furnish immediately the counsels of record and the parties with
copies of said decisions, orders or awards. Failure to comply with the duty prescribed herein
shall subject such responsible officer to appropriate administrative sanctions.
x x x x (Emphasis and italics supplied),
there was still a need for the issuance of a writ of execution of the NLRC decision.
Unlike then the order for reinstatement of a Labor Arbiter which is self-executory, that of the
NLRC is not. There is still a need for the issuance of a writ of execution. Thus this Court held in
Pioneer Texturizing Corp. v. NLRC:32
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. On appeal, however, the appellate tribunal concerned may enjoin or suspend the
reinstatement order in the exercise of its sound discretion.33 (Italics in the original, emphasis
and underscoring supplied)
If a Labor Arbiter does not issue a writ of execution of the NLRC order for the reinstatement of
an employee even if there is no restraining order, he could probably be merely observing judicial
courtesy, which is advisable if there is a strong probability that the issues before the higher
court would be rendered moot and moribund as a result of the continuation of the proceedings in
the lower court.34 In such a case, it is as if
_______________
33 Id., at pp. 1075-1076; pp. 825-826.
34 Go v. Judge Abrogar, 446 Phil. 227, 238; 398 SCRA 166, 171 (2003).
344
a temporary restraining order was issued, the effect of which Zamboanga City Water District v.
Buhat explains:
The issuance of the temporary restraining order . . . did not nullify the rights of private
respondents to their reinstatement and to collect their wages during the period of the effectivity
of the order but merely suspended the implementation thereof pending the determination of the
validity of the NLRC resolutions subject of the petition. Naturally, a finding of this Court that
private respondents were not entitled to reinstatement would mean that they had no right to
collect any back wages. On the other hand, where the Court affirmed the decision of the NLRC
and recognized the right of private respondents to reinstatement,. . . private respondents are
entitled to the wages accruing during the effectivity of the temporary restraining order.35
(Emphasis and italics supplied)
While Zamboanga was decided prior to St. Martin Funeral and, therefore, the NLRC decisions
were at the time passed upon by this Court to the exclusion of the appellate court, it is still
applicable.
Since this Court is now affirming the challenged decision of the Court of Appeals finding that
petitioner was validly dismissed and accordingly reversing the NLRC Decision that petitioner
was illegally dismissed and should be reinstated, petitioner is not entitled to collect any
backwages from the time the NLRC decision became final and executory up to the time the
Court of Appeals reversed said decision.
It does not appear that a writ of execution was issued for the implementation of the NLRC order
for reinstatement. Had one been issued, respondent would have been obliged to reinstate
petitioner and pay her salary until the said order of the NLRC for her reinstatement was reversed
by the Court of Appeals, and following Roquero, petitioner would not have been obliged to
reimburse respondent for whatever salary she received in the interim.
In sum, while under the sixth paragraph of Article 223 of the Labor Code, the decision of the
NLRC becomes final and executory after the lapse of ten calendar days from receipt thereof by
the parties, the adverse party is not precluded from assailing it via Petition for Certiorari under
Rule 65 before the Court of Appeals and then to this Court via a Petition for Review under Rule
45. If during the pendency of the review no order is issued by the courts enjoining the execution
of a decision of the Labor Arbiter or NLRC which is favorable to an employee, the Labor Arbiter
or the NLRC must exercise extreme prudence and observe judicial courtesy when the
circumstances so warrant if we are to heed the injunction of the Court in Philippine Geothermal,
Inc v. NLRC:
While it is true that compassion and human consideration should guide the disposition of cases
involving termination of employment since it affects ones source or means of livelihood, it
should not be overlooked that the benefits accorded to labor do not include compelling an
employer to retain the services of an employee who has been shown to be a gross liability to the
employer. The law in protecting the rights of the employees authorizes neither oppression nor
self-destruction of the employer. It should be made clear that when the law tilts the scale of
justice in favor of labor, it is but a recognition of the inherent economic inequality between labor
and management. The intent is to balance the scale of justice; to put the two parties on relatively
equal positions. There may be cases where the circumstances warrant favoring labor over the
interests of management but never should the scale be so tilted if the result is an injustice to the
employer. Justitia nemini neganda est (Justice is to be denied to none). 36 (Italics in the original;
emphasis and underscoring supplied)
WHEREFORE, the petition is DENIED. The assailed Court of Appeals Decision dated May 16,
2003 and Resolution dated November 17, 2003 are AFFIRMED.
_______________
36 G.R. No. 106370, September 8, 1994, 236 SCRA 371, 378-379, vide Homeowners Savings
and Loan Asso. v. National Labor Relations Commission, 330 Phil. 979, 985; 262 SCRA 406,
423 (1996).
346
SO ORDERED.
Quisumbing (Chairperson), Carpio, Tinga and Velasco, Jr., JJ., concur.
Petition denied, assailed decision and resolution affirmed.
Notes.While an employee may be validly dismissed for violation of a reasonable rule or
regulation adopted for the conduct of the companys business, an act allegedly in breach thereof
must clearly and convincingly fall within the express intendment of such order. (Villamor Golf
Club vs. Pehid, 472 SCRA 36 [2005]) An employee who is dismissed for cause is generally not
entitled to any financial assistance. Equity considerations however provide an exception. ( Piero
vs. National Labor Relations Commission, 437 SCRA 112 [2004])
o0o
 G.R. No. 129329. July 31, 2001.*
ESTER M. ASUNCION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Second
Division, MABINI MEDICAL CLINIC and DR. WILFRIDO JUCO, respondents.
Labor Law; Appeals; A disharmony between the factual findings of the Labor Arbiter and those
of the National Labor Relations Commission (NLRC) opens the door to a review thereof by the
Supreme Court.Although, it is a legal tenet that factual findings of administrative bodies are
entitled to great weight and respect, we are constrained to take a second look at the facts before
us because of the diversity in the opinions of the Labor Arbiter and the NLRC. A disharmony
between the factual findings of the Labor Arbiter and those of the NLRC opens the door to a
review thereof by this Court.
Same; Illegal Dismissal; Due Process; A workers employment is property in the constitutional
sensehe cannot be deprived of his work without due process.It bears stressing that a
workers employment is property in the constitutional sense. He cannot be deprived of his work
without due process. In order for the dismissal to be valid, not only must it be based on just
cause supported by clear and convincing evidence, the employee must also be given an
opportunity to be heard and defend himself. It is the employer who has the burden of proving
that the dismissal was with just or authorized cause. The failure of the employer to discharge this
burden means that the dismissal is not justified and that the employee is entitled to
reinstatement and backwages.
Same; Same; Evidence; Administrative Law; Absenteeism and Tardiness; Handwritten listing
and unsigned computer print-outs which are unauthenticated are unreliable to establish alleged
absenteeism and tardiness of an employeemere self-serving evidence should be rejected as
evidence without any rational probative value even in administrative proceedings.In the case
at bar, there is a paucity of evidence to establish the charges of absenteeism and tardiness. We
note that the employer company submitted mere handwritten listing and computer print-outs.
The handwritten listing was not signed by the one who made the same. As regards the print-
outs, while the listing was computer generated, the entries of time and other annotations were
again handwritten and unsigned. We find that the handwritten listing and unsigned computer
print-outs were unauthenticated and, hence, unreliable. Mere self-serving evidence of which the
listing and print-outs are of that nature should be rejected as evidence without any rational
probative value even in administrative proceedings.
Same; Same; Same; Same; Same; Evidence without any rational probative value may not be
made the basis of order or decision of administrative bodies.In IBM Philippines, Inc. v. NLRC,
this Court clarified that the liberality of procedure in administrative actions is not absolute and
does not justify the total disregard of certain fundamental rules of evidence. Such that evidence
without any rational probative value may not be made the basis of order or decision of
administrative bodies. The Courts ratiocination in that case is relevant to the propriety of
rejecting the unsigned handwritten listings and computer print-outs submitted by private
respondents which we quote, to wit: However, the liberality of procedure in administrative
actions is subject to limitations imposed by basic requirements of due process. As this Court
said in Ang Tibay v. CIR, the provision for flexibility in administrative procedure does not go so
far as to justify orders without a basis in evidence having rational probative value.
58
Same; Same; Same; Same; The purpose of the rule requiring the production of the best
evidence is the prevention of fraud, because if a party is in possession of such evidence and
withholds it, and seeks to substitute inferior evidence in its place, the presumption naturally
arises that the better evidence is withheld for fraudulent purposes which its production would
expose and defeat.Ironically, in the memorandum charging petitioner and notice of
termination, private respondents referred to the record book as its basis for petitioners alleged
absenteeism and tardiness. Interestingly, however, the record book was never presented in
evidence. Private respondents had possession thereof and the opportunity to present the same.
Being the basis of the charges against the petitioner, it is without doubt the best evidence
available to substantiate the allegations. The purpose of the rule requiring the production of the
best evidence is the prevention of fraud, because if a party is in possession of such evidence
and withholds it, and seeks to substitute inferior evidence in its place, the presumption naturally
arises that the better evidence is withheld for fraudulent purposes which its production would
expose and defeat. Thus, private respondents unexplained and unjustified non-presentation of
the record book, which is the best evidence in its possession and control of the charges against
the petitioner, casts serious doubts on the factual basis of the charges of absenteeism and
tardiness.
Same; Same; Due Process; What would qualify as sufficient or ample opportunity, for an
employee to enable him to prepare adequately for his defense, would be every kind of
assistance that management must accord to the employee to enable him to prepare adequately
for his defense.The law mandates that every opportunity and assistance must be accorded to
the employee by the management to enable him to prepare adequately for his defense. In Ruffy
v. NLRC, the Court held that what would qualify as sufficient or ample opportunity, as required
by law, would be every kind of assistance that management must accord to the employee to
enable him to prepare adequately for his defense. In the case at bar, private respondents
cannot be gainsaid to have given petitioner the ample opportunity to answer the charges leveled
against her.
Same; Same; Same; If doubts exist between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latterthe employer must
affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.
From the foregoing, there are serious doubts in the evidence on record as to the factual basis of
the charges against petitioner. These doubts shall be resolved in her favor in line with the policy
under the Labor Code to afford protection to labor and construe doubts in favor of labor. The
consistent rule is that if doubts exist between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter. The employer must
affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.
Not having satisfied its burden of proof, we conclude that the employer dismissed the petitioner
without any just cause. Hence, the termination is illegal.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
Philip A. Paredes for petitioner.
Jose C. Evangelista for private respondent.
KAPUNAN, J.:
In her petition filed before this Court, Ester Asuncion prays that the Decision, dated November
29, 1996, and the Resolution, dated February 20, 1997, of the public respondent National Labor
Relations Commission, Second Division, in NLRC CA 011188 which reversed the Decision of
the Labor Arbiter, dated May 15, 1996 be set aside.
The antecedents of this case are as follows:
On August 16, 1993, petitioner Ester M. Asuncion was employed as an accountant/bookkeeper
by the respondent Mabini Medical Clinic. Sometime in May 1994, certain officials of the NCR-
Industrial Relations Division of the Department of Labor and Employment conducted a routine
inspection of the premises of the respondent company and discovered upon the disclosure of
the petitioner of (documents) violations of the labor standards law such as the non-coverage
from the SSS of the employees. Consequently, respondent Company was made to correct these
violations.
On August 9, 1994, the private respondent, Medical Director Wilfrido Juco, issued a
memorandum to petitioner charging her with the following offenses:
5 1. Chronic Absentism (sic)You have incurred since Aug. 1993 up to the present 35
absences and 23 half-days.
6 2.Habitual tardinessYou have late (sic) for 108 times. As shown on the record book.
60
3 3.Loitering and wasting of company timeon several occasions and witnessed by several
employees.
4 4.Getting salary of an absent employee without acknowledging or signing for it.
5 5.Disobedience and insubordinationcontinued refusal to sign memos given to you.1
Petitioner was required to explain within two (2) days why she should not be terminated based
on the above charges.
Three days later, in the morning of August 12, 1994, petitioner submitted her response to the
memorandum. On the same day, respondent Dr. Juco, through a letter dated August 12, 1994,
dismissed the petitioner on the ground of disobedience of lawful orders and for her failure to
submit her reply within the two-day period.
This prompted petitioner to file a case for illegal termination before the NLRC.
In a Decision, dated May 15, 1996, Labor Arbiter Manuel Caday rendered judgment declaring
that the petitioner was illegally dismissed. The Labor Arbiter found that the private respondents
were unable to prove the allegation of chronic absenteeism as it failed to present in evidence the
time cards, logbooks or record book which complainant signed recording her time in reporting for
work. These documents, according to the Labor Arbiter, were in the possession of the private
respondents. In fact, the record book was mentioned in the notice of termination. Hence, the
non-presentation of these documents gives rise to the presumption that these documents were
intentionally suppressed since they would be adverse to private respondents claim. Moreover,
the Labor Arbiter ruled that the petitioners absences were with the conformity of the private
respondents as both parties had agreed beforehand that petitioner would not report to work on
Saturdays. The handwritten listing of the days when complainant was absent from work or late in
reporting for work and even the computerized print-out, do not suffice to prove that petitioners
absences were unauthorized as they
_______________
1Letter from Medical Director Wilfrido S. Juco to herein petitioner, dated August 9, 1994; Rollo,
p. 104.
61
could easily be manufactured.2 Accordingly, the dispositive portion of the decision states, to wit:
WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of the
complainant as illegal and ordering the respondent company to immediately reinstate her to her
former position without loss of seniority rights and to pay the complainants backwages and other
benefits, as follows:
1 1)P73,500.00 representing backwages as of the date of this decision until she is actually
reinstated in the service;
2 2)P20.000.00 by way of moral damages and another P20,000.00 representing exemplary
damages; and
3 3)10% of the recoverable award in this case representing attorneys fees.
SO ORDERED.3
On appeal, public respondent NLRC rendered the assailed decision which set aside the Labor
Arbiters ruling. Insofar as finding the private respondents as having failed to present evidence
relative to petitioners absences and tardiness, the NLRC agrees with the Labor Arbiter.
However, the NLRC ruled that petitioner had admitted the tardiness and absences though
offering justifications for the infractions. The decretal portion of the assailed decision reads:
WHEREFORE, premises considered, the appealed decision is hereby VACATED and SET
ASIDE and a NEW ONE entered dismissing the complaint for illegal dismissal for lack of merit.
However, respondents Mabini Medical Clinic and Dr. Wilfrido Juco are jointly and solidarily
ordered to pay complainant Ester Asuncion the equivalent of her three (3) months salary for and
as a penalty for respondents non-observance of complainants right to due process.
SO ORDERED.4
_______________
2 Decision, Labor Arbiter p. 19; Id., at 78.
3Id., at 24-25; Id., at 83-84.
4NLRC Decision, p. 17; Id., at 55.
62
Petitioner filed a motion for reconsideration which the public respondent denied in its Resolution,
dated February 19, 1997. Hence, petitioner through a petition for certiorari under Rule 65 of the
Rules of Court seeks recourse to this Court and raises the following issue:
THE PUBLIC RESPONDENT ERRED IN FINDING THAT THE PETITIONER WAS DISMISSED
BY THE PRIVATE RESPONDENT FOR A JUST OR AUTHORIZED CAUSE.
The petition is impressed with merit.
Although, it is a legal tenet that factual findings of administrative bodies are entitled to great
weight and respect, we are constrained to take a second look at the facts before us because of
the diversity in the opinions of the Labor Arbiter and the NLRC. 5 A disharmony between the
factual findings of the Labor Arbiter and those of the NLRC opens the door to a review thereof by
this Court.6
It bears stressing that a workers employment is property in the constitutional sense. He cannot
be deprived of his work without due process. In order for the dismissal to be valid, not only must
it be based on just cause supported by clear and convincing evidence, 7 the employee must also
be given an opportunity to be heard and defend himself. 8 It is the employer who has the burden
of proving that the dismissal was with just or authorized cause. 9 The failure
_______________
5 Manila Electric Company v. NLRC and Jeremias Cortez, 263 SCRA 531 (1996).
6 Manila Mandarin Employees Union v. NLRC, 264 SCRA 320 (1996).
7 Nagusara v. National Labor Relations Commission, 290 SCRA 245, 254 (1998) citing
Philippine Long Distance Telephone Co. v. NLRC, 276 SCRA 462, July 31, 1997.
8 RDS Trucking v. National Labor Relations Commission, 294 SCRA 623, 629 (1998); Maneja v.
National Labor Relations Commission, 290 SCRA 603, 620 (1998); Santos v. National Labor
Relations Commission 287 SCRA 117, 122 (1998).
9 Id., at 623; Lopez v. National Labor Relations Commission, 297 SCRA 508, 516 (1998);
Caurdanetaan Piece Workers Union v. Laguesma,
63
of the employer to discharge this burden means that the dismissal is not justified and that the
employee is entitled to reinstatement and backwages. 10
In the case at bar, there is a paucity of evidence to establish the charges of absenteeism and
tardiness. We note that the employer company submitted mere handwritten listing and computer
printouts. The handwritten listing was not signed by the one who made the same. As regards the
print-outs, while the listing was computer generated, the entries of time and other annotations
were again handwritten and unsigned.11
We find that the handwritten listing and unsigned computer print-outs were unauthenticated and,
hence, unreliable. Mere self-serving evidence of which the listing and print-outs are of that
nature should be rejected as evidence without any rational probative value even in
administrative proceedings. For this reason, we find the findings of the Labor Arbiter to be
correct. On this point, the Labor Arbiter ruled, to wit:
x x x In the instant case, while the Notice of Termination served on the complainant clearly
mentions the record book upon which her tardiness (and absences) was based, the respondent
(company) failed to establish (through) any of these documents and the handwritten listing,
notwithstanding, of (sic) the days when complainant was absent from work or late in reporting for
work and even the computerized print-outs, do not suffice to prove the complainants absences
were unauthorized as they could easily be manufactured, x x x12
In IBM Philippines, Inc. v. NLRC,13 this Court clarified that the liberality of procedure in
administrative actions is not absolute and does not justify the total disregard of certain
fundamental rules of evidence. Such that evidence without any rational probative value may not
be made the basis of order or decision of administrative
_______________
286 SCRA 401, 434 (1998); Del Monte Philippines, Inc. v. NLRC, 287 SCRA 71, 77 (1998).
10 Paguio Transport Corporation v. National Labor Relations Commission, 294 SCRA 657, 665-
666 (1998).
11 Rollo, p. 322.
12 Id., at 78.
13 305 SCRA 592 (1999).
64
bodies. The Courts ratiocination in that case is relevant to the propriety of rejecting the unsigned
handwritten listings and computer print-outs submitted by private respondents which we quote,
to wit:
However, the liberality of procedure in administrative actions is subject to limitations imposed by
basic requirements of due process. As this Court said in Ang Tibay v. CIR, the provision for
flexibility in administrative procedure does not go so far as to justify orders without a basis in
evidence having rational probative value. More specifically, as held Uichico v. NLRC:
It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the
technical rules of procedure in the adjudication of cases. However, this procedural rule should
not be construed as a license to disregard certain fundamental evidentiary rules. While the rules
of evidence prevailing in the courts of law or equity are not controlling in proceedings before the
NLRC, the evidence presented before it must at least have a modicum of admissibility for it to be
given some probative value. The Statement of Profit and Losses submitted by Crispa, Inc. to
prove its alleged losses, without the accompanying signature of a certified public accountant or
audited by an independent auditor, are nothing but self-serving documents which ought to be
treated as a mere scrap of paper devoid of any probative value.
The computer print-outs, which constitute the only evidence of petitioners, afford no assurance
of their authenticity because they are unsigned. The decisions of this Court, while adhering to a
liberal view in the conduct of proceedings before administrative agencies, have nonetheless
consistently required some proof of authenticity or reliability as condition for the admission of
documents.
In Jarcia Machine Shop and Auto Supply, Inc. v. NLRC, 14 this Court held as incompetent
unsigned daily time records presented to prove that the employee was neglectful of his duties:
Indeed, the DTRs annexed to the present petition would tend to establish private respondents
neglectful attitude towards his work duties as shown by repeated and habitual absences and
tardiness and propensity for working undertime for the year 1992. But the problem with these
_______________
14 266 SCRA 97 (1997); Ibid.
65
DTRs is that they are neither originals nor certified true copies. They are plain photoc opies of the
originals, if the latter do exist. More importantly, they are not even signed by private respondent
nor by any of the employers representatives, x x x.
In the case at bar, both the handwritten listing and computer print-outs being unsigned, the
authenticity thereof is highly suspect and devoid of any rational probative value especially in the
light of the existence of the official record book of the petitioners alleged absences and
tardiness in the possession of the employer company.
Ironically, in the memorandum charging petitioner and notice of termination, private respondents
referred to the record book as its basis for petitioners alleged absenteeism and tardiness.
Interestingly, however, the record book was never presented in evidence. Private respondents
had possession thereof and the opportunity to present the same. Being the basis of the charges
against the petitioner, it is without doubt the best evidence available to substantiate the
allegations. The purpose of the rule requiring the production of the best evidence is the
prevention of fraud, because if a party is in possession of such evidence and withholds it, and
seeks to substitute inferior evidence in its place, the presumption naturally arises that the better
evidence is withheld for fraudulent purposes which its production would expose and defeat. 15
Thus, private respondents unexplained and unjustified non-presentation of the record book,
which is the best evidence in its possession and control of the charges against the petitioner,
casts serious doubts on the factual basis of the charges of absenteeism and tardiness.
We find that private respondents failed to present a single piece of credible evidence to serve as
the basis for their charges against petitioner and consequently, failed to fulfill their burden of
proving the facts which constitute the just cause for the dismissal of the petitioner. However, the
NLRC ruled that despite such absence of evidence, there was an admission on the part of
petitioner in her Letter dated August 11, 1994 wherein she wrote:
_______________
15 IBM, Inc. v. NLRC, supra.
66
I am quite surprised why I have incurred 35 absences since August 1993 up to the present. I can
only surmise that Saturdays were not included in my work week at your clinic. If you will please
recall, per agreement with you, my work days at your clinic is from Monday to Friday without
Saturday work. As to my other supposed absences, I believe that said absences were
authorized and therefore cannot be considered as absences which need not be explained (sic).
It is also extremely difficult to understand why it is only now that I am charged to explain alleged
absences incurred way back August 1993.16
In reversing the decision of the Labor Arbiter, public respondent NLRC relied upon the supposed
admission of the petitioner of her habitual absenteeism and chronic tardiness.
We do not subscribe to the findings of the NLRC that the above quoted letter of petitioner
amounted to an admission of her alleged absences. As explained by petitioner, her alleged
absences were incurred on Saturdays. According to petitioner, these should not be considered
as absences as there was an arrangement between her and the private respondents that she
would not be required to work on Saturdays. Private respondents have failed to deny the
existence of this arrangement. Hence, the decision of the NLRC that private respondent had
sufficient grounds to terminate petitioner as she admitted the charges of habitual absences has
no leg to stand on.
Neither have the private respondents shown by competent evidence that the petitioner was
given any warning or reprimanded for her alleged absences and tardiness. Private respondents
claimed that they sent several notices to the petitioner warning her of her absences, however,
petitioner refused to receive the same. On this point, the Labor Arbiter succinctly observed:
The record is bereft of any showing that complainant was ever warned of her absences prior to
her dismissal on August 9, 1994. The alleged notices of her absences from August 17, until
September 30, 1993, from October until November 27, 1993, from December 1, 1993 up to
February 26, 1994 and the notice dated 31 May 1994 reminding complainant of her five (5) days
absences, four (4) half-days and tardiness for 582
_______________
16 Rollo, p. 105.
67
minutes (Annex 1 to 1-D attached to respondent Rejoinder), fail to show that the notices
were received by the complainant. The allegation of the respondents that the complainant
refused to received (sic) the same is self-serving and merits scant consideration. x x x17
The Court, likewise, takes note of the fact that the two-day period given to petitioner to explain
and answer the charges against her was most unreasonable, considering that she was charged
with several offenses and infractions (35 absences, 23 half-days and 108 tardiness), some of
which were allegedly committed almost a year before, not to mention the fact that the charges
leveled against her lacked particularity.
Apart from chronic absenteeism and habitual tardiness, petitioner was also made to answer for
loitering and wasting of company time, getting salary of an absent employee without
acknowledging or signing for it and disobedience and insubordination. 18 Thus, the Labor Arbiter
found that actually petitioner tried to submit her explanation on August 11, 1994 or within the
two-day period given her, but private respondents prevented her from doing so by instructing
their staff not to accept complainants explanation, which was the reason why her explanation
was submitted a day later.19
The law mandates that every opportunity and assistance must be accorded to the employee by
the management to enable him to prepare adequately for his defense. 20 In Ruffy v. NLRC,21 the
Court held that what would qualify as sufficient or ample opportunity, as required by law, would
be every kind of assistance that management must accord to the employee to enable him to
prepare adequately for his defense. In the case at bar, private respondents cannot be gainsaid
to have given petitioner the ample opportunity to answer the charges leveled against her.
_______________
17 Id., at 75-76,
18 Rollo, p. 124
19 See note 3.
20 IBM Inc. v. NLRC, supra; Maneja v. National Labor Relations Commission, supra.
21 182 SCRA 365, 369-370 (1990).
68
From the foregoing, there are serious doubts in the evidence on record as to the factual basis of
the charges against petitioner. These doubts shall be resolved in her favor in line with the policy
under the Labor Code to afford protection to labor and construe doubts in favor of labor.22 The
consistent rule is that if doubts exist between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter. The employer must
affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. 23
Not having satisfied its burden of proof, we conclude that the employer dismissed the petitioner
without any just cause. Hence, the termination is illegal.
Having found that the petitioner has been illegally terminated, she is necessarily entitled to
reinstatement to her former previous position without loss of seniority and the payment of
backwages.24
WHEREFORE, the Decision of the National Labor Relations Commission, dated
November 29, 1996 and the Resolution, dated February 20, 1997 are hereby REVERSED and
SET ASIDE, and the Decision of the Labor Arbiter, dated May 15, 1996 REINSTATED.
SO ORDERED.
Puno, Pardo and Ynares-Santiago, JJ., concur.
Davide, Jr. (Chairman), C.J., On official leave.
_______________
22 These policies are embodied in Articles 3 and 4 of the Labor Code, which read:
ART. 3. Declaration of basic policy.The State shall afford protection to labor, promote full
employment, ensure equal work opportunities regardless of sex, race or creed and regulate the
relations between workers and employers. x x x [Emphasis supplied].
ART. 4. Construction in favor of labor.All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall be resolved in
favor of labor.
23 Dizon v. NLRC, 180 SCRA 52 (1989).
24 LABOR CODE, Art. 279.
69
Judgment and resolution set aside, that of the Labor Arbiter reinstated.
Notes.The filing by a dismissed employee of a criminal action for libel during the
pendency of the illegal dismissal case does not constitute forum-shopping. (Equitable Banking
Corporation vs. National Labor Relations Commission, 273 SCRA 352 [1997])
The bare, unsubstantiated and uncorroborated denial of an employee regarding her
participation in anomalies does not prove her innocence nor disprove her alleged guiltsuch
denial or failure jto rebut the serious accusations hurled against her militates against her
innocence and strengthens the adverse averments of the employer. (Nokom vs. National Labor
Relations Commission, 336 SCRA 97 [2000])
Absent an express stipulation in the CBA, the phrase all dis-putes should be construed
as limited to the areas of conflict traditionally within the jurisdiction of Voluntary Arbitrators, i.e.,
disputes relating to contract-interpretation, contract-implementation, or interpretation or
enforcement of company personnel policiesillegal termination disputes do not fall within any of
three categories, within a special class of disputes that are generally within the exclusive original
jurisdiction of Labor Arbiters by express provision of law. (Vivero vs. Court of Appeals, 344
SCRA 268 [2000])
 G.R. No. 116464. March 1, 2000.*
RODENTO NAVARRO, ANTONIO BOCABAL and JULIAN R. DE GUZMAN, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), ARACELI CORNEJO and OLIMPIO
BRETON, respondents.
Labor Law; Appeals; Pleadings and Practice; Perfection of an appeal within the reglementary
period and in the manner prescribed by law is jurisdictional, and non-compliance with such legal
requirement is fatal and has the effect of rendering the judgment final and executory.The
perfection of an appeal within the reglementary period and in the manner prescribed by law is
jurisdictional, and noncompliance with such legal requirement is fatal and has the effect of
rendering the judgment final and executory. Such requirement cannot be trifled with.
Same; Same; Same; Appeal Bond; In case of money judgment in a labor case, appeal may be
perfected only upon posting of a cash or surety bond, the amount of which must be equivalent to
the monetary award, exclusive of damages and attorneys fees.Perfection of an appeal
includes the filing, within the prescribed period, of the memorandum of appeal containing,
among others, the assignment of error/s, arguments in support thereof, the relief sought and, in
appropriate cases, posting of the appeal bond. In case where the judgment involves a monetary
award, as in this case, the appeal may be perfected only upon posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the NLRC. The amount of the bond
must be equivalent to the monetary award, exclusive of moral and exemplary damages and
attorneys fees.
Same; Same; Same; Same; Although the Supreme Court has relaxed the requirement of the
posting of bonds on grounds of substantial justice, the same does not apply where the bond
posted is not genuine since a fake or expired bond is in legal contemplation merely a scrap of
paper.The records indicate that private respondents received the copy of labor arbiters
decision on April 3, 1992, hence, they had only until April 13, 1992 to perfect their appeal. While
private respondents filed their memorandum of appeal on time, they posted surety bond only on
April 30, 1992, which is beyond the ten-day reglementary period, a procedural lapse admitted by
private respondents. Private respondents failure to post the required appeal bond within the
prescribed period is inexcusable. Worse, the appeal bond was bogus having been issued by an
officer no longer connected for a long time with the bonding company. Unfortunately, this
irregularity was not sufficiently explained by private respondents. For sure, they cannot avoid
responsibility by disavowing any knowledge of its fictitiousness for they were required to secure
bond only from reputable companies. Corollary, they should have ensured that the bond is
genuine, otherwise, the purpose of requiring the posting of bond, that is, to guarantee the
payment of valid and legal claims against the employer, would not be served. We are mindful of
the fact that this Court, in a number of cases, has relaxed this requirement on grounds of
substantial justice and special circumstances of the case. However, we find no cogent reason to
apply this same liberal interpretation herein when the bond posted was not genuine. In this case,
there is really no bond posted since a fake or expired bond is in legal contemplation merely a
scrap of paper.
Same; Same; Same; Same; Statutory Construction; In cases where the employer appeals, the
intention of lawmakers to make the bond an indispensable requisite for the perfection of an
appeal is underscored by the provision that an appeal may be perfected only upon posting of a
cash or surety bond, and the use of the word only makes it clear that posting of a bond is the
exclusive means by which an employers appeal may be perfected.It should be stressed that
the intention of lawmakers to make the bond an indispensable requisite for the perfection of an
appeal by the employer is underscored by the provision that an appeal by the employer may be
perfected only upon the posting of a cash or surety bond. The word only makes it perfectly clear
that the lawmakers intended the posting of a cash or surety bond by the employer to be the
exclusive means by which an employers appeal may be perfected.
Same; Same; Inasmuch as the timely posting of appeal bond is an indispensable and
jurisdictional requisite and not a mere technicality of law, the NLRC has no authority to entertain
an appeal which was not filed within the reglementary period, much less to set aside the
decision of the labor arbiter, as in this case.As the appeal filed by private respondents was not
perfected within the reglementary period, the running of the prescriptive period for perfecting
appeal was not tolled. Consequently, the decision of the labor arbiter became final and
executory upon the lapse of ten calendar days from receipt of the decision. Hence, the decision
became immutable and it can no longer be amended nor altered by the labor tribunal.
Accordingly, inasmuch as the timely posting of appeal bond is an indispensable and
jurisdictional requisite and not a mere technicality of law, the NLRC has no authority to entertain
the appeal, much less to set aside the decision of the labor arbiter in this case. Any amendment
or alteration made which substantially affects the final and executory judgment is null and void
for lack of jurisdiction, including the entire proceedings held for that purpose.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
Ramon A. Gonzales for petitioners.
Benitez, Parlade, Africa, Herrera, Parlade & Panga Law Offices and Ramon Victor G. Alzona,
Jr. for private respondents.
QUISUMBING, J.:
This special civil action for certiorari seeks to annul the decision promulgated on July 29, 1993,
by public respondent in NLRC NCR Case No. 003279-92, and its resolution dated April 11,
1994, which denied petitioners motion for reconsideration.
Petitioners allege that they were jeepney drivers of private respondent Araceli Cornejo on
boundary system. They regularly ply the jeepneys assigned to them for eleven hours a day, five
times a week and each of them earn an average of P350.00 daily.
On April 20, 1991, when petitioners Rodento Navarro and Antonio Bocabal were about to get the
keys of their respective jeepneys, private respondent Olimpio Breton, the dispatcher, told them
that they cannot go out on the usual working hours of 5 PM to 4 AM (night shift) because their
working hours were moved to a new schedule of work, 7 PM to 6 AM. Expecting that the sudden
change of working hours will adversely affect their earnings, Navarro, Bocabal and seven other
night shift drivers decided not to ply their routes that day to protest the sudden change of
working hours. Petitioner Julian De Guzman reported to work as usual. However, he cut short
his trip because he allegedly felt dizzy and suffered stomach pain.
The following day, all the drivers who participated in the protest action were summoned by
Breton and were meted a one-day suspension but were asked to pay the boundary for April 20.
However, Breton promised to restore the night shift hours to 5 PM to 4 AM.
On April 23, 1991, petitioners were surprised to find somebody else were assigned to their
respective jeepneys. Breton told petitioners to look for work elsewhere, although the other
drivers who participated in the protest action were allowed to work.
For their part, private respondents claim that on April 20, 1991, at about 5:45 PM, Breton
advised the night shift drivers to take out the jeepneys at 7 PM. This action was made
considering that the regular hours were no longer observed by the drivers. Frequently, the
jeepneys were no longer checked-up because immediately after the day shift drivers return the
jeepneys at around 6 PM, the night shift drivers take them out without giving time for inspection.
Because of this strict implementation of time of work, the night shift drivers left the compound
and convinced other drivers to stop their operation. As a consequence, the jeepneys were not
taken out that night resulting in the loss of income to the operator.
On April 21, 1991, Breton met with the night shift drivers wherein they agreed that the working
hours starting the next day would be from 5 AM to 4 PM for the day shift, and 5 PM to 4 AM for
the night shift. Nonetheless, the night shift drivers were not able to drive their units on that day
since Breton advised the day shift and extra drivers to continue driving the units. This was a
precautionary step in the event the regular drivers would continue their strike as what happened
in December 1990 when all the drivers went on strike for five days.
26
Private respondents also claim that they were surprised petitioners never returned to work.
Since their business is imbued with public interest, extra drivers were made to drive the
jeepneys assigned to petitioners. They maintain that no new drivers were hired to replace
petitioners. It was only on June 7, 1991, after the first hearing of this complaint, when petitioners
made clear their refusal to return to work before the labor arbiter that replacements for them
were hired. Private respondents insist that petitioners were not dismissed but abandoned their
work.
On May 15, 1991, petitioners filed before the Regional Arbitration Branch a complaint for illegal
dismissal. The minutes of the proceedings indicate that the counsel for private respondents
informed the labor arbiter of the willingness of private respondents to take petitioners back.
Petitioners reportedly turned down private respondents offer since the drivers just want
separation pay.
On June 28, 1991, petitioners amended their complaint in which they sought payment for
severance pay, backwages, with 12% legal interest per annum; P50,000.00 to each complainant
for moral damages; P50,000.00 as exemplary damages and P15,000.00 as attorneys fees.
On November 26, 1991, the labor arbiter rendered judgment in favor of petitioners and decreed
as follows:
WHEREFORE, premises considered, respondents are ordered to pay complainants:
RODENTO NAVARRO separation pay in the amount of P40,950.00 (9 yrs. P350 x 13 days x 9
yrs.); ANTONIO BOCABAL separation pay in the amount of P22,750.00 (5 yrs. P350.00 x 13
days x 5 yrs.) and JULIAN DE GUZMAN separation pay in the amount of P31,850.00 (7 yrs.
P350.00 x 13 days x 7 yrs.) and the equivalent of 10% of the total monetary award as attorneys
fees in the amount of P9,555.00 (10% of P95,550.00).
SO ORDERED.1
________________
1 Rollo, pp. 43-44.
27
On April 3, 1992, private respondents were served a copy of the decision of the labor arbiter.
Aggrieved, they filed on April 13, 1992 with NLRC their memorandum on appeal. Nevertheless, it
was only on April 30, 1992, that private respondents filed the appeal bond. Unfortunately, the
aforesaid bond was later discovered to be spurious because the person who signed it was no
longer connected with the insurance company for more than ten years already. It was only on
July 20, 1993, that private respondents posted a substitute bond issued by another company in
the amount of P95,550.00.
In a decision dated July 29, 1993, public respondent ruled for private respondents, thus:
WHEREFORE, premises considered, the appealed decision is hereby SET ASIDE and another
entered directing the complainants, under pain of losing their employment, to report back to work
within ten (10) days from receipt of this Decision.
SO ORDERED.2
Their motion for reconsideration having been denied, petitioners filed the instant petition
imputing grave abuse of discretion on the part of public respondent:
I underscored by the provision that an appeal by the employer may be perfected only upon the
IN FINDING THAT PETITIONERS HAVE ABANDONED THEIR JOBS;
II
IN NOT FINDING THAT THE DISMISSAL OF PETITIONERS WAS WITHOUT NOTICE AND
HEARING;
III
IN ACTING ON THE APPEAL OF PRIVATE RESPONDENTS WHEN THE DECISION HAS
BECOME FINAL FOR NON-FILING OF A SUPERSEDEAS BOND WITHIN THE
REGLEMENTARY PERIOD TO APPEAL.3
________________
2 Id. at 36.
3 Id. at 7.
28
We shall first discuss the third issue raised by the petitioners inasmuch as it deals with a
jurisdictional question.
The perfection of an appeal within the reglementary period and in the manner prescribed by law
is jurisdictional, and noncompliance with such legal requirement is fatal and has the effect of
rendering the judgment final and executory. Such requirement cannot be trifled with. 4
Article 223 of the Labor Code provides:
ART. 223. Appeal.Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders.
xxx
In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the judgment
appealed from.
xxx
Perfection of an appeal includes the filing, within the prescribed period, of the memorandum of
appeal containing, among others, the assignment of error/s, arguments in support thereof, the
relief sought and, in appropriate cases, posting of the appeal bond. In case where the judgment
involves a monetary award, as in this case, the appeal may be perfected only upon posting of a
cash or surety bond issued by a reputable bonding company duly accredited by the NLRC. 5 The
amount of the bond must be equivalent to the monetary award, exclusive of moral and
exemplary damages and attorneys fees.
The records indicate that private respondents received the copy of labor arbiters decision on
April 3, 1992, hence, they
________________
4 MERS Shoe Manufacturing, Inc. v. NLRC, 286 SCRA 647 653 (1998).
5 Aba v. NLRC, GR-122627, July 28, 1999, p. 4, 311 SCRA 424.
29
had only until April 13, 1992 to perfect their appeal. While private respondents filed their
memorandum of appeal on time, they posted surety bond only on April 30, 1992, which is
beyond the ten-day reglementary period, a procedural lapse admitted by private respondents.
Private respondents failure to post the required appeal bond within the prescribed period is
inexcusable.6 Worse, the appeal bond was bogus having been issued by an officer no longer
connected for a long time with the bonding company. Unfortunately, this irregularity was not
sufficiently explained by private respondents. For sure, they cannot avoid responsibility by
disavowing any knowledge of its fictitiousness for they were required to secure bond only from
reputable companies. Corollary, they should have ensured that the bond is genuine, otherwise,
the purpose of requiring the posting of bond, that is, to guarantee the payment of valid and legal
claims against the employer, would not be served.
We are mindful of the fact that this Court, in a number of cases, 7 has relaxed this requirement on
grounds of substantial justice and special circumstances of the case. However, we find no
cogent reason to apply this same liberal interpretation herein when the bond posted was not
genuine. In this case, there is really no bond posted since a fake or expired bond is in legal
contemplation merely a scrap of paper. It should be stressed that the intention of lawmakers to
make the bond an indispensable requisite for the perfection of an appeal by the employer is
posting of a cash or surety bond. The word only makes it perfectly clear that the lawmakers
intended the posting of a cash or surety bond
________________
6 Don Orestes Romualdez Electric Cooperative, Inc. v. NLRC, GR-128389, November 25, 1999,
p. 6, 319 SCRA 255.
7 Rosewood Processing, Inc. v. NLRC, 290 SCRA 408, 420-421 (1998); Mabuhay Development
Industries v. NLRC, 288 SCRA 1, 6-7 (1998); Fernandez v. NLRC, 285 SCRA 149, 165 (1998).
30
by the employer to be the exclusive means by which an employers appeal may be perfected.8
As the appeal filed by private respondents was not perfected within the reglementary period, the
running of the prescriptive period for perfecting an appeal was not tolled. 9 Consequently, the
decision of the labor arbiter became final and executory upon the lapse of ten calendar days
from receipt of the decision. Hence, the decision became immutable and it can no longer be
amended nor altered by the labor tribunal. Accordingly, inasmuch as the timely posting of appeal
bond is an indispensable and jurisdictional requisite and not a mere technicality of law, the
NLRC has no authority to entertain the appeal, much less to set aside the decision of the labor
arbiter in this case. Any amendment or alteration made which substantially affects the final and
executory judgment is null and void for lack of jurisdiction, including the entire proceedings held
for that purpose.10
In view of the foregoing disposition, it is no longer necessary to discuss the other issues raised
in this petition.
WHEREFORE, the instant petition is GRANTED. The assailed Decision rendered on July
29, 1993, by public respondent and its Resolution dated April 11, 1994, are SET ASIDE. The
Decision of the Labor Arbiter dated November 26, 1991, is hereby REINSTATED. Costs against
private respondents.
SO ORDERED.
Bellosillo (Chairman), Mendoza, Buena and De Leon, Jr., JJ., concur.
Petition granted, decision and resolution set aside. That of the Labor Arbiter reinstated.
________________
8 See Note 4 at 653-654
9 Lamzon v. NLRC, GR-113600, May 28, 1999, p. 6, 307 SCRA 665.
10 Gaudia vs. NLRC, GR-109371, November 18, 1999, p. 9, 318 SCRA 438.
31
Notes.A substantial monetary award, even if it runs into millions, does not necessarily
give the employer-appellant a meritorious case and does not automatically warrant a reduction
of the appeal bond. (Calabash Garments, Inc. vs. National Labor Relations Commission, 260
SCRA 441 [1996])
The intention of the lawmakers to make the bond an indispensable requisite for the
perfection of an appeal by the employer is underscored by the provision that an appeal by the
employer may be perfected only upon the posting of a cash or surety bondthe word only
makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the
employer to be the exclusive means by which an employers appeal may be perfected. (MERS
Shoes Manufacturing, Inc. vs. National Labor Relations Commission, 286 SCRA 647 [1998])
o0o
Copyright 2017 Central Book Supply, Inc. All rights reserved.
 G.R. No. 152329. April 22, 2003.*
ALEJANDRO ROQUERO, petitioner, vs. PHILIPPINE AIRLINES, INC., respondent.
Labor Law; Illegal Dismissals; Grounds; Serious Misconduct; Definition; Requisites.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. For serious misconduct to warrant the dismissal of an employee, it (1) must
be serious; (2) must relate to the performance of the employees duty; and (3) must show that
the employee has become unfit to continue working for the employer.
Same; Same; Due process; Twin-Notice Rule; PAL complied with the twin-notice requirement
before dismissing the petitioner.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 employers decision to dismiss him. Both were
given by respondent PAL.
Same; Courts; National Labor Relations Commission; Judgments; Execution Pending Appeal;
Rationale; The State may authorize an immediate implementation, pending appeal, of a decision
reinstating a dismissed or separated employee.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.
Same; Same; Same; Same; Same; The order of reinstatement is immediately executory.The
order of reinstatement is immediately executory. The unjustified refusal of the employer to
reinstate a dismissed employee entitles him to payment of his salaries effective from the time the
employer failed to reinstate him despite the issuance of a writ of execution. Unless there is a
restraining order issued, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement.
_______________
* THIRD DIVISION.
425
Same; Same; Same; Same; Same; 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.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. 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.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Westwood Law for petitioner.
Bienvenido T. Jamoralin for private respondent.
PUNO, J.:
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.
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 lock 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 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 Arbiters decision, the dismissal of Roquero and Pabayo was upheld. The Labor
Arbiter found both parties at faultPAL 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
attorneys fees to the complainants.7
_______________
1 Rollo, pp. 28-30.
2 Ibid.; Records, p. 40.
3 Records, pp. 68-71, 93-96.
4 Id., at pp. 72-85, 97-110.
5 Supra note 1.
6 Although both Roquero and Pabayo filed the illegal dismissal case, only Roquero brought this
petition for review because Pabayo agreed to monetarily settle with PAL during the pendency of
the case.
7 Rollo, pp. 60-61.
427
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 PALs 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 attorneys fees to Roquero on the ground that one who has been validly
dismissed is not entitled to those benefits.14
The motion for reconsideration by Roquero was denied. In this Petition for Review on Certiorari
under Rule 45, he raises the following issues:
7 1.Whether or not the instigated employee shall be solely responsible for an action arising
from the instigation perpetrated by the employer;
6 2.Can the executory nature of the decision, more so the reinstatement aspect of a labor
 tribunals 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?
7 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 the workingman as to forcefully and meaningfully underscore labor as a primary social and
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 employees duty; and (3) must
show that the employee has become unfit 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 PALs 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 em-
_______________
15 Id., at p. 15.
16 Rollo, p. 35.
17 Austria vs. NLRC, 312 SCRA 410 (1999).
18 Philippine Aeolus Automotive United Corporation vs. NLRC, 331 SCRA 237 (2000).
429
ployment 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 employers 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.
_______________
19 Skippers Pacific, Inc., and Skippers Maritime Services, Ltd. vs. Manuel V. Mira (deceased),
substituted by Delfa F. Mira and Anne Marie F. Mira and the Court of Appeals, G.R. No. 144314,
November 21, 2002, 392 SCRA 371.
20 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.
21 March 21, 1989.
22 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. x x x.
23 200 SCRA 246 (1991).
430
xxx xxx xxx
These duties and responsibilities of the State are imposed not so much to express sympathy for
economic force, which the Constitution also expressly affirms with equal intensity. Labor is an
indispensable partner for the nations progress and stability.
xxx xxx xxx
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.
xxx xxx xxx
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.
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
_______________
24 Philippine Rabbit Bus Lines, Inc. vs. NLRC, 306 SCRA 151 (1999), citing Medina vs.
Consolidated Broadcasting System, 222 SCRA 707 (1993).
25 Ibid.
431
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.
Panganiban, Sandoval-Gutierrez, Corona and Carpio-Morales, JJ., concur.
Dismissal of petitioner affirmed but PAL to pay wages from order of reinstatement until finality of
Courts decision.
Note.Twin requirements of notice and hearing constitute the essential elements of due
process, substantive and procedural, must be complied with, before a valid dismissal exists.
(Aurora Land Projects Corporation vs. NLRC, 266 SCRA 48 [1997])
o0o
Copyright 2017 Central Book Supply, Inc. All rights reserved.
342 SUPREME COURT REPORTS ANNOTATED
Genuino vs. National Labor Relations Commission
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.
G.R. Nos. 142753-54. December 4, 2007.*
CITIBANK, N.A., WILLIAM FERGUSON, and AZIZ RAJKOTWALA, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION and MARILOU GENUINO, respondents.
Labor Law; Dismissals; Termination of Employees; Due Process; Twin Notice Requirement.In
a string of cases, 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, 526 SCRA 116 (2007), 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.
Same; Same; Same; Same; Where the notice of charges given to an employee is inadequate,
the charges being too general to enable the employee to intelligently and adequately prepare
her defense, the dismissal could not be in accordance with due process.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.
Same; Same; Loss of Confidence; In order to constitute as just cause for dismissal, loss of
confidence should relate to acts inimical to the interests of the employer; For loss of trust and
confidence to be a valid ground for an employees dismissal, it must be substantial and not
arbitrary, and must be founded on clearly established facts sufficient to warrant the employees
separation from work.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 repos ed 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. Also,
the act complained of should have arisen from the performance of the employees duties. For
loss of trust and confidence to be a valid ground for an employees dismissal, it must be
substantial and not arbitrary, and must be founded on clearly established facts sufficient to
warrant the employees separation from work. We also held that: [L]oss of confidence is a valid
ground for dismissing an employee and proof beyond reasonable doubt of the employees
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.
Same; Same; Due Process; Agabon Doctrine; The violation of an employees right to statutory
due process by the employer warrants the payment of indemnity in the form of nominal
damages, the amount of which is addressed to the sound discretion of the court, taking into
account the relevant circumstances.In view of Citibanks 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, 442 SCRA 573 (2004). The NLRCs 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.
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.
Same; Same; Payroll Reinstatement; Where the decision of the labor arbiter is for the
reinstatement of the employee, the employee shall either be admitted back to work or, at the
option of the employer, merely reinstated in the payroll, and 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 may be entitled to receive from his/her employer
under existing laws, collective bargaining agreement provisions, and company practices.
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. 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.
346
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Benjamin C. Santos & Ofelia Calceta-Santos Law Offices; Oben, Ventura, Defensor, Abola &
Associates and Santos, Parugao, Aquino & Santos Law Offices for Marilou Genuino.
Romulo, Mabanta, Buenaventura, Sayoc & De Los Angeles for Citibank, N.A., et al.
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 Commissions (NLRCs) Decision 3 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 CAs rulings. In G.R. Nos. 142732-33, Genuino
assails the CAs finding that her dismissal was valid. In G.R. Nos. 142753-54, Citibank questions
the CAs finding that Citibank violated Genuinos right to procedural due process and that
Genuino has a right to salaries.
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:
8 a.Confront our client with the factual and legal basis of your charges, and afford her an
opportunity to explain;
9 b. Substantiate your charge of fraudulent transactions against our client; or if the same
cannot be substantiated;
10 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 banks 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:
8 1.Norma T. de Jesus
9 2.Carmen Intengan/Romeo Neri
10 3.Mario Mamon
11 4.Vienna Ochoa/IETI
12 5.William Samara
13 6.Roberto Estandarte
14 7.Rita Browner
15 8.Ma. Redencion Sumpaico
16 9.Cesar Bautista
17 10.Teddy Keng
18 11.NDC-Guthrie
19 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
Genuinos counsel replied through a letter dated September 17, 1993, demanding for a bill of
particulars regarding the charges against Genuino. Citibanks counsel replied on September 20,
1993, as follows:
_______________
9 Id., at p. 68.
349
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 s he violated the
conflict of interest ruleeither 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 is set for tomorrow afternoon vis--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 banks interest vis--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 Citibanks 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, Citibanks counsel noted
Genuinos 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 Genuinos 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
Genuinos 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 fr om 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
attorneys fees.16
_______________
12 Id., at p. 70.
13 Id.
14 Id., at pp. 143-151.
15 Id., at pp. 184-200.
16 Id., at pp. 199-200.
351
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 Arbiters 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 wit h
this Court. Citibanks 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
Genuinos petition before the CA was docketed as CA-G.R. SP No. 51532 while Citibanks
petition was docketed as CA-G.R. SP No. 51533. Genuino prayed for the reversal of the NLRCs
decision insofar as it declared her dismissal valid and legal. Meanwhile, Citibank questioned the
NLRCs order to pay Genuinos salaries from the date of reinstatement until the date of the
NLRCs 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 Courts 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 Arbiters 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.
_______________
20 Rollo (G.R. Nos. 142732-33), p. 76.
21 Id., at p. 85.
353
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:
4 (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.
5 (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
_______________
22 Voyeur Visage Studio, Inc. v. Court of Appeals, G.R. No. 144939, March 18, 2005, 453
SCRA 731; citing Colegio de San Juan de Letran-Calamba v. Villas, G.R. No. 137795, March
26, 2003, 399 SCRA 550, 555; Kingsize Manufacturing Corporation v. National Labor Relations
Commission, G.R. Nos. 110452-54, November 24, 1994, 238 SCRA 349.
354
1 conference or hearing could be used by the parties as an opportunity to come to an amicable
settlement.
2 (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 employers charges, which x x x the letters of September 13 and 17, 1993 in
question have fully served.24
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
_______________
23 G.R. No. 166208, June 29, 2007, 526 SCRA 116.
24 Rollo (G.R. Nos. 142732-33), p. 112.
25 Book V, Rule XIV, Sec. 2.
355
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 Genuinos alleged knowledge and participation in the diversion of banks clients
funds, manner of diversion, and amounts involved; the acts attributed to Genuino that conflicted
with the banks 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
Genuinos dismissal justified.
356
Citibank maintains that Genuino was aware of the banks 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 Citibanks 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
_______________
26 Citibank filed with the RTC of Makati an injunction case against Dante L. Santos and INB.
Thereafter, Citibank executed a compromise agreement with Dante L. Santos, Global and
Torrance for the latter to return PhP 120million and the amounts of USD 64,500.00 and PhP
1.1million representing profits from the transfer. Dante L. Santos, Global and Torrance, however,
did not pay to Citibank the amount representing profits; hence, Citibank rescinded the
compromise agreement.
27 Sec. 31. x x x When a director, trustee or officer attempts to acquire or acquires, in violation
of his duty, any interest adverse to the corporation in respect of any matter which has been
reposed in him in confidence, as to which equity imposes a disability upon him to deal in his own
behalf, he shall be liable as a trustee for the corporation and must account for the profits which
otherwise would have accrued to the corporation.
Sec. 144. Violations of the Code.Violations of any of the provisions of this Code or its
amendments not otherwise specifically penalized therein shall be punished by a fine of not less
than one thousand (P1,000.00) pesos but not more than ten thousand (P10,000.00) pesos or by
imprisonment for not less than thirty (30) days but not more than five (5) years, or both, in the
discretion of the court.
357
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 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 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 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 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 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 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 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 plac ed with
the other companies less the spreads made by Global and/or Torrance, Mr. Dante L.
Santos and Ms. Marilou Genuino.29
In Lims 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
1 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
1 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
Citibanks accepting deposits and granting loans, nor in money placement activities that
compete with Citibanks 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 Lims 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 banks
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 Arbiters finding, the NLRC found the following facts supported by
the records:
1 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.
2 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 Citibanks interest.
3 c)Complainant is a substantial stockholder of Global Pacific, but she did not disclose fact to
the bank.
4 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
_______________
33 Id., at pp. 658-724. See footnote 26.
34 Id.
360
1 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.
2 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.
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 employees duties. 36 For loss of trust and
confidence to be a valid ground for an employees dismissal, it must be substantial and not
arbitrary, and must be founded on clearly established facts sufficient to warrant the employees
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 employees 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 Citibanks 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 Citibanks 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 banks 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
Genuinos control.
All the pieces of evidence compel us to conclude that Genuino did not have her employers
interest. The letter of the banks 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. Lims 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 Citibanks 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 NLRCs 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
_______________
40 Id., at p. 639.
363
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 CAs March 31, 2000 Resolution in CA-G.R. SP No. 51532 is increased to PhP
30,000.
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 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 complainant nominal
damages in the amount of PhP 30,000.
SO ORDERED.
Quisumbing (Chairperson), Carpio, Carpio-Morales and Tinga, JJ., concur.
_______________
42 IMPLEMENTING RULES OF THE LABOR CODE, Book VI, Rule 1, Sec. 7.
365
Petitions in G.R. Nos. 142732-33 denied; while petitions in G.R. Nos. 142753-54 granted.
Notes.The twin requirements of notice and hearing constitute essential elements of the
statutory process, and neither of these elements can be eliminated without running afoul of the
procedural mandate. (Condo Suite Club Travel, Inc. vs. National Labor Relations Commission,
323 SCRA 679 [2000])
 Loss of confidence, as a just cause for termination of employment, is premised on the fact
that the employee concerned holds a position of responsibility, trust and confidence, but in order
to constitute a just cause for dismissal, the act complained of must be work-related such as
would show the employee concerned to be unfit to continue working for the employer. (Gonzales
vs. National Labor Relations Commission, 355 SCRA 195 [2001])
o0o
Copyright 2017 Central Book Supply, Inc. All rights reserved.
 G.R. No. 164856. January 20, 2009.*
JUANITO A. GARCIA and ALBERTO J. DUMAGO, petitioners, vs. PHILIPPINE AIRLINES,
INC., respondent.
Labor Law; Wages; A dismissed employee whose case was favorably decided by the
Labor Arbiter is entitled to receive wages pending appeal upon reinstatement, which is
immediately executoryunless 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.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.
Same; Reinstatement; It settles the view that the Labor Arbiters order of reinstatement
is immediately executory and the employer has to either re-admit them to work under the same
terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and
that failing to exercise the options in the alternative, employer must pay the employees
salaries.The Court reaffirms the prevailing principle that even if the order of reinstatement of
the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate
and pay the wages of the dismissed employee during the period of appeal until reversal by the
higher court. It settles the view that the Labor Arbiters order of reinstatement is immediately
executory and the employer has to either re-admit them to work under the same terms and
conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to
exercise the options in the alternative, employer must pay the employees salaries.
Same; Same; 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.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
_______________
* EN BANC.
480
employer-corporation itself is similarly in a judicially monitored state of being resuscitated in
order to survive.
Same; Writ of Execution; The new National Labor Relations Commission (NLRC) Rules of
Procedure, which took effect on January 7, 2006, now require the employer to submit a report of
compliance within ten (10) calendar days from receipt of the Labor Arbiters decision,
disobedience to which clearly denotes a refusal to reinstatethe 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, and, with the new rules in place, there is hardly any difficulty in
determining the employers intransigence in immediately complying with the order.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 Arbiters
decision, disobedience to which clearly denotes a refusal to reinstate. The employee need not
file a motion for the issuance of the writ of execution since the Labor Arbiter shall thereafter motu
proprio issue the writ. With the new rules in place, there is hardly any difficulty in determining the
employers intransigence in immediately complying with the order.
Same; Corporate Rehabilitation; 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.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.
QUISUMBING, J., Separate Opinion:
Labor Law; Unjust Enrichment; Solutio Indebiti; The principle of unjust enrichment does not
apply, first, the provision on reinstatement pending appeal is in accord with the social justice
philosophy of our Constitutionit is meant to afford full protection to labor as it aims to stop
(albeit temporarily, since the appeal may be decided in favor of the employer) a continuing threat
481
or danger to the survival or even the life of the dismissed employee and his family, second, the
provision on reinstatement pending appeal partakes of a special law that must govern the instant
casethe provision of the Civil Code on unjust enrichment, being of general application, must
give way.The principle of unjust enrichment does not apply. First, the provision on
reinstatement pending appeal is in accord with the social justice philosophy of our Constitution. It
is meant to afford full protection to labor as it aims to stop (albeit temporarily, since the appeal
may be decided in favor of the employer) a continuing threat or danger to the survival or even
the life of the dismissed employee and his family. Second, the provision on reinstatement
pending appeal partakes of a special law that must govern the instant case. The provision of the
Civil Code on unjust enrichment, being of general application, must give way.
Same; Corporate Rehabilitation; Although the Philippine economy was gravely affected by the
Asian financial crisis, however, it cannot be assumed that it has likewise brought Philippine Air
Lines (PAL) to the brink of bankcruptcyin effect, we held that the mere fact that PAL
underwent corporate rehabilitation does not automatically mean that it suffered specific and
substantial losses that would necessitate retrenchment.We do not agree that reinstatement
pending appeal is inapplicable in the instant case since, as the majority puts it, PAL is similarly in
a state of being resuscitated in order to survive. PAL even argues that retrenchment and cash
flow constraints rendered it impossible to comply with the reinstatement order. In Flight
Attendants and Stewards Association of the Philippines (FASAP) v. Philippine Airlines, Inc., et
al., 559 SCRA 252 (2008), we noted that PAL failed to substantiate its claim of actual and
imminent substantial losses which would justify the retrenchment of more than 1,400 of its cabin
crew personnel. Although the Philippine economy was gravely affected by the Asian financial
crisis, however, it cannot be assumed that it has likewise brought PAL to the brink of bankruptcy.
In effect, we held that the mere fact that PAL underwent corporate rehabilitation does not
automatically mean that it suffered specific and substantial losses that would necessitate
retrenchment. In fact, PAL was on the road to recovery as early as February 1999 and was
declaring profits in millions in the succeeding years.
VELASCO, JR., J., Separate Opinion:
Labor Law; Procedural Laws vs. Substantive Laws; Procedural laws are adjective laws which
prescribe rules and forms of procedure of enforcing right or obtaining redress for their
invasionsubstantive law creates, defines, or regulates rights concerning life, liberty or
property or the powers of agencies or
482
instrumentalities for the administration of public affairs.A plain reading of the provision easily
reveals that it is procedural in nature. Procedural laws are adjective laws which prescribe rules
and forms of procedure of enforcing right or obtaining redress for their invasion. This is
differentiated from substantive law which creates, defines, or regulates rights concerning life,
liberty or property or the powers of agencies or instrumentalities for the administration of public
affairs. Art. 223 of the Labor Code is not a substantive, but basically a procedural provision
conferring at most on the prevailing employee at the labor arbiters level the right to execution of
the reinstatement order pending appeal. It does away with the application or motion for the
issuance of a writ of execution to prevent delay in the reinstatement of the employee.
Same; Reinstatement; While it is mandatory of the arbiter to issue the writ, still, in view of the
numerous cases handled by the arbiter, there is a necessity of the employee to work for the
release of said writ and have it implementedif the employee fails to have the writ implemented
and the decision of the labor arbiter is eventually overturned by the National Labor Relations
Commission (NLRC) or a higher body, then the employee loses the right to reinstatement.
While it is mandatory for the arbiter to issue the writ, still, in view of the numerous cases handled
by the arbiter, there is a necessity for the employee to work for the release of said writ and have
it implemented. If the employee fails to have the writ implemented and the decision of the labor
arbiter is eventually overturned by the NLRC or a higher body, then the employee loses the right
to reinstatement. The only instance when an employer becomes liable to pay the salaries of a
dismissed employee is when the employer, despite the service on him of the writ of execution,
unjustifiably refuses to reinstate the employee x x x.
Same; Same; Reinstatement pending appeal in illegal dismissal cases is a species of execution
pending appeal sanctioned by the Rules of Court, which applies suppletorily to the rules of
procedure in labor cases under Sec. 3, Rule I of the 2005 National Labor Relations Commission
(NLRC) Revised Rules of Procedure.Reinstatement pending appeal in illegal dismissal cases
is a species of execution pending appeal sanctioned by the Rules of Court, which applies
suppletorily to the rules of procedure in labor cases under Sec. 3, Rule I of the 2005 NLRC
Revised Rules of Procedure. While Sec. 2, Rule 39 of the Rules of Court allows such preliminary
relief upon due motion and for good reasons, Art. 233 requires the immediate execution pending
appeal of the reinstatement aspect of the arbiters decision and is self-executory. The reinstated
employee need not file a motion nor adduce good reasons for the grant of a reinstatement order
pending appeal.
483
BRION, J., Separate Concurring and Dissenting Opinion:
Labor Law; Reinstatement; Two alternatives in effecting reinstatement pending appeal with
National Labor Relations Commission (NLRC) from Labor Arbiters Decision.The law provides
the employer two alternatives in effecting reinstatement pending appeal. The first is actual
reinstatement, i.e., the worker returns to work and earns his pay while waiting for the result of
the employers appeal. The second is payroll reinstatement where, in lieu of actual
reinstatement, the employer complies with the obligation to reinstate by merely keeping the
worker in the payroll but out of the workplacea privilege that Article 223 of the Labor Code
itself grants.
Same; Same; Writs of Execution; In reinstatement decisions of a labor arbiter there is no need to
ask for a writ of execution except when the employer disobeys.The word immediately has 2002 Resolution of public respondent National Labor Relations Commission [NLRC] is hereby
been understood to mean without delay or lapse or interval of time. Based on this definition, the
Court has ruled that Article 223 does not need an application for and the issuance of a writ of
execution as prerequisite for the execution of a reinstatement award. In other words, the
reinstatement order is self-executory. This is the basis for the current NLRC Rules of Procedure
that leaves the enforcement of the reinstatement order to the employer who is given the duty to
submit a compliance report within 10 days from receipt of the decision. The labor arbiter issues a
writ of execution only when the employer disobeys the above directive or refuses to reinstate the
dismissed employee.
Same; Employee who receives salary based on labor arbiters decision of reinstatement has no
obligation to refund employer when National Labor Relations Commission (NLRC) reverses
arbiters decision.In the context of this case, Article 223 embodies a substantive grant that
must be given to the dismissed employees, irrespective of the presence of fault or lack of it on
the part of the employer. For this reason (separately from the reason more fully discussed
below), I do not agree with the ponencias position that PALs corporate rehabilitation excused it
from complying with Article 223. The corporate rehabilitation merely suspended the
implementation of Article 223, but did not totally excuse PAL from the obligation to reinstate, or
in lieu thereof, to pay the wages due during the appeal period. Thus, the reinstatement should
be implemented upon the lifting of the suspension or stay order. The intervening reversal by the
NLRC of the labor arbiters reinstatement decision cannot and should not affect that part of the
grant that had already been vested prior to the reversal. With the suspension lifted, PAL should
therefore be held liable for the wages due during the appeal period all the way up to the time of
reversal.
484
Same; Corporation Law; Laches; Philippine Air Lines (PAL) slept on its rights when it
failed to ask for suspension of labor proceedings.By failing to ask for the suspension of the
labor proceedings, PAL clearly slept on its right. At the very least, PALs failure to seasonably
assert its right to the suspension of proceedings raised the presumption that it had abandoned or
declined to assert this right.
Same; Same; Same; Having slept on its rights, Philippine Air Lines (PAL) should not now be
heard to say that the reinstatement that should accompany the appealed arbiters decision has
now become impossible due to ongoing corporate rehabilitation.On the authority of this
provision, respondent PALwho by its actions showed that it wanted to pursue its appeal
should not now be heard to say that the reinstatement that should accompany the appeal has
now been rendered impossible because of the ongoing corporate rehabilitation. To state it
another way, PAL was the corporate rehabilitation petitioner in whose behalf the suspension of
claims and actions was granted by law, and who knew that a suspension was in place; yet PAL
itself disregarded the supposed suspension by appealing to the NLRC. From the point of view of
fairness, it is the height of inequity to recognize the efficacy of PALs appeal and the NLRCs
consequent reversal of the labor arbiters decision, while not recognizing the reinstatement
pending appeal that should have been in place while PALs appeal was pending. If indeed the
suspension should have automatically set in, then such suspension should apply to all
proceedings from and after the SECs suspension order, i.e., from the labor arbiters to the
NLRCs proceedings. Unfortunately, this levelling of the playing field far from what would happen
if the ponencia prevails.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Rolando Go, Jr. for petitioners.
Bienvenido T. Jamoralin, Jr. for private respondent PAL, Inc.
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
485
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,
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 Notic e 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 Centers 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 resolved by the Labor Arbiter in their favor, thus
_______________
1 Justices Marina L. Buzon, Sergio L. Pestao (ponente) and Jose C. Mendoza comprised the
[Former] Fourteenth Division of the appellate court.
2 Rollo, pp. 47-48.
3 Juanito A. Garcia and Alberto J. Dumago were employed as aircraft inspector and aircraft
furnisher master, respectively.
4 Particularly, Chapter II, Section 6, Articles 46 (Violation of Law/Gov-ernment Regulations) and
48 (Prohibited Drugs).
5 Records, Vol. 1, p. 167. The dispositive portion of the Decision penned by Labor Arbiter
Ramon Valentin Reyes reads:
WHEREFORE, conformably with the foregoing, judgment is hereby rendered finding the
respondents guilty of illegal suspension and illegal dismissal and ordering them to reinstate
complainants to their former position without loss of seniority rights and other privileges.
Respondents are hereby further ordered to pay jointly and severally unto the complainants the
486
ordering PAL to, inter alia, immediately comply with the reinstatement aspect of the decision.
Prior to the promulgation of the Labor Arbiters decision, the Securities and Exchange
Commission (SEC) placed PAL (hereafter referred to as respondent), which was suffering from
severe financial losses, under an Interim Rehabilitation Receiver, who was subsequently
replaced by a Permanent Rehabilitation Receiver on June 7, 1999.
From the Labor Arbiters decision, respondent appealed to the NLRC which, by Resolution of
January 31, 2000, reversed said decision and dismissed petitioners complaint for lack of merit.6
Petitioners Motion for Reconsideration was denied by Resolution of April 28, 2000 and Entry of
Judgment was issued on July 13, 2000.7
_______________
following:
Alberto J. DumagoP409,500.00 backwages as of 1/10/99
34,125.00 for 13th month pay
Juanito A. GarciaP1,290,744.00 backwages as of 1/10/99
107,562.00 for 13th month pay
[t]he amounts of P100,000.00 and P50,000.00 to each complainant as and by way of moral and
exemplary damages; and
[t]he sum equivalent to ten percent (10%) of the total award as and for attorneys fees.
Respondents are directed to immediately comply with the reinstatement aspect of this
Decision. However, in the event that reinstatement is no longer feasible, respondent is hereby
ordered, in lieu thereof, to pay unto the complainants their separation pay computed at one
month for [e]very year of service.
SO ORDERED. (Emphasis and underscoring supplied)
6 Records, Vol. 1, pp. 174-186.
7 Id., at p. 209. A second look at the antecedents of the main case reveals that petitioners went
on certiorari to the Court of Appeals to challenge the finding of the validity of their dismissal. By
Resolutions of August 10, 2000 and November 5, 2003, the appellate court dismissed the
petition docketed as CA-G.R. SP No. 59826 and denied reconsideration thereof on technical
grounds. By Decision of June 8, 2005, the Court reversed the two resolutions and remanded the
case to the appellate court for further proceedings. vide Rollo, pp. 218-219; Garcia v. Philippine
Airlines, Inc., G.R. No. 160798,
487
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 arbiters decision (the first ground), and (2) the impossibility to
comply with the reinstatement order due to corporate rehabilitation provides a reasonable
justification for the failure to exercise the options under Article 223 of the Labor Code (the
second ground).
By Decision of August 29, 2007, this Court PARTIALLY GRANTED the present petition and
effectively reinstated the NLRC Resolutions insofar as it suspended the proceedings, viz.:
Since petitioners claim against PAL is a money claim for their wages during the pendency of
PALs appeal to the NLRC, the same should have been suspended pending the rehabilitation
proceedings. The Labor Arbiter, the NLRC, as well as the Court of Appeals should have
abstained from resolving petitioners case for illegal dismissal and should instead have directed
them to lodge their claim before PALs receiver.
However, to still require petitioners at this time to re-file their labor claim against PAL under
peculiar circumstances of the casethat their dismissal was eventually held valid with only the
matter of reinstatement pending appeal being the issuethis Court deems it legally expedient to
suspend the proceedings in this case.
_______________
June 8, 2005, 459 SCRA 768. The appellate court, by Decision of March 28, 2008 and
Resolution of July 11, 2008, dismissed the petition.
488
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 Arbiters order of reinstatement pending appeal and the
NLRC decision overturning that of the Labor Arbiter, now that respondent has exited from
rehabilitation proceedings.
Amplification of the First Ground
The appellate court counted on as its first ground the view that a subsequent finding of a valid
dismissal removes the basis for implementing the reinstatement aspect of a labor arbiters
decision.
On this score, the Courts attention is drawn to seemingly divergent decisions concerning
reinstatement pending appeal or, particularly, the option of payroll reinstatement. On the one
hand is the jurisprudential trend as expounded in a line of cases including Air Philippines Corp.
v. Zamora,10 while on the other is the recent case 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:
_______________
8 Garcia v. Philippine Airlines, Inc., G.R. No. 164856, August 29, 2007, 531 SCRA 574, 582-
583. Penned by Justice Leonardo A. Quisumbing.
9 Rollo, pp. 250-257.
10 G.R. No. 148247, August 7, 2006, 498 SCRA 59.
11 G.R. Nos. 142732-33, December 4, 2007, 539 SCRA 342.
489
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 em-
_______________
12 Supra note 10 at pp. 72-73.
13 Roquero v. Philippine Airlines, Inc., 449 Phil. 437, 446; 401 SCRA 424, 430 (2003).
490
ployee was reinstated to work during the pendency of the appeal, then the employee is entitled
to the compensation received for actual services rendered without need of refund.
Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her
dismissal is based on a just cause, then she is not entitled to be paid the salaries stated in item
no. 3 of the fallo of the September 3, 1994 NLRC Decision. 14 (Emphasis, italics and
underscoring supplied)
It has thus been advanced that there is no point in releasing the wages to petitioners since their
dismissal was found to be valid, and to do so would constitute unjust enrichment.
Prior to Genuino, there had been no known similar case containing a dispositive portion where
the employee was required to refund the salaries received on payroll reinstatement. In fact, in a
catena of cases,15 the Court did not order the refund of salaries garnished or received by 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 Constitu-
_______________
14 Supra note 11 at pp. 363-364. The Court therein sustained the NLRCs reversal of the Labor
Arbiters decision but cancelled the NLRCs award of salaries accruing from the Labor Arbiters aspect of the decision. In Pioneer Texturing Corp. v. NLRC,18 which was cited in Panuncillo v.
order of reinstatement pending appeal.
15 Composite Enterprises, Inc. v. Caparoso, G.R. No. 159919, August 8, 2007, 529 SCRA 470;
Kimberly Clark (Phils), Inc. v. Facundo, G.R. No. 144885, July 26, 2006 (Unsigned Resolution);
Sanchez v. National Labor Relations Commission, G.R. No. 124348, February 7, 2001 Unsigned
Resolution; International Container Terminal Services, Inc. v. National Labor Relations
Commission, 360 Phil. 527; 300 SCRA 335, 339 (1998).
491
tion also expressly affirms with equal intensity. Labor is an indispensable partner for the nations
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.
_______________
16 Roquero v. Philippine Airlines, supra at p. 445 citing Aris (Phil.), Inc. v. National Labor
Relations Commission, 200 SCRA 246 (1991).
492
Further, the Genuino ruling not only disregards the social justice principles behind the rule, but
also institutes a scheme unduly favorable to management. Under such scheme, the salaries
dispensed pendente lite merely serve as a bond posted in installment by the employer. For in
the event of a reversal of the Labor Arbiters decision ordering reinstatement, the employer gets
back the same amount without having to spend ordinarily for bond premiums. This circumvents,
if not directly contradicts, the proscription that the posting of a bond [even a cash bond] by the
employer shall not stay the execution for reinstatement. 17
In playing down the stray posture in Genuino requiring the dismissed employee on payroll
reinstatement to refund the salaries in case a final decision upholds the validity of the dismissal,
the Court realigns the proper course of the prevailing doctrine on reinstatement pending appeal
vis--vis the effect of a reversal on appeal.
Respondent insists that with the reversal of the Labor Arbiters Decision, there is no more basis
to enforce the reinstatement aspect of the said decision. In his Separate Opinion, Justice
Presbitero Velasco, Jr. supports this argument and finds the prevailing doctrine in Air Philippines
and allied cases inapplicable because, unlike the present case, the writ of execution therein was
secured prior to the reversal of the Labor Arbiters decision.
The proposition is tenuous. First, the matter is treated as a mere race against time. The
discussion stopped there without considering the cause of the delay. Second, it requires the
issuance of a writ of execution despite the immediately executory nature of the reinstatement
CAP Philippines, Inc.,19 the Court observed:
_______________
17 Labor Code, Article 223, par. 3.
18 345 Phil. 1057; 280 SCRA 806, 826 (1997) which established the doctrine that an order or
award for reinstatement is self-executory, meaning that it does not require a writ of execution,
much less a motion for its issuance.
19 G.R. No. 161305, February 9, 2007, 515 SCRA 323.
493
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 Arbiters order of reinstatement is immediately executory and
the employer has to either re-admit them to work under the same terms and conditions
prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise
the options in the alternative, employer must pay the employees salaries.22
_______________
20 Supra note 18 at pp. 1075-1076.
21 Supra note 12.
22 Kimberly Clark (Phils), Inc. v. Facundo, supra.
494
Amplification of the Second Ground
The remaining issue, nonetheless, is resolved in the negative on the strength of the second
ground relied upon by the appellate court in the assailed issuances. The Court sustains the
appellate courts finding that the peculiar predicament of a corporate rehabilitation rendered it
impossible for respondent to exercise its option under the circumstances.
The spirit of the rule on reinstatement pending appeal animates the proceedings once the Labor
Arbiter issues the decision containing an order of reinstatement. The immediacy of its execution
needs no further elaboration. Reinstatement pending appeal necessitates its immediate
execution during the pendency of the appeal, if the law is to serve its noble purpose. At the
same time, any attempt on the part of the employer to evade or delay its execution, as observed
in Panuncillo and as what actually transpired in Kimberly,23 Composite,24 Air Philippines,25 and
Roquero,26 should not be countenanced.
After the labor arbiters decision is reversed by a higher tribunal, the employee may be
barred from collecting the accrued wages, if it is shown that the delay in enforcing the
reinstatement pending appeal was without fault on the part of the employer.
The test is two-fold: (1) there must be actual delay or the fact that the order of
reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not
be due to the employers unjustified act or omission. If the delay is due to the employers
unjustified refusal, the employer may still be required to pay the salaries notwithstanding the
reversal of the Labor Arbiters decision.
_______________
23 Supra, where the 3 months salary was delayed because the employer filed another baseless
motion to quash writ of execution.
24 Supra, where the employer did not release the salaries despite agreeing on payroll
reinstatement, awaiting the resolution of its unmeritorious Motion to be Allowed to pay
Separation Pay in lieu of Reinstatement.
25 Supra, where the employer did not at all comply with the standing writ of execution.
26 Supra, where the employer refused to comply with the writ of execution, arguing that it filed a
petition for review before the Court.
495
In Genuino, there was no showing that the employer refused to reinstate the employee, who was
the Treasury Sales Division Head, during the short span of four months or from the promulgation
on May 2, 1994 of the Labor Arbiters Decision up to the promulgation on September 3, 1994 of
the NLRC Decision. Notably, the former NLRC Rules of Procedure did not lay down a
mechanism to promptly effectuate the self-executory order of reinstatement, making it difficult to
establish that the employer actually refused to comply.
In a situation like that in International Container Terminal Services, Inc. v. NLRC 27 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
Arbiters order of reinstatement until its ultimate reversal by the NLRC. It was later discovered
that the employee indeed moved for the issuance of a writ but was not acted upon by the Labor
Arbiter. In that scenario where the delay was caused by the Labor Arbiter, it was ruled that the
inaction of the Labor Arbiter who failed to act upon the employees motion for the issuance of a
writ of execution may no longer adversely affect the cause of the dismissed employee in view of
the self-executory nature of the order of reinstatement.28
The new NLRC Rules of Procedure, which took effect on January 7, 2006, now require the
employer to submit a report of compliance within 10 calendar days from receipt of the Labor
Arbiters decision,29 disobedience to which clearly denotes a refusal to reinstate. The employee
need not file a motion for the issuance of the writ of execution since the Labor Arbiter shall
thereafter motu proprio issue the writ. With the new rules in place, there is hardly any difficulty in
determining the employers intransigence in immediately complying with the order.
_______________
27 Supra.
28 International Container Terminal Services, Inc. v. National Labor Relations Commission,
supra.
29 Revised Rules of Procedure of the NLRC (2005), Rule V, Sec. 14 and Rule XI, Sec. 6.
496
In the case at bar, petitioners exerted efforts 30 to execute the Labor Arbiters order of
reinstatement until they were able to secure a writ of execution, albeit issued on October 5, 2000
after the reversal by the NLRC of the Labor Arbiters decision. Technically, there was still actual
delay which brings to the question of whether the delay was due to respondents unjustified act
or omission.
It is apparent that there was inaction on the part of respondent to reinstate them, but whether
such omission was justified depends on the onset of the exigency of corporate rehabilitation.
It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims
before any court, tribunal or board against the corporation shall ipso jure be suspended.31 As
stated early on, during the pendency of petitioners complaint before the Labor Arbiter, the SEC
placed respondent under an Interim Rehabilitation Receiver. After the Labor Arbiter rendered his
decision, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation
Receiver.
Case law recognizes that unless there is a restraining order, the implementation of the order of
reinstatement is ministerial and mandatory. 32 This injunction or suspension of claims by
legislative fiat33 partakes of the nature of a restraining order that constitutes a legal justification
for respondents non-compliance with the reinstatement order. Respondents failure to exercise
the alternative options of actual reinstatement and payroll reinstatement was thus justified. Such
being the case, respondents obligation to pay the salaries pending appeal, as the normal effect
of the 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 em-
_______________
30 Petitioners state that respondent ignored their letter of June 14, 1999, prompting them to file
a Motion for Issuance of Writ of Execution [of the Labor Arbiters January 11, 1999] and to Cite
the Respondents in Contempt of November 11, 1999, Rollo, pp. 78-85, 169.
31 Garcia v. Philippine Airlines, Inc., supra note 8.
32 Roquero v. Philippine Airlines, supra note 13.
33 Pres. Decree No. 902-A, Sec. 6 (c), as amended.
497
ployee 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 employees salaries upon the employers failure to exercise the
alternative options under Article 223 of the Labor Code is not a hard and fast rule, considering
the inherent constraints of corporate rehabilitation.
WHEREFORE, the petition is PARTIALLY DENIED. Insofar as the Court of Appeals Decision of
December 5, 2003 and Resolution of April 16, 2004 annulling the NLRC Resolutions affirming
the validity of the Writ of Execution and the Notice of Garnishment are concerned, the Court
finds no reversible error.
SO ORDERED.
498
Puno (C.J.), Ynares-Santiago, Carpio, Austria-Martinez, Corona, Azcuna, Tinga,
Nachura and Leonardo-De Castro, JJ., concur.
Quisumbing, J., With Separate Opinion.
Chico-Nazario, J., I join the concurring and dissenting of J. Brion.
Velasco, Jr., J., I concur in the result (with separate opinion).
Brion, J., With Concurring & Dissenting Opinion.
SEPARATE OPINION
QUISUMBING, J.:
From this Courts Decision1 dated August 29, 2007, which ordered the suspension of
the proceedings in this case, respondent Philippine Airlines, Inc. (PAL) filed a Manifestation and
Compliance2 on November 13, 2007 containing an Order 3 dated September 28, 2007, from the
Securities and Exchange Commission (SEC) granting its request to exit from the rehabilitation
proceedings.
In a letter dated September 14, 2007, the members of the Permanent Rehabilitation
Receiver (PRR) recommended PALs exit from rehabilitation because the same is feasible
based on the corporations improved financial condition, capability to service debts or
obligations, rosy projected cash flows, sustainable profitability and adherence to its Amended
and Restated Rehabilitation Plan.4 This assessment was bolstered by the Office of the General
Accountant of the SEC in its Memorandum dated September 26, 2007, which concluded that
PALs projected income and projected cash flow for the next three years, cost of debt and equity
capital, and latest interim (unaudited) financial statements, satisfactorily addressed concerns on
its financial condition and sustainability of profit. 5
_______________
1 Garcia v. Philippine Airlines, Inc., G.R. No. 164856, August 29, 2007, 531 SCRA 574.
2 Rollo, pp. 250-251.
3 Id., at p. 252-257.
4 Id., at p. 254.
5 Id., at pp. 254-256.
499
Based on these recommendations, the SEC found the termination of the rehabilitation
proceedings, on the ground of successful rehabilitation, in order, thus:
WHEREFORE, in the light of the foregoing, and considering PALs firm commitment to settle its
outstanding obligations as well as the fact that its operations and its financial condition have
been normalized and stabilized in conformity with the Amended and Restated Rehabilitation
Plan, exemplifying a successful corporate rehabilitation, the PALs request to exit from
rehabilitation is hereby GRANTED.
The PRR is likewise directed to furnish all creditors and parties concerned with copies of this
Order at the expense of the Petitioner and submit proof of service thereof to the Commission,
within fifteen (15) days from date of receipt of this Order.
SO ORDERED.6
In view of the foregoing development, the instant case may now be resolved. But first, a brief
summation of the antecedent proceedings.
Petitioners Alberto J. Dumago and Juanito A. Garcia were Aircraft Furnishers Master C and
Aircraft Inspector, respectively, assigned in the PAL Technical Center. On October 9, 1995, they
were dismissed for violation of Chapter II, Section 6, Article 46 (Violation of Law/Govern-ment
Regulations) and Chapter II, Section 6, Article 48 (Prohibited Drugs) of the PAL Code of
Discipline.7 Both simultaneously filed a case for illegal dismissal and damages.
On January 11, 1999, the Labor Arbiter rendered a Decision8 in petitioners favor:
WHEREFORE, conformably with the foregoing, judgment is hereby rendered finding the
respondents guilty of illegal suspension and illegal dismissal and ordering them to reinstat e
complainants to their former position without loss of seniority rights and other privileges.
Respondents are hereby further ordered to pay jointly and severally unto the complainants the
following:
_______________
6 Id., at p. 257.
7 Records, Vol. I, pp. 32-33.
8 Id., at pp. 160-167.
500
Alberto J. Dumago P409,500.00 backwages as of 1/10/99 34,125.00 for 13th month pay
Juanito A. Garcia P1,290,744.00 backwages as of 1/10/99 107,562.00 for 13th month pay
The amounts of P100,000.00 and P50,000.00 to each complainant as and by way of moral and
exemplary damages; and
The sum equivalent to ten percent (10%) of the total award as and for attorneys fees.
Respondents are directed to immediately comply with the reinstatement aspect of this Decision.
However, in the event that reinstatement is no longer feasible, respondent[s] are hereby
ordered, in lieu thereof, to pay unto the complainants their separation pay computed at one
month for [e]very year of service.
SO ORDERED.9
On appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiters
decision and dismissed the case for lack of merit.10 Reconsideration having been denied, an
Entry of Judgment11 was issued on July 13, 2000.
On October 5, 2000, the Labor Arbiter issued a Writ of Execution 12 commanding the sheriff to
proceed:
x x x x
1. To the Office of respondent PAL Building I, Legaspi St., Legaspi Village, Makati City or to
any of its Offices in the Philippines and cause reinstatement of complainants to their former
position and to cause the collection of the amount of [P]549,309.60 from respondent PAL
representing the backwages of said complainants on the reinstatement aspect;
2. In case you cannot collect from respondent PAL for any reason, you shall levy on the office
equipment and other movables and garnish its deposits with any bank in the Philippines, subject
to the limitation that equivalent amount of such levied movables and/or the amount garnished in
your own judgment, shall be equivalent to [P]549,309.60. If still insufficient, levy against
immovable properties of PAL not otherwise exempt from execution.
_______________
9 Id., at p. 167.
10 Id., at pp. 174-186.
11 Id., at pp. 209-210.
12 CA Rollo, pp. 57-61.
501
x x x x13
Although PAL filed an Urgent Motion to Quash Writ of Execution, the Labor Arbiter issued a
Notice of Garnishment14 addressed to the President/Manager of the Allied Bank Head Office in
Makati City for the amount of P549,309.60.
PAL moved to lift the Notice of Garnishment while petitioners moved for the release of the
garnished amount. PAL opposed petitioners motion. It also filed an Urgent Petition for Injunction
which the NLRC resolved as follows:
WHEREFORE, premises considered, the Petition is partially GRANTED. Accordingly, the Writ
of Execution dated October 5, 2000 and related [N]otice of Garnishment [dated October 25,
2000] are DECLARED valid. However, the instant action is SUSPENDED and REFERRED to
the Receiver of Petitioner PAL for appropriate action.
SO ORDERED.15
PAL appealed to the Court of Appeals on the grounds that: (1) by declaring the writ of execution
and the notice of garnishment valid, the NLRC gave petitioners undue advantage and
preference over PALs other creditors and hampered the task of the PRR; and (2) there was no
longer any legal or factual basis to reinstate petitioners as a result of the reversal by the NLRC
of the Labor Arbiters decision.
On December 5, 2003,16 the appellate court ruled that the Labor Arbiter issued the writ of
execution and the notice of garnishment without jurisdiction. Hence, the NLRC erred in
upholding its validity. Since PAL was under receivership, it could not have possibly reinstated
petitioners due to retrenchment and cash-flow constraints. The appellate court declared that a
stay of execution may be warranted by the fact that PAL was under rehabilitation receivership.
The dispositive portion of the decision dated December 5, 2003, reads:
_______________
13 Id., at pp. 60-61.
14 Id., at p. 71.
15 Id., at p. 21.
16 Rollo, pp. 38-48. Penned by Associate Justice Sergio L. Pestao, with Associate Justices
Marina L. Buzon and Jose C. Mendoza concurring.
502
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 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.17
Petitioners moved for reconsideration which the appellate court denied on April 16, 2004, 18 thus:
Considering the Motion for Reconsideration filed by private respondents dated [January] 6,
2004 of this Courts Decision promulgated on December 5, 2003, as well as the Comment filed
by petitioner dated February 20, 2003, the Court, finding no sufficient and compelling reason
which will merit a reconsideration of the Decision rendered in this case as the issues raised
therein had already been carefully considered and passed upon in the Decision sought to be
reconsidered, hereby resolves to DENY the instant motion for reconsideration for lack of merit.
SO ORDERED.19
Hence, the instant petition raising a single issue as follows:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
PETITIONERS ARE ENTITLED TO THEIR ACCRUED WAGES DURING THE PENDENCY OF
PALS APPEAL.20
Simply put, the issue is: Are petitioners entitled to their wages during the pendency of PALs
appeal to the NLRC?
Petitioners argue that pursuant to this Courts ruling in International Container Terminal
Services, Inc. v. NLRC,21 the reinstatement aspect of the Labor Arbiters decision, albeit under
appeal, is immedi-
_______________
17 Id., at pp. 47-48.
18 Id., at p. 49.
19 Id.
20 Id., at p. 219.
21 G.R. No. 115452, December 21, 1998, 300 SCRA 335 (1998).
503
ately enforceable as a consequence of which, the employer is duty-bound to choose forthwith
whether to re-admit the employee or to reinstate him in the payroll. Failing to exercise the
options in the alternative, the employer must pay the salary of the employee which automatically
accrued from notice of the Labor Arbiters order of reinstatement until its ultimate reversal by the
NLRC.22 Petitioners add that PAL should not be excused from complying with the order of
reinstatement on the ground that it was under receivership. At the time PAL received a copy of
the Labor Arbiters decision, PAL was not yet under receivership.
Respondent counters that PAL was already under an Interim Rehabilitation Receiver at the time
it received a copy of the Labor Arbiters decision. It also contends that it cannot be compelled to
reinstate petitioners pending appeal to the NLRC since retrenchment and cash flow constraints
rendered it impossible to exercise its option under Article 223 of the Labor Code.
At the crux of the controversy is the application of Article 223 of the Labor Code which provides
that:
ART. 223. Appeal. . . .
xxxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending
appeal. The employee shall either be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation, or at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for
reinstatement provided herein.
x x x x
To be sure, the Court has divergent views on the immediately executory nature of reinstatement
pending appeal particularly where the reinstatement order is reversed on appeal. On one hand,
the Court has ruled that even if the Labor Arbiters reinstatement order is reversed on appeal, it
is the employers obligation to reinstate and pay the wages of the dismissed employee during
the period of appeal
_______________
22 Id., at p. 343.
504
until reversal by the NLRC. However, if the employee has been reinstated during the period of
appeal 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.23
On the other hand, the Court has held that if the decision of the Labor Arbiter is later reversed on
appeal upon the finding that the ground for dismissal is valid, then the employer has the right to
require the dismissed employee on payroll reinstatement to refund the salaries s/he received
while the case was pending appeal, or it can be deducted from the accrued benefits that the
dismissed employee was entitled to receive from his/her employer under existing laws, collective
bargaining agreement provisions, and company practices. However, if the employee was
reinstated to work during the pendency of the appeal, then the employee is entitled to the
compensation received for actual services rendered without need of refund. 24
In his dissenting opinion, Justice Presbitero J. Velasco, Jr. adopts the second interpretation and
explains that since no actual or payroll reinstatement pending appeal transpired, petitioners are
no longer entitled to their salaries for the period in question with the reversal of the Labor
Arbiters reinstatement order. There is no more legal basis for the payment of their salaries since
their right to reinstatement pending appeal has been lost and extinguished. To release their
salaries for the period in question would constitute unjust enrichment.
The rationale for execution pending appeal has been explained by this Court in Aris (Phil.), Inc.
v. NLRC,25 thus:
_______________
23 Kimberly Clark (Phils.), Inc. v. Ernesto Facundo, et al., G.R. No. 144885, July 12, 2006, p. 8
(Unsigned Resolution); Roquero v. Philippine Airlines, Inc., G.R. No. 152329, April 22, 2003, 401
SCRA 424, 430-431; See International Container Terminal Services, Inc. National Labor
Relations Commission, G.R. No. 115452, December 21, 1998, 300 SCRA 335, 343.
24 Genuino v. National Labor Relations Commission, G.R. Nos. 142732-33 & 142753-54,
December 4, 2007, 539 SCRA 342, 363-364.
25 G.R. No. 90501, August 5, 1991, 200 SCRA 246; See Composite Enterprises, Inc. v.
Caparoso, G.R. No. 159919, August 8, 2007, 529 SCRA 470,
505
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.26
xxxx
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 familytheir 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. 27
Clearly, the principle of unjust enrichment does not apply. First, the provision on reinstatement
pending appeal is in accord with the social justice philosophy of our Constitution. It is meant to
afford full protection to labor as it aims to stop (albeit temporarily, since the appeal may be
decided in favor of the employer) a continuing threat or danger to the survival or even the life of
the dismissed employee and his family.28 Second, the provision on reinstatement pending
appeal partakes of a special law that must govern the instant case. The provision of the Civil
Code on unjust enrichment, being of general application, must give way.
In any case, Justice Velasco points out that the writ of execution in the instant case was issued
after the promulgation of the NLRC resolution. As petitioners failed to act on their rights and
seek enforcement of the reinstatement pending appeal, PAL is not liable to pay their accrued
salaries for the period in question.
_______________
482; Air Philippines Corporation v. Zamora, G.R. No. 148247, August 7, 2006, 498 SCRA 59,
73; Roquero v. Philippine Airlines, Inc., supra note 23 at pp. 429-430.
26 Aris (Phil.), Inc. v. National Labor Relations Commission, id., at p. 253.
27 Id., at p. 255.
28 Id.
506
In Pioneer Texturizing Corp. v. NLRC,29 this Court clarified that an award or order for
reinstatement is self-executory, to wit:
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. . . .
xxxx
. . . 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. . . . . 30 (Italics in the
original.)
Since the reinstatement order is self-executory, it is inaccurate to say that its non-
implementation was due to petitioners fault who failed to enforce their rights at the proper and
opportune time. To reiterate, the reinstatement order does not require a writ of execution, much
less a motion for its issuance. To require petitioners to move for the enforcement of the
reinstatement order and blame them for its belated enforcement, as Justice Velasco does, would
render nugatory the self-executory nature of the award.
Justice Velasco also posits that Article 223 of the Labor Code does not automatically make the
employer liable for accrued salaries during the reinstatement pending appeal where no
reinstatement took place. He stresses that the only relief given under the NLRC Rules of
Procedure is the remedy of compulsion via a citation for contempt, thus:
_______________
29 G.R. No. 118651, October 16, 1997, 280 SCRA 806; See International Container Services,
Inc. v. National Labor Relations Commission, supra note 21 at p. 341.
30 Pioneer Texturizing Corp. v. National Labor Relations Commission, id., at pp. 824-825.
507
RULE V. SEC. 14. Contents of Decisions.. . .
In case the decision of the Labor Arbiter includes an order of reinstatement, it shall likewise
contain: a) a statement that the reinstatement aspect is immediately executory; and b) a
directive for the employer to submit a report of compliance within ten (10) calendar days from
receipt of the said decision.
RULE IX. SEC. 6. EXECUTION OF REINSTATEMENT PENDING APPEAL.In case the
decision includes an order of reinstatement, and the employer disobeys the directive under the
second paragraph of Section 14 of Rule V or refuses to reinstate the dismissed employee, the
Labor Arbiter shall immediately issue a writ of execution, even pending appeal, directing the
employer to immediately reinstate the dismissed employee either physically or in the payroll, and
to pay the accrued salaries as a consequence of such reinstatement at the rate specified in the
decision.
The Sheriff shall serve the writ of execution upon the employer or any other person required by
law to obey the same. If he disobeys the writ, such employer or person may be cited for
contempt in accordance with Rule IX. (Emphasis and underscoring supplied.)
Contrary to the position of Justice Velasco, there are actually two reliefs given in the foregoing
provisions: (1) the payment of accrued salaries, and (2) a citation for contempt.
If the Labor Arbiters decision includes a reinstatement order, the decision should state that the
reinstatement aspect is immediately executory and direct the employer to submit a compliance
report within ten calendar days from receipt of the said decision. Should the employer disobey
the directive of the Labor Arbiter or refuse to reinstate the dismissed employee, the Labor Arbiter
shall immediately issue a writ of execution, even pending appeal, directing the employer to
immediately reinstate the dismissed employee either physically or in the payroll, and to pay the
accrued salaries as a consequence of such reinstatement. If the employer still disobeys the writ
of execution, then he may be cited for contempt.
Finally, the majority put forth the view that after the Labor Arbiters reinstatement order is
reversed by the NLRC, the employee may be barred from collecting his accrued salaries if it is
shown that the non-implementation of the reinstatement order was not due to the
508
fault of the employer. In the instant case, the corporate rehabilitation of PAL had the effect of
suspending all actions or claims against it. It partakes of the nature of a restraining order that
constitutes a legal justification for PALs non-compliance with the reinstatement order. The writer
adds that reinstatement pending appeal does not contemplate the period when the employer is
similarly in a state of being resuscitated in order to survive.
In Rubberworld (Phils.), Inc. v. NLRC,31 we recognized that the automatic stay of all pending
actions for claims is intended to enable the management committee or the rehabilitation receiver
to effectively exercise its/his powers free from any judicial or extra judicial interference that might
unduly hinder or prevent the rescue of the distressed corporation. To allow such other actions
to continue would only add to the burden of the management committee or rehabilitation
receiver, whose time, effort and resources would be wasted in defending claims against the
corporation instead of being directed toward its restructuring and rehabilitation.
Indeed, rehabilitation merely provides for the automatic stay of all pending actions or the
suspension of payments of the distressed corporation to prevent the dissipation of its assets; it
does not relieve the corporation of its obligations. Upon its successful rehabilitation, it must settle
in full all claims previously suspended.
Applying the foregoing rule, we cannot adhere to the posture taken by the majority. Just because
PAL was under rehabilitation did not necessarily mean that immediately executory orders such
as reinstatement pending appeal will be put to naught. That would in effect nullify the relief given
to the employee when all the law seeks to do is suspend it.
Furthermore, we do not agree that reinstatement pending appeal is inapplicable in the instant
case since, as the majority puts it, PAL is similarly in a state of being resuscitated in order to
survive. PAL even argues that retrenchment and cash flow constraints rendered it impossible to
comply with the reinstatement order. In Flight Attendants and Stewards Association of the
Philippines (FASAP) v. Philippine Airlines,
_______________
31 G.R. No. 128003, July 26, 2000, 336 SCRA 433, 437.
509
Inc., et al.,32 we noted that PAL failed to substantiate its claim of actual and imminent substantial
losses which would justify the retrenchment of more than 1,400 of its cabin crew personnel.
Although the Philippine economy was gravely affected by the Asian financial crisis, however, it
cannot be assumed that it has likewise brought PAL to the brink of bankruptcy. 33 In effect, we
held that the mere fact that PAL underwent corporate rehabilitation does not automatically mean
that it suffered specific and substantial losses that would necessitate retrenchment. In fact, PAL
was on the road to recovery as early as February 1999 and was declaring profits in millions in
the succeeding years.34
Given the circumstances in this case, delay on the employees part was not an issue. But we
cannot agree that the petitioners could be barred from collecting accrued wages, merely on the
ground of their delay in enforcing reinstatement pending appeal. For it was the statutory duty of
the respondent as employer to comply with a self-executory order in favor of the employees,
herein petitioners.
Thus, while its rehabilitation may have prevented PAL from exercising its option either to re-
admit petitioners to work or to reinstate them in the payroll, it did not defeat petitioners right to
reinstatement pending appeal which vested upon rendition of the Labor Arbiters decision; more
so when no actual and imminent substantial losses were proven by PAL.
To reiterate, there is no longer any legal impediment to hold PAL liable for petitioners salaries
which automatically accrued from notice of the Labor Arbiters order of reinstatement until its
ultimate reversal by the NLRC.35
WHEREFORE, I would vote to GRANT the petition.
_______________
32 G.R. No. 178083, July 22, 2008, 559 SCRA 252.
33 Id., at p. 17.
34 Id., at p. 21.
35 Kimberly Clark (Phils.), Inc. v. Ernesto Facundo, et al., supra note 23 at p. 9; International
Container Terminal Services, Inc. v. National Labor Relations Commission, supra note 21 at p.
343; See Composite Enterprises, Inc. v. Caparoso, supra note 25 at p. 483.
510
SEPARATE OPINION
VELASCO, JR., J.:
The ponencia affirms the December 5, 2003 Decision and the April 16, 2004 Resolution of the
Court of Appeals (CA) in CA-G.R. SP No. 69540, annulling the National Labor Relations
Commission (NLRC) resolutions that affirmed the validity of the Writ of Execution and Notice of
Garnishment in question. I concur with the ponencia but for a different reason.
A summary of the facts contained in the ponencia is as follows:
Petitioners Juanito A. Garcia and Alberto J. Dumago were dismissed by Philippine Airlines, Inc.
(PAL) in 1995 for violation of company and government regulations regarding illegal drugs. Both
Garcia and Dumago filed a case for illegal dismissal and damages. Subsequently, on January
11, 1999, the labor arbiter decided the case in their favor and ordered PAL to immediately
reinstate both employees and to pay them backwages, among other items. On appeal, the
NLRC reversed the labor arbiters decision and dismissed the complaint for lack of merit. After
the motion for reconsideration was denied, an Entry of Judgment was issued on July 13, 2000.
Thereafter, on October 5, 2000, the labor arbiter issued a Writ of Execution which commanded
the sheriff to cause [the] reinstatement of complainants to their former positions and to cause
the collection of the amount of [P]549,309.60 from respondent PAL representing the backwages
of said complainants on the reinstatement aspect. On October 25, 2000, the labor arbiter issued
a notice of garnishment.
The only issue in this case is whether Garcia and Dumago are entitled to their wages for the
period between the labor arbiters order of reinstatement and the NLRCs decision overturning
the labor arbiters decision.
The issue should be resolved in the negative.
In addition to the ground enunciated by the majority view that there was no unjustified act or
omission on the part of PAL to reinstate the employees due to corporate rehabilitation, I submit
that, in the light of the facts of the case where the employees failed to obtain
511
a writ of execution and their reinstatement was not implemented prior to the reversal of the
arbiters decision granting reinstatement, they are not entitled to payment of backwages.
Consider the following reasons:
(1) Paragraph 3 of Article 223 of the Labor Code provides:
x x x In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be executory,
even pending appeal. The employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the option of the employer,
merely reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided therein. (Emphasis supplied.)
A plain reading of the provision easily reveals that it is procedural in nature. Procedural laws are
adjective laws which prescribe rules and forms of procedure of enforcing right or obtaining
redress for their invasion.1 This is differentiated from substantive law which creates, defines, or
regulates rights concerning life, liberty or property or the powers of agencies or instrumentalities
for the administration of public affairs.2 Art. 223 of the Labor Code is not a substantive, but
basically a procedural provision conferring at most on the prevailing employee at the labor
arbiters level the right to execution of the reinstatement order pending appeal. It does away with
the application or motion for the issuance of a writ of execution to prevent delay in the
reinstatement of the employee. While the filing of the motion and the need to justify execution
pending appeal are dispensed with, still, there appears to be a need for the issuance of a writ of
execution contrary to the pronouncement in the ponencia citing Pioneer Texturizing Corp. v.
NLRC (Pioneer).3 Rule XI, Section 6 of the 2005 NLRC Revised Rules of Procedure provides:
_______________
1 R.E. Agpalo, Statutory Construction 295 (3RD ED., 1995); cited in Agpalo, Legal Works and
Phrases 581 (1997).
2 Tirona v. Alejo, G.R. No. 129313, October 10, 2001, 367 SCRA 17, 32.
3 G.R. No. 118651, October 16, 1997, 280 SCRA 806.
512
Section 6. Execution of Reinstatement Pending Appeal.In case the decision includes an
order of reinstatement, and the employer disobeys the directive under the second paragraph of
Section 14 of Rule V or refuses to reinstate the dismissed employee, the Labor Arbiter shall
immediately issue writ of execution, even pending appeal, directing the employer to immediately
reinstate the dismissed employee either physically or in the payroll, and to pay the accrued
salaries as a consequence of such reinstatement at the rate specified in the decision.
The Sheriff shall serve the writ of execution upon the employer or any other person
required by law to obey the same. If he disobeys the writ, such employer or person may be cited
for contempt in accordance with Rule IX.
In this respect, while it is mandatory for the arbiter to issue the writ, still, in view of the numerous
cases handled by the arbiter, there is a necessity for the employee to work for the release of
said writ and have it implemented. If the employee fails to have the writ implemented and the
decision of the labor arbiter is eventually overturned by the NLRC or a higher body, then the
employee loses the right to reinstatement.
The only instance when an employer becomes liable to pay the salaries of a dismissed
employee is when the employer, despite the service on him of the writ of execution, unjustifiably
refuses to reinstate the employee, thus:
x x x the unjustified refusal of the employer to reinstate an illegally dismissed employee entitles
the employee to payment of his salaries, effective from the date the employer failed to reinstate
despite an executory writ of execution served upon him. Such ruling is in accord with the
mandate of the new law awarding full backwages until actual reinstatement (Article 279 of the
Labor Code as amended.)4
Art. 223 does not, as couched, accord the dismissed employee the substantive right to wages
under any and all circumstances during such pendency of the appeal regardless of the outcome
of the appeal before the NLRC. As explained, if reinstatement remains unimple-
_______________
4 Medina v. Consolidated Broadcasting System (CBS)-DZWX, G.R. Nos. 99054-56, May 28,
1993, 222 SCRA 707, 711.
513
mented due to inaction of the employee, then he is not entitled to payment of wages for the
appeal period. If it were otherwise, there is, in a limited sense, no reason for the employer to
challenge the pay aspect of the labor arbiters decision on appeal as the employee would be
adjudged entitled to backwages before the NLRC at any event. Worse, it will in effect nullify the
first paragraph of Art. 223 which grants the employer the right to appeal the labor arbiters
decision to the NLRC within 10 calendar days from receipt of the decision. It will even
emasculate the judicial power of review of the CA and this Court. The reason is simplethe
employee will be paid his salaries anyway even the appeal of the employer is found meritorious
and the dismissal of the employee is upheld. It puts to naught the right of appeal of the employer
even if the employee waives or, by sheer indifference, neglects to pursue reinstatement pending
appeal.
Moreover, the employees need not strive to secure reinstatement in the interim as payment of
his wages from rendition of the labor arbiters decision to the time the NLRC issues its own is
most assured. The employee may opt not to avail of the reinstatement and instead obtain work
somewhere else since payment of his salaries is guaranteed regardless of the outcome of the
appeal, a classic case of having ones cake and eating it too. Simply put, the situation is
oppressive, most unfair, and unjust to the employer.
(2) Undoubtedly, the reinstatement of the employee under Art. 223 contemplates an execution
pending appeal. Aris (Phil.), Inc. v. NLRC (Aris) clarified the nature of the provisional relief of
reinstatement pending the final resolution of the appeal of the losing party in the following wise:
Execution pending appeal is interlinked with the right to appeal x x x. The latter may be availed
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, however, is x x x a
statutory privilege of statutory origin 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
514
discretion of the court upon good reasons to be stated in a special order. 5 (Emphasis supplied.)
Thus, reinstatement pending appeal in illegal dismissal cases is a species of execution pending
appeal sanctioned by the Rules of Court, which applies suppletorily to the rules of procedure in
labor cases under Sec. 3, Rule I of the 2005 NLRC Revised Rules of Procedure. While Sec. 2,
Rule 39 of the Rules of Court allows such preliminary relief upon due motion and for good
reasons, Art. 233 requires the immediate execution pending appeal of the reinstatement aspect
of the arbiters decision and is self-executory. The reinstated employee need not file a motion
nor adduce good reasons for the grant of a reinstatement order pending appeal. Such good
reasons required in Rule 39 of the Rules of Court are, as articulated in Aris, already captured in
the raison d etre behind Art. 223, viz.:
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 familytheir 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. 6
It is established in this jurisdiction that in discretionary execution envisaged under said Rule 39,
the prevailing party is obliged to make restitution or reparation, as justice and equity may
warrant, in case the executed judgment is reversed on appeal. 7 If the party granted execution
pending appeal is required to make restitution or reparation in ordinary civil cases, then an
_______________
5 G.R. No. 90501, August 5, 1991, 200 SCRA 246, 253.
6 Id., at p. 255.
7 Rules of Court, Rule 39, Sec. 5. See Legaspi v. Ong, G.R. No. 141311, May 26, 2005, 459
SCRA 122; Pilipinas Bank v. Court of Appeals, G.R. No. 97873, August 12, 1993, 225 SCRA
268.
515
employee reinstated under payroll reinstatement is likewise obliged to make restitution of the
salaries paid to him once the dismissal is upheld.8 Such being the case, the right to
reinstatement pending appeal is not a substantive but merely a procedural right.
(3) The complaint of the petitioners alleges illegal dismissal as their cause of action. Such is a
pleading allowed the dismissed employee under Sec. 1, Rule III of the 2005 NLRC Revised
Rules of Procedure which defines complaint as a pleading alleging the cause or causes of
action of the complainant or petitioner. There is no definition of cause of action in the NLRC
Rules of Procedure. Since the Rules of Court applies in a suppletory character and effect to the
2005 NLRC Revised Rules of Procedure,9 then the definition of cause of action in Sec. 2, Rule 2
of the 1997 Rules of Civil Procedure is adoptedthat it is the act or omission by which a party
violates a right of another. In an illegal dismissal case, the cause of action of the dismissed
employee is the employers unlawful act in dismissing him from the service, thus violating the
right of the employee to employment. Hence, the employee must prove his cause of action
before he is entitled to relief. When the Labor Arbiter declares the illegality of the dismissal and
orders his immediate reinstatement pending appeal, the cause of action of the employee is
sustained subject to the appeal before the NLRC. While the appeal is pending, the employee is
entitled to a provisional reliefexecution pending appeal of the reinstatement aspect of the
decision of the arbiter. Thus, he has the right to the immediate execution of the order of
reinstatement based on the arbiters decision. This is predicated on Art. 223 which declares that
reinstatement pending appeal is immediately executory, and supported by Pioneer,10 which
allowed the employees reinstatement even without a motion being filed or the need to justify
said relief pending appeal. In short, there is a legal basis for the reinstatement pending appeal
the arbiters decision. If the reinstatement is not implemented prior to the reversal decision of the
NLRC, and the NLRC
_______________
8 Genuino v. National Labor Relations Commission, G.R. Nos. 142732-33 & 142753-54,
December 4, 2007, 539 SCRA 342.
9 Rule I, Sec. 3.
10 Supra note 3.
516
decision becomes final, like in the case at bar, certainly the employee is no longer entitled to
reinstatement since there is no more legal basis for such relief. The finding that the dismissal is
valid and legal removes the legal anchorage for reinstatement. The right of employment of the
dismissed worker is, therefore, lost and forfeited. Necessarily, the employee is not even entitled
to payment of salaries he could have earned had he been reinstated pending appeal for the
simple reason that there is also no legal basis for such payment.
In the case at bar, when the NLRC rendered its reversal decision and held the petitioners
dismissal from PAL valid, it had in effect removed the legal basis for petitioners reinstatement.
Accordingly, as there is no more basis for reinstatement, the payment of unearned wages during
the appeal, therefore, has no legal basis either. The labor arbiter, to stress, issued his decision
on January 11, 1999, while the NLRC decision became final on July 13, 2000. In the interim,
petitioners never lifted a finger to have the execution pending appeal implemented. They
secured the writ of execution only on October 5, 2000, long after the finality of the NLRCs
decision. By that time, the execution of the reinstatement pending appeal had no more legal
basis as was lost and forfeited. We cannot fault the employer for the failed reinstatement when
the employees themselves failed to enforce their rights at the proper and opportune moment. In
the end, they were not able to substantiate and prove their cause of action. All reliefs that could
have been granted to them were extinguished by the final NLRC decision that their dismissal is
valid and legal.
(4) Art. 223 of the Labor Code does not automatically render the employer liable for
backwages for the period reckoned from the date of the labor arbiters decision up to the date of
the decision of a higher body reversing the arbiters decision if there the employee failed to
enforce the labor arbiters order of reinstatement. Art. 223, 3rd paragraph is SILENT as to the
consequences of the non-implementation of reinstatement pending appeal through the inaction
of the employee, in the event the reinstatement is subsequently set aside. What should be
applied is the literal meaning or plain-meaning rule under the maximspeech is the index of
intention (index animi sumo). If the statute is clear, plain, and free from ambiguity, it must be
given its
517
literal meaning and applied without attempted interpretation. 11 What is not clearly provided and
specified in the law cannot be extended to those matters outside its scope. 12 Since the payment
of backwages for the period reckoned from the date of decision awarding reinstatement up to the
reversal thereof was not explicitly provided in the 3rd paragraph of Art. 223, then such award is
unauthorized and without legal basis.
(5) The labor arbiter is duty-bound to order reinstatement by issuing a writ of execution if his
decision directs the reinstatement is immediately executory. While it was explained in Pioneer
that there is no need for the issuance of a writ of execution regarding reinstatement pending
appeal, the Department of Labor and Employment saw the need for the issuance of a writ of
execution to implement an order or decision. The suggested procedure in Pioneer is ineffective
and the losing party does not generally comply with the order or decision possibly due to
ignorance of the NLRC Rules of Procedure and jurisprudence. More importantly, a writ of
execution or garnishment is always the generally accepted procedure in implementing final
orders and decisions. The 2005 NLRC Revised Rules of Procedure, particularly Sec. 14, Rule V,
has always prescribed the necessity for a writ of execution, thus:
SEC. 14. CONTENTS OF DECISIONS.The decisions and orders of the Labor Arbiter shall
be clear and concise and shall include a brief statement of the: a) facts of the case; b) issues
involved; c) applicable laws or rules; d) conclusions and the reasons therefore; and e) specific
remedy or relief granted. In cases involving monetary awards, the decisions or orders of the
Labor Arbiter shall contain the amount awarded.
In case the decision of the Labor Arbiter includes an order of reinstatement, it shall likewise
contain: a) a statement that the reinstatement aspect is immediately executory; and b) a
directive for the employer to submit a report of compliance within ten (10) calendar days from
receipt of the said decision.
The complementing Sec. 6, Rule XI provides:
Section 6. Execution of Reinstatement Pending Appeal.In case the decision includes an
order of reinstatement, and the employer disobeys the directive under the second paragraph of
Section 14 of Rule V or refuses to reinstate the dismissed employee, the Labor Arbiter shall
immediately issue a writ of execution, even pending appeal, dissecting the employer to
immediately reinstate the dismissed employee either physically or in the payroll, and to pay the
accrued salaries as a consequence of such reinstatement at the rate specified in the decision.
The sheriff shall serve the writ of execution upon the employer or any other person required
by law to obey the same. If he disobeys the writ, such employer or person may be cited for
contempt in accordance with Rule IX. (Emphasis ours.)
Even the previous Sec. 3, Rule VIII of the NLRC Rules of Procedure, as amended by Resolution
No. 01-02, Series of 2002, saw the need for such writ:
SEC. 3. Issuance of Partial Writ Pending Appeal.In case the decision includes an order or
reinstatement, the Labor Arbiter shall immediately issue a partial writ of execution even pending
appeal directing the employer to immediately reinstate the dismissed employee either physically
or through payroll and to pay the corresponding salaries as a consequence of the
reinstatement. (Emphasis ours.)
It is abundantly clear from the above-quoted rules that an employer has to be compelled to
reinstate the employee by means of a writ, and one who disobeys the writ of execution may be
cited for contempt. The employer, as may be noted, can be coerced to actually reinstate the
employees concerned to their former positions or agree to a payroll readmission. Nowhere in the
rules does it say that the employer shall contextually be liable for the payment of backwages in
the event reinstatement is not effected. The only relief given under the rules is the remedy of
compulsion via a citation for contempt.
(6) Pioneer did not rule that in the event of unjustifiable refusal to reinstate the employee, then
the employer is liable for the wages
519
which could have been earned during the appeal period. Neither did it rule that in case the
employer refuses to reinstate the employee, then a writ of execution is no longer necessary. As
a matter of fact, Pioneer cannot be considered a precedent to the case at bar considering that
the Court subsequently affirmed the finding of illegal dismissal upon which the reinstatement on
appeal was based. In the present case, the finding of illegal dismissal by the labor arbiter was
overturned by the NLRC and the ruling that there was a valid dismissal eventually became final
without the employees being reinstated during the appeal period, thus, the non-entitlement to the
unearned wages.
Justice Brion, in his Concurring and Dissenting Opinion, opined that the labor arbiter issues a
writ of execution only when the employer disobeys the above directive or refuses to reinstate the
dismissed employee which is not the procedure prescribed in Rule XI, Sec. 6. This Section
requires the labor arbiter to immediately issue a writ of execution upon promulgation of the
arbiters decision. It is imprecise to say that a writ of execution is no longer necessary to
effectuate a reinstatement pending appeal, as laid down in Pioneer. A writ of execution is
needed after all. What is avoided by Art. 223 is the filing of a motion for reinstatement pending
appeal and the presentation of evidence to justify reinstatement. Thus, reinstatement is self-
executory only in that sense.
In the case at bar, PAL did not reinstate the petitioners due to corporate rehabilitation, doubtless
a justifiable cause. Thus, it was incumbent for the employees to procure a writ of execution to
compel reinstatement. If PAL disobeyed, then they could have asked the labor arbiter to cite the
airline in contempt. They did not. They only got the writ after the NLRC decision annulling the
arbiters decision has become final. In this situation, they are not clearly entitled to the wages
that could have been due to them during the appeal period.
(7) Air Philippines Corp. v. Zamora (Air Philippines)13 likewise is not a precedent to the case at
bar since it involved a reinstatement of a dismissed employee where the appeal of the higher
court has not
_______________
13 G.R. No. 148247, August 7, 2006, 498 SCRA 59.
520
yet been finally resolved. Naturally, the employee in Air Philippines was still entitled to
reinstatement because the legal basis thereforethe decision of the labor arbiterwas the
prevailing ruling at that time although challenged on appeal. In the case at bench, the appeal
has already been finally decided by the higher tribunalthe NLRC. There is, thus, to reiterate,
no more legal basis for the reinstatement of the dismissed employees since it has been finally
decreed that the dismissal is valid.
(8) If there is a justification for the refusal to reinstate, then the employer is not liable for the
payment of salaries during the appeal period. 14 In PT&T v. NLRC15 and Equitable Banking
Corporation v. NLRC,16 it was held that where the dismissed employees reinstatement would
lead to a strained employer-employee relationship or to an atmosphere of antipathy and
antagonism, the exception to the twin remedies of reinstatement and payment of backwages can
be invoked, and reinstatement, which might become anathema to industrial peace, could be held
back pending appeal.17 In the case at bar, considering that the dismissed employees committed
a crime involving a breach of the Dangerous Drugs Actsniffing shabu, which addiction might
contaminate the other employees in the workplace thereby prejudicing the quality of work in a
public service and utility company like PAL, then the denial of reinstatement is justified.
(9) The cases of Roquero, Intercontinental Cointainer Terminal Services, Inc. (ICTSI), and
Kimberly are not precedents to the case at bar.
In Roquero, the employees filed a motion for a writ of execution of the NLRCs order of
reinstatement which was granted by the labor arbiter during the pendency of the appeal. In the
case at bar, the writ was issued after the appeal was finally decided finding the dismissal valid.
In Roquero, the Court ruled that:
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.
Thus, the Roquero case is different in that the decision ordering reinstatement has not yet been
reversed by the higher court when reinstatement was sought. Here, it was demanded after a
final ruling of the legality of the dismissal.
In ICTSI, the employee filed a motion for writ of execution with the NLRC pending his appeal for
reinstatement. In the instant case, petitioners obtained a writ of execution after the NLRC had
disposed of the appeal by reversing the arbiters decision reinstating them.
In Kimberly, the labor arbiter issued a writ of execution for the reinstatement of the employees
pending appeal. Subsequently, he directed the company to pay the employees back salaries,
and the companys bank deposits were garnished. In the case at bar, the labor arbiter issued the
writ of execution after the appeal has been resolved and the labor arbiters decisions was
reversed by the NLRC.
Thus, the case of Romero, ICTSI, and Kimberly cannot support the proposition that respondent
PAL is still required to pay the wages of petitioners when they only claimed reinstatement after
the issuance of a final ruling at their dismissal is valid.
The doctrine of stare decisis et non quieta movere means to adhere to precedents and not to
unsettle things which are established. Under said doctrine, when the Court has once laid down
a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply
it to all future cases, where facts are substantially the same regardless of whether the parties
and property are the
522
same.18 Since the facts in the instant petition are not substantially the same as in Roquero and
other cases cited in the Concurring and Dissenting Opinion of Justice Brion, then I submit that
the principles of law enunciated in Roquero and other cases cannot be applied to the case at
bar.
(10) If petitioners will be adjudged to receive the salaries they could have earned during the
pendency of the appeal after the case has been resolved with finality that their dismissal is valid,
then petitioners will unduly enrich themselves at the expense of PAL without any legal basis.
Such award would violate the doctrine of unjust enrichment that a person shall not be allowed to
profit or enrich himself inequitably at anothers expense. 19 Nemo cum alterius detrimento
locupletari potest. No one shall enrich himself at the expense of another.20
To sum up:
After the decision of the arbiter ordering reinstatement pending appeal is issued, the labor arbiter
is tasked to immediately issue a writ of execution for the implementation of the reinstatement
pursuant to Sec. 6, Rule XI of the 2005 NLRC Revised Rules of Procedure. Despite the duty of
the labor arbiter to issue such writ, the employee must exert effort and follow up to see to it that
the said writ is actually issued by the labor arbiter. After issuance of the partial writ, the Sheriff
shall serve the writ upon the employer. The employee must follow up with the sheriff the actual
and immediate service of the writ upon the employer. If the employer disobeys the writ, the
employer may be cited for contempt. The employee must file a motion for contempt wit the Labor
Arbiter.
If the employee obtains the writ of execution prior to reversal of the labor arbiters decision, but
the employer refuses without just cause to obey the reinstating writ, the latter is liable for the
wages of
_______________
18 Confederation of Sugar Producers Association, Inc. v. Department of Agrarian Reform, G.R.
No. 169514, March 30, 2007, 519 SCRA 582, 618.
19 Soriano v. Court of Appeals, G.R. No. 78975, September 7, 1989, 177 SCRA 330.
20 Santos v. Court of Appeals, G.R No. 100963, April 6, 1993, 221 SCRA 42.
523
the employee even if the decision of the labor arbiter is eventually reversed. 21
If the refusal of the employer to reinstate the employee pending appeal is justified, then
reinstatement pending appeal cannot be compelled nor is the employer liable for backwages.
If the actually-reinstated employee worked in his former position pending appeal up to the date
of reversal of the decision of the labor arbiter, then he is not obliged to reimburse the wages he
earned, anchored on the principle that employees are entitled to fair wages for their days work.
If the reinstating decision is reversed on appeal, then the employee placed on payroll
reinstatement is required to reimburse the employer the wages he received during the payroll
reinstatement since he is not legally entitled thereto after all as the order of reinstatement has no
more legal basis as a result of the finding of a valid dismissal. Without reimbursement, the
employee would unduly be enriched at the expense of the employer, contrary to the provision of
Art. 22 of the Civil Code which states that every person who, through an act of performance by
another, or any other means, acquires or comes into possession of something at the expense of
the latter without just or legal ground, shall return the same to him.
If, as in this case, the employees fail to effectuate the release of the writ of execution and seek
the enforcement of the reinstatement order during the pendency of the appeal and such order is
subsequently reversed on appeal, the employer shall not be liable for the backwages
corresponding to the period of the failed reinstatement.
I, therefore, vote to DISMISS the petition and concur in the result.
SEPARATE CONCURRING AND DISSENTING OPINION
BRION, J.:
The present case involves two issues touching on different areas of law. The first issue relates to
labor lawthe effect on a reinstatement
_______________
21 Medina, supra note 4.
524
pending appeal of the reversal by the National Labor Relations Commission (NLRC) of the labor
arbiters reinstatement decision. The second is a corporate rehabilitation issue.
I concur with the ponencia on the first issue, but dissent from the conclusion on the corporate
rehabilitation issue. Thus, I vote to GRANT the petition and order the respondent Philippine
Airlines, Inc. (PAL) to pay the petitioners the salaries due them prior to the NLRCs reversal of
the labor arbiters decision.
The Reinstatement Pending Appeal Issue
The labor law provision at the center of the present dispute is Article 223 of the Labor Code
which provides:
x x x
In any event the decision of the Labor Arbiter reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned shall immediately be executory, even pending
appeal. The employee shall either be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or, at the option of the employee merely
reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for
reinstatement provided herein.
x x x
Under the terms of this provision, the existence of the right to reinstatement itself, either actually
or by payroll, presents no controversial point. Its implementation, however, may result in
complications arising from the nature of the granted right, as the pendency of an appeal
necessarily recognizes that the reinstatement which the labor arbiter ordered may still be
reversed by the NLRC. Thus, the question arises: what happens to the reinstatement made
when a reversal intervenes? More specifically, what happens to the salaries already paid
pending appeal to the worker whose dismissal the NLRC declares to be legal?
The law provides the employer two alternatives in effecting reinstatement pending appeal. The
first is actual reinstatement, i.e., the worker returns to work and earns his pay while waiting for
the result of the employers appeal. The second is payroll reinstate-
525
ment where, in lieu of actual reinstatement, the employer complies with the obligation to
reinstate by merely keeping the worker in the payroll but out of the workplacea privilege that
Article 223 of the Labor Code itself grants.
Either case poses no patent legal complication and has been amply covered by our rulings in
their implementation.1 In the first case, no refund or reimbursement of salaries paid is necessary,
as the worker earned his or her salaries through actual services rendered. In the second case,
the worker would have worked, but the employer waived his right to exact services for the
salaries he had paid. Thus, even if a reversal subsequently occurs, the employer is estopped
from claiming any reimbursement or refund of salaries paid since they were paid for services
deemed rendered.
The present case escapes the clear and easy application of Article 223 because neither actual
nor payroll reinstatement took place during the period of appeal; instead, the labor arbiter issued
a writ of execution for the salaries corresponding to the period of appeal after the NLRC had
issued its order of reversal. Thus, the question that arises and the one directly posed by this
case is: is the right to reinstatement pending appeal enforceable even after the reversal of the
order that gave rise to the right?
The Reinstatement Provision Examined
The immediately executory character of a labor arbiters reinstatement order is not an original
provision of the Labor Code as framed in 1974. It only came in 1989 by way of an amendment to
the Labor Code under R.A. No. 6715. The obvious intent of the Legislatureas this Court
ascertained in Aris (Phil.) Inc. v. NLRC2is to lay down a compassionate policy towards the
workingman in recognition of his role in the social and economic life of the nation.
_______________
1 Triad Security and Allied Service, Inc., et al. v. Ortega, Jr., et al., G.R. No. 160871, February 6,
2006, 481 SCRA 591; Medina, et al. v. Consolidated Broadcasting System, et al., G.R. No.
99054, May 28, 1993, 22 SCRA 707.
2 G.R. No. 90501, August 5, 1991, 200 SCRA 246.
526
In more practical terms, the provision came because of the need to level the playing field
between labor and management; a worker deprived of his or means of livelihood during the
pendency of the employers appeal in a dismissal case is at an extreme disadvantage because
of lack of funds for his or her basic survival needs. This realization, coupled with the undisputed
delay that attends litigation, is enough to discourage workers from seeking redress of from
pursuing cases already filed, to their gross disadvantage. This situation can be an oft-repeating
reality unless the State intervenes.
R.A. No. 6715 is such intervention made pursuant to the constitutional mandate for the
protection of labor. We recognized this State obligation in Fuentes v. NLRC,3 when we ruled:
The State is bound under the Constitution to afford full protection to labor and when conflicting
interests of labor and capital are to be weighed on the scales of social justice, the heavier
influence of the latter should be counterbalanced with the sympathy and compassion the law
accords the less privileged workingman.
The mandatory execution pending appeal contemplated is both novel and unique as the
executions we have known before R.A. No. 6715 were executions of final and executory
judgments4 and discretionary executions pending appeal.5 In the latter case, the Rules of Court
only allow executions pending appeal upon a finding of good justificatory reasons. In a way,
Article 223 is still consistent with this concept under the view that Congress thereby effectively
pre-determined the good reason to justify execution pending appeal: the proceeds shall be the
employees source of livelihood and means of support while the employers appeal is pending.
The word immediately has been understood to mean without delay or lapse or interval of time. 6
Based on this definition, the Court has ruled that Article 223 does not need an applic ation for
and the issuance of a writ of execution as prerequisite for the execution of a
_______________
3 G.R. No. 110017, January 2, 1997, 266 SCRA 24.
4 Rules of Court, Rule 39, Section 1.
5 Id., Section 2(a).
6 Blacks Law Dictionary, 5th ed., p. 675.
527
reinstatement award.7 In other words, the reinstatement order is self-executory.8 This is the basis
for the current NLRC Rules of Procedure that leaves the enforcement of the reinstatement order
to the employer who is given the duty to submit a compliance report within 10 days from receipt
of the decision.9 The labor arbiter issues a writ of execution only when the employer disobeys
the above directive or refuses to reinstate the dismissed employee.10
Since Article 223 is self-executory, the dismissed worker in effect becomes a passive beneficiary
of the labor arbiters order. He does not need to actively move to secure his reinstatement; thus,
his failure to move for the implementation of the labor arbiters order in no way prejudices his
right to an immediate reinstatement and to its proceeds. If at all, only his refusal to be reinstated
or a waiver of this right on his part can disentitle him to what the law grants.
The cases of Roquero v. Philippine Airlines,11 International Container Terminal Services, Inc.
(ICTSI) v. NLRC,12 and Kimberly Clark (Phil.), Inc. v. Facundo13 are authorities for the position
that notwithstanding the reversal by the NLRC of the labor arbiters order of reinstatement, the
dismissed employee is still entitled to the wages accruing during the pendency of the appeal.
Justice Velasco in his Separate Opinion posits that there is no more legal ground to grant the
dismissed employees the wages that accrued during the pendency of the appeal once the order
of reinstatement is reversed. As basis, he relies on: the case of Genuino v. NLRC;14 the rule on
reimbursement under Section 5, Rule 39 of the
_______________
7 Panuncillo v. CAP Philippines, Inc., G.R. No. 161305, February 9, 2007, 515 SCRA 323.
8 Pioneer Texturizing Corporation v. National Labor Relations Commission, G.R. No. 118651,
October 16, 1997, 280 SCRA 807.
9 Rule V, Section 14.
10 Rule IX, Section 6.
11 G.R. No. 152329, April 22, 2003, 401 SCRA 424.
12 G.R. No. 115452, December 21, 1998, 300 SCRA 335.
13 G.R. No. 144885, July 26, 2006.
14 G.R. Nos. 142732-33 & 142753-54, December 4, 2007, 539 SCRA 342.
528
Rules of Court; and the principle of unjust enrichment under the Civil Code.
The Genuino case declared that if the decision of the labor arbiter is later reversed on appeal
upon finding that the ground for dismissal is valid, then the employer has the right to require the
dismissed employee on payroll reinstatement to refund the salaries he received while the case
was pending appeal. This reimbursement doctrine, according to Justice Velasco, finds further
support in Section 5 Rule 39 of the Rules of Court where the prevailing party is obliged to make
restitution or reparation in case the executed judgment is reversed on appeal. Since
reinstatement pending appeal in illegal dismissal cases is by nature an execution pending
appeal, he reasons out that the Rules of Court should be applied suppletorily. From this take off
point, Justice Velasco opines that the employee, who is not reinstated while the appeal is
pending, is overtaken by events when the reinstatement order is reversed on appeal and cannot
now be reinstated. At this point, he is also not entitled to the salaries he would have earned had
he been reinstated pending appeal. A contrary view would allegedly violate the civil law principle
of unjust enrichment.
Aside from the paucity of authorities supporting the Genuino view, I do not find Justice Velascos
argument sufficiently persuasive to justify a deviation from the Courts persuasive interpretation
of Article 223 in Roquero, ICTSI, and Kimberly Clark.
In the first place, Section 5 of Rule 39 refers specifically to discretionary executions pending
appeal as provided under Section 2 of that Rule. It finds no application to the mandatory
executions pending appeal provided under Article 223, as the special reasons behind the
immediate execution under Article 223discussed aboveare outside the contemplation of
Section 5, Rule 39. To be exact, Section 5, Rule 39 does not take into account the special labor
relations setting that justifies Article 223, and disregards too the constitutional mandate that
compels Congress to provide remediessubstantive and proceduralto situations where labor
may be at a disadvantage.
Second, Article 223, viewed from the prism of its intent, is not a mere procedural rule governing
appeals from decisions of labor arbiters. Understood fully and properly, it embodies and grants a
sub-
529
stantive right to dismissed employees whose cases are brought to the NLRC on appeal. Source
of livelihood and supporta workers basic means for survivalcannot be matters of procedure
that can be undone and taken back when conditions change. A State intervention to address the
specific and identified need to level the playing field in the course of an employers appeal to the
NLRC (i.e., from a finding that a worker has been illegally dismissed) cannot likewise simply be a
matter of procedure; it is a State declaration that, after a first-level finding of an illegal dismissal,
the worker must be protected by immediately affording him or her the right to the work and the
wages previously denied by the employer. In this sense, Article 223 cannot but embody a
substantive grant that passes the test of legality even from the point of view of constitutional law.
It does not violate due process as it is a reasonable measure supported by a prior finding of
illegality made after the employer had been duly heard. It is also not a confiscatory grant as the
law requires the worker to render services to earn his salary, subject only to the payroll
reinstatement that is recognized for the benefit of the employer.
In the context of this case, Article 223 embodies a substantive grant that must be given to the
dismissed employees, irrespective of the presence of fault or lack of it on the part of the
employer. For this reason (separately from the reason more fully discussed below), I do not
agree with the ponencias position that PALs corporate rehabilitation excused it from complying
with Article 223. The corporate rehabilitation merely suspended the implementation of Article
223, but did not totally excuse PAL from the obligation to reinstate, or in lieu thereof, to pay the
wages due during the appeal period. Thus, the reinstatement should be implemented upon the
lifting of the suspension or stay order. The intervening reversal by the NLRC of the labor arbiters
reinstatement decision cannot and should not affect that part of the grant that had already been
vested prior to the reversal. With the suspension lifted, PAL should therefore be held liable for
the wages due during the appeal period all the way up to the time of reversal.
Third, contrary to Justice Velascos opinion, the silence of Article 223 on the workers entitlement
to wages pending appeal cannot lead
530
to the conclusion that no such entitlement exists. To so conclude is to close our eyes to the clear
intent of the amended Article 223. Assuming arguendo that no such intent is patent, the silence
of Article 223 cannot also lead to the conclusion that the workerwho has been declared
illegally dismissedis not entitled to the wages he or she should have earned had not the illegal
dismissal taken place. The only logical conclusion that can be made, and one that can hardly be
disputed, is that the silence of Article 223 leads to a situation of doubt. Any doubt, however, in
the interpretation of implementation of the Labor Code should be resolved in favour of labor
pursuant to the Labor Codes own Article 4.
Justice Velascos latest argumentunjust enrichment under Article 22 of the Civil Codemust
similarly fall when read together with Article 223 of the Labor Code.
Established jurisprudence teaches us that there can be no unjust enrichment pursuant to Article
22 of the Civil Code if there is a legal basis for the situation complained of as unjust. 15 In the
present case, what is complained of as unjust is the payment to the petitioners of the salaries
they would have earned during the pendency of the employers appeal had the employer
reinstated them. Justice Velasco labels the situation as unjust because the NLRC subsequently
reversed the labor arbiters decision and declared the dismissal legal. This situation, however, is
precisely what Article 223 of the Labor Code addresses; the State saw it fit to provide the
dismissed worker a substantive right during the pendency of the employers appeal to level the
playing field in an employee dismissal situation. Thus, there is legal basis for the situation
complained of as unjust so that Article 22 of the Civil Code cannot apply.
The Corporate Rehabilitation Issue
The ponencias conclusion on this issue is embodied in the statement: The Court sustains the
appellate courts finding that the pecu-
_______________
15 Baje, et al. v. Court of Appeals, G.R. No. L-18783, May 25, 1964, 11 SCRA 34;
Commissioner of Internal Revenue v. Firemans Fund Insurance Co., et al., G.R. No. 30644,
March 9, 1987, 148 SCRA 315.
531
liar predicament of a corporate rehabilitation rendered it impossible for respondent to exercise its
option under the circumstances. In other words, the ponencia believes that the onset of the
corporate rehabilitation automatically and absolutely barred the respondent from reinstating the
petitioners; reinstatement was a legal impossibility so that respondent should be exempt from
the application of Article 223 of the Labor Code.
As a general proposition, the ponencias conclusion is correct because the law16 indeed speaks
of the suspension of all claims or actions against a corporation once a rehabilitation receiver or
management committee has been appointed. 17 Care, however, should be taken in considering
when and how the suspension of claims or actions against a distressed corporation is triggered.
For one, the law on corporate rehabilitation is an evolving law that has seen a lot of changes in
the course of its development. Care must be observed to ensure that the appropriate law and
rules at the material time of the case are applied. The suspensionimposed for the benefit of a
distressed corporationis also not a remedy impervious to and isolated from its surrounding
circumstances. The suspension can be affected by how the petitioning corporation avails of the
benefit, and by how its action affect third parties. These observations are mentioned because
they are critical in reading the effects of the suspension that PAL belatedly claimed in the
present case.
_______________
16 P.D. No. 902-A, originally issued on March 11, 1976, which covered petitions for suspension
of payments and the appointment of management committees or rehabilitation receivers.
17 P.D. 902-A, as amended by P.D. Nos. 1653, s. 1979; 1758, s. 1981; and 1799, s. 1981,
provides: x x x Provided, further, That the Commission may appoint a rehabilitation receiver of
corporations, partnerships or other associations supervised or regulated by other government
agencies, such as banks and insurance companies, upon request of the government agency
concerned: Provided, finally, That upon appointment of a management committee, rehabilitation
receiver, board or body, pursuant to this Decree, all action for claims against corporations,
partnerships or associations under management or receivership pending before any court,
tribunal, board or body shall be suspended accordingly. [Emphasis supplied.]
532
Jurisdiction over corporate rehabilitation has not been static. Starting with the Securities and
Exchange Commission (SEC) under PD No. 902-A, jurisdiction shifted to the Regional Trial
Courts (RTC) effective July 19, 2000 pursuant to Section 5.1 of RA No. 8799 (the Securities
Regulation Code); this Court did not issue the Interim Rules of Procedure on Corporate
Rehabilitation until December 15, 2000.18 Prior to this shift, both the law and the SEC Rules19 did
not clearly state that corporate rehabilitation proceedings are in rem, while this characteristic is
clearly spelled out under the Courts Interim Rules of Procedure on Corporate Rehabilitation. 20
These seemingly minor evolutionary developments assume a great significance in the present
case because all the material developments under discussion transpired under the SEC rules,
not under the Courts Interim Rules of Procedure on Corporate Rehabilitation. 21 To illustrate this
point, the records show that the petitioners filed their complaint for illegal dismissal only on
October 30, 1997. PAL filed its petition for approval of corporate rehabilitation plan on June 19,
1998, and the SEC issued its Order22 appointing an interim rehabilitation receiver on June 23,
1998. It was not until a week later or on July 1, 1998 that the SEC issued a Stay Order of all
claims against PAL.
An intriguing aspect of this Stay Order is that it does not appear to have been invoked by PAL to
secure the suspension of the petitioners claim against it. Thus, the claim for illegal dismissal
before the labor arbiter proceeded until his decision on January 11, 1999 reinstating the
petitioners. The dispositive portion of this decision states:
WHEREFORE, conformably with the foregoing, judgment is hereby rendered finding the
respondents guilty of illegal suspension and illegal dismissal and ordering them to reinstate
complainants to their former positions without loss of seniority rights and other privileges.
Respondents are
_______________
18 A.M. No. 00-8-10-SC.
19 SEC Revised Rules of Procedure dated August 1, 1989 and July 15, 1999. [The SEC rules
applicable during the pendency of petitioners appeal.]
20 Rule 3, Section 1.
21 Supra note 18.
22 Rollo, p. 196; a permanent receiver was not appointed until June 7, 1999.
533
hereby further ordered to pay jointly and severally unto the complainants the following:
Alberto J. DumagoP409,500.00 backwages as of 1/10/99
34,125.00 for 13th month pay
Juanito A. GarciaP1,290,744.00 backwages as of 1/10/99
107,562.00 for 13th month pay
The amounts of P100,000.00 and P50,000.00 to each complainant as and by way of moral and
exemplary damages; and
The sum equivalent to 10% of the total award as and for attorneys fees.
Respondents are directed to immediately comply with the reinstatement aspect of this
Decision. However, in the event that reinstatement is no longer feasible, respondents are [is]
hereby ordered, in lieu thereof, to pay unto the complainants their separation pay computed at
one month for every year of service.
SO ORDERED.23 [Emphasis supplied.]
This portion is quoted because of its terms; it did not only declare the petitioners to have been
illegally dismissed, but also directly ordered PAL to immediately reinstate them to their positions.
Thus, as early as January 1999, PAL was on notice that the petitioners should be reinstated.
PAL interestingly saw no need to notify the NLRC on appeal of the ongoing corporate
rehabilitation and its suspensive effects. Thus, PAL appealed to the NLRC on February 26, 1999
purely on the merits of its case against the petitioners. Not a word was said about the
suspension of the proceedings pursuant to the SEC Order of July 1, 1998.
In the interim, the counsel for the petitioners wrote PAL (on June 14, 1999) to claim the
reinstatement that the labor arbiter to be immediately made. To quote from this letter:
Considering that PAL, Inc. failed to reinstate our clients immediately upon its receipt of t he
Decision on February 24, 1999, our clients are entitled to the payment of their salaries computed
from that date and which, as of
_______________
23 Rollo, p. 59.
534
June 24, 1999 amounts to P42,000.00 for complainant Alberto J. Dumago, and P132,384.00 for
complainant Juanito Garcia.24
On November 11, 1999, the petitioners continued their quest for immediate reinstatement by
filing a Motion for Issuance of Writ of Execution and to Cite the Respondents in Contempt. It
does not appear from the records before us that PAL ever opposed this motion. Within three
months from the filing of this motion, the NLRC rendered its decision reversing the labor arbiter
in a decision dated January 31, 2000.
Again, not one word appeared in the NLRC decision showing that the NLRC took official notice
of the SECs order of suspension dated July 11, 1999. The same is true with the NLRCs
Resolution dated April 28, 2000 denying the petitioners motion for reconsideration.
On October 5, 2000, the labor arbiter issued a writ of execution to enforce the reinstatement
pending appeal aspect of his decision, and on October 20, 2000 issued a notice of notwithstanding the reversal of the Labor Arbiters decision.
garnishment.25 It was only at that point that PAL, citing P.D. No. 902-A and Rubberworls (Phils.), it is interesting to note that PALs claim of lack of fault cannot be justified as the failure to
Inc. v. NLRC,26 invoked the appointment of a receiver as basis to resist the writ of execution. implement the petitioners reinstatement pending appeal is directly traceable to it, not to the
Rubberworld, while seemingly a similar case, presents a situation far different from the petitioners. To go back to the developments in this case, the labor arbiters decision contained a
circumstances of the present case. Although it was a labor case that was suspended due to the direct order for immediate reinstatement, and PAL openly and unjustifiably disregarded this
pendency of corporate rehabilitation proceedings, PAL failed to note that the employer in order. PAL did not have to wait for a writ of execution because the order to immediately reinstate
Rubberworld filed a motion for the suspension of the labor proceedings pursuant to the SECs was in the decision itself. The petitioners, for their part, seasonably demanded through their
stay order.27 This, the respondent PAL failed to seasonably do, resulting in the legal letter of June 14, 1999 that they be reinstated; they subsequently filed a motion for the issuance
consequences discussed below. of a writ of execution. All these efforts failed to draw any response, either from PAL or from the
As the corporation accorded with the suspension of claims and actions for or against it in labor arbiter. If PAL responded at all, it was only after it won at the NLRC level. It was also at this
the course of corporate rehabilitation, PAL had the burden to actively assert the suspension that time that it cited for the first time the SEC order for suspension of proceedings. The labor arbiter,
the law allows. on the other hand, likewise responded through the issuance of a writ of execution only after the
_______________ NLRC had ruled. Under these facts, the failure to effect reinstatement cannot be imputed to the
24 Id., pp. 78-80. petitioners, and they should not be made to suffer for a fault not attributable to them. Thus, the
25 By this time, jurisdiction over corporate rehabilitation proceedings has been transferred to ponencias own standards belie the correctness of its conclusion to deny the petition.
RTCs per Section 5.1 of RA No. 8799.
26 G.R. No. 126773, April 14, 1999, 305 SCRA 721. Copyright 2017 Central Book Supply, Inc. All rights reserved.
27 Id., p. 725.
535
This is particularly true under the then prevailing SEC rules which were not clear and c ategorical
about the in rem nature of the corporate rehabilitation proceedings.
By failing to ask for the suspension of the labor proceedings, PAL clearly slept on its right. At the
very least, PALs failure to seasonably assert its right to the suspension of proceedings raised
the presumption that it had abandoned or declined to assert this right. 28
PAL did not merely sleep on its rights; worse than this omission, PAL even actively represented
that no suspension was called for when it appealed to the NLRC the decision of the labor arbiter.
Thus, while PAL could have put its appeal on hold without affecting its right to appeal, it showed
both the petitioners and the labor tribunals that its preference was to pursue the case. This
active and express representation by PAL brings into play the concept of estoppel under Article
1431 of the Civil Code which provides:
Through estoppel an admission or representation is rendered conclusive upon the person
making it, and cannot be denied or disproved as against the person relying thereon.
On the authority of this provision, respondent PALwho by its actions showed that it wanted to
pursue its appealshould not now be heard to say that the reinstatement that should
accompany the appeal has now been rendered impossible because of the on-going corporate
rehabilitation. To state it another way, PAL was the corporate rehabilitation petitioner in whose
behalf the suspension of claims and actions was granted by law, and who knew that a
suspension was in place; yet PAL itself disregarded the supposed suspension by appealing to
the NLRC. From the point of view of fairness, it is the height of inequity to recognize the efficacy
of PALs appeal and the NLRCs consequent reversal of the labor arbiters decision, while not
recognizing the reinstatement pending
_______________
28 Lopez v. David, Jr., G.R. No. 152145, March 30, 2004, 305 SCRA 721; Pilipinas Shell v. John
Bordman, Ltd., G.R. No. 159831, October 14, 2005, 473 SCRA 151; Lim Tay v. Court of
Appeals, G.R. No. 126891, August 5, 1998, 293 SCRA 634.
536
appeal that should have been in place while PALs appeal was pending.
If indeed the suspension should have automatically set in, then such suspension should apply to
all proceedings from and after the SECs suspension order, i.e., from the labor arbiters to the
NLRCs proceedings. Unfortunately, this levelling of the playing field is far from what would
happen if the ponencia prevails.
Even by the terms of the ponencia itself which provides:
After the labor arbiters decision is reversed by a higher tribunal, the employee may be barred
from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement
pending appeal was without fault on the part of the employer.
The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement
pending appeal was not executed prior to its reversal and (2) the delay must not be due to the
employers unjustified refusal, the employer may still be required to pay the salaries
 G.R. No. 177467. March 9, 2011.*
PFIZER, INC. AND/OR REY GERARDO BACARRO, AND/OR FERDINAND CORTES,
AND/OR ALFRED MAGALLON, AND/OR ARISTOTLE ARCE, petitioners, vs. GERALDINE
VELASCO, respondent.
Labor Law; Illegal Dismissals; Under Article 223 of the Labor Code, an employee
entitled to reinstatement shall either be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely
reinstated in the payroll.Under Article 223 of the Labor Code, an employee entitled to
reinstatement shall either be admitted back to
_______________
** Designated as additional member in lieu of Associate Justice Antonio Eduardo B. Nachura,
per Special Order 933 dated January 24, 2011.
* FIRST DIVISION.
136
work under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the payroll. It is established in jurisprudence
that reinstatement means restoration to a state or condition from which one had been removed
or separated. The person reinstated assumes the position he had occupied prior to his
dismissal.
Same; Same; The option of the employer to effect actual or payroll reinstatement must
be exercised in good faith.Foreseeably, an employer may circumvent the immediately
enforceable reinstatement order of the Labor Arbiter by crafting return-to-work directives that are
ambiguous or meant to be rejected by the employee and then disclaim liability for backwages
due to non-reinstatement by capitalizing on the employees purported refusal to work. In sum,
the option of the employer to effect actual or payroll reinstatement must be exercised in good
faith.
Same; Same; An order for reinstatement entitles an employee to receive his accrued
backwages from the moment the reinstatement order was issued up to the date when the same
was reversed by a higher court without fear of refunding what he had received.In sum, the
Court reiterates the principle that reinstatement pending appeal necessitates that it must be
immediately self-executory without need for a writ of execution during the pendency of the
appeal, if the law is to serve its noble purpose, and any attempt on the part of the employer to
evade or delay its execution should not be allowed. Furthermore, we likewise restate our ruling
that an order for reinstatement entitles an employee to receive his accrued backwages from the
moment the reinstatement order was issued up to the date when the same was reversed by a
higher court without fear of refunding what he had received.
PETITION for review on certiorari of the resolutions of the Court of Appeals.
The facts are stated in the opinion of the Court.
Sycip, Salazar, Hernandez & Gatmaitan for petitioners.
Ronald Rex S. Recidoro for respondent.
LEONARDO-DE CASTRO, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure to annul
and set aside the Resolution1 dated October 23, 2006 as well as the Resolution 2 dated April 10,
2007 both issued by the Court of Appeals in CA-G.R. SP No. 88987 entitled, Pfizer, Inc. and/or
Rey Gerardo Bacarro, and/or Ferdinand Cortes, and/or Alfred Magallon, and/or Aristotle Arce v.
National Labor Relations Commission Second Division and Geraldine Velasco. The October 23,
2006 Resolution modified upon respondents motion for reconsideration the Decision 3 dated
November 23, 2005 of the Court of Appeals by requiring PFIZER, Inc. (PFIZER) to pay
respondents wages from the date of the Labor Arbiters Decision 4 dated December 5, 2003 until
it was eventually reversed and set aside by the Court of Appeals. The April 10, 2007 Resolution,
on the other hand, denied PFIZERs motion for partial reconsideration.
The facts of this case, as stated in the Court of Appeals Decision dated November 23, 2005, are
as follows:
Private respondent Geraldine L. Velasco was employed with petitioner PFIZER, INC. as
Professional Health Care Representative since 1 August 1992. Sometime in April 2003, Velasco
had a medical work up for her high-risk pregnancy and was subsequently advised bed rest
which resulted in her extending her leave of absence. Velasco filed her sick leave for the period
from 26 March to 18 June 2003, her vacation leave from 19 June to 20 June 2003, and leave
without pay from 23 June to 14 July 2003.
On 26 June 2003, while Velasco was still on leave, PFIZER through its Area Sales Manager,
herein petitioner Ferdinand Cortez,
_______________
1 Rollo, pp. 42-44.
2 Id., at pp. 65-66.
3 Id., at pp. 307-323; penned by Associate Justice Rosmari D. Carandang with Associate
Justices Andres B. Reyes, Jr. and Monina Arevalo-Zenarosa, concurring.
4 Id., at pp. 187-201.
138
personally served Velasco a Show-cause Notice dated 25 June 2003. Aside from mentioning
about an investigation on her possible violations of company work rules regarding unauthorized
deals and/or discounts in money or samples and unauthorized withdrawal and/or pull-out of
stocks and instructing her to submit her explanation on the matter within 48 hours from receipt
of the same, the notice also advised her that she was being placed under preventive
suspension for 30 days or from that day to 6 August 2003 and consequently ordered to
surrender the following accountabilities; 1) Company Car, 2) Samples and Promats, 3)
CRF/ER/VEHICLE/SOA/POSAP/MPOA and other related Company Forms, 4) Cash Card, 5)
Caltex Card, and 6) MPOA/TPOA Revolving Travel Fund. The following day, petitioner Cortez
together with one Efren Dariano retrieved the above-mentioned accountabilities from Velascos
residence.
In response, Velasco sent a letter addressed to Cortez dated 28 June 2003 denying the
charges. In her letter, Velasco claimed that the transaction with Mercury Drug, Magsaysay
Branch covered by her check (no. 1072) in the amount of P23,980.00 was merely to
accommodate two undisclosed patients of a certain Dr. Renato Manalo. In support thereto,
Velasco attached the Doctors letter and the affidavit of the latters secretary.
On 12 July 2003, Velasco received a Second Show-cause Notice informing her of additional
developments in their investigation. According to the notice, a certain Carlito Jomen executed an
affidavit pointing to Velasco as the one who transacted with a printing shop to print PFIZER
discount coupons. Jomen also presented text messages originating from Velascos company
issued cellphone referring to the printing of the said coupons. Again, Velasco was given 48
hours to submit her written explanation on the matter. On 16 July 2003, Velasco sent a letter to
PFIZER via Aboitiz courier service asking for additional time to answer the second Show-cause
Notice.
That same day, Velasco filed a complaint for illegal suspension with money claims before the
Regional Arbitration Branch. The following day, 17 July 2003, PFIZER sent her a letter inviting
her to a disciplinary hearing to be held on 22 July 2003. Velasco received it under protest and
informed PFIZER via the receiving copy of the said letter that she had lodged a complaint
against the latter and that the issues that may be raised in the July 22 hearing can be tackled
during the hearing of her case or at the preliminary conference set for 5 and 8 of August 2003.
She likewise opted to withhold answering the Second Show-cause Notice. On 25 July 2003,
Velasco received a Third Show-cause Notice, together with copies of the affidavits of two
Branch Managers of Mercury Drug, asking her for her comment within 48 hours. Finally, on 29
July 2003, PFIZER informed Velasco of its Management Decision terminating her employment.
On 5 December 2003, the Labor Arbiter rendered its decision declaring the dismissal of Velasco
illegal, ordering her reinstatement with backwages and further awarding moral and exemplary
damages with attorneys fees. On appeal, the NLRC affirmed the same but deleted the award of
moral and exemplary damages.5
The dispositive portion of the Labor Arbiters Decision dated December 5, 2003 is as follows:
WHEREFORE, judgment is hereby rendered declaring that complainant was illegally
dismissed. Respondents are ordered to reinstate the complainant to her former position without
loss of seniority rights and with full backwages and to pay the complainant the following:
1. Full backwages (basic salary, company benefits, all allowances as of December 5, 2003 in
the amount of P572,780.00);
2. 13th Month Pay, Midyear, Christmas and performance bonuses in the amount of
P105,300.00;
3. Moral damages of P50,000.00;
4. Exemplary damages in the amount of P30,000.00;
5. Attorneys Fees of 10% of the award excluding damages in the amount of P67,808.00.
The total award is in the amount of P758,080.00. 6
PFIZER appealed to the National Labor Relations Commission (NLRC) but its appeal was
denied via the NLRC
_______________
5 Id., at pp. 307-310.
6 Id., at p. 201.
140
Decision7 dated October 20, 2004, which affirmed the Labor Arbiters ruling but deleted the
award for damages, the dispositive portion of which is as follows:
WHEREFORE, premises considered, the instant appeal and the motion praying for the deposit
in escrow of complainants payroll reinstatement are hereby denied and the Decision of the
Labor Arbiter is affirmed with the modification that the award of moral and exemplary damages is
deleted and attorneys fees shall be based on the award of 13th month pay pursuant to Article III
of the Labor Code.8
PFIZER moved for reconsideration but its motion was denied for lack of merit in a NLRC
Resolution9 dated December 14, 2004.
Undaunted, PFIZER filed with the Court of Appeals a special civil action for the issuance of a
writ of certiorari under Rule 65 of the Rules of Court to annul and set aside the aforementioned
NLRC issuances. In a Decision dated November 23, 2005, the Court of Appeals upheld the
validity of respondents dismissal from employment, the dispositive portion of which reads as
follows:
WHEREFORE, the instant petition is GRANTED. The assailed Decision of the NLRC dated 20
October 2004 as well as its Resolution of 14 December 2004 is hereby ANNULED and SET
ASIDE. Having found the termination of Geraldine L. Velascos employment in accordance with
the two notice rule pursuant to the due process requirement and with just cause, her complaint
for illegal dismissal is hereby DISMISSED.10
_______________
7 Id., at pp. 234-248; penned by NLRC Commissioner Ernesto C. Verceles with Presiding
Commissioner Lourdes C. Javier and Commissioner Tito F. Genilo, concurring.
8 Id., at p. 247.
9 Id., at pp. 265-266.
10 Id., at pp. 322-323.
141
Respondent filed a Motion for Reconsideration which the Court of Appeals resolved in the
assailed Resolution dated October 23, 2006 wherein it affirmed the validity of respondents
dismissal from employment but modified its earlier ruling by directing PFIZER to pay respondent
her wages from the date of the Labor Arbiters Decision dated December 5, 2003 up to the Court
of Appeals Decision dated November 23, 2005, to wit:
IN VIEW WHEREOF, the dismissal of private respondent Geraldine Velasco is AFFIRMED, but
petitioner PFIZER, INC. is hereby ordered to pay her the wages to which she is entitled to from
the time the reinstatement order was issued until November 23, 2005, the date of promulgation
of Our Decision.11
Respondent filed with the Court a petition for review under Rule 45 of the Rules of Civil
Procedure, which assailed the Court of Appeals Decision dated November 23, 2005 and was
docketed as G.R. No. 175122. Respondents petition, questioning the Court of Appeals
dismissal of her complaint, was denied by this Courts Second Division in a minute Resolution 12
dated December 5, 2007, the pertinent portion of which states:
Considering the allegations, issues and arguments adduced in the petition for review on
certiorari, the Court resolves to DENY the petition for failure to sufficiently show any reversible
error in the assailed judgment to warrant the exercise of this Courts discretionary appellate
jurisdiction, and for raising substantially factual issues.
On the other hand, PFIZER filed the instant petition assailing the aforementioned Court of
Appeals Resolutions and offering for our resolution a single legal issue, to wit:
Whether or not the Court of Appeals committed a serious but reversible error when it ordered
Pfizer to pay Velasco wages from the date of the Labor Arbiters decision ordering her
reinstatement until
_______________
11 Id., at p. 43.
12 Rollo (G.R. No. 175122), p. 238.
142
November 23, 2005, when the Court of Appeals rendered its decision declaring Velascos
dismissal valid.13
The petition is without merit.
PFIZER argues that, contrary to the Court of Appeals pronouncement in its assailed Decision
dated November 23, 2005, the ruling in Roquero v. Philippine Airlines, Inc.14 is not applicable in
the case at bar, particularly with regard to the nature and consequences of an order of
reinstatement, to wit:
The order of reinstatement is immediately executory. The unjustified refusal of the employer to
reinstate a dismissed employee entitles him to payment of his salaries effective from the time the
employer failed to reinstate him despite the issuance of a writ of execution. Unless there is a
restraining order issued, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement. In the case at bar, no restraining order was granted. Thus, it was mandatory on
PAL to actually reinstate Roquero or reinstate him in the payroll. Having failed to do so, PAL
must pay Roquero the salary he is entitled to, as if he was reinstated, from the time of the
decision of the NLRC until the finality of the decision of the Court. 15 (Emphases supplied.)
It is PFIZERs contention in its Memorandum16 that there was no unjustified refusal on [its part]
to reinstate [respondent] Velasco during the pendency of the appeal,17 thus, the pronouncement
in Roquero cannot be made to govern this case. During the pendency of the case with the Court
of Appeals and prior to its November 23, 2005 Decision, PFIZER claimed that it had already
required respondent to report for work on July 1, 2005. However, according to PFIZER, it was
respondent who refused to return to work when she wrote
_______________
13 Id., at p. 403.
14 449 Phil. 437; 401 SCRA 424 (2003).
15 Id., at p. 446; p. 430.
16 Rollo, pp. 394-415.
17 Id., at p. 405.
143
PFIZER, through counsel, that she was opting to receive her separation pay and to avail of
PFIZERs early retirement program.
In PFIZERs view, it should no longer be required to pay wages considering that (1) it had
already previously paid an enormous sum to respondent under the writ of execution issued by
the Labor Arbiter; (2) it was allegedly ready to reinstate respondent as of July 1, 2005 but it was
respondent who unjustifiably refused to report for work; (3) it would purportedly be tantamount to
allowing respondent to choose payroll reinstatement when by law it was the employer which
had the right to choose between actual and payroll reinstatement; (4) respondent should be
deemed to have resigned and therefore not entitled to additional backwages or separation pay;
and (5) this Court should not mechanically apply Roquero but rather should follow the doctrine in
Genuino v. National Labor Relations Commission 18 which was supposedly more in accord with
the dictates of fairness and justice.19
We do not agree.
At the outset, we note that PFIZERs previous payment to respondent of the amount of
P1,963,855.00 (representing her wages from December 5, 2003, or the date of the Labor Arbiter
decision, until May 5, 2005) that was successfully garnished under the Labor Arbiters Writ of
Execution dated May 26, 2005 cannot be considered in its favor. Not only was this sum legally
due to respondent under prevailing jurisprudence but also this circumstance highlighted
PFIZERs unreasonable delay in complying with the reinstatement order of the Labor Arbiter . A
perusal of the records, including PFIZERs own submissions, confirmed that it only required
respondent to report for work on July 1, 2005, as shown by its Letter 20
_______________
18 G.R. Nos. 142732-33 and 142753-54, December 4, 2007, 539 SCRA 342.
19 Rollo, p. 411.
20 Id., at p. 304.
144
dated June 27, 2005, which is almost two years from the time the order of reinstatement was
handed down in the Labor Arbiters Decision dated December 5, 2003.
As far back as 1997 in the seminal case of Pioneer Texturizing Corporation v. National Labor
Relations Commission,21 the Court held that an award or order of reinstatement is immediately
self-executory without the need for the issuance of a writ of execution in accordance with the
third paragraph of Article 22322 of the Labor Code. In that case, we discussed in length the
rationale for that doctrine, to wit:
The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall
be immediately executory even pending appeal and the posting of a bond by the employer shall
not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an
award of reinstatement immediately enforceable, even pending appeal. To require the
application for and issuance of a writ of execution as prerequisites for the execution of a
reinstatement award would certainly betray and run counter to the very object and intent of
Article 223, i.e., the immediate execution of a reinstatement order. The reason is simple. An
application for a writ of execution and its issuance could be delayed for numerous reasons. A
mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the
part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting
at naught the strict mandate and noble purpose envisioned by Article 223. In other words, if the
requirements of Article 224 [including the issuance of a writ of execution] were to govern, as we
so declared in Maranaw, then the executory nature of
_______________
21 345 Phil. 1057; 280 SCRA 806 (1997).
22 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.
145
a reinstatement order or award contemplated by Article 223 will be unduly circumscribed and
rendered ineffectual. In enacting the law, the legislature is presumed to have ordained a valid
and sensible law, one which operates no further than may be necessary to achieve its specific
purpose. Statutes, as a rule, are to be construed in the light of the purpose to be achieved and
the evil sought to be prevented. x x x In introducing a new rule on the reinstatement aspect of a
labor decision under Republic Act No. 6715, Congress should not be considered to be indulging
in mere semantic exercise. x x x23 (Italics in the original; emphasis and underscoring supplied.)
In the case at bar, PFIZER did not immediately admit respondent back to work which, according
to the law, should have been done as soon as an order or award of reinstatement is handed
down by the Labor Arbiter without need for the issuance of a writ of execution. Thus, respondent
was entitled to the wages paid to her under the aforementioned writ of execution. At most,
PFIZERs payment of the same can only be deemed partial compliance/execution of the Court of
Appeals Resolution dated October 23, 2006 and would not bar respondent from being paid her
wages from May 6, 2005 to November 23, 2005.
It would also seem that PFIZER waited for the resolution of its appeal to the NLRC and, only
after it was ordered by the Labor Arbiter to pay the amount of P1,963,855.00 representing
respondents full backwages from December 5, 2003 up to May 5, 2005, did PFIZER decide to
require respondent to report back to work via the Letter dated June 27, 2005.
PFIZER makes much of respondents non-compliance with its return-to-work directive by
downplaying the reasons forwarded by respondent as less than sufficient to justify her purported
refusal to be reinstated. In PFIZERs view, the return-to-work order it sent to respondent was
adequate to satisfy the jurisprudential requisites concerning the reinstatement of an illegally
dismissed employee.
_______________
23 Pioneer Texturizing Corporation v. National Labor Relations Commission, supra note 21 at
pp. 1075-1076; pp. 825-826.
146
It would be useful to reproduce here the text of PFIZERs Letter dated June 27, 2005:
Dear Ms. Velasco:
Please be informed that, pursuant to the resolutions dated 20 October 2004 and 14 December
2004 rendered by the National Labor Relations Commission and the order dated 24 May 2005
issued by Executive Labor Arbiter Vito C. Bose, you are required to report for work on 1 July
2005, at 9:00 a.m., at Pfizers main office at the 23rd Floor, Ayala LifeFGU Center, 6811 Ayala
Avenue, Makati City, Metro Manila.
Please report to the undersigned for a briefing on your work assignments and other
responsibilities, including the appropriate relocation benefits.
For your information and compliance.
Very truly yours,
(Sgd.)
Ma. Eden Grace Sagisi
Labor and Employee Relations Manager24
To reiterate, under Article 223 of the Labor Code, an employee entitled to reinstatement shall
either be admitted back to work under the same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the employer, merely reinstated in the payroll.
It is established in jurisprudence that reinstatement means restoration to a state or condition
from which one had been removed or separated. The person reinstated assumes the position he
had occupied prior to his dismissal. Reinstatement presupposes that the previous position from
which one had been removed still exists, or that there is an unfilled position which is
substantially equivalent or of similar nature as the one previously occupied by the employee. 25
_______________
24 Rollo, p. 304.
25 Asian Terminals, Inc. v. Villanueva, G.R. No. 143219, November 28, 2006, 508 SCRA 346,
352.
147
Applying the foregoing principle to the case before us, it cannot be said that with PFIZERs June
27, 2005 Letter, in belated fulfillment of the Labor Arbiters reinstatement order, it had shown a
clear intent to reinstate respondent to her former position under the same terms and conditions
nor to a substantially equivalent position. To begin with, the return-to-work order PFIZER sent
respondent is silent with regard to the position or the exact nature of employment that it wanted
respondent to take up as of July 1, 2005. Even if we assume that the job awaiting respondent in
the new location is of the same designation and pay category as what she had before, it is plain
from the text of PFIZERs June 27, 2005 letter that such reinstatement was not under the same
terms and conditions as her previous employment, considering that PFIZER ordered
respondent to report to its main office in Makati City while knowing fully well that respondents
previous job had her stationed in Baguio City (respondents place of residence) and it was still
necessary for respondent to be briefed regarding her work assignments and responsibilities,
including her relocation benefits.
The Court is cognizant of the prerogative of management to transfer an employee from one
office to another within the business establishment, provided that there is no demotion in rank or
diminution of his salary, benefits and other privileges and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion without
sufficient cause.26 Likewise, the management prerogative to transfer personnel must be
exercised without grave abuse of discretion and putting to mind the basic elements of justice and
fair play. There must be no showing that it is unnecessary, inconvenient and prejudicial to the
displaced employee.27
_______________
26 Norkis Trading Co., Inc. v. Gnilo, G.R. No. 159730, February 11, 2008, 544 SCRA 279, 289.
27 Urbanes, Jr. v. Court of Appeals, G.R. No. 138379, November 25, 2004, 444 SCRA 84, 95.
148
The June 27, 2005 return-to-work directive implying that respondent was being relocated to
PFIZERs Makati main office would necessarily cause hardship to respondent, a married woman
with a family to support residing in Baguio City. However, PFIZER, as the employer, offered no
reason or justification for the relocation such as the filling up of respondents former position and
the unavailability of substantially equivalent position in Baguio City. A transfer of work
assignment without any justification therefor, even if respondent would be presumably doing the
same job with the same pay, cannot be deemed faithful compliance with the reinstatement order.
In other words, in this instance, there was no real, bona fide reinstatement to speak of prior to
the reversal by the Court of Appeals of the finding of illegal dismissal.
In view of PFIZERs failure to effect respondents actual or payroll reinstatement, it is indubitable
that the Roquero ruling is applicable to the case at bar. The circumstance that respondent opted
for separation pay in lieu of reinstatement as manifested in her counsels Letter28 dated July 18,
2005 is of no moment. We do not see respondents letter as taking away the option from
management to effect actual or payroll reinstatement but, rather under the factual milieu of this
case, where the employer failed to categorically reinstate the employee to her former or
equivalent position under the same terms, respondent was not obliged to comply with PFIZERs
ambivalent return-to-work order. To uphold PFIZERs view that it was respondent who
unjustifiably refused to work when PFIZER did not reinstate her to her former position, and
worse, required her to report for work under conditions prejudicial to her, is to open the doors to
potential employer abuse. Foreseeably, an employer may circumvent the immediately
enforceable reinstatement order of the Labor Arbiter by crafting return-to-work directives that are
ambiguous or meant to be rejected by the employee and then disclaim liability for backwages
due to non-reinstatement by capitalizing on
_______________
28 Rollo, pp. 305-306.
149
the employees purported refusal to work. In sum, the option of the employer to effect actual or
payroll reinstatement must be exercised in good faith.
Moreover, while the Court has upheld the employers right to choose between actually
reinstating an employee or merely reinstating him in the payroll, we have also in the past
recognized that reinstatement might no longer be possible under certain circumstances. In F.F.
Marine Corporation v. National Labor Relations Commission,29 we had the occasion to state:
It is well-settled that when a person is illegally dismissed, he is entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages. In the event, however, that
reinstatement is no longer feasible, or if the employee decides not be reinstated, the employer
shall pay him separation pay in lieu of reinstatement. Such a rule is likewise observed in the
case of a strained employer-employee relationship or when the work or position formerly held by
the dismissed employee no longer exists. In sum, an illegally dismissed employee is entitled to:
(1) either reinstatement if viable or separation pay if reinstatement is no longer viable, and (2)
backwages.30 (Emphasis supplied.)
Similarly, we have previously held that an employees demand for separation pay may be
indicative of strained relations that may justify payment of separation pay in lieu of
reinstatement.31 This is not to say, however, that respondent is entitled to separation pay in
addition to backwages. We stress here that a finding of strained relations must nonetheless still
be supported by substantial evidence.32
In the case at bar, respondents decision to claim separation pay over reinstatement had no
legal effect, not only be-
_______________
29 495 Phil. 140; 455 SCRA 154 (2005).
30 Id., at p. 159; pp. 172-173.
31 F.R.F. Enterprises, Inc. v. National Labor Relations Commission, 313 Phil. 493, 502; 243
SCRA 593, 597 (1995).
32 Golden Ace Builders v. Talde, G.R. No. 187200, May 5, 2010, 620 SCRA 283.
150
cause there was no genuine compliance by the employer to the reinstatement order but also
because the employer chose not to act on said claim. If it was PFIZERs position that
respondents act amounted to a resignation it should have informed respondent that it was
accepting her resignation and that in view thereof she was not entitled to separation pay.
PFIZER did not respond to respondents demand at all. As it was, PFIZERs failure to effect
reinstatement and accept respondents offer to terminate her employment relationship with the
company meant that, prior to the Court of Appeals reversal in the November 23, 2005 Decision,
PFIZERs liability for backwages continued to accrue for the period not covered by the writ of
execution dated May 24, 2005 until November 23, 2005.
Lastly, PFIZER exhorts the Court to re-examine the application of Roquero with a view that a
mechanical application of the same would cause injustice since, in the present case, respondent
was able to gain pecuniary benefit notwithstanding the circumstance of reversal by the Court of
Appeals of the rulings of the Labor Arbiter and the NLRC thereby allowing respondent to profit
from the dishonesty she committed against PFIZER which was the basis for her termination. In
its stead, PFIZER proposes that the Court apply the ruling in Genuino v. National Labor
Relations Commission33 which it believes to be more in accord with the dictates of fairness and
justice. In that case, we canceled the award of salaries from the date of the decision of the Labor
Arbiter awarding reinstatement in light of our subsequent ruling finding that the dismissal is for a
legal and valid ground, to wit:
Anent the directive of the NLRC in its September 3, 1994 Decision ordering Citibank to pay the
salaries due to the complainant from the date it reinstated complainant in the payroll (computed
at P60,000.00 a month, as found by the Labor Arbiter) up to and until the date of this decision,
the
_______________
33 Supra note 18.
151
Court hereby cancels said award in view of its finding that the dismissal of Genuino is for a legal
and valid ground.
Ordinarily, the employer is required to reinstate the employee during the pendency of the appeal
pursuant to Art. 223, paragraph 3 of the Labor Code, which states:
xxxx
If the decision of the labor arbiter is later reversed on appeal upon the finding that the
ground for dismissal is valid, then the employer has the right to require the dismissed employee
on payroll reinstatement to refund the salaries s/he received while the case was pending appeal,
or it can be deducted from the accrued benefits that the dismissed employee was entitled to
receive from his/her employer under existing laws, collective bargaining agreement provisions,
and company practices. However, if the employee was reinstated to work during the pendency
of the appeal, then the employee is entitled to the compensation received for actual services
rendered without need of refund.
Considering that Genuino was not reinstated to work or placed on payroll reinstatement,
and her dismissal is based on a just cause, then she is not entitled to be paid the salaries stated
in item no. 3 of the fallo of the September 3, 1994 NLRC Decision.34 (Emphases supplied.)
Thus, PFIZER implores the Court to annul the award of backwages and separation pay as well
as to require respondent to refund the amount that she was able to collect by way of
garnishment from PFIZER as her accrued salaries.
The contention cannot be given merit since this question has been settled by the Court en banc.
In the recent milestone case of Garcia v. Philippine Airlines, Inc.,35 the Court wrote finis to the
stray posture in Genuino requiring the dismissed employee placed on payroll reinstatement to
refund the salaries in case a final decision upholds the validity of the dismissal. In Garcia, we
clarified
_______________
34 Id., at pp. 363-364.
35 G.R. No. 164856, January 20, 2009, 576 SCRA 479.
152
the principle of reinstatement pending appeal due to the emergence of differing rulings on the
issue, to wit:
On this score, the Courts attention is drawn to seemingly divergent decisions concerning
reinstatement pending appeal or, particularly, the option of payroll reinstatement. On the one
hand is the jurisprudential trend as expounded in a line of cases including Air Philippines Corp.
v. Zamora, while on the other is the recent case of Genuino v. National Labor Relations
Commission. At the core of the seeming divergence is the application of paragraph 3 of Article
223 of the Labor Code x x x.
xxxx
The view as maintained in a number of cases is that:
x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee
during the period of appeal until reversal by the higher court. On the other hand, if the employee
has been reinstated during the appeal period and such reinstatement order is reversed with
finality, the employee is not required to reimburse whatever salary he received for he is entitled
to such, more so if he actually rendered services during the period. (Emphasis in the original;
italics and underscoring supplied)
In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is
entitled to receive wages pending appeal upon reinstatement, which is immediately executory.
Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order
of reinstatement and it is mandatory on the employer to comply therewith.
The opposite view is articulated in Genuino which states:
If the decision of the labor arbiter is later reversed on appeal upon the finding
that the ground for dismissal is valid, then the employer has the right to require the
dismissed employee on payroll reinstatement to refund the salaries [he] received
while the case was pending appeal, or it can be deducted from the accrued benef its
that the dismissed employee was entitled to receive from [his] employer under
existing laws, collective bargaining agreement provisions, and com-
153
pany practices. However, if the employee was reinstated to work during the pendency of the
appeal, then the employee is entitled to the compensation received for actual services rendered
without need of refund.
Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her
dismissal is based on a just cause, then she is not entitled to be paid the salaries stated in item
no. 3 of the fallo of the September 3, 1994 NLRC Decision. (Emphasis, italics and underscoring
supplied)
It has thus been advanced that there is no point in releasing the wages to petitioners since their
dismissal was found to be valid, and to do so would constitute unjust enrichment.
Prior to Genuino, there had been no known similar case containing a dispositive portion where
the employee was required to refund the salaries received on payroll reinstatement. In fact, in a
catena of cases, the Court did not order the refund of salaries garnished or received by payroll-
reinstated employees despite a subsequent reversal of the reinstatement order.
The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise render
inutile the rationale of reinstatement pending appeal.
xxxx
x x x Then, by and pursuant to the same power (police power), the State may authorize an
immediate implementation, pending appeal, of a decision reinstating a dismissed or separated
employee since that saving act is designed to stop, although temporarily since the appeal may
be decided in favor of the appellant, a continuing threat or danger to the survival or even the life
of the dismissed or separated employee and his family.36
Furthermore, in Garcia, the Court went on to discuss the illogical and unjust effects of the
refund doctrine erroneously espoused in Genuino:
Even outside the theoretical trappings of the discussion and into the mundane realities of
human experience, the refund doctrine easily demonstrates how a favorable decision by the
Labor
_______________
36 Id., at pp. 488-491.
154
Arbiter could harm, more than help, a dismissed employee. The employee, to make both ends
meet, would necessarily have to use up the salaries received during the pendency of the appeal,
only to end up having to refund the sum in case of a final unfavorable decision. It is mirage of a
stop-gap leading the employee to a risky cliff of insolvency.
Advisably, the sum is better left unspent. It becomes more logical and practical for the employee
to refuse payroll reinstatement and simply find work elsewhere in the interim, if any is available.
Notably, the option of payroll reinstatement belongs to the employer, even if the employee is
able and raring to return to work. Prior to Genuino, it is unthinkable for one to refuse payroll
reinstatement. In the face of the grim possibilities, the rise of concerned employees declining
payroll reinstatement is on the horizon.
Further, the Genuino ruling not only disregards the social justice principles behind the rule, but
also institutes a scheme unduly favorable to management. Under such scheme, the salaries
dispensed pendente lite merely serve as a bond posted in installment by the employer. For in
the event of a reversal of the Labor Arbiters decision ordering reinstatement, the employer gets
back the same amount without having to spend ordinarily for bond premiums. This circumvents,
if not directly contradicts, the proscription that the posting of a bond [even a cash bond] by the
employer shall not stay the execution for reinstatement.
In playing down the stray posture in Genuino requiring the dismissed employee on payroll
reinstatement to refund the salaries in case a final decision upholds the validity of the dismissal,
the Court realigns the proper course of the prevailing doctrine on reinstatement pending appeal
vis--vis the effect of a reversal on appeal.
xxxx
The Court reaffirms the prevailing principle that even if the order of reinstatement of the
Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and
pay the wages of the dismissed employee during the period of appeal until reversal by the higher
court.
x x x.37 (Emphasis supplied.)
_______________
37 Id., at pp. 491-493.
155
In sum, the Court reiterates the principle that reinstatement pending appeal necessitates that it
must be immediately self-executory without need for a writ of execution during the pendency of
the appeal, if the law is to serve its noble purpose, and any attempt on the part of the employer
to evade or delay its execution should not be allowed. Furthermore, we likewise restate our
ruling that an order for reinstatement entitles an employee to receive his accrued backwages
from the moment the reinstatement order was issued up to the date when the same was
reversed by a higher court without fear of refunding what he had received. It cannot be denied
that, under our statutory and jurisprudential framework, respondent is entitled to payment of her
wages for the period after December 5, 2003 until the Court of Appeals Decision dated
November 23, 2005, notwithstanding the finding therein that her dismissal was legal and for just
cause. Thus, the payment of such wages cannot be deemed as unjust enrichment on
respondents part.
WHEREFORE, the petition is DENIED and the assailed Resolution dated October 23, 2006 as
well as the Resolution dated April 10, 2007 both issued by the Court of Appeals in CA-G.R. SP
No. 88987 are hereby AFFIRMED.
SO ORDERED.
Corona (C.J., Chairperson), Velasco, Jr., Del Castillo and Perez, JJ., concur.
Petition denied, resolutions affirmed.
Note.The normal consequences of a finding that an employee has been illegally
dismissed are, firstly, that the employee becomes entitled to reinstatement to his former position
without loss of seniority rights and, secondly, the payment of backwages corresponding to the
period from his illegal dismissal up to actual reinstatement. (Nissan North EDSA Balin-tawak,
Quezon City vs. Serrano, Jr., 588 SCRA 238 [2009])
o0o
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424 SUPREME COURT REPORTS ANNOTATED
Aba vs. National Labor Relations Commission
G.R. No. 122627. July 28, 1999.*
WILSON ABA, petitioner, vs. NATIONAL LABOR RELA TIONS COMMISSION (Fourth Division)
and ALFONSO VILLEGAS, respondents.
Labor Law; Remedial Law; Appeal; Words and Phrases; Appeal means the elevation by an a
ggrieved party of any decision or award of a lower body to a higher body by means of a
pleading.Appeal means the elevation by an aggrieved party of any decision or award of a
lower body to a higher body by means of a pleading which includes the assignment of errors,
arguments in support thereof, and the reliefs prayed for.
Same; Same; Same; Perfection of an appeal includes the filing, within the prescribed period, of
the memorandum of appeal containing, among others, the assignment of error/s, arguments in
support thereof, the relief sought and, in appropriate cases, posting of the appeal bond.
Perfection of an appeal includes the filing, within the prescribed period, of the memorandum of
appeal containing, among others, the assignment of error/s, arguments in support thereof, the
relief sought and, in appropriate cases, posting of the appeal bond. An appeal bond is necessary
only in case of a judgment involving a monetary award, in which case, the appeal may be
perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount equivalent to the monetary award in
the judgment appealed from.
Same; Same; Same; Technical rules of evidence are not binding in any proceedings before the
Commission or any of the labor arbiters.In the instant case, it is undisputed that the appeal
was filed within the reglementary period. The memorandum of appeal contained an assignment
of errors, the arguments in support thereof, and the reliefs sought. No appeal bond was
necessary as the decision being appealed did not contain any monetary award. Nowhere is it
written that payment of appeal docketing fee is necessary for the perfection of the appeal.
Therefore, there is no question that the appeal in the instant case has been perfected and the
failure to pay the appeal docketing fee is not fatal. Besides, it is settled jurisprudence that
technical rules of evidence are not binding in any proceedings before the Commission or any of
the labor arbiters. It has been the policy of this Court to resolve labor disputes with the view of
compassionate justice towards the working class.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the Court.
Francisco D. Yap for petitioner. Reuel T. Bael for private respondent.
BELLOSILLO, J.:
WILSON ABA filed against Hda. Sta. Ines and/or Alfonso Villegas a complaint for illegal
dismissal, legal holiday pay, premium pay on holiday and rest day, service incentive leave pay,
separation pay, and salary and 13th month differentials.1
__________________
1 Records, p. 1.
426
In his Position Paper2 Aba claimed he worked at Hda. Sta. Ines from 26 December 1976 until his
termination on 27 August 1990 due allegedly to his union activities. Hda. Sta. Ines and Villegas
vehemently denied Abas accusations and claimed that the latter was not even in their employ.
To prove their point, they submitted copy of a complaint filed by Aba, this time against Hda.
Fatima and/or Alfonso Villegas for underpayment of salaries. In the complaint, Aba claimed he
was employed by Hda. Fatima on 5 January 1972 until the filing of the complaint on 6 December
1990. In view of the overlapping periods of employment, Hda. Sta. Ines and Villegas concluded it
was impossible for Aba to have been employed simultaneously by Hda. Fatima and by Hda. Sta.
Ines as he could not have served two (2) employers at the same time, especially when these
employers were 15 kilometers apart from each other.
On 17 November 1993 Labor Arbiter Geoffrey P. Villahermosa dismissed the instant complaint
with prejudice considering the apparent inconsistency in Abas periods of employment. 3 In his
Appeal4 Aba complained that the case should not have been dismissed as one pertained to
illegal dismissal, while the other to unpaid salaries. Consequently, they should have been
consolidated and decided on the merits.
On 10 March 1994 the National Labor Relations Commission remanded the case to the Labor
Arbiter for a decision on the merits as there were still essential factual matters which had to be
ascertained.
On remand, both parties submitted their respective position papers. In his Position Paper, Aba
alleged this time that he started working at Hda. Sta. Ines as early as 1968. On the other hand,
private respondents maintained they never employed Aba. As proof, they presented a copy of
the decision in RAB Case No. 09-418-90-D, Cresencio Abriga, Sr., et al. v. Hda. Fatima and/or
Alfonso Villegas. In that case, Aba was
__________________
2 Id., pp. 6-7.
3 Id., pp. 28-29.
4 Id., pp. 36-39.
427
awarded P1,846.00 representing his 13th-month pay from Hda. Fatima. Private respondents
also submitted the affidavits of Cristito Tabio and Moises Ponce, timekeeper and cabo,
respectively, at Hda. Sta. Ines attesting that Aba was never employed by Hda. Sta. Ines.
On 25 January 1995 the Labor Arbiter dismissed the case holding that there was no employer-
employee relationship between the parties. Aba appealed ascribing error on the Labor Arbiter for
rendering judgment based solely on position papers and without the benefit of any hearing. Too,
Aba claimed private respondents failed to overcome the burden of proving that his termination
was for a valid cause.
Nonetheless, upon verification of the appeal, it was shown that Aba had failed to pay the appeal
docketing fee contrary to his assertion in the prefatory paragraph of his Memorandum of
Appeal.5 Consequently, the NLRC dismissed his appeal for non-payment of the appeal
docketing fee.6 Aba timely filed his Motion for Reconsideration together with the appeal
docketing fee. Likewise, Aba filed a Supplemental Brief for the Complainant-Appellant.7 Therein,
he attempted to relate in chronological order his employment with Hda. Sta. Ines from 1968 to
1990 and attached therewith the affidavits of hacienda workers Gaudioso C. Rumbo8 and
Enrique T. Manaquil.9 But the NLRC denied Abas motion; hence, this petition.
Is delay in paying the appeal docketing fee fatal to petitioners appeal? The Office of the Solicitor
General opines that the dismissal of petitioners appeal for failure to pay the appeal docketing
fee on time was not in consonance with the constitutional mandate to protect labor and settled
jurisprudence. Accordingly, it moves for the setting aside of the decision of the NLRC which
dismissed Abas appeal and motion
____________________
5 Id., p. 138.
6 Id., pp. 160-161.
7 Id., pp. 142-147.
8 Id., pp. 148-149.
9 Id., pp. 150-151.
428
for reconsideration for non-payment of the appeal docketing fee.
The petition is impressed with merit. Appeal means the elevation by an aggrieved party of any
decision or award of a lower body to a higher body by means of a pleading which includes the
assignment of errors, arguments in support thereof, and the reliefs prayed for. 10 On the other
hand, perfection of an appeal includes the filing, within the prescribed period, of the
memorandum of appeal containing, among others, the assignment of error/s, arguments in
support thereof, the relief sought and, in appropriate cases, posting of the appeal bond. 11 An
appeal bond is necessary only in case of a judgment involving a monetary award, in which case,
the appeal may be perfected only upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from. 12
In the instant case, it is undisputed that the appeal was filed within the reglementary period. The
memorandum of appeal contained an assignment of errors, the arguments in support thereof,
and the reliefs sought. No appeal bond was necessary as the decision being appealed did not
contain any monetary award. Nowhere is it written that payment of appeal docketing fee is
necessary for the perfection of the appeal. Therefore, there is no question that the appeal in the
instant case has been perfected and the failure to pay the appeal docketing fee is not fatal.
Besides, it is settled jurisprudence that technical rules of evidence are not binding in any
proceedings before the Commission or any of the labor arbiters.13 It has been the policy of this
Court to resolve labor disputes with the view of compassionate justice towards the working
class.
____________________
10 Sec. 1, par. (bb), Book V, Omnibus Rules Implementing the Labor Code.
11 Sec. 1, par. (cc); id.
12 Art. 223, Labor Code of the Philippines.
13 Art. 221; id.
429
Corollarily, this issue has already been squarely resolved in C.W. Tan Mfg. v. NLRC14 wherein
we ruled
As to the issue of the non-payment of the appeal fee on time, this Court held in Del Rosario &
Sons Logging Enterprises, Inc. v. NLRC that failure to pay the appeal docketing fee confers a
directory and not mandatory power to dismiss an appeal and such power must be exercised with
a sound discretion and with a great deal of circumspection considering all attendant
circumstances. It is true that in Acda v. Minister of Labor we said that the payment of the appeal
fee is by no means a mere technicality but is an essential requirement in the perfection of an
appeal. However, where as in this case the fee had been paid belatedly, the broader interest of
justice and the desired objective in deciding the case on the merits demand that the appeal be
given due course.
Significantly, Aba is even excused from paying docket fees pursuant to Art. 277, par. (d), of the
Labor Code which provides that no docket fee shall be assessed in labor standards disputes, 15
and the instant case is a labor standards dispute as it involves not only the issue of illegal
dismissal but also payment of legal holiday pay, premium pay on holiday and rest day, service
incentive leave pay, separation pay, salary and 13th month differentials.
WHEREFORE, the petition is GRANTED. The challenged decision of 20 July 1995 and the
resolution of 28 August 1995 of public respondent National Labor Relations Commission are
REVERSED and SET ASIDE. Public respondent NLRC is DIRECTED to decide the appeal on
its merits, taking into account not only the additional documents submitted to it but also the
evidence submitted by the parties before the Labor Arbiter.
SO ORDERED.
Puno, Mendoza, Quisumbing and Buena, JJ., concur.
__________________
14 G.R. No. 79596, 10 February 1989, 170 SCRA 244.
15 Art. 277, par. (d), Labor Code of the Philippines.
430
Petition granted; Challenged decision reversed and set aside.
Notes.The perfection of an appeal in the manner and within the period prescribed by law
is not only mandatory but also jurisdictional. (Garcia vs. National Labor Relations Commission,
264 SCRA 261 [1996])
The National Labor Relations Commission may admit affidavits submitted on appeal, for it
cannot be disputed that technical rules of evidence are not binding in labor cases. (Panlilio vs.
National Labor Relations Commission, 281 SCRA 53 [1997])
o0o
Copyright 2017 Central Book Supply, Inc. All rights reserved.
 G.R. Nos. 178034 & 178117. October 17, 2013.*
G.R. Nos. 186984-85.
ANDREW JAMES MCBURNIE, petitioner, vs. EULALIO GANZON, EGI-MANAGERS, INC. and
E. GANZON, INC., respondents.
Remedial Law; Civil Procedure; Motion for Reconsideration; The Supreme Court
emphasizes that second and subsequent motions for reconsideration are, as a general rule,
prohibited. Section 2, Rule 52 of the Rules of Court provides that [n]o second motion for
reconsideration of a judgment or final resolution by the same party shall be entertained.At the
outset, the Court emphasizes that second and subsequent motions for reconsideration are, as a
general rule, prohibited. Section 2, Rule 52 of the Rules of Court provides that [n]o second
motion for reconsideration of a judgment or final resolution by the same party shall be
entertained. The rule rests on the basic tenet of immutability of judgments. At some point, a
decision becomes final and executory and, consequently, all litigations must come to an end.
The general rule, however, against second and subsequent motions for reconsideration admits
of settled exceptions. For one, the present Internal Rules of the Supreme Court, particularly
Section 3, Rule 15 thereof, provides: Sec. 3. Second motion for reconsideration.The Court
shall not entertain a second motion for reconsideration, and any exception to this rule can only
be granted in the higher interest of justice by the Court en banc upon a vote of at least two-thirds
of its actual membership. There is reconsideration in the higher interest of justice when the
assailed decision is not only legally erroneous, but is likewise patently unjust and potentially
capable of causing unwarranted and irremediable injury or damage to the parties. A second
motion for reconsideration can only be entertained before the ruling sought to be reconsidered
becomes final by operation of law or by the Courts declaration.
Same; Same; Appeal Bonds; No motion to reduce bond shall be entertained except on
meritorious grounds and upon the posting of a
_______________
* EN BANC.
647
bond in a reasonable amount in relation to the monetary award.We emphasize that the crucial
issue in this case concerns the sufficiency of the appeal bond that was posted by the
respondents. The present rule on the matter is Section 6, Rule VI of the 2011 NLRC Rules of
Procedure, which was substantially the same provision in effect at the time of the respondents
appeal to the NLRC, and which reads: RULE VI APPEALS Sec. 6. BOND.In case the decision
of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond. The appeal bond
shall either be in cash or surety in an amount equivalent to the monetary award, exclusive of
damages and attorneys fees. x x x x No motion to reduce bond shall be entertained except on
meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the
monetary award. The filing of the motion to reduce bond without compliance with the requisites
in the preceding paragraph shall not stop the running of the period to perfect an appeal.
Same; Same; Same; Labor Law; Time and again, the Supreme Court has cautioned the
National Labor Relations Commission (NLRC) to give Article 223 of the Labor Code, particularly
the provisions requiring bonds in appeals involving monetary awards, a liberal interpretation in
line with the desired objective of resolving controversies on the merits.Time and again, the
Court has cautioned the NLRC to give Article 223 of the Labor Code, particularly the provisions
requiring bonds in appeals involving monetary awards, a liberal interpretation in line with the
desired objective of resolving controversies on the merits. The NLRCs failure to take action on
the motion to reduce the bond in the manner prescribed by law and jurisprudence then cannot
be countenanced. Although an appeal by parties from decisions that are adverse to their
interests is neither a natural right nor a part of due process, it is an essential part of our judicial
system. Courts should proceed with caution so as not to deprive a party of the right to appeal,
but rather, ensure that every party has the amplest opportunity for the proper and just disposition
of their cause, free from the constraints of technicalities. Considering the mandate of labor
tribunals, the principle equally applies to them.
Labor Law; Appeals; Although the general rule provides that an appeal in labor cases
from a decision involving a monetary award may be perfected only upon the posting of a cash or
surety bond, the
Court has relaxed this requirement under certain exceptional circumstances in order to resolve
controversies on their merits.Although the general rule provides that an appeal in labor cases
from a decision involving a monetary award may be perfected only upon the posting of a cash or
surety bond, the Court has relaxed this requirement under certain exceptional circumstances in
order to resolve controversies on their merits. These circumstances include: (1) the fundamental
consideration of substantial justice; (2) the prevention of miscarriage of justice or of unjust
enrichment; and (3) special circumstances of the case combined with its legal merits, and the
amount and the issue involved. Guidelines that are applicable in the reduction of appeal bonds
were also explained in Nicol v. Footjoy Industrial Corporation, 528 SCRA 300 (2007). The bond
requirement in appeals involving monetary awards has been and may be relaxed in meritorious
cases, including instances in which (1) there was substantial compliance with the Rules, (2)
surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a
liberal interpretation of the requirement of an appeal bond would serve the desired objective of
resolving controversies on the merits, or (4) the appellants, at the very least, exhibited their
willingness and/or good faith by posting a partial bond during the reglementary period.
Same; Remedial Law; Civil Procedure; Appeal Bonds; Time and again, the Supreme
Court has explained that the bond requirement imposed upon appellants in labor cases is
intended to ensure the satisfaction of awards that are made in favor of appellees, in the event
that their claims are eventually sustained by the courts.As the Court, nonetheless, remains
firm on the importance of appeal bonds in appeals from monetary awards of LAs, we stress that
the NLRC, pursuant to Section 6, Rule VI of the NLRC Rules of Procedure, shall only accept
motions to reduce bond that are coupled with the posting of a bond in a reasonable amount.
Time and again, we have explained that the bond requirement imposed upon appellants in labor
cases is intended to ensure the satisfaction of awards that are made in favor of appellees, in the
event that their claims are eventually sustained by the courts. On the part of the appellants, its
posting may also signify their good faith and willingness to recognize the final outcome of their
appeal.
649
Same; Same; Same; Same; In all cases, the reduction of the appeal bond shall be
justified by meritorious grounds and accompanied by the posting of the required appeal bond in
a reasonable amount.In all cases, the reduction of the appeal bond shall be justified by
meritorious grounds and accompanied by the posting of the required appeal bond in a
reasonable amount. The requirement on the existence of a meritorious ground delves on the
worth of the parties arguments, taking into account their respective rights and the circumstances
that attend the case. The condition was emphasized in University Plans Incorporated v. Solano,
652 SCRA 492 (2011); wherein the Court held that while the NLRCs Revised Rules of
Procedure allows the [NLRC] to reduce the amount of the bond, the exercise of the authority is
not a matter of right on the part of the movant, but lies within the sound discretion of the NLRC
upon a showing of meritorious grounds. By jurisprudence, the merit referred to may pertain to
an appellants lack of financial capability to pay the full amount of the bond, the merits of the
main appeal such as when there is a valid claim that there was no illegal dismissal to justify the
award, the absence of an employer-employee relationship, prescription of claims, and other
similarly valid issues that are raised in the appeal. For the purpose of determining a meritorious
ground, the NLRC is not precluded from receiving evidence, or from making a preliminary
determination of the merits of the appellants contentions.
Same; Same; Same; Same; Although the National Labor Relations Commission (NLRC)
Rules of Procedure, particularly Section 6 of Rule VI thereof, provides that the bond to be posted
shall be in a reasonable amount in relation to the monetary award, the merit of the motion shall
always take precedence in the determination.Although the NLRC Rules of Procedure,
particularly Section 6 of Rule VI thereof, provides that the bond to be posted shall be in a
reasonable amount in relation to the monetary award, the merit of the motion shall always take
precedence in the determination. Settled is the rule that procedural rules were conceived, and
should thus be applied in a manner that would only aid the attainment of justice. If a stringent
application of the rules would hinder rather than serve the demands of substantial justice, the
former must yield to the latter.
Same; Termination of Employment; Illegal Dismissals; Before a case for illegal dismissal
can prosper, an employer-employee relationship must first be established.Before a case for
illegal dismissal can prosper, an employer-employee relationship must first be established.
Although an employment agreement forms part of the case records, respondent Ganzon signed
it with the notation per my note. The respondents have sufficiently explained that the note
refers to the letter dated May 11, 1999 which embodied certain conditions for the employments
effectivity. As we have previously explained, however, the said conditions, particularly on the
successful completion of the project financing for the hotel project in Baguio City and McBurnies
acquisition of an Alien Employment Permit, failed to materialize. Such defense of the
respondents, which was duly considered by the NLRC in its Decision dated November 17, 2009,
was not sufficiently rebutted by McBurnie.
Same; Employer-Employee Relationship; Criteria in the Determination of an Employer-
Employee Relationship.Given the parties conflicting claims on their true intention in executing
the agreement, it was necessary to resort to the established criteria for the determination of an
employer-employee relationship, namely: (1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; and (4) the power to control the employees
conduct. The rule of thumb remains: the onus probandi falls on the claimant to establish or
substantiate the claim by the requisite quantum of evidence. Whoever claims entitlement to the
benefits provided by law should establish his or her right thereto. McBurnie failed in this regard.
As previously observed by the NLRC, McBurnie even failed to show through any document such
as payslips or vouchers that his salaries during the time that he allegedly worked for the
respondents were paid by the company. In the absence of an employer-employee relationship
between McBurnie and the respondents, McBurnie could not successfully claim that he was
dismissed, much less illegally dismissed, by the latter. Even granting that there was such an
employer-employee relationship, the records are barren of any document showing that its
termination was by the respondents dismissal of McBurnie.
MOTIONS FOR RECONSIDERATION of the decision and resolutions of the Supreme Court.
651
The facts are stated in the resolution of the Court.
Arnel Z. Dolendo and Leonard R. Subiela for petitioner.
Teodoro M. Jumamil for respondents.
RESOLUTION
REYES, J.:
For resolution are the
(1) third motion for reconsideration1 filed by Eulalio Ganzon (Ganzon), EGI-Managers,
Inc. (EGI) and E. Ganzon, Inc. (respondents) on March 27, 2012, seeking a reconsideration of
the Courts Decision2 dated September 18, 2009 that ordered the dismissal of their appeal to the
National Labor Relations Commission (NLRC) for failure to post additional appeal bond in the
amount of P54,083,910.00; and
(2) motion for reconsideration3 filed by petitioner Andrew James McBurnie (McBurnie) on
September 26, 2012, assailing the Court en bancs Resolution4 dated September 4, 2012 that
(1) accepted the case from the Courts Third Division and (2) enjoined the implementation of the
Labor Arbiters (LA) decision finding him to be illegally dismissed by the respondents.
Antecedent Facts
The Decision dated September 18, 2009 provides the following antecedent facts and
proceedings
On October 4, 2002, McBurnie, an Australian national, instituted a complaint for illegal dismissal
and other monetary claims against the respondents. McBurnie claimed that on May 11, 1999, he
signed a five-year employment agreement5 with the company EGI as an Executive Vice-
President who shall oversee the management of the companys hotels and resorts within the
Philippines. He performed work for the company until sometime in November 1999, when he
figured in an accident that compelled him to go back to Australia while recuperating from his
injuries. While in Australia, he was informed by respondent Ganzon that his services were no
longer needed because their intended project would no longer push through.
The respondents opposed the complaint, contending that their agreement with McBurnie was to
jointly invest in and establish a company for the management of hotels. They did not intend to
create an employer-employee relationship, and the execution of the employment contract that
was being invoked by McBurnie was solely for the purpose of allowing McBurnie to obtain an
alien work permit in the Philippines. At the time McBurnie left for Australia for his medical
treatment, he had not yet obtained a work permit.
In a Decision6 dated September 30, 2004, the LA declared McBurnie as having been illegally
dismissed from employment, and thus entitled to receive from the respondents the following
amounts: (a) US$985,162.00 as salary and benefits for the unexpired term of their employment
contract, (b) P2,000,000.00 as moral and exemplary damages, and (c) attorneys fees equivalent
to 10% of the total monetary award.
_______________
5 Id., at pp. 165-169.
6 Id., at pp. 424-435.
653
Feeling aggrieved, the respondents appealed the LAs Decision to the NLRC. 7 On November 5,
2004, they filed their Memorandum of Appeal8 and Motion to Reduce Bond,9 and posted an
appeal bond in the amount of P100,000.00. The respondents contended in their Motion to
Reduce Bond, inter alia, that the monetary awards of the LA were null and excessive, allegedly
with the intention of rendering them incapable of posting the necessary appeal bond. They
claimed that an award of more than P60 Million Pesos to a single foreigner who had no work
permit and who left the country for good one month after the purported commencement of his
employment was a patent nullity.10 Furthermore, they claimed that because of their business
losses that may be attributed to an economic crisis, they lacked the capacity to pay the bond of
almost P60 Million, or even the millions of pesos in premium required for such bond.
On March 31, 2005, the NLRC denied11 the motion to reduce bond, explaining that in cases
involving monetary award, an employer seeking to appeal the [LAs] decision to the Commission
is unconditionally required by Art. 223, Labor Code to post bond in the amount equivalent to the
monetary award x x x.12 Thus, the NLRC required from the respondents the posting of an
additional bond in the amount of P54,083,910.00.
When their motion for reconsideration was denied,13 the respondents decided to elevate the
matter to the Court of Appeals (CA) via the Petition for Certiorari and Prohibition (With Extremely
Urgent Prayer for the Issuance of a Preliminary Injunction and/or Temporary Restraining
Order)14 docketed as CA-G.R. SP No. 90845.
In the meantime, in view of the respondents failure to post the required additional bond, the
NLRC dismissed their appeal in a Resolution15 dated March 8, 2006. The respondents motion
for reconsideration was denied on June 30, 2006. 16 This prompted the respondents to file with
the CA the Petition for Certiorari (With Urgent Prayers for the Immediate Issuance of a
Temporary Restraining Order and a Writ of Preliminary Injunction) 17 docketed as CA-G.R. SP
No. 95916, which was later consolidated with CA-G.R. SP No. 90845.
CA-G.R. SP Nos. 90845 and 95916
On February 16, 2007, the CA issued a Resolution18 granting the respondents application for a
writ of preliminary injunction. It directed the NLRC, McBurnie, and all persons acting for and
under their authority to refrain from causing the execution and enforcement of the LAs decision
in favor of McBurnie, conditioned upon the respondents posting of a bond in the amount of
P10,000,000.00. McBurnie sought reconsideration of the issuance of the writ of preliminary
injunction, but this was denied by the CA in its Resolution19 dated May 29, 2007.
McBurnie then filed with the Court a Petition for Review on Certiorari20 docketed as G.R. Nos.
178034 and 178117, assailing the CA Resolutions that granted the respondents application for
the injunctive writ. On July 4, 2007, the Court denied the petition on the ground of McBurnies
failure to comply with the 2004 Rules on Notarial Practice and to sufficiently show that the CA
committed any reversible error.21 A motion for reconsideration was denied with finality in a
Resolution22 dated October 8, 2007.
Unyielding, McBurnie filed a Motion for Leave (1) To File Supplemental Motion for
Reconsideration and (2) To Admit the Attached Supplemental Motion for Reconsideration, 23
which was treated by the Court as a second motion for reconsideration, a prohibited pleading
under Section 2, Rule 56 of the Rules of Court. Thus, the motion for leave was denied by the
Court in a Resolution24 dated November 26, 2007. The Courts Resolution dated July 4, 2007
then became final and executory on November 13, 2007; accordingly, entry of judgment was
made in G.R. Nos. 178034 and 178117.25
In the meantime, the CA ruled on the merits of CA-G.R. SP No. 90845 and CA-G.R. SP No.
95916 and rendered its Decision26 dated October 27, 2008, allowing the respondents motion to
reduce appeal bond and directing the NLRC to give due course to their appeal. The dispositive
portion of the CA Decision reads:
WHEREFORE, in view of the foregoing, the petition for certiorari and prohibition docketed as CA
GR SP No. 90845 and the petition for certiorari docketed as CA GR SP No. 95916 are
GRANTED. Petitioners[] Motion to Reduce Appeal Bond is GRANTED. Petitioners are hereby
DIRECTED to post appeal bond in the amount of P10,000,000.00. The NLRC is hereby
DIRECTED to give due course to petitioners appeal in CA GR SP No. 95916 which is ordered
remanded to the NLRC for further proceedings.
SO ORDERED.27
On the issue28 of the NLRCs denial of the respondents motion to reduce appeal bond, the CA
ruled that the NLRC committed grave abuse of discretion in immediately denying the motion
without fixing an appeal bond in an amount that was reasonable, as it denied the respondents of
their right to appeal from the decision of the LA 9 The CA explained that (w)hile Art. 223 of the
Labor Code requiring bond equivalent to the monetary award is explicit, Section 6, Rule VI of the
NLRC Rules of Procedure, as amended, recognized as exception a motion to reduce bond upon
meritorious grounds and upon posting of a bond in a reasonable amount in relation to the
monetary award.30
On the issue31 of the NLRCs dismissal of the appeal on the ground of the respondents failure to
post the additional appeal bond, the CA also found grave abuse of discretion on the part of the
NLRC, explaining that an appeal bond in the amount of P54,083,910.00 was prohibitive and
excessive. Moreover, the appellate court cited the pendency of the petition for certiorari over the
denial of the motion to reduce bond, which should have prevented the NLRC from immediately
dismissing the respondents appeal.32
Undeterred, McBurnie filed a motion for reconsideration. At the same time, the respondents
moved that the appeal be resolved on the merits by the CA. On March 3, 2009, the CA
issued a Resolution33 denying both motions. McBurnie then filed with the Court the Petition for
Review on Certiorari34 docketed as G.R. Nos. 186984-85.
In the meantime, the NLRC, acting on the CAs order of remand, accepted the appeal from the
LAs decision, and in its Decision35 dated November 17, 2009, reversed and set aside the
Decision of the LA, and entered a new one dismissing McBurnies complaint. It explained that
based on records, McBurnie was never an employee of any of the respondents, but a potential
investor in a project that included said respondents, barring a claim of dismissal, much less, an
illegal dismissal. Granting that there was a contract of employment executed by the parties,
McBurnie failed to obtain a work permit which would have allowed him to work for any of the
respondents.36 In the absence of such permit, the employment agreement was void and thus,
could not be the source of any right or obligation.
Court Decision dated September 18, 2009
On September 18, 2009, the Third Division of this Court rendered its Decision 37 which reversed
the CA Decision dated October 27, 2008 and Resolution dated March 3, 2009. The dispositive
portion reads:
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals
in CA-G.R. SP Nos. 90845 and 95916 dated October 27, 2008 granting respondents
Motion to Reduce Appeal Bond and ordering the National Labor Relations
Commission to give due course to respondents appeal, and its March 3, 2009
Resolution denying petitioners motion for reconsideration, are REVERSED and SET
ASIDE. The March 8, 2006 and June 30, 2006 Resolutions of the National Labor
Relations Commission in NLRC NCR CA NO. 042913-05 dismissing respondents
appeal for failure to perfect an appeal and denying their motion for reconsideration,
respectively, are REINSTATED and AFFIRMED.
SO ORDERED.38
The Court explained that the respondents failure to post a bond equivalent in amount to the LAs
monetary award was fatal to the appeal. 39 Although an appeal bond may be reduced upon
motion by an employer, the following conditions must first be satisfied: (1) the motion to reduce
bond shall be based on meritorious grounds; and (2) a reasonable amount in relation to the
monetary award is posted by the appellant. Unless the NLRC grants the motion to reduce the
cash bond within the 10-day reglementary period to perfect an appeal from a judgment of the
LA, the employer is mandated to post the cash or surety bond securing the full amount within the
said 10-day period.40 The respondents initial appeal bond of P100,000.00 was grossly
inadequate compared to the LAs monetary award.
The respondents first motion for reconsideration41 was denied by the Court for lack of merit via a
Resolution42 dated December 14, 2009.
Meanwhile, on the basis of the Courts Decision, McBurnie filed with the NLRC a motion for
reconsideration with motion to recall and expunge from the records the NLRC Decision dated
November 17, 2009.43 The motion was granted by the NLRC in its Decision 44 dated January 14,
2010.45
Undaunted by the denial of their first motion for reconsideration of the Decision dated September
18, 2009, the respondents filed with the Court a Motion for Leave to Submit Attached Second
Motion for Reconsideration46 and Second Motion for Reconsideration,47 which motion for leave
was granted in a Resolution48 dated March 15, 2010. McBurnie was allowed to submit his
comment on the second motion, and the respondents, their reply to the comment. On January
25, 2012, however, the Court issued a Resolution49 denying the second motion for lack of
merit, considering that a second motion for reconsideration is a prohibited pleading x x x.50
The Courts Decision dated September 18, 2009 became final and executory on March 14,
2012. Thus, entry of judgment51 was made in due course, as follows:
ENTRY OF JUDGMENT
This is to certify that on September 18, 2009 a decision rendered in the above-entitled cases
was filed in this Office, the dispositive part of which reads as follows:
xxxx
and that the same has, on March 14, 2012 become final and executory and is hereby recorded
in the Book of Entries of Judgments.52
The Entry of Judgment indicated that the same was made for the Courts Decision rendered in
G.R. Nos. 186984-85.
On March 27, 2012, the respondents filed a Motion for Leave to File Attached Third Motion for
Reconsideration, with an attached Motion for Reconsideration (on the Honorable Courts 25
January 2012 Resolution) with Motion to Refer These Cases to the Honorable Court En Banc. 53
The third motion for reconsideration is founded on the following grounds:
I.
THE PREVIOUS 15 MARCH 2010 RESOLUTION OF THE HONORABLE COURT ACTUALLY
GRANTED RESPONDENTS MOTION FOR LEAVE TO SUBMIT A SECOND MOTION FOR
RECONSIDERATION.
HENCE, RESPONDENTS RESPECTFULLY CONTEND THAT THE SUBSEQUENT 25
JANUARY 2012 RESOLUTION CANNOT DENY THE SECOND MOTION FOR
RECONSIDERATION ON THE GROUND THAT IT IS A PROHIBITED PLEADING.
MOREOVER, IT IS RESPECTFULLY CONTENDED THAT THERE ARE VERY PECULIAR
CIRCUMSTANCES AND NUMEROUS IMPORTANT ISSUES IN THESE CASES THAT
CLEARLY JUSTIFY GIVING DUE COURSE TO RESPONDENTS SECOND MOTION FOR
RECONSIDERATION, WHICH ARE:
_______________
52 Id.
53 Id., at pp. 874-909.
661
II.
THE 10 MILLION PESOS BOND WHICH WAS POSTED IN COMPLIANCE WITH THE
OCTOBER 27, 2008 DECISION OF THE COURT OF APPEALS IS A SUBSTANTIAL AND
SPECIAL MERITORIOUS CIRCUMSTANCE TO MERIT RECONSIDERATION OF THIS
APPEAL.
III.
THE HONORABLE COURT HAS HELD IN NUMEROUS LABOR CASES THAT WITH
RESPECT TO ARTICLE 223 OF THE LABOR CODE, THE REQUIREMENTS OF THE LAW
SHOULD BE GIVEN A LIBERAL INTERPRETATION, ESPECIALLY IF THERE ARE SPECIAL
MERITORIOUS CIRCUMSTANCES AND ISSUES.
IV.
THE [LAS] JUDGMENT WAS PATENTLY VOID SINCE IT AWARDS MORE THAN [P]60
MILLION PESOS TO A SINGLE FOREIGNER WHO HAD NO WORK PERMIT, AND NO
WORKING VISA.
V.
PETITIONER MCBURNIE DID NOT IMPLEAD THE NATIONAL LABOR RELATIONS
COMMISSION (NLRC) IN HIS APPEAL HEREIN, MAKING THE APPEAL INEFFECTIVE
AGAINST THE NLRC.
VI.
NLRC HAS DISMISSED THE COMPLAINT OF PETITIONER MCBURNIE IN ITS NOVEMBER
17, 2009 DECISION.
VII.
THE HONORABLE COURTS 18 SEPTEMBER 2009 DECISION WAS TAINTED WITH VERY
SERIOUS IRREGULARITIES.
662
VIII.
GR NOS. 178034 AND 178117 HAVE BEEN INADVERTENTLY INCLUDED IN THIS CASE.
IX.
THE HONORABLE COURT DID NOT DULY RULE UPON THE OTHER VERY MERITORIOUS
ARGUMENTS OF THE RESPONDENTS WHICH ARE AS FOLLOWS:
(A) PETITIONER NEVER ATTENDED ANY OF ALL 14 HEARINGS BEFORE THE [LA]
(WHEN 2 MISSED HEARINGS MEAN DISMISSAL)[.]
(B) PETITIONER REFERRED TO HIMSELF AS A VICTIM OF LEISURE EXPERTS, INC.,
BUT NOT OF ANY OF THE RESPONDENTS[.]
(C) PETITIONERS POSITIVE LETTER TO RESPONDENT MR. EULALIO GANZON
CLEARLY SHOWS THAT HE WAS NOT ILLEGALLY DISMISSED NOR EVEN DISMISSED BY
ANY OF THE RESPONDENTS AND PETITIONER EVEN PROMISED TO PAY HIS DEBTS
FOR ADVANCES MADE BY RESPONDENT[S].
(D) PETITIONER WAS NEVER EMPLOYED BY ANY OF THE RESPONDENTS.
PETITIONER PRESENTED WORK FOR CORONADO BEACH RESORT WHICH IS [NEITHER]
OWNED NOR CONNECTED WITH ANY OF THE RESPONDENTS.
(E) THE [LA] CONCLUDED THAT PETITIONER WAS DISMISSED EVEN IF THERE WAS
ABSOLUTELY NO EVIDENCE AT ALL PRESENTED THAT PETITIONER WAS DISMISSED
BY THE RESPONDENTS[.]
663
(F) PETITIONER LEFT THE PHILIPPINES FOR AUSTRALIA JUST 2 MONTHS AFTER THE
START OF THE ALLEGED EMPLOYMENT AGREEMENT, AND HAS STILL NOT RETURNED
TO THE PHILIPPINES AS CONFIRMED BY THE BUREAU OF IMMIGRATION.
(G) PETITIONER COULD NOT HAVE SIGNED AND PERSONALLY APPEARED BEFORE
THE NLRC ADMINISTERING OFFICER AS INDICATED IN THE COMPLAINT SHEET SINCE
HE LEFT THE COUNTRY 3 YEARS BEFORE THE COMPLAINT WAS FILED AND HE NEVER
CAME BACK.54
On September 4, 2012, the Court en banc55 issued a Resolution56 accepting the case from the
Third Division. It also issued a temporary restraining order (TRO) enjoining the implementation
of the LAs Decision dated September 30, 2004. This prompted McBurnies filing of a Motion for
Reconsideration,57 where he invoked the fact that the Courts Decision dated September 18,
2009 had become final and executory, with an entry of judgment already made by the Court.
Our Ruling
In light of pertinent law and jurisprudence, and upon taking a second hard look of the parties
arguments and the records of the case, the Court has ascertained that a reconsideration of this
Courts Decision dated September 18, 2009 and Resolutions dated December 14, 2009 and
January 25, 2012, along with the lifting of the entry of judgment in G.R. No. 186984-85, is in
order.
_______________
54 Id., at pp. 876-878.
55 By a vote of 12.
56 Rollo (G.R. Nos. 186984-85), p. 979.
57 Id., at pp. 994-1010.
664
The Courts acceptance of the
third motion for reconsideration
At the outset, the Court emphasizes that second and subsequent motions for reconsideration
are, as a general rule, prohibited. Section 2, Rule 52 of the Rules of Court provides that [n]o
second motion for reconsideration of a judgment or final resolution by the same party shall be
entertained. The rule rests on the basic tenet of immutability of judgments. At some point, a
decision becomes final and executory and, consequently, all litigations must come to an end. 58
The general rule, however, against second and subsequent motions for reconsideration admits
of settled exceptions. For one, the present Internal Rules of the Supreme Court, particularly
Section 3, Rule 15 thereof, provides:
Sec. 3. Second motion for reconsideration.The Court shall not entertain a
second motion for reconsideration, and any exception to this rule can only be granted
in the higher interest of justice by the Court en banc upon a vote of at least two-thirds
of its actual membership. There is reconsideration in the higher interest of justice
when the assailed decision is not only legally erroneous, but is likewise patently
unjust and potentially capable of causing unwarranted and irremediable injury or
damage to the parties. A second motion for reconsideration can only be entertained
before the ruling sought to be reconsidered becomes final by operation of law or by
the Courts declaration.
x x x x (Emphasis ours)
In a line of cases, the Court has then entertained and granted second motions for
reconsideration in the higher interest of substantial justice, as allowed under the Internal Rules
when the assailed decision is legally erroneous, patently unjust and potentially capable of
causing unwarranted and irremediable injury or damage to the parties. In Tirazona v. Philippine
EDS Techno-Service, Inc. (PET, Inc.),59 we also explained that a second motion for
reconsideration may be allowed in instances of extraordinarily persuasive reasons and only
after an express leave shall have been obtained. 60 In Apo Fruits Corporation v. Land Bank of
the Philippines,61 we allowed a second motion for reconsideration as the issue involved therein
was a matter of public interest, as it pertained to the proper application of a basic
constitutionally-guaranteed right in the governments implementation of its agrarian reform
program. In San Miguel Corporation v. NLRC,62 the Court set aside the decisions of the LA and
the NLRC that favored claimants-security guards upon the Courts review of San Miguel
Corporations second motion for reconsideration. In Vir-Jen Shipping and Marine Services, Inc.
v. NLRC, et al.,63 the Court en banc reversed on a third motion for reconsideration the ruling of
the Courts Division on therein private respondents claim for wages and monetary benefits.
It is also recognized that in some instances, the prudent action towards a just resolution of a
case is for the Court to suspend rules of procedure, for the power of this Court to suspend its
own rules or to except a particular case from its operations whenever the purposes of justice
require it, cannot be questioned.64 In De Guzman v. Sandiganbayan,65 the Court, thus,
explained:
[T]he rules of procedure should be viewed as mere tools designed to facilitate the attainment of
justice. Their strict and rigid application, which would result in technicalities that tend to frustrate
rather than promote substantial justice, must always be avoided. Even the Rules of Court
envision this liberality. This power to suspend or even disregard the rules can be so pervasive
and encompassing so as to alter even that which this Court itself has already declared to be
final, as we are now compelled to do in this case. x x x.
xxxx
The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of
justice but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere
slaves to or robots of technical rules, shorn of judicial discretion. That is precisely why courts in
rendering real justice have always been, as they in fact ought to be, conscientiously guided by
the norm that when on the balance, technicalities take a backseat against substantive rights, and
not the other way around. Truly then, technicalities, in the appropriate language of Justice
Makalintal, should give way to the realities of the situation. x x x.66 (Citations omitted)
Consistent with the foregoing precepts, the Court has then reconsidered even decisions that
have attained finality, finding it more appropriate to lift entries of judgments already made in
these cases. In Navarro v. Executive Secretary,67 we reiterated the pronouncement in De
Guzman that the power to suspend or even disregard rules of procedure can be so pervasive
and compelling as to alter even that which this Court itself has already declared final. The Court
then recalled in Navarro an entry of judgment after it had determined the validity and
constitutionality of Republic Act No. 9355, explaining that:
Verily, the Court had, on several occasions, sanctioned the recall of entries of judgment in light
of attendant extraordinary circumstances. The power to suspend or even disregard rules of
procedure can be so pervasive and compelling as to alter even that which this Court itself had
already declared final. In this case, the compelling concern is not only to afford the movants-
intervenors the right to be heard since they would be adversely affected by the judgment in this
case despite not being original parties thereto, but also to arrive at the correct interpretation of
the provisions of the [Local Government Code (LGC)] with respect to the creation of local
government units. x x x.68 (Citations omitted)
In Muoz v. CA,69 the Court resolved to recall an entry of judgment to prevent a miscarriage of
justice. This justification was likewise applied in Tan Tiac Chiong v. Hon. Cosico,70 wherein the
Court held that:
The recall of entries of judgments, albeit rare, is not a novelty. In Muoz v. CA, where the case
was elevated to this Court and a first and second motion for reconsideration had been denied
with finality, the Court, in the interest of substantial justice, recalled the Entry of Judgment as
well as the letter of transmittal of the records to the Court of Appeals. 71 (Citation omitted)
In Barnes v. Judge Padilla,72 we ruled:
[A] final and executory judgment can no longer be attacked by any of the parties or be modified,
directly or indirectly, even by the highest court of the land.
However, this Court has relaxed this rule in order to serve substantial justice considering (a)
matters of life, liberty, honor or property, (b) the existence of special or compelling
circumstances, (c) the merits of the case, (d) a cause not entirely attributable to the fault or
negligence of the party favored by the suspension of the rules, (e) a lack of any showing that the
review sought is merely frivolous and dilatory, and (f) the other party will not be unjustly
prejudiced thereby.73 (Citations omitted)
As we shall explain, the instant case also qualifies as an exception to, first, the proscription
against second and subsequent motions for reconsideration, and second, the rule on
immutability of judgments; a reconsideration of the Decision dated September 18, 2009, along
with the Resolutions dated December 14, 2009 and January 25, 2012, is justified by the higher
interest of substantial justice.
To begin with, the Court agrees with the respondents that the Courts prior resolve to grant, and
not just merely note, in a Resolution dated March 15, 2010 the respondents motion for leave to
submit their second motion for reconsideration already warranted a resolution and discussion of
the motion for reconsideration on its merits. Instead of doing this, however, the Court issued on
January 25, 2012 a Resolution74 denying the motion to reconsider for lack of merit, merely citing
that it was a prohibited pleading under Section 2, Rule 52 in relation to Section 4, Rule 56 of the
1997 Rules of Civil Procedure, as amended. 75 In League of Cities of the Philippines (LCP) v.
Commission on Elections,76 we reiterated a ruling that when a motion for leave to file and admit
a second motion for reconsideration is granted by the Court, the Court therefore allows the filing
of the second motion for reconsideration. In such a case, the second motion for reconsideration
is no longer a prohibited pleading. Similarly in this case, there was then no reason for the Court
to still consider the respondents second motion for reconsideration as a prohibited pleading, and
deny it plainly on such ground. The Court intends to remedy such error through this resolution.
More importantly, the Court finds it appropriate to accept the pending motion for reconsideration
and resolve it on the merits in order to rectify its prior disposition of the main issues in the
petition. Upon review, the Court is constrained to rule differently on the petitions. We have
determined the grave error in affirming the NLRCs rulings, promoting results that are patently
unjust for the respondents, as we consider the facts of the case, pertinent law, jurisprudence,
and the degree of the injury and damage to the respondents that will inevitably result from the
implementation of the Courts Decision dated September 18, 2009.
The rule on appeal bonds
We emphasize that the crucial issue in this case concerns the sufficiency of the appeal bond that
was posted by the respondents. The present rule on the matter is Section 6, Rule VI of the 2011
NLRC Rules of Procedure, which was substantially the same provision in effect at the time of the
respondents appeal to the NLRC, and which reads:
RULE VI
APPEALS
Sec. 6. BOND.In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the posting of a cash
or surety bond. The appeal bond shall either be in cash or surety in an amount equivalent to the
monetary award, exclusive of damages and attorneys fees.
xxxx
No motion to reduce bond shall be entertained except on meritorious grounds
and upon the posting of a bond in a reasonable amount in relation to the monetary
award.
The filing of the motion to reduce bond without compliance with the requisites in
the preceding paragraph shall not stop the running of the period to perfect an appeal.
(Emphasis supplied)
While the CA, in this case, allowed an appeal bond in the reduced amount of P10,000,000.00
and then ordered the cases remand to the NLRC, this Courts Decision dated September 18,
2009 provides otherwise, as it reads in part:
The posting of a bond is indispensable to the perfection of an appeal in cases involving
monetary awards from the decision of the Labor Arbiter. The lawmakers clearly intended to
make the bond a mandatory requisite for the perfection of an appeal by the employer as inferred
from the provision that an appeal by the employer may be perfected only upon the posting of a
cash or surety bond. The word only makes it clear that the posting of a cash or surety bond by
the employer is the essential and exclusive means by which an employers appeal may be
perfected. x x x.
Moreover, the filing of the bond is not only mandatory but a jurisdictional requirement as well,
that must be complied with in order to confer jurisdiction upon the NLRC. Noncompliance
therewith renders the decision of the Labor Arbiter final and executory. This requirement is
intended to assure the workers that if they prevail in the case, they will receive the money
judgment in their favor upon the dismissal of the employers appeal. It is intended to discourage
employers from using an appeal to delay or evade their obligation to satisfy their employees just
and lawful claims.
xxxx
Thus, it behooves the Court to give utmost regard to the legislative and administrative intent to
strictly require the employer to post a cash or surety bond securing the full amount of the
monetary award within the 10[-]day reglementary period. Nothing in the Labor Code or the
NLRC Rules of Procedure authorizes the posting of a bond that is less than the monetary award
in the judgment, or would deem such insufficient posting as sufficient to perfect the appeal.
While the bond may be reduced upon motion by the employer, this is subject to the conditions
that (1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a
reasonable amount in relation to the monetary award is posted by the appellant, otherwise the
filing of the motion to reduce bond shall not stop the running of the period to perfect an appeal.
The qualification effectively requires that unless the NLRC grants the reduction of the cash bond
within the 10[-]day reglementary period, the employer is still expected to post the cash or surety
bond securing the full amount within the said 10-day period. If the NLRC does eventually grant
the motion for reduction after the reglementary period has elapsed, the correct relief would be to
reduce the cash or surety bond already posted by the employer within the 10-day period.77
(Emphasis supplied; underscoring ours)
To begin with, the Court rectifies its prior pronouncement the unqualified statement that even
an appellant who seeks a reduction of an appeal bond before the NLRC is expected to post a
cash or surety bond securing the full amount of the judgment award within the 10-day
reglementary period to perfect the appeal.
_______________
77 Rollo (G.R. Nos. 186984-85), pp. 487-489.
672
The suspension of the period
to perfect the appeal upon the
filing of a motion to reduce bond
To clarify, the prevailing jurisprudence on the matter provides that the filing of a motion to reduce
bond, coupled with compliance with the two conditions emphasized in Garcia v. KJ Commercial78
for the grant of such motion, namely, (1) a meritorious ground, and (2) posting of a bond in a
reasonable amount, shall suffice to suspend the running of the period to perfect an appeal from
the labor arbiters decision to the NLRC.79 To require the full amount of the bond within the 10-
day reglementary period would only render nugatory the legal provisions which allow an
appellant to seek a reduction of the bond. Thus, we explained in Garcia:
The filing of a motion to reduce bond and compliance with the two conditions
stop the running of the period to perfect an appeal. x x x
xxxx
The NLRC has full discretion to grant or deny the motion to reduce bond, and it
may rule on the motion beyond the 10-day period within which to perfect an appeal.
Obviously, at the time of the filing of the motion to reduce bond and posting of a bond
in a reasonable amount, there is no assurance whether the appellants motion is
indeed based on meritorious ground and whether the bond he or she posted is of a
reasonable amount. Thus, the appellant always runs the risk of failing to perfect an
appeal.
x x x In order to give full effect to the provisions on motion to reduce bond, the
appellant must be allowed to wait for the ruling of the NLRC on the motion even
beyond the 10-day period to per-
fect an appeal. If the NLRC grants the motion and rules that there is indeed meritorious ground
and that the amount of the bond posted is reasonable, then the appeal is perfected. If
the NLRC denies the motion, the appellant may still file a motion for reconsideration
as provided under Section 15, Rule VII of the Rules. If the NLRC grants the motion
for reconsideration and rules that there is indeed meritorious ground and that the
amount of the bond posted is reasonable, then the appeal is perfected. If the NLRC
denies the motion, then the decision of the labor arbiter becomes final and executory.
xxxx
In any case, the rule that the filing of a motion to reduce bond shall not stop the
running of the period to perfect an appeal is not absolute. The Court may relax the
rule. In Intertranz Container Lines, Inc. v. Bautista, the Court held:
Jurisprudence tells us that in labor cases, an appeal from a decision involving a
monetary award may be perfected only upon the posting of cash or surety bond. The
Court, however, has relaxed this requirement under certain exceptional
circumstances in order to resolve controversies on their merits. These circumstances
include: (1) fundamental consideration of substantial justice; (2) prevention of
miscarriage of justice or of unjust enrichment; and (3) special circumstances of the
case combined with its legal merits, and the amount and the issue involved.80
(Citations omitted and emphasis ours)
A serious error of the NLRC was its outright denial of the motion to reduce the bond, without
even considering the respondents arguments and totally unmindful of the rules and
jurisprudence that allow the bonds reduction. Instead of resolving the motion to reduce the bond
on its merits, the NLRC insisted on an amount that was equivalent to the monetary award,
merely explaining:
_______________
80 Id., at pp. 409-411.
674
We are constrained to deny respondents[] motion for reduction. As held by the Supreme Court
in a recent case, in cases involving monetary award, an employer seeking to appeal the Labor
Arbiters decision to the Commission is unconditionally required by Art. 223, Labor Code to post
bond in the amount equivalent to the monetary award (Calabash Garments vs. NLRC, G.R. No.
110827, August 8, 1996). x x x81 (Emphasis ours)
When the respondents sought to reconsider, the NLRC still refused to fully decide on the motion.
It refused to at least make a preliminary determination of the merits of the appeal, as it held:
We are constrained to dismiss respondents Motion for Reconsideration. Respondents
contention that the appeal bond is excessive and based on a decision which is a patent nullity
involve[s] the merits of the case. x x x82
Prevailing rules and jurisprudence
allow the reduction of appeal bonds.
By such haste of the NLRC in peremptorily denying the respondents motion without considering
the respondents arguments, it effectively denied the respondents of their opportunity to seek a
reduction of the bond even when the same is allowed under the rules and settled jurisprudence.
It was equivalent to the NLRCs refusal to exercise its discretion, as it refused to determine and
rule on a showing of meritorious grounds and the reasonableness of the bond tendered under
the circumstances.83 Time and again, the Court has cautioned the NLRC to give Article 223 of
the Labor Code, particularly
_______________
81 Rollo (G.R. Nos. 186984-85), p. 244.
82 Id., at p. 325.
83 See Nicol v. Footjoy Industrial Corp., 555 Phil. 275, 287; 528 SCRA 300, 313 (2007).
675
the provisions requiring bonds in appeals involving monetary awards, a liberal interpretation in
line with the desired objective of resolving controversies on the merits.84 The NLRCs failure to
take action on the motion to reduce the bond in the manner prescribed by law and jurisprudence
then cannot be countenanced. Although an appeal by parties from decisions that are adverse to
their interests is neither a natural right nor a part of due process, it is an essential part of our
judicial system. Courts should proceed with caution so as not to deprive a party of the right to
appeal, but rather, ensure that every party has the amplest opportunity for the proper and just
disposition of their cause, free from the constraints of technicalities. 85 Considering the mandate
of labor tribunals, the principle equally applies to them.
Given the circumstances of the case, the Courts affirmance in the Decision dated September
18, 2009 of the NLRCs strict application of the rule on appeal bonds then demands a re-
examination. Again, the emerging trend in our jurisprudence is to afford every party-litigant the
amplest opportunity for the proper and just determination of his cause, free from the constraints
of technicalities.86 Section 2, Rule I of the NLRC Rules of Procedure also provides the policy that
[the] Rules shall be liberally construed to carry out the objectives of the Constitution, the Labor
Code of the Philippines and other
_______________
84 Cosico, Jr. v. NLRC, 338 Phil. 1080; 272 SCRA 583 (1997), citing Star Angel Handicraft v.
National Labor Relations Commission, G.R. No. 108914, September 20, 1994, 236 SCRA 580;
Dr. Postigo v. Phil. Tuberculosis Society, Inc., 515 Phil. 601; 479 SCRA 628 (2006); Rada v.
NLRC, G.R. No. 96078, January 9, 1992, 205 SCRA 69, and YBL (Your Bus Line) v. National
Labor Relations Commission, 268 Phil. 169; 190 SCRA 160 (1990).
85 Bolos v. Bolos, G.R. No. 186400, October 20, 2010, 634 SCRA 429, 439.
86 Aujero v. Philippine Communications Satellite Corporation, G.R. No. 193484, January 18,
2012, 663 SCRA 467, 481-482, citing Heirs of the Deceased Spouses Arcilla v. Teodoro, G.R.
No. 162886, August 11, 2008, 561 SCRA 545, 557.
676
relevant legislations, and to assist the parties in obtaining just, expeditious and inexpensive
resolution and settlement of labor disputes. 87
In accordance with the foregoing, although the general rule provides that an appeal in labor
cases from a decision involving a monetary award may be perfected only upon the posting of a
cash or surety bond, the Court has relaxed this requirement under certain exc eptional
circumstances in order to resolve controversies on their merits. These circumstances include: (1)
the fundamental consideration of substantial justice; (2) the prevention of miscarriage of justice
or of unjust enrichment; and (3) special circumstances of the case combined with its legal merits,
and the amount and the issue involved.88 Guidelines that are applicable in the reduction of
appeal bonds were also explained in Nicol v. Footjoy Industrial Corporation.89 The bond
requirement in appeals involving monetary awards has been and may be relaxed in meritorious
cases, including instances in which (1) there was substantial compliance with the Rules, (2)
surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a
liberal interpretation of the requirement of an appeal bond would serve the desired objective of
resolving controversies on the merits, or (4) the appellants, at the very least, exhibited their
willingness and/or good faith by posting a partial bond during the reglementary period.90
In Blancaflor v. NLRC,91 the Court also emphasized that while Article 22392 of the Labor Code,
as amended by Republic
_______________
87 Garcia v. KJ Commercial, supra note 78, at p. 410.
88 Intertranz Container Lines, Inc. v. Bautista, G.R. No. 187693, July 13, 2010, 625 SCRA 75,
84, citing Rosewood Processing, Inc. v. NLRC, 352 Phil. 1013; 290 SCRA 408 (1998).
89 555 Phil. 275; 528 SCRA 300 (2007).
90 Id., at p. 292; p. 318.
91 G.R. No. 101013, February 2, 1993, 218 SCRA 366.
92 Art. 223. AppealDecisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission
677
Act No. 6715, which requires a cash or surety bond in an amount equivalent to the monetary
award in the judgment appealed from may be considered a jurisdictional requirement for the
perfection of an appeal, nevertheless, adhering to the principle that substantial justice is better
served by allowing the appeal on the merits to be threshed out by the NLRC, the foregoing
requirement of the law should be given a liberal interpretation.
As the Court, nonetheless, remains firm on the importance of appeal bonds in appeals from
monetary awards of LAs, we stress that the NLRC, pursuant to Section 6, Rule VI of the NLRC
Rules of Procedure, shall only accept motions to reduce bond that are coupled with the posting
of a bond in a reasonable amount. Time and again, we have explained that the bond
requirement imposed upon appellants in labor cases is intended to ensure the satisfaction of
awards that are made in favor of appellees, in the event that their claims are eventually
sustained by the courts.93 On the part of the appellants, its posting may also signify their good
faith and willingness to recognize the final outcome of their appeal.
At the time of a motion to reduce appeal bonds filing, the question of what constitutes a
reasonable amount of bond that must accompany the motion may be subject to differing
_______________
by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or
orders. x x x
In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the judgment
appealed from.
xxxx
93 See Mindanao Times Corporation v. Confesor, G.R. No. 183417, February 5, 2010, 611
SCRA 748; Computer Innovations Center v. NLRC, 500 Phil. 573; 462 SCRA 183 (2005); St.
Gothard Disco Pub & Restaurant v. NLRC, G.R. No. 102570, February 1, 1993, 218 SCRA 327.
678
interpretations of litigants. The judgment of the NLRC which has the discretion under the law to
determine such amount cannot as yet be invoked by litigants until after their motions to reduce
appeal bond are accepted.
Given these limitations, it is not uncommon for a party to unduly forfeit his opportunity to seek a
reduction of the required bond and thus, to appeal, when the NLRC eventually disagrees with
the partys assessment. These have also resulted in the filing of numerous petitions against the
NLRC, citing an alleged grave abuse of discretion on the part of the labor tribunal for its finding
on the sufficiency or insufficiency of posted appeal bonds.
It is in this light that the Court finds it necessary to set a parameter for the litigants and the
NLRCs guidance on the amount of bond that shall hereafter be filed with a motion for a bonds
reduction. To ensure that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure
that give parties the chance to seek a reduction of the appeal bond are effectively carried out,
without however defeating the benefits of the bond requirement in favor of a winning litigant, all
motions to reduce bond that are to be filed with the NLRC shall be accompanied by the posting
of a cash or surety bond equivalent to 10% of the monetary award that is subject of the appeal,
which shall provisionally be deemed the reasonable amount of the bond in the meantime that an
appellants motion is pending resolution by the Commission. In conformity with the NLRC Rules,
the monetary award, for the purpose of computing the necessary appeal bond, shall exclude
damages and attorneys fees.94 Only after the posting of a bond in the re-
_______________
94 2011 NLRC Rules of Procedure, Rule VI, Section 6 reads:
SEC. 6. BOND.In case the decision of the Labor Arbiter or the Regional Director
involves a monetary award, an appeal by the employer may be perfected only upon the posting
of a bond, which shall either be in the form of cash deposit or surety bond equivalent in amount
to the monetary award, exclusive of damages and attorneys fees.
679
quired percentage shall an appellants period to perfect an appeal under the NLRC Rules be
deemed suspended.
The foregoing shall not be misconstrued to unduly hinder the NLRCs exercise of its discretion,
given that the percentage of bond that is set by this guideline shall be merely provisional. The
NLRC retains its authority and duty to resolve the motion and determine the final amount of bond
that shall be posted by the appellant, still in accordance with the standards of meritorious
grounds and reasonable amount. Should the NLRC, after considering the motions merit,
determine that a greater amount or the full amount of the bond needs to be posted by the
appellant, then the party shall comply accordingly. The appellant shall be given a period of 10
days from notice of the NLRC order within which to perfect the appeal by posting the required
appeal bond.
Meritorious ground as a condition
for the reduction of the appeal bond
In all cases, the reduction of the appeal bond shall be justified by meritorious grounds and
accompanied by the posting of the required appeal bond in a reasonable amount.
The requirement on the existence of a meritorious ground delves on the worth of the parties
arguments, taking into account their respective rights and the circumstances that attend the
case. The condition was emphasized in University Plans Incorporated v. Solano,95 wherein the
Court held that while the NLRCs Revised Rules of Procedure allows the [NLRC] to reduce the
amount of the bond, the exercise of the authority is not a matter of right on the part of the
movant, but lies within the sound discretion of the NLRC upon a showing of meritorious
grounds.96 By jurisprudence, the
_______________
95 G.R. No. 170416, June 22, 2011, 652 SCRA 492.
96 Id., at pp. 503-504, citing Ramirez v. Court of Appeals, G.R. No. 182626, December 4, 2009,
607 SCRA 752, 765.
680
merit referred to may pertain to an appellants lack of financial capability to pay the full amount of
the bond,97 the merits of the main appeal such as when there is a valid claim that there was no
illegal dismissal to justify the award,98 the absence of an employer-employee relationship,99
prescription of claims,100 and other similarly valid issues that are raised in the appeal. 101 For the
purpose of determining a meritorious ground, the NLRC is not precluded from receiving
evidence, or from making a preliminary determination of the merits of the appellants
contentions.102
In this case, the NLRC then should have considered the respondents arguments in the
memorandum on appeal that was filed with the motion to reduce the requisite appeal bond.
Although a consideration of said arguments at that point would have been merely preliminary
and should not in any way bind the eventual outcome of the appeal, it was apparent that the
respondents defenses came with an indication of merit that deserved a full review of the
decision of the LA. The CA, by its Resolution dated February 16, 2007, even found justified the
issuance of a preliminary injunction to enjoin the immediate execution of the LAs decision, and
this Court, a temporary restraining order on September 4, 2012.
Significantly, following the CAs remand of the case to the NLRC, the latter even rendered a
Decision that contained findings that are inconsistent with McBurnies claims. The NLRC
reversed and set aside the decision of the LA, and entered a new one dismissing McBurnies
complaint. It ex-
_______________
97 See Nicol v. Footjoy Industrial Corp., supra note 89.
98 See Semblante v. Court of Appeals, G.R. No. 196426, August 15, 2011, 655 SCRA 444.
99 Id.
100 See Star Angel Handicraft v. National Labor Relations Commission, supra note 84.
101 See YBL (Your Bus Line) v. NLRC, supra note 84.
102 See University Plans Incorporated v. Solano, supra note 95; Nicol v. Footjoy Industrial
Corp., supra note 89.
681
plained that McBurnie was not an employee of the respondents; thus, they could not have
dismissed him from employment. The purported employment contract of the respondents with
the petitioner was qualified by the conditions set forth in a letter dated May 11, 1999, which
reads:
May 11, 1999
MR. ANDREW MCBURNIE
Re: Employment Contract
Dear Andrew,
It is understood that this Contract is made subject to the understanding that it is effective only
when the project financing for our Baguio Hotel project pushed through.
The agreement with EGI Managers, Inc. is made now to support your need to facilitate your work
permit with the Department of Labor in view of the expiration of your contract with Pan Pacific.
Regards,
Sgd.
Eulalio Ganzon (p. 203, Records)103
For the NLRC, the employment agreement could not have given rise to an employer-employee
relationship by reason of legal impossibility. The two conditions that form part of their agreement,
namely, the successful completion of the project financing for the hotel project in Baguio City
and McBurnies acquisition of an Alien Employment Permit, remained unsatisfied. 104 The NLRC
concluded that McBurnie was instead a potential investor in a project that included Ganzon, but
the said project failed to pursue due to lack of funds. Any work performed by McBurnie in
relation to the project was merely preliminary to the business venture and part of his due
diligence study before pursuing the project, done at his own
_______________
103 Rollo (G.R. Nos. 186984-85), p. 649.
104 Id., at p. 650.
682
instance, not in furtherance of the employment contract but for his own investment purposes. 105
Lastly, the alleged employment of the petitioner would have been void for being contrary to law,
since it is undisputed that McBurnie did not have any work permit. The NLRC declared:
Absent an employment permit, any employment relationship that [McBurnie] contemplated with
the [respondents] was void for being contrary to law. A void or inexistent contract, in turn, has no
force and effect from the beginning as if it had never [been] entered into. Thus, without an Alien
Employment Permit, the Employment Agreement is void and could not be the source of a right
or obligation. In support thereof, the DOLE issued a certification that [McBurnie] has neither
applied nor [been] issued [an] Alien Employment Permit (p. 204, Records). 106
McBurnie moved to reconsider, citing the Courts Decision of September 18, 2009 that reversed
and set aside the CAs Decision authorizing the remand. Although the NLRC granted the motion
on the said ground via a Decision107 that set aside the NLRCs Decision dated November 17,
2009, the findings of the NLRC in the November 17, 2009 decision merit consideration,
especially since the findings made therein are supported by the case records.
In addition to the apparent merit of the respondents appeal, the Court finds the reduction of the
appeal bond justified by the substantial amount of the LAs monetary award. Given its
considerable amount, we find reason in the respondents claim that to require an appeal bond in
such amount could only deprive them of the right to appeal, even force them out of business and
affect the livelihood of their employees.108 In
_______________
105 Id., at pp. 650-651.
106 Id., at p. 654.
107 Id., at pp. 640-655.
108 Id., at pp. 64-65.
683
Rosewood Processing, Inc. v. NLRC,109 we emphasized: Where a decision may be made to rest
on informed judgment rather than rigid rules, the equities of the case must be accorded their due
weight because labor determinations should not be secundum rationem but also secundum
caritatem.110
What constitutes a reasonable
amount in the determination of
the final amount of appeal bond
As regards the requirement on the posting of a bond in a reasonable amount, the Court holds
that the final determination thereof by the NLRC shall be based primarily on the merits of the
motion and the main appeal.
Although the NLRC Rules of Procedure, particularly Section 6 of Rule VI thereof, provides that
the bond to be posted shall be in a reasonable amount in relation to the monetary award, the
merit of the motion shall always take precedence in the determination. Settled is the rule that
procedural rules were conceived, and should thus be applied in a manner that would only aid the
attainment of justice. If a stringent application of the rules would hinder rather than serve the
demands of substantial justice, the former must yield to the latter. 111
Thus, in Nicol where the appellant posted a bond of P10,000,000.00 upon an appeal from the
LAs award of P51,956,314.00, the Court, instead of ruling right away on the reasonableness of
the bonds amount solely on the basis of the judgment award, found it appropriate to remand the
case to the NLRC, which should first determine the merits of the
_______________
109 352 Phil. 1013; 290 SCRA 408 (1998).
110 Id., at p. 1031; p. 423.
111 City of Dumaguete v. Philippine Ports Authority, G.R. No. 168973, August 24, 2011, 656
SCRA 102, 117, citing Basco v. Court of Appeals, 392 Phil. 251, 266; 326 SCRA 768, 783
(2000).
684
motion. In University Plans,112 the Court also reversed the outright dismissal of an appeal where
the bond posted in a judgment award of more than P30,000,000.00 was P30,000.00. The Court
then directed the NLRC to first determine the merit, or lack of merit, of the motion to reduce the
bond, after the appellant therein claimed that it was under receivership and thus, could not
dispose of its assets within a short notice. Clearly, the rule on the posting of an appeal bond
should not be allowed to defeat the substantive rights of the parties. 113
Notably, in the present case, following the CAs rendition of its Decision which allowed a reduced
appeal bond, the respondents have posted a bond in the amount of P10,000,000.00. In
Rosewood, the Court deemed the posting of a surety bond of P50,000.00, coupled with a motion
to reduce the appeal bond, as substantial compliance with the legal requirements for an appeal
from a P789,154.39 monetary award considering the clear merits which appear, res ipsa
loquitor, in the appeal from the [LAs] Decision, and the petitioners substantial compliance with
rules governing appeals.114 The foregoing jurisprudence strongly indicate that in determining the
reasonable amount of appeal bonds, the Court primarily considers the merits of the motions and
appeals.
Given the circumstances in this case and the merits of the respondents arguments before the
NLRC, the Court holds that the respondents had posted a bond in a reasonable amount, and
had thus complied with the requirements for the perfection of an appeal from the LAs decision.
The CA was correct in ruling that:
In the case of Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees Association,
President Rodolfo Jimenez[,] and members[,] Reynaldo Fajardo, et al. vs. NLRC, Nueva Ecija I
Electric Cooperative, Inc. (NEECO I) and Patricio de la Pea (GR No. 116066, January 24,
2000), the Supreme Court recognized that: the NLRC, in its Resolution No. 11-01-91 dated
November 7, 1991 deleted the phrase exclusive of moral and exemplary damages as well as
attorneys fees in the determination of the amount of bond, and provided a safeguard against the
imposition of excessive bonds by providing that (T)he Commission may in meritorious cases
and upon motion of the appellant, reduce the amount of the bond.
In the case of Cosico[,] Jr. vs. NLRC[,] 272 SCRA 583, it was held:
The unreasonable and excessive amount of bond would be oppressive and unjust and would
have the effect of depriving a party of his right to appeal.
xxxx
In dismissing outright the motion to reduce bond filed by petitioners, NLRC abused its discretion.
It should have fixed an appeal bond in a reasonable amount. Said dismissal deprived petitioners
of their right to appeal the Labor Arbiters decision.
xxxx
NLRC Rules allow reduction of appeal bond on meritorious grounds (Sec. 6, Rule VI, NLRC
Rules of Procedure). This Court finds the appeal bond in the amount of [P]54,083,910.00
prohibitive and excessive, which constitutes a meritorious ground to allow a motion for reduction
thereof.115
The foregoing declaration of the Court requiring a bond in a reasonable amount, taking into
account the merits of the motion and the appeal, is consistent with the oft-repeated
_______________
115 Rollo (G.R. Nos. 186984-85), pp. 67, 69.
686
principle that letter-perfect rules must yield to the broader interest of substantial justice. 116
The effect of a denial of the
appeal to the NLRC
In finding merit in the respondents motion for reconsideration, we also take into account the
unwarranted results that will arise from an implementation of the Courts Decision dated
September 18, 2009. We emphasize, moreover, that although a remand and an order upon the
NLRC to give due course to the appeal would have been the usual course after a finding that the
conditions for the reduction of an appeal bond were duly satisfied by the respondents, given
such results, the Court finds it necessary to modify the CAs order of remand, and instead rule
on the dismissal of the complaint against the respondents.
Without the reversal of the Courts Decision and the dismissal of the complaint against the
respondents, McBurnie would be allowed to claim benefits under our labor laws despite his
failure to comply with a settled requirement for foreign nationals.
Considering that McBurnie, an Australian, alleged illegal dismissal and sought to claim under our
labor laws, it was necessary for him to establish, first and foremost, that he was qualified and
duly authorized to obtain employment within our jurisdiction. A requirement for foreigners who
intend to work within the country is an employment permit, as provided under Article 40, Title II
of the Labor Code which reads:
Art. 40. Employment permit for non-resident aliens.Any alien seeking admission to the
Philippines for employment purposes and any domestic or foreign employer who desires to
engage an alien for employment
_______________
116 Nicol v. Footjoy Industrial Corp., supra note 89, at p. 290; p. 316, citing Rosewood
Processing, Inc. v. NLRC, supra note 109.
687
in the Philippines shall obtain an employment permit from the Department of Labor.
In WPP Marketing Communications, Inc. v. Galera,117 we held that a foreign nationals failure to
seek an employment permit prior to employment poses a serious problem in seeking relief from
the Court.118 Thus, although the respondent therein appeared to have been illegally dismissed
from employment, we explained:
This is Galeras dilemma: Galera worked in the Philippines without proper work permit but now
wants to claim employees benefits under Philippine labor laws.
xxxx
The law and the rules are consistent in stating that the employment permit must be acquired
prior to employment. The Labor Code states: Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign employer who desires to engage an alien for
employment in the Philippines shall obtain an employment permit from the Department of
Labor. Section 4, Rule XIV, Book I of the Implementing Rules and Regulations provides:
Employment permit required for entry.No alien seeking employment,
whether as a resident or non-resident, may enter the Philippines without first
securing an employment permit from the Ministry. If an alien enters the country
under a non-working visa and wishes to be employed thereafter, he may be
allowed to be employed upon presentation of a duly approved employment
permit.
Galera cannot come to this Court with unclean hands. To grant Galeras prayer is to
sanction the violation of the Philippine labor laws requiring aliens to secure work
permits before their employment. We hold that the status quo must prevail in the
present case and we leave the parties where they are. This ruling, however, does
not bar Galera from seeking relief from other jurisdictions. 119 (Citations omitted and
underscoring ours)
Clearly, this circumstance on the failure of McBurnie to obtain an employment permit, by itself,
necessitates the dismissal of his labor complaint.
Furthermore, as has been previously discussed, the NLRC has ruled in its Decision dated
November 17, 2009 on the issue of illegal dismissal. It declared that McBurnie was never an
employee of any of the respondents.120 It explained:
All these facts and circumstances prove that [McBurnie] was never an
employee of Eulalio Ganzon or the [respondent] companies, but a potential investor
in a project with a group including Eulalio Ganzon and Martinez but said project did
not take off because of lack of funds.
[McBurnie] further claims that in conformity with the provision of the
employment contract pertaining to the obligation of the [respondents] to provide
housing, [respondents] assigned him Condo Unit # 812 of the Makati Cinema Square
Condominium owned by the [respondents]. He was also allowed to use a Hyundai
car. If it were true that the contract of employment was for working visa purposes
only, why did the [respondents] perform their obligations to him?
There is no question that [respondents] assigned him Condo Unit # 812 of the
MCS, but this was not free of charge. If it were true that it is part of the compensation
package as employee, then [McBurnie] would not be obligated to pay anything, but
clearly, he admitted in his letter that he had to pay all the expenses incurred in the
apartment.
Assuming for the sake of argument that the employment contract is valid between them, record
shows that [McBurnie] worked from September 1, 1999 until he met an accident on the last week
of October. During the period of employment, [the respondents] must have paid his salaries in
the sum of US$26,000.00, more or less.
However, [McBurnie] failed to present a single evidence that [the respondents] paid his salaries
like payslip, check or cash vouchers duly signed by him or any document showing proof of
receipt of his compensation from [the respondents] or activity in furtherance of the employment
contract.
Granting again that there was a valid contract of employment, it is undisputed that on November
1, 1999, [McBurnie] left for Australia and never came back. x x x.121 (Emphasis supplied)
Although the NLRCs Decision dated November 17, 2009 was set aside in a Decision dated
January 14, 2010, the Courts resolve to now reconsider its Decision dated September 18, 2009
and to affirm the CAs Decision and Resolution in the respondents favor effectively restores the
NLRCs basis for rendering the Decision dated November 17, 2009.
More importantly, the NLRCs findings on the contractual relations between McBurnie and the
respondents are supported by the records.
First, before a case for illegal dismissal can prosper, an employer-employee relationship
must first be established.122 Although an employment agreement forms part of the case records,
respondent Ganzon signed it with the notation per my note.123 The respondents have
sufficiently explained that the note refers to the letter124 dated May 11, 1999 which embodied
certain conditions for the employments effectivity. As we have previously explained, however,
the said conditions, particularly on the successful completion of the project financing for the hotel
project in Baguio City and McBurnies acquisition of an Alien Employment Permit, failed to
materialize. Such defense of the respondents, which was duly considered by the NLRC in its
Decision dated November 17, 2009, was not sufficiently rebutted by McBurnie.
Second, McBurnie failed to present any employment permit which would have authorized
him to obtain employment in the Philippines. This circumstance negates McBurnies claim that
he had been performing work for the respondents by virtue of an employer-employee
relationship. The absence of the employment permit instead bolsters the claim that the
supposed employment of McBurnie was merely simulated, or did not ensue due to the non-
fulfillment of the conditions that were set forth in the letter of May 11, 1999.
Third, besides the employment agreement, McBurnie failed to present other competent
evidence to prove his claim of an employer-employee relationship. Given the parties conflicting (b) For purposes of compliance with condition no. (2), a motion shall be accompanied by the
claims on their true intention in executing the agreement, it was necessary to resort to the posting of a provisional cash or surety bond equivalent to ten percent (10%) of the monetary
established criteria for the determination of an employer-employee relationship, namely: (1) the award subject of the appeal, exclusive of damages and attorneys fees;
selection and engagement of the employee; (2) the payment of wages; (3) the power of (c) Compliance with the foregoing conditions shall suffice to suspend the running of the 10-day
dismissal; and (4) the power to control the employees conduct. 125 The rule of thumb remains: reglementary period to perfect an appeal from the labor arbiters decision to the NLRC;
the onus probandi falls on the claimant to establish or substantiate the claim by the requisite (d) The NLRC retains its authority and duty to resolve the motion to reduce bond and
quantum of evidence. Whoever claims entitlement to the benefits provided by law should determine the final amount of bond that shall be posted by the appellant, still in accordance with
establish his or her right thereto.126 McBurnie failed in this regard. As previously observed by the the standards of meritorious grounds and reasonable amount; and
NLRC, McBurnie even failed to show through any document such as payslips or vouchers that (e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that
his salaries during the time that he allegedly worked for the respondents were paid by the exceeds the amount of the provisional bond, the appellant shall be given a fresh period of ten
company. In the absence of an employer-employee relationship between McBurnie and the (10) days from notice of the NLRC order within which to perfect the appeal by posting the
respondents, McBurnie could not successfully claim that he was dismissed, much less illegally required appeal bond.
dismissed, by the latter. Even granting that there was such an employer-employee relationship, SO ORDERED.
the records are barren of any document showing that its termination was by the respondents Sereno (CJ., Chairperson), Carpio, Leonardo-De Castro, Brion, Peralta, Bersamin,
dismissal of McBurnie. Villarama, Jr., Perez and Mendoza, JJ., concur.
Given these circumstances, it would be a circuitous exercise for the Court to remand the case to Velasco, Jr., J., No part.
the NLRC, more so in the absence of any showing that the NLRC should now rule differently on Del Castillo, J., On official leave.
the cases merits. In Medline Management, Inc. v. Roslinda,127 the Court ruled that when there is Abad, J., On official leave.
enough basis on which the Court may render a proper evaluation of the merits of the case, the Perlas-Bernabe, J., No part.
Court may dispense with the time-consuming procedure of remanding a case to a labor tribunal Leonen, J., On official leave.
in order to prevent delays in the disposition of the case, to serve the ends of justice and when Motion for Reconsideration filed on September 26, 2012 denied; Motion for
a remand would serve no purpose save to further delay its disposition contrary to the spirit of Reconsideration filed on March 27, 2012 granted; and judgment dated September 18, 2009 and
fair play.128 In Real v. Sangu Philippines, Inc.,129 we again ruled: resolutions dated December 14, 2009 and January 25, 2012 set aside.
With the foregoing, it is clear that the CA erred in affirming the decision of the NLRC which Notes.No motion to reduce bond shall be entertained except on meritorious grounds,
dismissed petitioners complaint for lack of jurisdiction. In cases such as this, the Court normally and only upon the posting of a bond in a reasonable amount in relation to the monetary award.
remands the case to the NLRC and directs it to properly dispose of the case on the merits. (The Heritage Hotel Manila vs. National Labor Relations Commission, 598 SCRA 127 [2009])
However, when there is enough basis on which a proper evaluation of the merits of petitioners The filing of the bond is not only mandatory but also a jurisdictional requirement that must
case may be had, the Court may dispense with the time-consuming procedure of remand in be complied with in order to confer jurisdiction upon the National Labor Relations Commission
order to prevent further delays in the disposition of the case. It is already an accepted rule of (NLRC); Non-compliance with the requirement renders the decision of the Labor Arbiter final and
procedure for us to strive to settle the entire controversy in a single proceeding, leaving no root executory. (Ramirez vs. Court of Appeals, 607 SCRA 752 [2009])
or branch to bear the seeds of litigation. If, based on the records, the pleadings, and other o0o
evidence, the dispute can be resolved by us, we will do so to serve the ends of justice instead of Copyright 2017 Central Book Supply, Inc. All rights reserved.
remanding the case to the lower court for further proceedings. x x x.130 (Citations omitted)
It bears mentioning that although the Court resolves to grant the respondents motion for
reconsideration, the other grounds raised in the motion, especially as they pertain to insinuations
on irregularities in the Court, deserve no merit for being founded on baseless conclusions.
Furthermore, the Court finds it unnecessary to discuss the other grounds that are raised in the
motion, considering the grounds that already justify the dismissal of McBurnies complaint.
All these considered, the Court also affirms its Resolution dated September 4, 2012;
accordingly, McBurnies motion for reconsideration thereof is denied.
WHEREFORE, in light of the foregoing, the Court rules as follows:
(a) The motion for reconsideration filed on September 26, 2012 by petitioner Andrew
James McBurnie is DENIED;
(b) The motion for reconsideration filed on March 27, 2012 by respondents Eulalio
Ganzon, EGI-Managers, Inc. and E. Ganzon, Inc. is GRANTED.
(c) The Entry of Judgment issued in G.R. Nos. 186984-85 is LIFTED. This Courts
Decision dated September 18, 2009 and Resolutions dated December 14, 2009 and January 25,
2012 are SET ASIDE. The Court of Appeals Decision dated October 27, 2008 and Resolution
dated March 3, 2009 in CA-G.R. SP No. 90845 and CA-G.R. SP No. 95916 are AFFIRMED
WITH MODIFICATION. In lieu of a remand of the case to the National Labor Relations
Commission, the complaint for illegal dismissal filed by petitioner Andrew James McBurnie
against respondents Eulalio Ganzon, EGI-Managers, Inc. and E. Ganzon, Inc. is DISMISSED.
Furthermore, on the matter of the filing and acceptance of motions to reduce appeal bond, as
provided in Section 6, Rule VI of the 2011 NLRC Rules of Procedure, the Court hereby
RESOLVES that henceforth, the following guidelines shall be observed:
(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to
the following conditions: (1) there is meritorious ground; and (2) a bond in a reasonable amount
is posted;
 G.R. No. 168583. July 26, 2010.*
ATTY. ALLAN S. MONTAO, petitioner, vs. ATTY. ERNESTO C. VERCELES, respondent.
Labor Law; Department of Labor and Employment (DOLE); Jurisdiction; The Bureau of
Labor Relations (BLR) and the Regional Directors of Department of Labor and Employment
(DOLE) have concurrent jurisdiction over inter-union and intra-union disputes; Such disputes
include the conduct or nullification of election of union and workers association officers.
Section 226 of the Labor Code clearly provides that the BLR and the Regional Directors of
DOLE have concurrent jurisdiction over inter-union and intra-union disputes. Such disputes
include the conduct or nullification of election of union and workers association officers. There
is, thus, no doubt as to the BLRs jurisdiction over the instant dispute involving member-unions
of a federation arising from disagreement over the provisions of the federations constitution and
by-laws.
Same; Same; Same; Under the implementing rules, redress must just be sought within
the organization itself in accordance with its constitution and by-laws; this requirement is not
absolute but yields to exception under varying circumstances.It is true that under the
Implementing Rules, redress must first be sought within the organization itself in accordance
with its constitution and by-laws. However, this requirement is not absolute but yields to
exception under varying circumstances. In the case at bench, Atty. Verceles made his protest
over Atty. Montaos candidacy during the plenary session before the holding of the election
proceedings. The FFW COMELEC, notwithstanding its reservation and despite objections from
certain convention delegates, allowed Atty. Montaos candidacy and proclaimed him winner for
the position. Under the rules, the committee on election shall endeavor to settle or resolve all
protests during or immediately after the close of election proceedings and any protest left
unresolved shall be resolved by the committee within five days after the close of the election
proceedings.
_______________
* FIRST DIVISION.
406
406 SUPREME COURT REPORTS ANNOTATED
Montao vs. Verceles
Remedial Law; Appeals; It is settled that new issues cannot be raised for the first time
on appeal or on motion for reconsideration.Atty. Montao accuses Atty. Verceles of violating
the rules on forum shopping. We note however that this issue was only raised for the first time in
Atty. Montaos motion for reconsideration of the Decision of the CA, hence, the same deserves
no merit. It is settled that new issues cannot be raised for the first time on appeal or on motion
for reconsideration. While this allegation is related to the ground of forum shopping alleged by
Atty. Montao at the early stage of the proceedings, the latter, as a ground for the dismissal of
actions, is separate and distinct from the failure to submit a proper certificate against forum
shopping.
Same; Same; Court can still delve into the merits notwithstanding supervening events
that would ordinarily render the case moot of the issue capable of repetition, yet evading
review.During the pendency of this case, the challenged term of office held and served by
Atty. Montao expired in 2006, thereby rendering the issues of the case moot. In addition, Atty.
Verceles appointment in 2003 as NLRC Commissioner rendered the case moot as such
supervening event divested him of any interest in and affiliation with the federation in
accordance with Article 213 of the Labor Code. However, in a number of cases, we still delved
into the merits notwithstanding supervening events that would ordinarily render the case moot, if
the issues are capable of repetition, yet evading review, as in this case.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Estrada and Associates Law Offices for respondent.
DEL CASTILLO, J.:
The Federation/Unions Constitution and By-Laws govern the relationship between and
among its members. They are akin to ordinary contracts in that their provisions have obligatory
force upon the federation/union and its member. What has been expressly stipulated therein
shall be strictly binding on both.
407
VOL. 625, JULY 26, 2010
Montao vs. Verceles
By this Petition for Review on Certiorari,1 petitioner Atty. Allan S. Montao (Atty. Montao)
assails the Decision2 dated May 28, 2004 and Resolution3 dated June 28, 2005 of the Court of
Appeals (CA) in CA-G.R. SP No. 71731, which declared as null and void his election as the
National Vice-President of Federation of Free Workers (FFW), thereby reversing the May 8,
2002 Decision4 of the Bureau of Labor Relations (BLR) in BLR-O-TR-66-7-13-01.
Factual Antecedents
Atty. Montao worked as legal assistant of FFW Legal Center on October 1, 1994. 5
Subsequently, he joined the union of rank-and-file employees, the FFW Staff Association, and
eventually became the employees union president in July 1997. In November 1998, he was
likewise designated officer-in-charge of FFW Legal Center.6
During the 21st National Convention and Election of National Officers of FFW, Atty. Montao
was nominated for the position of National Vice-President. In a letter dated May 25, 2001,7
however, the Commission on Election (FFW COMELEC), informed him that he is not qualified
for the position as his candidacy violates the 1998 FFW Constitution and By-Laws, particularly
Section 76 of Article XIX8 and Section 25
_______________
1 Rollo, pp. 3-47.
2 Id., at pp. 48-62; penned by Associate Justice Perlita J. Tria Tirona and concurred in by
Associate Justices Conrado M. Vasquez, Jr. and Jose C. Reyes, Jr.
3 Id., at pp. 82-85.
4 Id., at pp. 113-119; penned by BLR Director Hans Leo J. Cacdac.
5 Id., at p. 141.
6 Id., at p. 139.
7 Id., at p. 140.
8 Section 76. Except as otherwise provided in this Constitution, no Member of the Governing
Board shall at the same time be
408
408 SUPREME COURT REPORTS ANNOTATED
Montao vs. Verceles
(a) of Article VIII,9 both in Chapter II thereof. Atty. Montao thus filed an Urgent Motion for
Reconsideration10 praying that his name be included in the official list of candidates.
Election ensued on May 26-27, 2001 in the National Convention held at Subic International
Hotel, Olongapo City. Despite the pending motion for reconsideration with the FFW COMELEC,
and strong opposition and protest of respondent Atty. Ernesto C. Verceles (Atty. Verceles), a
delegate to the convention and president of University of the East Employees Association
(UEEA-FFW) which is an affiliate union of FFW, the convention delegates allowed Atty.
Montaos candidacy. He emerged victorious and was proclaimed as the National Vice-
President.
On May 28, 2001, through a letter11 to the Chairman of FFW COMELEC, Atty. Verceles
reiterated his protest over Atty. Montaos candidacy which he manifested during the plenary
session before the holding of the election in the Convention. On June 18, 2001, Atty. Verceles
sent a follow-up letter12 to the President of FFW requesting for immediate action on his protest.
Proceedings before the Bureau of Labor Relations
_______________
an employee in the staff of the Federation. (see 1998 FFW Constitution & By-Laws, CA Rollo,
pp. 53-70.)
9 Section 25. A Candidate/Nominee for the position of Governing Board Member, whether
Titular or Deputy shall, except as otherwise provided in this Constitution, possess the following
qualifications:
a. he/she must be a bonafide member of the Federation for at least two (2) consecutive years
and a member of an affiliated organization which is up to date with its monthly dues to the
Federation. (see 1998 FFW Constitution and By-Laws, id.)
10 Rollo, pp. 142-147.
11 Id., at p. 175.
12 Id., at p. 176.
409
VOL. 625, JULY 26, 2010
Montao vs. Verceles
On July 13, 2001, Atty. Verceles, as President of UEEA-FFW and officer of the Governing Board
of FFW, filed before the BLR a petition13 for the nullification of the election of Atty. Montao as
FFW National Vice-President. He alleged that, as already ruled by the FFW COMELEC, Atty.
Montao is not qualified to run for the position because Section 76 of Article XIX of the FFW
Constitution and By-Laws prohibits federation employees from sitting in its Governing Board.
Claiming that Atty. Montaos premature assumption of duties and f ormal induction as vice-
president will cause serious damage, Atty. Verceles likewise prayed for injunctive relief. 14
Atty. Montao filed his Comment with Motion to Dismiss 15 on the grounds that the Regional
Director of the Department of Labor and Employment (DOLE) and not the BLR has jurisdiction
over the case; that the filing of the petition was premature due to the pending and unresolved
protest before the FFW COMELEC; and that, Atty. Verceles has no legal standing to initiate the
petition not being the real party in interest.
Meanwhile, on July 16, 2001, the FFW COMELEC sent a letter to FFW National President, Bro.
Ramon J. Jabar, in reference to the election protest filed before it by Atty. Verceles. In this
correspondence, which was used by Atty. Verceles as an additional annex to his petition before
the BLR, the FFW COMELEC intimated its firm stand that Atty. Montaos candidacy
contravenes the FFWs Constitution, by stating:
At the time Atty. Verceles lodged his opposition in the floor before the holding of the election,
we, the Comelec unanimously made the decision that Atty. Montao and others are disqualified
and barred from running for any position in the election of the Federation, in view of pertinent
provisions of the FFW Constitution.
_______________
13 Id., at pp. 155-161.
14 Id., at p. 162.
15 Id., at pp. 167-174.
410
410 SUPREME COURT REPORTS ANNOTATED
Montao vs. Verceles
Our decision which we repeated several times as final was however further deliberated upon by
the body, which then gave the go signal for Atty. Montaos candidacy notwithstanding our
decision barring him from running and despite the fact that several delegates took the floor
[stating] that the convention body is not a constitutional convention body and as such could not
qualify to amend the FFWs present constitution to allow Atty. Montao to run.
We would like to reiterate what we stated during the plenary session that our decision was final
in view of the cited pertinent provisions of the FFW Constitution and we submit that the decision
of the convention body in allowing Atty. Montaos candidacy is not valid in view of the fact that it
runs counter to the FFW Constitution and the body at that time was not acting as a
Constitutional Convention body empowered to amend the FFW Constitution on the spot.
Our having conducted the election does not depart from the fact that we did not change our
decision disqualifying candidates such as Atty. Allan S. Montao, and others from running. The
National Convention as a co-equal constitutional body of the Comelec was not given the license
nor the authority to violate the Constitution. It therefore, cannot reverse the final decision of the
Comelec with regard to the candidacy of Atty. Allan Montao and other disqualified
candidates.16
The BLR, in its Order dated August 20, 2001,17 did not give due course to Atty. Montaos
Motion to Dismiss but ordered the latter to submit his answer to the petition pursuant to the
rules. The parties thereafter submitted their respective pleadings and position papers.
On May 8, 2002, the BLR rendered a Decision18 dismissing the petition for lack of merit. While it
upheld its jurisdiction over the intra-union dispute case and affirmed, as well, Atty. Verceles
legal personality to institute the action as president of an affiliate union of FFW, the BLR ruled
that there were no
_______________
16 FFW COMELEC letter dated July 16, 2001. id., at pp. 151-152.
17 Id., at p. 191.
18 Id., at 409
pp. 113-119.
411
VOL. 625, JULY 26, 2010
Montao vs. Verceles
grounds to hold Atty. Montao unqualified to run for National Vice-President of FFW. It held that
the applicable provision in the FFW Constitution and By-Laws to determine whether one is
qualified to run for office is not Section 76 of Article XIX19 but Section 26 of Article VIII20 thereof.
The BLR opined that there was sufficient compliance with the requirements laid down by this
applicable provision and, besides, the convention delegates unanimously decided that Atty.
Montao was qualified to run for the position of National Vice-President.
Atty. Verceles filed a Motion for Reconsideration but it was denied by the BLR.
Proceedings before the Court of Appeals
Atty. Verceles thus elevated the matter to the CA via a petition for certiorari,21 arguing that the
Convention had no authority under the FFW Constitution and By-Laws to over-
_______________
19 Supra note 8.
20 Section 26. A candidate for the position of National President, National Vice-President,
and National Treasurer shall possess the following qualifications:
a. a candidate must be a bonafide member of the Federation for at least two (2) consecutive
years;
b. a candidate must be of good moral character and has not been convicted by a final
judgment of a crime involving moral turpitude before a candidates election to office or during a
candidates incumbency;
c. except the Treasurer, a candidate must serve the Federation full time for the period of
his/her incumbency;
d. a candidate for National President and National Vice-President must be or must have been
an officer or member of a legitimate labor organization in the FFW for at least three (3) years. A
legitimate labor organization shall mean a duly registered labor union as defined by the Labor
Code as Amended. (see 1998 FFW Constitution & By-Laws, CA Rollo, pp. 53-70.)
21 Id., at pp. 2-24.
412
412 SUPREME COURT REPORTS ANNOTATED
Montao vs. Verceles
rule and set aside the FFW COMELECs Decision rendered pursuant to the latters power to
screen candidates.
On May 28, 2004, the CA set aside the BLRs Decision. While it agreed that jurisdiction was
properly lodged with the BLR, that Atty. Verceles has legal standing to institute the petition, and
that the applicable provision of FFW Constitution and By-Laws is Section 26 of Article VIII and
not Section 76 of Article XIX, the CA however ruled that Atty. Montao did not possess the
qualification requirement under paragraph (d) of Section 26 that candidates must be an officer or
member of a legitimate labor organization. According to the CA, since Atty. Montao, as legal
assistant employed by FFW, is considered as confidential employee, consequently, he is
ineligible to join FFW Staff Association, the rank-and-file union of FFW. The CA, thus, granted
the petition and nullified the election of Atty. Montao as FFW National Vice-President.
Atty. Montao moved for reconsideration claiming that the CA seriously erred in granting Atty.
Verceles petition on the ground that FFW Staff Association, of which he is an officer and
member, is not a legitimate labor organization. He asserted that the legitimacy of the union was
never raised as an issue. Besides, the declaration of the CA that FFW Staff Association is not a
legitimate labor organization amounts to a collateral attack upon its legal personality, which is
proscribed by law. Atty. Montao also reiterated his allegations of lack of jurisdiction and lack of
cause of action due to a pending protest. In addition, he claimed violation of the mandatory
requirement on certification against forum shopping and mootness of the case due to the
appointment of Atty. Verceles as Commissioner of the National Labor Relations Commission
(NLRC), thereby divesting himself of interest in any matters relating to his affiliation with FFW.
Believing that it will be prejudiced by the CA Decision since its legal existence was put at stake,
the FFW Staff Asso-
413
 VOL. 625, JULY 26, 2010
Montao vs. Verceles
ciation, through its president, Danilo A. Laserna, sought intervention.
On June 28, 2005, the CA issued a Resolution22 denying both Atty. Montaos motion for
reconsideration23 and FFW Staff Associations motion for intervention/clarification. 24
Issues
Hence, this petition anchored on the following grounds:
I.
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, IN RENDERING THE
ASSAILED DECISION, IN THAT:
A.) THE SOLE GROUND USED AND/OR INVOKED IN GRANTING THE PETITION A QUO
WAS NOT EVEN RAISED AND/OR INVOKED BY PETITIONER;
B.) THE DECLARATION THAT FFW STAFF ASSOCIATION IS NOT A LEGITIMATE LABOR
ORGANIZATION, WITHOUT GIVING SAID ORGANIZATION A DAY IN COURT
AMOUNTS TO A COLLATERAL ATTACK PROSCRIBED UNDER THE LAW; AND
C.) THE COURT OF APPEALS FAILED AND/OR REFUSED TO PASS UPON OTHER
LEGAL ISSUES WHICH HAD BEEN TIMELY RAISED, SPECIFICALLY ON THE
PREMATURITY OF THE COMPLAINT AND THE LACK OF CERTIFICATION
AGAINST FORUM SHOPPING OF THE PETITION A QUO.
II.
THE COURT OF APPEALS ERRED IN UPHOLDING THE EXERCISE OF JURISDICTION
BY HEREIN RESPONDENT BUREAU AND IN NOT ORDERING THE DISMISSAL OF THE
CASE,
_______________
22 Rollo, p. 82-85.
23 Id., at pp. 63-80.
24 Id., at pp. 278-292.
414
414 SUPREME COURT REPORTS ANNOTATED
Montao vs. Verceles
DESPITE EXPRESS PROVISION OF LAW GRANTING SAID JURISDICTION OVER CASES
INVOLVING PROTESTS AND PETITIONS FOR ANNULMENT OF RESULTS OF ELECTIONS
TO THE REGIONAL DIRECTORS OF THE DEPARTMENT OF LABOR AND EMPLOYMENT.
III.
IN THE ALTERNATIVE, THE COURT OF APPEALS LIKEWISE ERRED IN NOT
ORDERING THE DISMISSAL OF THE PETITION A QUO, IN THAT:
A.) THE FILING OF THE PETITION FOR NULLIFICATION OF THE RESULT OF ELECTION
IS PREMATURE, IN VIEW OF PENDENCY OF HEREIN RESPONDENT ATTY.
VERCELES PROTEST BEFORE THE COMMISSION ON ELECTION OF THE
FEDERATION OF FREE WORKERS (FFW COMELEC) AT THE TIME OF THE
FILING OF THE SAID PETITION, HENCE, HE HAS NO CAUSE OF ACTION; AND
B.) HEREIN RESPONDENT ATTY. VERCELES HAS VIOLATED SECTION 5, RULE 7 OF
THE 1997 RULES ON CIVIL PROCEDURE, AS HIS PETITION A QUO HAS NO
CERTIFICATION AGAINST FORUM SHOPPING, WHICH IS A MANDATORY
REQUIREMENT. IT IS ALSO IN UTTER DISREGARD AND IN GROSS VIOLATION
OF SUPREME COURT CIRCULAR NO. 04-94.
IV.
FINALLY, ASSUMING ARGUENDO THAT HEREIN RESPONDENT BUREAU ACTED
WITH JURISDICTION OVER THE CASE; AND ASSUMING FURTHER THAT HEREIN
RESPONDENT ATTY. VERCELES HAS A CAUSE OF ACTION, DESPITE THE PENDENCY
OF HIS PROTEST BEFORE FFWS COMELEC AT THE TIME HE FILED HIS PETITION A
QUO; AND ASSUMING FINALLY, THAT HEREIN RESPONDENT ATTY. VERCELES BE
EXCUSED IN DISREGARDING THE MANDATORY REQUIREMENT ON CERTIFICATION
AGAINST FORUM SHOPPING WHICH WAS TIMELY OBJECTED TO, THE COURT OF
APPEALS COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR
EXCESS OF JURISDICTION, IN NOT ORDERING THE DISMISSAL OF THE CASE FOR
HAVING 413
415
VOL. 625, JULY 26, 2010
Montao vs. Verceles
BEEN RENDERED MOOT AND ACADEMIC BY A SUPERVENING EVENT THAT WAS,
WHEN HEREIN RESPONDENT ATTY. VERCELES SOUGHT APPOINTMENT AND WAS
APPOINTED AS COMMISSIONER OF THE NATIONAL LABOR RELATIONS COMMISSION
(NLRC), THUS, DIVESTING HIMSELF WITH ANY INTEREST WITH MATTERS RELATING TO
HIS FORMER MEMBERSHIP AND AFFILIATION WITH THE FEDERATION OF FREE
WORKERS (FFW), HENCE, HE IS NO LONGER A REAL PARTY IN INTEREST, AS HE DOES
NOT STAND TO BE INJURED OR BENEFITED BY THE JUDGMENT IN THE INSTANT
CASE.25
Atty. Montao contends that the CA gravely erred in upholding the jurisdiction of the BLR; in not
declaring as premature the petition in view of the pending protest before FFW COMELEC; in not
finding that the petition violated the rule on non-forum shopping; in not dismissing the case for
being moot in view of the appointment of Atty. Verceles as NLRC Commissioner; and in granting
the petition to annul his election as FFW National Vice-President on the ground that FFW Staff
Association is not a legitimate labor organization.
Our Ruling
The petition is devoid of merit.
The BLR has jurisdiction over intra-
union disputes involving a federation.
We find no merit in petitioners claim that under Section 6 of Rule XV 26 in relation to Section 1 of
Rule XIV27 of Book V of
_______________
25 Id., at pp. 19-21.
26 SEC. 6. Protests and petitions for annulment of election results.Protests or petitions for
annulment of the result of an election shall be filed with and acted upon by the Regional Director
in accordance with the provisions prescribed in Rule XIV of this Book. No protest or petition shall
be entertained by the Regional Director unless the issue raised has been resolved by the
committee.
27 SEC. 1. Complaint; who may file.Any member of a union may file with the Regional
Director a complaint for any violation of
416
416 SUPREME COURT REPORTS ANNOTATED
Montao vs. Verceles
the Omnibus Rules Implementing the Labor Code, it is the Regional Director of the DOLE and
not the BLR who has jurisdiction over election protests.
Section 226 of the Labor Code28 clearly provides that the BLR and the Regional Directors of
DOLE have concurrent jurisdiction over inter-union and intra-union disputes. Such disputes
include the conduct or nullification of election of union and workers association officers. 29 There
is, thus, no doubt as to the BLRs jurisdiction over the instant dispute involving member-unions
of a federation arising from disagreement over the provisions of the federations constitution and
by-laws.
We agree with BLRs observation that:
Rule XVI lays down the decentralized intra-union dispute settlement mechanism. Section 1
states that any complaint in this regard shall be filed in the Regional Office where the union is
domiciled. The concept of domicile in labor relations regulation is equivalent to the place where
the union seeks to operate or has established a geographical presence for purposes of
collective bargaining or for dealing with employers concerning terms and conditions of
employment.
_______________
the constitution and by-laws and the rights and conditions of membership under Article 241 of
the Code. x x x. Such complaint shall be filed in the Regional Office where the union is
domiciled.
28 ART. 226. BUREAU OF LABOR RELATIONS.The Bureau of Labor Relations and the
Labor Relations Divisions in the regional offices of the Department of Labor shall have original
and exclusive authority to act, at their own initiative or upon request of either or both parties, on
all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or
affecting labor-management relations in all workplaces whether agricultural or nonagricultural,
except those arising from the implementation or interpretation of collective bargaining
agreements which shall be the subject of grievance procedure and/or voluntary arbitration.
x x x x.
29 See Omnibus Rules Implementing the Labor Code, Book V, Rule XI, Section 1.
417
VOL. 625, JULY 26, 2010
Montao vs. Verceles
The matter of venue becomes problematic when the intra-union dispute involves a federation,
because the geographical presence of a federation may encompass more than one
administrative region. Pursuant to its authority under Article 226, this Bureau exercises original
jurisdiction over intra-union disputes involving federations. It is well-settled that FFW, having
local unions all over the country, operates in more than one administrative region. Therefore, this
Bureau maintains original and exclusive jurisdiction over disputes arising from any violation of or
disagreement over any provision of its constitution and by-laws.30
The petition to annul Atty. Montaos
election as VP was not prematurely filed.
There is likewise no merit to petitioners argument that the petition should have been
immediately dismissed due to a pending and unresolved protest before the FFW COMELEC
pursuant to Section 6, Rule XV, Book V of the Omnibus Rules Implementing the Labor Code. 31
It is true that under the Implementing Rules, redress must first be sought within the organization
itself in accordance with its constitution and by-laws. However, this requirement is not absolute
but yields to exception under varying circumstances.32 In the case at bench, Atty. Verceles made
his protest over Atty. Montaos candidacy during the plenary session before the holding of the
election proceedings. The FFW COMELEC, notwithstanding its reservation and despite
objections from certain convention delegates, allowed Atty. Montaos candidacy and
proclaimed him winner for the position. Under the rules, the committee on election shall
endeavor to settle or resolve all protests during or immediately after the close of election
proceedings and any protest left unresolved shall be resolved by the committee within five
_______________
30 Rollo, pp. 115-116.
31 Supra note 26.
32 Villar v. Hon. Inciong, 206 Phil. 366, 381; 121 SCRA 444, 459 (1983).
418
418 SUPREME COURT REPORTS ANNOTATED
Montao vs. Verceles
days after the close of the election proceedings.33 A day or two after the election, Atty. Verceles
made his written/formal protest over Atty. Montaos candidacy/proclamation with the FFW
COMELEC. He exhausted the remedies under the constitution and by-laws to have his protest
acted upon by the proper forum and even asked for a formal hearing on the matter. Still, the
FFW COMELEC failed to timely act thereon. Thus, Atty. Verceles had no other recourse but to
take the next available remedy to protect the interest of the union he represents as well as the
whole federation, especially so that Atty. Montao, immediately after being proclaimed, already
assumed and started to perform the duties of the position. Consequently, Atty. Verceles properly
sought redress from the BLR so that the right to due process will not be violated. To insist on the
contrary is to render the exhaustion of remedies within the union as illusory and vain. 34
The allegation regarding certification against forum shopping was belatedly raised.
Atty. Montao accuses Atty. Verceles of violating the rules on forum shopping. We note however
that this issue was only raised for the first time in Atty. Montaos motion for reconsideration of
the Decision of the CA, hence, the same deserves no merit. It is settled that new issues cannot
be raised for the first time on appeal or on motion for reconsideration. 35 While this allegation is
related to the ground of forum shopping alleged by Atty. Montao at the early stage of the
proceedings, the latter, as a ground for the dismissal of actions, is
_______________
33 Omnibus Rules Implementing the Labor Code, Book V, Rule XV, Sections 4 and 5.
34 Diokno v. Cacdac, G.R. No. 168475, July 4, 2007, 526 SCRA 440, 458-459.
35 Arceo v. Government Service Insurance System, G.R. No. 162374, June 18, 2009, 589
SCRA 420, 426.
419
VOL. 625, JULY 26, 2010
Montao vs. Verceles
separate and distinct from the failure to submit a proper certificate against forum shopping. 36
There is necessity to resolve the case
despite the417issues having become moot.
During the pendency of this case, the challenged term of office held and served by Atty.
Montao expired in 2006, thereby rendering the issues of the case moot. In addition, Atty.
Verceles appointment in 2003 as NLRC Commissioner rendered the case moot as such
supervening event divested him of any interest in and affiliation with the federation in
accordance with Article 213 of the Labor Code. However, in a number of cases, 37 we still delved
into the merits notwithstanding supervening events that would ordinarily render the case moot, if
the issues are capable of repetition, yet evading review, as in this case.
As manifested by Atty. Verceles, Atty. Montao ran and won as FFW National President after his
challenged term as FFW National Vice-President had expired. It must be stated at this juncture
that the legitimacy of Atty. Montaos leadership as National President is beyond our jurisdiction
and is not in issue in the instant case. The only issue for our resolution is petitioners
qualification to run as FFW National Vice-President during the May 26-27, 2001 elections. We
find it necessary and imperative to resolve this issue not only to prevent further repetition but
also to clear any doubtful in-
_______________
36 Juaban v. Espina, G.R. No. 170049, March 14, 2008, 548, SCRA 588, 605; Spouses Melo v.
Court of Appeals, 376 Phil. 204, 213; 318 SCRA 94, 102 (1999).
37 Province of North Cotabato v. Government of the Republic of the Philippines Peace Panel on
Ancestral Domain (GRP), G.R. No. 183591, October 14, 2008, 568 SCRA 402, 460-461; Manalo
v. Calderon, G.R. No. 178920, October 15, 2007, 536 SCRA 290, 301; Albaa v. Commission
on Elections, 478 Phil. 941, 949; 435 SCRA 98, 105 (2004); Gov. Mandanas v. Hon. Romulo,
473 Phil. 806, 827; 429 SCRA 736, 757-758 (2004).
420
420 SUPREME COURT REPORTS ANNOTATED
Montao vs. Verceles
terpretation and application of the provisions of FFW Constitution & By-laws in order to ensure
credible future elections in the interest and welfare of affiliate unions of FFW.
Atty. Montao is not qualified to run
as FFW National Vice-President in
view of the prohibition established in
Section 76, Article XIX of the 1998
FFW Constitution and By-Laws.
Section 76, Article XIX of the FFW Constitution and By-laws provides that no member of the
Governing Board shall at the same time be an employee in the staff of the federation. There is
no dispute that Atty. Montao, at the time of his nomination and election for the position in the
Governing Board, is the head of FFW Legal Center and the President of FFW Staff Association.
Even after he was elected, albeit challenged, he continued to perform his functions as staff
member of FFW and no evidence was presented to show that he tendered his resignation. 38 On
this basis, the FFW COMELEC disqualified Atty. Montao. The BLR, however, overturned FFW
COMELECs ruling and held that the applicable provision is Section 26 of Article VIII. The CA
subsequently affirmed this ruling of the BLR but held Atty. Montao unqualified for the position
for failing to meet the requirements set forth therein.
We find that both the BLR and CA erred in their findings.
To begin with, FFW COMELEC is vested with authority and power, under the FFW Constitution
and By-Laws, to screen candidates and determine their qualifications and eligibility to run in the
election and to adopt and promulgate rules concerning the conduct of elections. 39 Under the
Rules
_______________
38 See FFW Administrative and Communication Staff Certification dated October 13, 2001,
Rollo, p. 153.
39 Section 56 (c) and (g), Article XIII of the FFW Constitution and By-Laws, CA Rollo, pp. 53-70.
421
VOL. 625, JULY 26, 2010 421
Montao vs. Verceles
Implementing the Labor Code, the Committee shall have the power to prescribe rules on the
qualification and eligibility of candidates and such other rules as may facilitate the orderly
conduct of elections.40 The Committee is also regarded as the final arbiter of all election
protests.41 From the foregoing, FFW COMELEC, undeniably, has sufficient authority to adopt its
own interpretation of the explicit provisions of the federations constitution and by-laws and
unless it is shown to have committed grave abuse of discretion, its decision and ruling will not be
interfered with. The FFW Constitution and By-laws are clear that no member of the Governing
Board shall at the same time perform functions of the rank-and-file staff. The BLR erred in
disregarding this clear provision. The FFW COMELECs ruling which considered Atty. Montaos
candidacy in violation of the FFW Constitution is therefore correct.
We, thus, concur with the CA that Atty. Montao is not qualified to run for the position but not for
failure to meet the requirement specified under Section 26 (d) of Article VIII of FFW Constitution
and By-Laws. We note that the CAs declaration of the illegitimate status of FFW Staff
Association is proscribed by law, owing to the preclusion of collateral attack. 42 We nonetheless
resolve to affirm the CAs finding that Atty. Montao is disqualified to run for the position of
National Vice-President in view of the proscription in the FFW Constitution and By-Laws on
federation employees from sitting in its Governing Board. Accordingly, the election of Atty.
Montao as FFW Vice-President is null and void.
_______________
40 Omnibus Rules Implementing the Labor Code, Book V, Rule XV, Section 2 (b) and (i).
41 Id. Section 2 (g).
42 San Miguel Corporation Employees Union-Phil. Transport and General Workers Org. v. San
Miguel Packaging Products Employees Union-Pambansang Diwa ng Manggagawang Pilipino,
G.R. No. 171153, September 12, 2007, 533 SCRA 125, 145.
Copyright 2017 Central Book Supply, Inc. All rights reserved.
 G.R. No. 196426. August 15, 2011.*
MARTICIO SEMBLANTE and DUBRICK PILAR, petitioners, vs. COURT OF APPEALS,
19TH DIVISION, now SPECIAL FORMER 19TH DIVISION, GALLERA DE MANDAUE/
SPOUSES VICENTE and MARIA LUISA LOOT, respondents.
Labor Law; Appeals; Appeal Bonds; Procedural Rules and Technicalities; Time and
again, the Supreme Court, considering the substantial merits of the case, has relaxed the rule
on, and excused the late posting of, the appeal bond when there are strong and compelling
reasons for the liberality, such as the prevention of miscarriage of justice extant in the case or
the special circumstances in the case combined with its legal merits or the amount and the issue
involved.The posting of a bond is indispensable to the perfection of an appeal in cases
involving monetary awards from the Decision of the Labor Arbiter. Article 223 of the Labor Code
provides: x x x Time and again, however, this Court, considering the substantial merits of the
case, has relaxed this rule on, and excused the late posting of, the appeal bond when there are
strong and compelling reasons for the liberality, such as the prevention of miscarriage of justice
extant in the case or the special circumstances in the case combined with its legal merits or the
amount and the issue involved. After all, technical rules cannot prevent courts from exercising
their duties to determine and settle, equitably and completely, the rights and obligations of the
parties. This is one case where the exception to the general rule lies.
Same; Same; Same; Same; Employer-Employee Relationship; Four-Fold Test of
Employment; Cockfighting; Masiadors and Sentenciadors; The rule on the posting of an appeal
bond cannot defeat the substantive rights of respondents to be free from an unwarranted burden
of answering for an illegal dismissal for which they were never responsible; Since the
complainants performed their functions as masiador and sentenciador free from the direction
and control of respondents, and that in the conduct of their work, they relied mainly
_______________
* THIRD DIVISION.
445
VOL. 655, AUGUST 15, 2011
Semblante vs. Court of Appeals, 19th Division
on their expertise that is characteristic of the cockfight gambling, and were never given by
respondents any tool needed for the performance of their work, they are not considered as
employees of the cockpit operator.While respondents had failed to post their bond within the
10-day period provided above, it is evident, on the other hand, that petitioners are NOT
employees of respondents, since their relationship fails to pass muster the four-fold test of
employment We have repeatedly mentioned in countless decisions: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employees conduct, which is the most important element. As found by both
the NLRC and the CA, respondents had no part in petitioners selection and management;
petitioners compensation was paid out of the arriba (which is a percentage deducted from the
total bets), not by petitioners; and petitioners performed their functions as masiador and
sentenciador free from the direction and control of respondents. In the conduct of their work,
petitioners relied mainly on their expertise that is characteristic of the cockfight gambling, and
were never given by respondents any tool needed for the performance of their work.
Respondents, not being petitioners employers, could never have dismissed, legally or illegally,
petitioners, since respondents were without power or prerogative to do so in the first place. The
rule on the posting of an appeal bond cannot defeat the substantive rights of respondents to be
free from an unwarranted burden of answering for an illegal dismissal for which they were never
responsible.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Reynante A. Dela Cerna for petitioners.
Maderazo & Associates for respondents.
446
446 SUPREME COURT REPORTS ANNOTATED
Semblante vs. Court of Appeals, 19th Division
VELASCO, JR., J.:
Before Us is a Petition for Review on Certiorari under Rule 45, assailing and seeking to set aside
the Decision1 and Resolution2 dated May 29, 2009 and February 23, 2010, respectively, of the
Court of Appeals (CA) in CA-G.R. SP No. 03328. The CA affirmed the October 18, 2006
Resolution3 of the National Labor Relations Commission (NLRC), Fourth Division (now Seventh
Division), in NLRC Case No. V-000673-2004.
Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that they were hired
by respondents-spouses Vicente and Maria Luisa Loot, the owners of Gallera de Mandaue (the
cockpit), as the official masiador and sentenciador, respectively, of the cockpit sometime in
1993.
As the masiador, Semblante calls and takes the bets from the gamecock owners and other
bettors and orders the start of the cockfight. He also distributes the winnings after deducting the
arriba, or the commission for the cockpit. Meanwhile, as the sentenciador, Pilar oversees the
proper gaffing of fighting cocks, determines the fighting cocks physical condition and capabilities
to continue the cockfight, and eventually declares the result of the cockfight. 4
For their services as masiador and sentenciador, Semblante receives PhP 2,000 per week or a
total of PhP 8,000 per month, while Pilar gets PhP 3,500 a week or PhP 14,000 per month. They
work every Tuesday, Wednesday, Saturday, and
_______________
1 Rollo, pp. 56-65. Penned by Associate Justice Florito S. Macalino and concurred in by
Associate Justices Stephen C. Cruz and Rodil V. Zalameda.
2 Id., at pp. 79-80. Penned by Associate Justice Edwin D. Sorongon and concurred in by
Associate Justices Edgardo L. Delos Santos and Socorro B. Inting.
3 Id., at pp. 99-103. Penned by Commissioner Oscar S. Uy and concurred in by Presiding
Commisioner Gerardo C. Nograles. Commissioner Aurelio D. Menzon took no part, as he was
on leave.
4 Id., at p. 68.
447
VOL. 655, AUGUST 15, 2011
Semblante vs. Court of Appeals, 19th Division
445 week, excluding monthly derbies and cockfights held on special holidays. Their
Sunday every
working days start at 1:00 p.m. and last until 12:00 midnight, or until the early hours of the
morning depending on the needs of the cockpit. Petitioners had both been issued employees
identification cards5 that they wear every time they report for duty. They alleged never having
incurred any infraction and/or violation of the cockpit rules and regulations.
On November 14, 2003, however, petitioners were denied entry into the cockpit upon the
instructions of respondents, and were informed of the termination of their services effective that
date. This prompted petitioners to file a complaint for illegal dismissal against respondents.
In answer, respondents denied that petitioners were their employees and alleged that they were
associates of respondents independent contractor, Tomas Vega. Respondents claimed that
petitioners have no regular working time or day and they are free to decide for themselves
whether to report for work or not on any cockfighting day. In times when there are few cockfights
in Gallera de Mandaue, petitioners go to other cockpits in the vicinity. Lastly, petitioners, so
respondents assert, were only issued identification cards to indicate that they were free from the
normal entrance fee and to differentiate them from the general public. 6
In a Decision dated June 16, 2004, Labor Arbiter Julie C. Rendoque found petitioners to be
regular employees of respondents as they performed work that was necessary and
indispensable to the usual trade or business of respondents for a number of years. The Labor
Arbiter also ruled that petitioners were illegally dismissed, and so ordered respondents to pay
petitioners their backwages and separation pay. 7
_______________
5 Id., at p. 103.
6 Id., at p. 68; respondents Position Paper.
7 Id., at pp. 82-96.
448
448 SUPREME COURT REPORTS ANNOTATED
Semblante vs. Court of Appeals, 19th Division
Respondents counsel received the Labor Arbiters Decision on September 14, 2004. And within
the 10-day appeal period, he filed the respondents appeal with the NLRC on September 24,
2004, but without posting a cash or surety bond equivalent to the monetary award granted by the
Labor Arbiter.8
It was only on October 11, 2004 that respondents filed an appeal bond dated October 6, 2004.
Hence, in a Resolution9 dated August 25, 2005, the NLRC denied the appeal for its non-
perfection.
Subsequently, however, the NLRC, acting on respondents Motion for Reconsideration, reversed
its Resolution on the postulate that their appeal was meritorious and the filing of an appeal bond,
albeit belated, is a substantial compliance with the rules. The NLRC held in its Resolution of
October 18, 2006 that there was no employer-employee relationship between petitioners and
respondents, respondents having no part in the selection and engagement of petitioners, and
that no separate individual contract with respondents was ever executed by petitioners. 10
Following the denial by the NLRC of their Motion for Reconsideration, per Resolution dated
January 12, 2007, petitioners went to the CA on a petition for certiorari. In support of their
petition, petitioners argued that the NLRC gravely abused its discretion in entertaining an appeal
that was not perfected in the first place. On the other hand, respondents argued that the NLRC
did not commit grave abuse of discretion, since they eventually posted their appeal bond and
that their appeal was so meritorious warranting the relaxation of the rules in the interest of
justice.11
_______________
8 Id., at p. 99.
9 Penned by Commissioner Oscar S. Uy and concurred in by Commissioners Gerardo C.
Nograles and Aurelio D. Menzon.
10 Rollo, pp. 70-71.
11 Id., at p. 71.
449
VOL. 655, AUGUST 15, 2011
Semblante vs. Court of Appeals, 19th Division
In its Decision dated May 29, 2009, the appellate court found for respondents, noting that
referees and bet-takers in a cockfight need to have the kind of expertise that is characteristic of
the game to interpret messages conveyed by mere gestures. Hence, petitioners are akin to
independent contractors who possess unique skills, expertise, and talent to distinguish them
from ordinary employees. Further, respondents did not supply petitioners with the tools and
instrumentalities they needed to perform work. Petitioners only needed their unique skills and
talents to perform their job as masiador and sentenciador.12 The CA held:
In some circumstances, the NLRC is allowed to be liberal in the interpretation of the rules in
deciding labor cases. In this case, the appeal bond was filed, although late. Moreover, an
exceptional circumstance obtains in the case at bench which warrants a relaxation of the bond
requirement as a condition for perfecting the appeal. This case is highly meritorious that propels
this Court not to strictly apply the rules and thus prevent a grave injustice from being done.
As elucidated by the NLRC, the circumstances obtaining in this case wherein no actual
employer-employee exists between the petitioners and the private respondents [constrain] the
relaxation of the rules. In this regard, we find no grave abuse attributable to the administrative
body.
xxxx
Petitioners are duly licensed masiador and sentenciador in the cockpit owned by Lucia Loot. 1989, 177 SCRA 38, 49; Taberrah v. National Labor Relations Commission, 342 Phil. 394; 276
Cockfighting, which is a part of our cultural heritage, has a peculiar set of rules. It is a game
based on the fighting ability of the game cocks in the cockpit. The referees and bet-takers need
to have that kind of expertise that is characteristic of the cockfight gambling who can interpret
the message conveyed even by mere gestures. They ought to have the talent and skill to get the
bets from numerous cockfighting aficionados and decide which cockerel to put in the arena.
They are placed in that elite spot where they can control the game and the
_______________
12 Id., at p. 73.
450
450 SUPREME COURT REPORTS ANNOTATED
Semblante vs. Court of Appeals, 19th Division
crowd. They are not given salaries by cockpit owners as their compensation is based on the
arriba. In fact, they can offer their services everywhere because they are duly licensed by the
GAB. They are free to choose which cockpit arena to enter and offer their expertise. Private
respondents cannot even control over the means and methods of the manner by which they
perform their work. In this light, they are akin to independent contractors who possess unique
skills, expertise and talent to distinguish them from ordinary employees.
Furthermore, private respondents did not supply petitioners with the tools and instrumentalities
they needed to perform their work. Petitioners only needed their talent and skills to be a
masiador and sentenciador. As such, they had all the tools they needed to perform their
work. (Emphasis supplied.)
The CA refused to reconsider its Decision. Hence, petitioners came to this Court, arguing in the
main that the CA committed a reversible error in entertaining an appeal, which was not perfected
in the first place.
Indeed, the posting of a bond is indispensable to the perfection of an appeal in cases involving
monetary awards from the Decision of the Labor Arbiter. 13 Article 223 of the Labor Code
provides:
Article 223. Appeal.Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the
following grounds:
xxxx
In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the judgment
appealed from. (Emphasis supplied.)
_______________
13 McBurnie
449 v. Ganzon, G.R. Nos. 178034 & 178117 & 186984-85, September 18, 2009, 600
SCRA 658, 667.
451
VOL. 655, AUGUST 15, 2011
Semblante vs. Court of Appeals, 19th Division
Time and again, however, this Court, considering the substantial merits of the case, has relaxed
this rule on, and excused the late posting of, the appeal bond when there are strong and
compelling reasons for the liberality,14 such as the prevention of miscarriage of justice extant in
the case15 or the special circumstances in the case combined with its legal merits or the amount
and the issue involved.16 After all, technical rules cannot prevent courts from exercising their
duties to determine and settle, equitably and completely, the rights and obligations of the
parties.17 This is one case where the exception to the general rule lies.
While respondents had failed to post their bond within the 10-day period provided above, it is
evident, on the other hand, that petitioners are NOT employees of respondents, since their
relationship fails to pass muster the four-fold test of employment We have repeatedly mentioned
in countless deci-
_______________
14 Orozco v. Court of Appeals, Fifth Division, G.R. No. 155207, April 29, 2005, 457 SCRA 700,
706-710, citing Olacao v. National Labor Relations Commission, G.R. No. 81390, August 29,
SCRA 431 (1997); Cosico, Jr. v. National Labor Relations Commission, G.R. No. 118432, 338
Phil. 1080; 272 SCRA 583 (1997); Star Angel Handicraft v. National Labor Relations
Commission, G.R. No. 108914, September 20, 1994, 236 SCRA 580, 584; Blancaflor v. National
Labor Relations Commission, G.R. No. 101013, February 2, 1993, 218 SCRA 366, 371; YBL v.
National Labor Relations Commission, G.R. No. 93381, September 28, 1990, 190 SCRA 160,
163.
15 Philippine Airlines, Inc. v. National Labor Relations Commission, G.R. No. 120506, October
28, 1996, 263 SCRA 638, 658; Manaban v. Sarphil Corporation, G.R. No. 150915, April 11,
2005, 455 SCRA 240, citing Jaro v. Court of Appeals, G.R. No. 127536, February 19, 2002, 377
SCRA 282.
16 Rosewood Processing, Inc. v. National Labor Relations Commission, 352 Phil. 1013, 1029;
290 SCRA 408, 421 (1998); citing Philippine Airlines, Inc., supra.
17 Orozco, supra at p. 709; citing Buenaobra v. Lim King Guan, G.R. No. 150147, January 20,
2004, 420 SCRA 359, 364.
452
452 SUPREME COURT REPORTS ANNOTATED
Semblante vs. Court of Appeals, 19th Division
sions: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employees conduct, which is the most
important element.18
As found by both the NLRC and the CA, respondents had no part in petitioners selection and
management;19 petitioners compensation was paid out of the arriba (which is a percentage
deducted from the total bets), not by petitioners; 20 and petitioners performed their functions as
masiador and sentenciador free from the direction and control of respondents. 21 In the conduct
of their work, petitioners relied mainly on their expertise that is characteristic of the cockfight
gambling,22 and were never given by respondents any tool needed for the performance of their
work.23
Respondents, not being petitioners employers, could never have dismissed, legally or illegally,
petitioners, since respondents were without power or prerogative to do so in the first place. The
rule on the posting of an appeal bond cannot defeat the substantive rights of respondents to be
free from an unwarranted burden of answering for an illegal dismissal for which they were never
responsible.
_______________
18 Manila Water Company Inc. v. Dalumpines, G.R. No. 175501, October 4, 2010, 632 SCRA
76, 92, citing Lopez v. Metropolitan Waterworks and Sewerage System, 501 Phil. 115, 137; 462
SCRA 428, 442 (2005) and Manila Water Company, Inc. v. Pena, 478 Phil. 68, 81; 434 SCRA
53, 61 (2004); Makati Haberdashery, Inc. v. National Labor Relations Commission, G.R. Nos.
83380-81, November 15, 1989, 179 SCRA 448, 452, citing Bautista v. Inciong, G.R. No. 52824,
March 16, 1988, 158 SCRA 556; Asim v. Castro, G.R. Nos. 75063-64, June 30, 1988, 163
SCRA 344; Continental Marble Corporation v. National Labor Relations Commission, G.R. No.
43825, May 9, 1988, 161 SCRA 151.
19 Rollo, p. 70.
20 Id., at pp. 70-71, 73.
21 Id., at p. 73.
22 Id.
23 Id.
453
VOL. 655, AUGUST 15, 2011 453
Semblante vs. Court of Appeals, 19th Division

Strict implementation of the rules on appeals must give way to the factual and legal reality that is
evident from the records of this case.24 After all, the primary objective of our laws is to dispense
justice and equity, not the contrary.
WHEREFORE, We DENY this petition and AFFIRM the May 29, 2009 Decision and February
23, 2010 Resolution of the CA, and the October 18, 2006 Resolution of the NLRC.
SO ORDERED.
Carpio,** Brion,*** Peralta and Sereno,**** JJ., concur.
Petition denied, judgment and resolution affirmed.
Note.The no work no pay scheme is merely a method of computing compensation, not
a basis for determining the existence or absence of employer-employee relationship. (CRC
Agricultural Trading vs. National Labor Relations Commission, 609 SCRA 138 [2009])
o0o
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24 Locsin v. Nissan Lease, Philippines, Inc., G.R. No. 185567, October 20, 2010, 634 SCRA
392, 413.
** Acting member per Special Order No. 1059 dated August 1, 2011.
*** Acting member per Special Order No. 1056 dated July 27, 2011.
**** Additional member per Special Order No. 1028 dated June 21, 2011.
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