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Labor Law II Item 2 cases - NLRC

G.R. Nos. 191288 & 191304 March 7, 2012 When they arrived at the worksite, Gala and the other workers saw that Truck No.
1837, supervised by Zuñiga, was already there. The linemen of Truck No. 1837 were
MANILA ELECTRIC COMPANY, Petitioner, already at work. Gala and the other members of the crew of Truck No. 1891 were
vs. instructed to help in the digging of a hole for the pole to be installed.
JAN CARLO GALA, Respondent.
While the Meralco crew was at work, one Noberto "Bing" Llanes, a non-Meralco
DECISION employee, arrived. He appeared to be known to the Meralco foremen as they were
seen conversing with him. Llanes boarded the trucks, without being stopped, and took
BRION, J.: out what were later found as electrical supplies. Aside from Gala, the foremen and the
other linemen who were at the worksite when the pilferage happened were later
We resolve the petition for review on certiorari,1 seeking to annul the decision2 dated charged with misconduct and dishonesty for their involvement in the incident.
August 25, 2009 and the resolution3 dated February 10, 2010 of the Court of Appeals (CA)
rendered in CA-G.R. SP. Nos. 105943 and 106021. Unknown to Gala and the rest of the crew, a Meralco surveillance task force was
monitoring their activities and recording everything with a Sony video camera. The
The Antecedents task force was composed of Joseph Aguilar, Ariel Dola and Frederick Riano.

The facts are summarized below.
On March 2, 2006, respondent Jan Carlo Gala commenced employment with the petitioner
Meralco Electric Company (Meralco) as a probationary lineman. He was assigned at
Meralco’s Valenzuela Sector. He initially served as member of the crew of Meralco’s Truck
No. 1823 supervised by Foreman Narciso Matis. After one month, he joined the crew of
Truck No. 1837 under the supervision of Foreman Raymundo Zuñiga, Sr.
On July 27, 2006, barely four months on the job, Gala was dismissed for alleged complicity
in pilferages of Meralco’s electrical supplies, particularly, for the incident which took place
on May 25, 2006. On that day, Gala and other Meralco workers were instructed to replace a
worn-out electrical pole at the Pacheco Subdivision in Valenzuela City. Gala and the other
linemen were directed to join Truck No. 1891, under the supervision of Foreman Nemecio
Hipolito.
Meralco called for an investigation of the incident and asked Gala to explain. Gala
denied involvement in the pilferage, contending that even if his superiors might have
committed a wrongdoing, he had no participation in what they did. He claimed that: (1)
he was at some distance away from the trucks when the pilferage happened; (2) he did
not have an inkling that an illegal activity was taking place since his supervisors were
conversing with Llanes, giving him the impression that they knew him; (3) he did not
call the attention of his superiors because he was not in a position to do so as he was a
mere lineman; and (4) he was just following instructions in connection with his work
and had no control in the disposition of company supplies and materials. He
maintained that his mere presence at the scene of the incident was not sufficient to
hold him liable as a conspirator.
Despite Gala’s explanation, Meralco proceeded with the investigation and eventually
terminated his employment on July 27, 2006.4 Gala responded by filing an illegal
dismissal complaint against Meralco.5

The Compulsory Arbitration Rulings
In a decision dated September 7, 2007,6 Labor Arbiter Teresita D. Castillon-Lora dismissed
the complaint for lack of merit. She held that Gala’s participation in the pilferage of
Meralco’s property rendered him unqualified to become a regular employee.
Gala appealed to the National Labor Relations Commission (NLRC). In its decision of May
2, 2008,7 the NLRC reversed the labor arbiter’s ruling. It found that Gala had been illegally
dismissed, since there was "no concrete showing of complicity with the alleged
misconduct/dishonesty[.]"8 The NLRC, however, ruled out Gala’s reinstatement, stating
that his tenure lasted only up to the end of his probationary period. It awarded him
backwages and attorney’s fees.
Both parties moved for partial reconsideration; Gala, on the ground that he should have
been reinstated with full backwages, damages and interests; and Meralco, on the ground that
the NLRC erred in finding that Gala had been illegally dismissed. The NLRC denied the
motions. Relying on the same grounds, Gala and Meralco elevated the case to the CA
through a petition for certiorari under Rule 65 of the Rules of Court.
The CA Decision
In its decision of August 25, 2009,9 the CA denied Meralco’s petition for lack of merit and
partially granted Gala’s petition. It concurred with the NLRC that Gala had been illegally
dismissed, a ruling that was supported by the evidence. It opined that nothing in the records
show Gala’s knowledge of or complicity in the pilferage. It found insufficient the joint
affidavit10 of the members of Meralco’s task force testifying that Gala and two other
linemen knew Llanes.
The CA modified the NLRC decision of May 2, 200811 and ordered Gala’s reinstatement
with full backwages and other benefits. The CA also denied Meralco’s motion for
reconsideration. Hence, the present petition for review on certiorari.12
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Labor Law II Item 2 cases - NLRC
The Petition
The petition is anchored on the ground that the CA seriously erred and gravely abused
its discretion in -
1. ruling that Gala was illegally dismissed; and
2. directing Gala’s reinstatement despite his probationary status.
Meralco faults the CA for not giving credit to its witnesses Aguilar, Dola and Riano,
and instead treated their joint affidavit (Samasamang Sinumpaang Salaysay) as
inconclusive to establish Gala’s participation in the pilferage of company property on
May 25, 2006. It submits that the affidavit of the three Meralco employees disproves
the CA’s findings, considering that their statements were based on their first-hand
account of the incident during their day-long surveillance on May 25, 2006. It points
out that the three Meralco employees categorically stated that all of the company’s
foremen and linemen present at that time, including Gala, had knowledge of the
pilferage that was happening at the time. According to Aguilar, Dola and Riano, the
trucks’ crew, including Gala, was familiar with Llanes who acted as if his presence —
particularly, that of freely collecting materials and supplies — was a regular
occurrence during their operations.
Meralco maintains that Gala himself admitted in his own testimony13 that he had been
familiar with Llanes even before the May 25, 2006 incident where he saw Zuñiga, the
foreman of Truck No. 1837, conversing with Llanes. Meralco submits that Gala’s
admission, instead of demonstrating "his feigned innocence," 14 even highlights his
guilt, especially considering that by design, his misfeasance assisted Llanes in
pilfering company property; Gala neither intervened to stop Llanes, nor did he report
the incident to the Meralco management.
Meralco posits that because of his undeniable knowledge of, if not participation in, the
pilferage activities done by their group, the company was well within its right in

terminating his employment as a probationary employee for his failure to meet the basic
standards for his regularization. The standards, it points out, were duly explained to him and
outlined in his probationary employment contract. For this reason and due to the expiration
of Gala’s probationary employment, the CA should not have ordered his reinstatement with
full backwages.
Finally, Meralco argues that even if Gala was illegally dismissed, he was entitled to just his
backwages for the unexpired portion of his employment contract with the company.
Gala’s Case
By way of his Comment (to the Petition) dated September 2, 2010, 15 Gala asks for a denial
of the petition because of (1) serious and fatal infirmities in the petition; (2) unreliable
statements of Meralco’s witnesses; and (3) clear lack of basis to support the termination of
his employment.
Gala contends, in regard to the alleged procedural defects of the petition, that the
"Verification and Certification,""Secretary’s Certificate" and "Affidavit of Service" do not
contain the details of the Community or Residence Tax Certificates of the affiants, in
violation of Section 6 of Commonwealth Act No. 465 (an Act to Impose a Residence Tax).
Additionally, the lawyers who signed the petition failed to indicate their updated Mandatory
Continuing Legal Education (MCLE) certificate numbers, in violation of the rules.
With respect to the merits of the case, Gala bewails Meralco’s reliance on the joint
affidavit16 of Aguilar, Dola and Riano not only because it was presented for the first time on
appeal to the CA, but also because it was a mere afterthought. He explains that Aguilar and
Dola were the very same persons who executed a much earlier sworn statement or
transcription dated July 7, 2006. This earlier statement did not even mention Gala, but the
later joint affidavit "splashes GALA’s name in a desperate attempt to link him to an
imagined wrongdoing."17
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Labor Law II Item 2 cases - NLRC
Zeroing in on what he believes as lack of credibility of Meralco’s evidence, Gala
posits that there is clear lack of basis for the termination of his employment. Thus, he
wonders why Meralco did not present as evidence the video footage of the entire
incident which it claims exists. He suspects that the footage was adverse to Meralco’s
position in the case.
Gala adds that the allegations of a "reported pilferage" or "rampant theft or pilferage"
committed prior to May 25, 2006 by his superiors were not established, for even the
labor arbiter did not make a finding on the foremen’s involvement in the incident. He
stresses that the same is true in his case as there is no proof of his participation in the
pilferage.
Gala further submits that even if he saw Llanes on May 25, 2006 at about the time of
the occurrence of the pilferage near or around the Meralco trucks, he was not aware
that a wrongdoing was being committed or was about to be committed. He points out
at that precise time, his superiors were much nearer to the trucks than he as he was
among the crew digging a hole. He presumed at the time that his own superiors, being
the more senior employees, could be trusted to protect company property.
Finally, Gala posits that his reinstatement with full backwages is but a consequence of
the illegality of his dismissal. He argues that even if he was on probation, he is
entitled to security of tenure. Citing Philippine Manpower Services, Inc. v. NLRC, 18
he claims that in the absence of any justification for the termination of his
probationary employment, he is entitled to continued employment even beyond the
probationary period.
The Court’s Ruling
The procedural issue
Gala would want the petition to be dismissed outright on procedural grounds,
claiming that the "Verification and Certification,""Secretary’s Certificate" and

"Affidavit of Service" accompanying the petition do not contain the details of the
Community Tax Certificates of the affiants, and that the lawyers who signed the petition
failed to indicate their updated MCLE certificate numbers, in violation of existing rules.
We stress at this point that it is the spirit and intention of labor legislation that the NLRC
and the labor arbiters shall use every reasonable means to ascertain the facts in each case
speedily and objectively, without regard to technicalities of law or procedure, provided due
process is duly observed.19 In keeping with this policy and in the interest of substantial
justice, we deem it proper to give due course to the petition, especially in view of the
conflict between the findings of the labor arbiter, on the one hand, and the NLRC and the
CA, on the other. As we said in S.S. Ventures International, Inc. v. S.S. Ventures Labor
Union,20 "the application of technical rules of procedure in labor cases may be relaxed to
serve the demands of substantial justice."
The substantive aspect of the case
We find merit in the petition.
Contrary to the conclusions of the CA and the NLRC, there is substantial evidence
supporting Meralco’s position that Gala had become unfit to continue his employment with
the company. Gala was found, after an administrative investigation, to have failed to meet
the standards expected of him to become a regular employee and this failure was mainly
due to his "undeniable knowledge, if not participation, in the pilferage activities done by
their group, all to the prejudice of the Company’s interests."21
Gala insists that he cannot be sanctioned for the theft of company property on May 25, 2006.
He maintains that he had no direct participation in the incident and that he was not aware
that an illegal activity was going on as he was at some distance from the trucks when the
alleged theft was being committed. He adds that he did not call the attention of the foremen
because he was a mere lineman and he was focused on what he was doing at the time. He
argues that in any event, his mere presence in the area was not enough to make him a
conspirator in the commission of the pilferage.
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Labor Law II Item 2 cases - NLRC
Gala misses the point. He forgets that as a probationary employee, his overall job
performance and his behavior were being monitored and measured in accordance with
the standards (i.e., the terms and conditions) laid down in his probationary
employment agreement.22 Under paragraph 8 of the agreement, he was subject to
strict compliance with, and non-violation of the Company Code on Employee
Discipline, Safety Code, rules and regulations and existing policies. Par. 10 required
him to observe at all times the highest degree of transparency, selflessness and
integrity in the performance of his duties and responsibilities, free from any form of
conflict or contradicting with his own personal interest.
The evidence on record established Gala’s presence in the worksite where the
pilferage of company property happened.1âwphi1 It also established that it was not
only on May 25, 2006 that Llanes, the pilferer, had been seen during a Meralco
operation. He had been previously noticed by Meralco employees, including Gala
(based on his admission),23 in past operations. If Gala had seen Llanes in earlier
projects or operations of the company, it is incredulous for him to say that he did not
know why Llanes was there or what Zuñiga and Llanes were talking about. To our
mind, the Meralco crew (the foremen and the linemen) allowed or could have even
asked Llanes to be there during their operations for one and only purpose — to serve
as their conduit for pilfered company supplies to be sold to ready buyers outside
Meralco worksites.
The familiarity of the Meralco crew with Llanes, a non-Meralco employee who had
been present in Meralco field operations, does not contradict at all but rather support
the Meralco submission that there had been "reported pilferage" or "rampant theft," by
the crew, of company property even before May 25, 2006. Gala downplays this
particular point with the argument that the labor arbiter made no such finding as she
merely assumed it to be a fact,24 her only "basis" being the statement that "may
natanggap na balita na ang mga crew na ito ay palagiang hindi nagsasauli ng mga
electric facilities na kanilang ginagamit o pinapalitan bagkus ito ay ibinenta
palabas."25 Gala impugns the statement as hearsay. He also wonders why Meralco’s
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supposed "video footage" of the incident on May 25, 2006 was never presented in evidence.
The established fact that Llanes, a non-Meralco employee, was often seen during company
operations, conversing with the foremen, for reason or reasons connected with the ongoing
company operations, gives rise to the question: what was he doing there? Apparently, he
had been visiting Meralco worksites, at least in the Valenzuela Sector, not simply to
socialize, but to do something else. As testified to by witnesses, he was picking up unused
supplies and materials that were not returned to the company. From these factual premises,
it is not hard to conclude that this activity was for the mutual pecuniary benefit of himself
and the crew who tolerated the practice. For one working at the scene who had seen or who
had shown familiarity with Llanes (a non-Meralco employee), not to have known the reason
for his presence is to disregard the obvious, or at least the very suspicious.
We consider, too, and we find credible the company submission that the Meralco crew who
worked at the Pacheco Subdivision in Valenzuela City on May 25, 2006 had not been
returning unused supplies and materials, to the prejudice of the company. From all these,
the allegedly hearsay evidence that is not competent in judicial proceedings (as noted
above), takes on special meaning and relevance.
authorities. Thus, we find substantial evidence to support the conclusion that Gala
does not deserve to remain in Meralco’s employ as a regular employee. He violated
his probationary employment agreement, especially the requirement for him "to
observe at all times the highest degree of transparency, selflessness and integrity in
the performance of their duties and responsibilities[.]" 27 He failed to qualify as a
regular employee.28
For ignoring the evidence in this case, the NLRC committed grave abuse of discretion
and, in sustaining the NLRC, the CA committed a reversible error.
WHEREFORE, premises considered, the petition is GRANTED. The assailed
decision and resolution of the Court of Appeals are SET ASIDE. The complaint is
DISMISSED for lack of merit.
SO ORDERED.

With respect to the video footage of the May 25, 2006 incident, Gala himself admitted that
he viewed the tape during the administrative investigation, particularly in connection with
the accusation against him that he allowed Llanes (binatilyong may kapansanan sa bibig) to
board the Meralco trucks.26 The choice of evidence belongs to a party and the mere fact that
the video was shown to Gala indicates that the video was not an evidence that Meralco was
trying to suppress. Gala could have, if he had wanted to, served a subpoena for the
production of the video footage as evidence. The fact that he did not does not strengthen his
case nor weaken the case of Meralco.

On the whole, the totality of the circumstances obtaining in the case convinces us that Gala
could not but have knowledge of the pilferage of company electrical supplies on May 25,
2006; he was complicit in its commission, if not by direct participation, certainly, by his
inaction while it was being perpetrated and by not reporting the incident to company

G.R. No. 155844 July 14, 2008
NATIONWIDE SECURITY and ALLIED SERVICES, INC., Petitioner,
vs.
THE COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION
and JOSEPH DIMPAZ, HIPOLITO LOPEZ, EDWARD ODATO, FELICISIMO
PABON and JOHNNY AGBAY, Respondents.
RESOLUTION
QUISUMBING, J.:
This petition for certiorari seeks the reversal and setting aside of the Decision 1 dated
January 31, 2002 and the Resolution2 dated September 12, 2002 of the Court of Appeals in
CA-G.R. SP No. 65465. The appellate court had affirmed the January 30, 2001 3 and April
20, 2001 Resolutions of the National Labor Relations Commission (NLRC).
The factual antecedents of this case are as follows.
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Labor Law II Item 2 cases - NLRC
Labor Arbiter Manuel M. Manansala found petitioner Nationwide Security and Allied
Services, Inc., a security agency, not liable for illegal dismissal in NLRC NCR
00-01-00833-96 and 00-02-01129-96 involving eight security guards who were
employees of the petitioner. However, the Labor Arbiter directed the petitioner to pay
the aforementioned security guards ₱81,750.00 in separation pay, ₱8,700.00 in unpaid
salaries, ₱93,795.68 for underpayment and 10% attorney’s fees based on the total
monetary award.4
Dissatisfied with the decision, petitioner appealed to the NLRC which dismissed its
appeal for two reasons — first, for having been filed beyond the reglementary period
within which to perfect the appeal and second, for filing an insufficient appeal bond. It
disposed as follows:
WHEREFORE, in the light of the foregoing, it is hereby ordered that:
1. the instant appeal be considered DISMISSED; and,
2. the Decision appealed from be deemed FINAL and EXECUTORY.
SO ORDERED.5
Its motion for reconsideration having been denied, petitioner then appealed to the
Court of Appeals to have the appeal resolved on the merits rather than on pure
technicalities in the interest of due process.
The Court of Appeals dismissed the case, holding that in a special action for certiorari,
the burden is on petitioner to prove not merely reversible error, but grave abuse of
discretion amounting to lack of or excess of jurisdiction on the part of public
respondent NLRC. The dispositive portion of its decision states:

WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED. The
questioned Resolutions dated 30 January 2001 and 20 April 2001 of the National Labor
Relations Commission are accordingly AFFIRMED.
SO ORDERED.6
The Court of Appeals likewise denied the petitioner’s motion for reconsideration. 7 Hence,
this petition which raises the following issues:
I.
WHETHER OR NOT TECHNICALITIES IN LABOR CASES MUST PREVAIL OVER
THE SPIRIT AND INTENTION OF THE LABOR CODE UNDER ARTICLE 221
THEREOF WHICH STATES:
"In any proceeding before the Commission or any of the Labor Arbiters, the rules of
evidence prevailing in courts of Law or equity shall not be controlling and it is the spirit
and [i]ntention of this Code that the Commission and its members and Labor Arbiters
shall use every and all reasonable means to ascertain the facts in each case speedily
and objectively and without [regard] to technicalities of law or procedure, all [i]n the
interest of due process." Emphasis added.
II.
WHETHER OR NOT THE DOCTRINE IN THE CASE OF STAR ANGEL
HANDICRAFT vs. NLRC, et al., 236 SCRA 580 AND ROSEWOOD PROCESSING, INC.
VS. NLRC, G.R. [No.] 116476, May 21, 1998 FINDS APPLICATION IN THE INSTANT
CASE [;]
III.
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Labor Law II Item 2 cases - NLRC
WHETHER OR NOT SEPARATION PAY IS JUSTIFIED AS AWARD IN CASES
WHERE THE EMPLOYEE IS TERMINATED DUE TO CONTRACT
EXPIRATION AS IN THE INSTANT CASE; AND
IV.
WHETHER OR NOT THE REQUIREMENT ON CERTIFICATION AGAINST
FORUM SHOPPING WHICH WAS RAISED BEFORE THE NLRC IS
ENFORCEABLE IN THE INSTANT CASE.8
Petitioner contends that the Court of Appeals erred when it dismissed its case based
on technicalities while the private respondents contend that the appeal to the NLRC
had not been perfected, since the appeal was filed outside the reglementary period,
and the bond was insufficient.9
After considering all the circumstances in this case and the submission by the parties,
we are in agreement that the petition lacks merit.
At the outset it must be pointed out here that the petition for certiorari filed with the
Court by petitioner under Rule 65 of the Rules of Court is inappropriate. The proper
remedy is a petition for review under Rule 45 purely on questions of law. There being
a remedy of appeal via petition for review under Rule 45 of the Rules of Court
available to the petitioner, the filing of a petition for certiorari under Rule 65 is
improper.1avvphi1
But even if we bend our Rules to allow the present petition for certiorari, still it will
not prosper because we do not find any grave abuse of discretion amounting to lack of
or excess of jurisdiction on the part of the Court of Appeals when it dismissed the
petition of the security agency. We must stress that under Rule 65, the abuse of
discretion must be so patent and gross as to amount to an evasion of positive duty or
to a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation
of law, as where the power is exercised in an arbitrary and despotic manner by reason

of passion or personal hostility.10 No such abuse of discretion happened here. The assailed
decision by the Court of Appeals was certainly not capricious nor arbitrary, nor was it a
whimsical exercise of judgment amounting to a lack of jurisdiction. 11
The Labor Code provides as follows:
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. Such appeal may be
entertained only on any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
(b) If the decision, order or award was secured through fraud or coercion, including graft
and corruption;
(c) If made purely on questions of law, and
(d) If serious errors in the findings of facts are raised which would cause grave or
irreparable damage or injury to the appellant.
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
The New Rules of Procedure of the NLRC states:
Section 1. Periods of appeal. – Decisions, resolutions or orders of the Labor Arbiter shall
be final and executory unless appealed to the Commission by any or both parties within ten
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Labor Law II Item 2 cases - NLRC
(10) calendar days from receipt thereof; and in case of decisions, resolutions or orders
of the Regional Director of the Department of Labor and Employment pursuant to
Article 129 of the Labor Code, within five (5) calendar days from receipt thereof. If
the 10th or 5th day, as the case may be, falls on a Saturday, Sunday or holiday, the last
day to perfect the appeal shall be the first working day following such Saturday,
Sunday or holiday.
No motion or request for extension of the period within which to perfect an appeal
shall be allowed.
In the instant case, both the NLRC and the Court of Appeals found that petitioner
received the decision of the Labor Arbiter on July 16, 1999. This factual finding is
supported by sufficient evidence,12 and we take it as binding on us. Petitioner then
simultaneously filed its "Appeal Memorandum", "Notice of Appeal" and "Motion to
Reduce Bond", by registered mail on July 29, 1999, under Registry Receipt No.
003098.13 These were received by the NLRC on July 30, 1999. 14 The appeal to the
NLRC should have been perfected, as provided by its Rules, within a period of 10
days from receipt by petitioner of the decision on July 16, 1999. Clearly, the filing of
the appeal--three days after July 26, 1999--was already beyond the reglementary
period and in violation of the NLRC Rules and the pertinent Article on Appeal in the
Labor Code.
Failure to perfect an appeal renders the decision final and executory.15 The right to
appeal is a statutory right and one who seeks to avail of the right must comply with
the statute or the rules. The rules, particularly the requirements for perfecting an
appeal within the reglementary period specified in the law, must be strictly followed
as they are considered indispensable interdictions against needless delays and for the
orderly discharge of judicial business.16It is only in highly meritorious cases that this
Court will opt not to strictly apply the rules and thus prevent a grave injustice from
being done.17 The exception does not obtain here. Thus, we are in agreement that the
decision of the Labor Arbiter already became final and executory because petitioner
failed to file the appeal within 10 calendar days from receipt of the decision.

Clearly, the NLRC committed no grave abuse of discretion in dismissing the appeal before
it. It follows that the Court of Appeals, too, did not err, nor gravely abuse its discretion, in
sustaining the NLRC Order, by dismissing the petition for certiorari before it. Hence, with
the primordial issue resolved, we find no need to tarry on the other issues raised by
petitioner.
WHEREFORE, the Decision dated January 31, 2002 and the Resolution dated September
12, 2002 of the Court of Appeals in CA- G.R. SP No. 65465 are AFFIRMED. Costs against
petitioner.
SO ORDERED.
G.R. No. 168501 January 31, 2011
ISLRIZ TRADING/VICTOR HUGO LU, Petitioner,
vs.
EFREN CAPADA, LAURO LICUP, NORBERTO NIGOS, RONNIE ABEL,
GODOFREDO MAGNAYE, ARNEL SIBERRE, EDMUNDO CAPADA,
NOMERLITO MAGNAYE and ALBERTO DELA VEGA, Respondents.
DECISION
DEL CASTILLO, J.:
We reiterate in this petition the settled view that employees are entitled to their accrued
salaries during the period between the Labor Arbiter’s order of reinstatement pending
appeal and the resolution of the National Labor Relations Commission (NLRC) overturning
that of the Labor Arbiter. Otherwise stated, even if the order of reinstatement of the Labor
Arbiter is reversed on appeal, the employer is still obliged to reinstate and pay the wages of
the employee during the period of appeal until reversal by a higher court or tribunal. In this
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Labor Law II Item 2 cases - NLRC
case, respondents are entitled to their accrued salaries from the time petitioner
received a copy of the Decision of the Labor Arbiter declaring respondents’
termination illegal and ordering their reinstatement up to the date of the NLRC
resolution overturning that of the Labor Arbiter.
This Petition for Review on Certiorari assails the Decision1 dated March 18, 2005 of
the Court of Appeals (CA) in CA-G.R. SP No. 84744 which dismissed the petition for
certiorari before it, as well as the Resolution2 dated June 16, 2005 which denied the
motion for reconsideration thereto.
Factual Antecedents
Respondents Efren Capada, Lauro Licup, Norberto Nigos and Godofredo Magnaye
were drivers while respondents Ronnie Abel, Arnel Siberre, Edmundo Capada,
Nomerlito Magnaye and Alberto Dela Vega were helpers of Islriz Trading, a gravel
and sand business owned and operated by petitioner Victor Hugo Lu. Claiming that
they were illegally dismissed, respondents filed a Complaint3 for illegal dismissal and
non-payment of overtime pay, holiday pay, rest day pay, allowances and separation
pay against petitioner on August 9, 2000 before the Labor Arbiter. On his part,
petitioner imputed abandonment of work against respondents.
Proceedings before the Labor Arbiter and the NLRC
On December 21, 2001, Labor Arbiter Waldo Emerson R. Gan (Gan) rendered a
Decision4 in this wise:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Declaring respondent ISLRIZ TRADING guilty of illegal dismissal.
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2. Ordering respondent to reinstate complainants to their former positions without loss of
seniority rights and the payment of full backwages from date of dismissal to actual
reinstatement which are computed as follows: (As of date of decision);
1. EFREN CAPADA ₱ 102,400.00 (6,400.00X16)
termination nor abandonment of work, the NLRC ordered respondents’ reinstatement
but without backwages. The dispositive portion of said Resolution reads as follows:
WHEREFORE, premises considered, the appeal is GRANTED and the Decision dated
21 December 2001 is hereby ordered SET ASIDE.

2. LAURO LICUP 87,040.00 (5,440.00X16) A New Decision is hereby rendered finding that the failure to work of
complainants-appellees is neither occasioned by termination (n)or abandonment of
3. NORBERTO NIGOS 87,040.00 (5,440.00X16) work, hence, respondents-appellants shall reinstate complainants-appellees to their
former positions without backwages within ten (10) days from receipt of this
4. RONNIE ABEL 76,800.00 (4,800.00X16)
Resolution.
5. GODOFREDO MAGNAYE 102,400.00 (6,400.00X16)
SO ORDERED.8
6. ARNEL SIBERRE 51,200.00 (3,200.00X16)
Respondents filed a Motion for Reconsideration9 thereto but same was likewise
7. EDMUNDO CAPADA 76,800.00 (4,800.00X16) denied in a Resolution10 dated November 18, 2002. This became final and executory
on December 7, 2002.11
8. NOMERLITO MAGNAYE 76,800.00 (4,800.00X16)
On December 9, 2003, however, respondents filed with the Labor Arbiter an Ex-Parte
9. ALBERTO DELA VEGA 51,200.00 (3,200.00X16) Motion to Set Case for Conference with Motion.12 They averred therein that since the
Decision of Labor Arbiter Gan ordered their reinstatement, a Writ of
Execution13 dated April 22, 2002 was already issued for the enforcement of its
3. Ordering respondent to pay complainants 10% of the total monetary award as attorney’s reinstatement aspect as same is immediately executory even pending appeal. But this
fees. notwithstanding and despite the issuance and subsequent finality of the NLRC
Resolution which likewise ordered respondents’ reinstatement, petitioner still refused
All other claims are dismissed for lack of merit. to reinstate them. Thus, respondents prayed that in view of the orders of reinstatement,
a computation of the award of backwages be made and that an Alias Writ of
SO ORDERED.5 Execution for its enforcement be issued.

Aggrieved, petitioner appealed6 to the NLRC which granted the appeal. The NLRC set The case was then set for pre-execution conference on January 29, February 24 and
aside the Decision of Labor Arbiter Gan in a Resolution7 dated September 5, 2002. Finding March 5, 2004. Both parties appeared thereat but failed to come to terms on the issue
that respondents’ failure to continue working for petitioner was neither caused by of the monetary award. Hence, the office of the Labor Arbiter through Fiscal
 11

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Examiner II Ma. Irene T. Trinchera (Fiscal Examiner Trinchera) issued an undated Petitioner questioned this computation in his Motion/Manifestation15 claiming that
Computation14 of respondents’ accrued salaries from January 1, 2002 to January 30, 2004 or said computation was without any factual or legal basis considering that Labor Arbiter
for a total of 24.97 months in the amount of ₱1,110,665.60 computed as follows: Gan’s Decision had already been reversed and set aside by the NLRC and that
therefore there should be no monetary award.
Accrued Salary from January 1, 2002 to January 30, 2004 = 24.97 months
Nevertheless, Labor Arbiter Danna M. Castillon (Castillon) still issued a Writ of
Execution16 dated March 9, 2004 to enforce the monetary award in accordance with
1. Efren Capada ₱ 6,400.00 x 24.97 months ₱ 159,808.00
the abovementioned computation. Accordingly, the Sheriff issued a Notice of
Sale/Levy on Execution of Personal Property17 by virtue of which petitioner’s
2. Lauro Licup ₱ 5,440.00 x 24.97 months ₱ 135,836.80 properties were levied and set for auction sale on March 29, 2004. In an effort to
forestall this impending execution, petitioner then filed a Motion to Quash Writ of
3. Norberto Nigos ₱ 5,440.00 x 24.97 months ₱ 135,836.80 Execution with Prayer to Hold in Abeyance of Auction Sale 18 and a Supplemental
Motion to Quash/Stop Auction Sale.19 He also served upon the Sheriff a letter of
protest.20 All of these protest actions proved futile as the Sheriff later submitted his
4. Ronnie Abel ₱ 4,800.00 x 24.97 months ₱ 119,856.00 Report dated March 30, 2004 informing the Labor Arbiter that he had levied some of
petitioner’s personal properties and sold them in an auction sale where respondents
5. Godofredo Magnaye ₱ 6,400.00 x 24.97 months ₱ 159,808.00 were the only bidders. After each of the respondents entered a bid equal to their
individual shares in the judgment award, the levied properties were awarded to them.

6. Arnel Siberre ₱ 3,200.00 x 24.97 months ₱ 79, 904.00

7. Edmundo Capada ₱ 4,800.00 x 24.97 months
8. Nomerlito Magnaye ₱ 4,800.00 x 24.97 months
9. Alberto de la Vega ₱ 3,200.00 x 24.97 months
Total
Later, respondents claimed that although petitioner’s levied properties were already
awarded to them, they could not take full control, ownership and possession of said
₱ 119, 856.00 properties because petitioner had allegedly padlocked the premises where the
properties were situated. Hence, they asked Labor Arbiter Castillon to issue a
break-open order.21 For his part and in a last ditch effort to nullify the writ of
₱ 119, 856.00
execution, petitioner filed a Motion to Quash Writ of Execution, Notice of Sale/Levy
on Execution of Personal Property and Auction Sale on Additional Grounds. 22 He
₱ 79, 904.00 reiterated that since the NLRC Resolution which reversed the Decision of the Labor
Arbiter ordered respondents’ reinstatement without payment of backwages or other
monetary award, only the execution of reinstatement sansany backwages or monetary
award should be enforced. It is his position that the Writ of Execution dated March 9,
₱ 1,110,665.60 2004 ordering the Sheriff to collect respondents’ accrued salaries of ₱1,110,665.60
plus ₱1,096.00 execution fees or the total amount of ₱1,111,761.60, in effect illegally

amended the said NLRC Resolution; hence, said writ of execution is null and void. And, as
the writ is null and void, it follows that the Labor Arbiter cannot issue a break-open order.
In sum, petitioner prayed that the Writ of Execution be quashed and all proceedings
subsequent to it be declared null and void and that respondents’ Urgent Motion for Issuance
of Break Open Order be denied for lack of merit.
Both motions were resolved in an Order23 dated June 3, 2004. Labor Arbiter Castillon
explained therein that the monetary award subject of the questioned Writ of Execution
refers to respondents’ accrued salaries by reason of the reinstatement order of Labor Arbiter
Gan which is self-executory pursuant to Article 22324 of the Labor Code. The Order
cited Roquero v. Philippine Airlines Inc.25 where this Court ruled that employees are still
entitled to their accrued salaries even if the order of reinstatement has been reversed on
appeal. As to the application for break open order, Labor Arbiter Castillon relied on the
Sheriff’s report that there is imminent danger that petitioner’s properties sold at the public
auction might be transferred or removed, as in fact four of said properties were already
transferred. Thus, she deemed it necessary to grant respondents’ request for a break open
order to gain access to petitioner’s premises. The dispositive portion of said Order reads:
WHEREFORE, premises considered, the Motion to Quash Writ of Execution [and] Notice
of Sale/Levy on Execution Sale filed by the respondent(s) [are] hereby DENIED. In view of
the refusal of the respondents’ entry to its premises, Deputy Sheriff S. Diega of this Office
is hereby ordered to break-open the entrance of the premises of respondent wherein the
properties are located.
For this purpose, he may secure the assistance of the local police officer having jurisdiction
over the locality where the said properties are located.
SO ORDERED.26
Undeterred, petitioner brought the matter to the CA through a Petition for Certiorari.
Proceedings before the Court of Appeals
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Before the CA, petitioner imputed grave abuse of discretion amounting to lack or
excess of jurisdiction upon Labor Arbiter Castillon for issuing the questioned Writ of
Execution and the Order dated June 3, 2004. He maintained that since the December
21, 2001 Decision of Labor Arbiter Gan has already been reversed and set aside by
the September 5, 2002 Resolution of the NLRC, the Writ of Execution issued by
Labor Arbiter Castillon should have confined itself to the said NLRC Resolution
which ordered respondents’ reinstatement without backwages. Hence, when Labor
Arbiter Castillon issued the writ commanding the Sheriff to satisfy the monetary
award in the amount of ₱1,111,761.60, she acted with grave abuse of discretion
amounting to lack or excess of jurisdiction. For the same reason, her issuance of the
Order dated June 3, 2004 denying petitioner’s Motion to Quash Writ of Execution
with Prayer to Hold in Abeyance Auction Sale and granting respondents’ Urgent
Motion for Issuance of Break Open Order is likewise tainted with grave abuse of
discretion. Aside from these, petitioner also questioned the conduct of the auction sale.
He likewise claimed that he was denied due process because he was not given the
opportunity to file a motion for reconsideration of the Order denying his Motion to
Quash Writ of Execution considering that a break-open order was also made in the
same Order. For their part, respondents posited that since they have already disposed
of petitioner’s levied properties, the petition has already become moot.
In a Decision27 dated March 18, 2005, the CA quoted the June 3, 2004 Order of Labor
Arbiter Castillon and agreed with her ratiocination that pursuant to Article 223 of the
Labor Code, what is sought to be enforced by the subject Writ of Execution is the
accrued salaries owing to respondents by reason of the reinstatement order of Labor
Arbiter Gan. The CA also found as unmeritorious the issues raised by petitioner with
regard to the conduct of the auction sale. Moreover, it did not give weight to
petitioner’s claim of lack of due process considering that a motion for reconsideration
of a Writ of Execution is not an available remedy. Thus, the CA dismissed the petition.
Petitioner’s Motion for Reconsideration28 suffered the same fate as it was also denied
in a Resolution29 dated June 16, 2005.

Hence, petitioner is now before this Court through this Petition for Review
on Certiorari where he presents the following issues:
1. Whether the provision of Article 223 of the Labor Code is applicable to this case x x x.
2. Whether x x x the Decision dated March 18, 2005 and the Resolution dated June 16,
2005 of the Court of Appeals are contrary to law and jurisprudence[.]
3. Whether x x x the award of accrued salaries has legal and factual bases[.] 30
The Parties’ Arguments
Petitioner contends that the assailed Decision and Resolution of the CA are contrary to law
and jurisprudence. This is because in upholding the issuance of the questioned Writ of
Execution for the enforcement of respondents’ accrued salaries, said Decision and
Resolution, in effect, altered the NLRC Resolution which only decreed respondents’
reinstatement without backwages. Moreover, he
posits that Article 223 of the Labor Code only applies when an employee has been illegally
dismissed from work. And since in this case the NLRC ruled that respondents’ failure to
continue working for petitioner was not occasioned by termination, there is no illegal
dismissal to speak of, hence, said provision of the Labor Code does not apply. Lastly,
petitioner claims that the computation of respondents’ accrued salaries in the total amount
of ₱1,110,665.60 has no legal and factual bases since as repeatedly pointed out by him, the
NLRC Resolution reversing the Labor Arbiter’s Decision has already ordered respondents’
reinstatement without backwages after it found that there was no illegal termination.
Respondents, on the other hand, maintain that the CA did not err in applying Article 223 of
the Labor Code to the instant case. They thus contend that the computation of their accrued
salaries covering the period during which they were supposed to have been reinstated or
from January 1, 2002 to January 30, 2004, should be upheld since same merely applied
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Article 223. In sum, respondents believe that the assailed Decision and Resolution of
the CA are in accord with law and jurisprudence.
Our Ruling
The petition is not meritorious.
The core issue to be resolved in this case is similar to the one determined in Garcia v.
Philippine Airlines Inc.,31 that is, whether respondents may collect their wages during
the period between the Labor Arbiter’s order of reinstatement pending appeal and the
NLRC Resolution overturning that of the Labor Arbiter.
In order to provide a thorough discussion of the present case, an overview of Garcia is
proper.
In Garcia, petitioners therein were dismissed by Philippine Airlines Inc. (PAL) after
they were allegedly caught in the act of sniffing shabu during a raid at the PAL
Technical Center’s Toolroom Section. They thus filed a complaint for illegal
dismissal. In the meantime, PAL was placed under an interim rehabilitation
receivership because it was then suffering from severe financial losses. Thereafter, the
Labor Arbiter ruled in petitioners’ favor and ordered PAL to immediately comply
with the reinstatement aspect of the decision. PAL appealed to the NLRC. The NLRC
reversed the Labor Arbiter’s Decision and dismissed petitioners’ complaint for lack of
merit. As petitioners’ Motion for Reconsideration thereto was likewise denied, the
NLRC issued an Entry of Judgment. Notably, PAL’s Interim Rehabilitation Receiver
was replaced by a Permanent Rehabilitation Receiver during the pendency of its
appeal with the NLRC. A writ of execution with respect to the reinstatement aspect of
the Labor Arbiter’s Decision was then issued and pursuant thereto, a Notice of
Garnishment was likewise issued. To stop this, PAL filed an Urgent Petition for
Injunction with the NLRC. While the NLRC suspended and referred the action to the
rehabilitation receiver, it however, likewise affirmed the validity of the writ so that
PAL appealed to the CA. Fortunately for PAL, the CA nullified the assailed NLRC

Resolutions on the grounds that (1) a subsequent finding of a valid dismissal removes the
basis for the reinstatement aspect of a labor arbiter’s decision and, (2) the impossibility to
comply with the reinstatement order due to corporate rehabilitation justifies PAL’s failure
to exercise the options under Article 223 of the Labor Code. When the case reached this
Court, we partially granted the petition in a Decision dated August 29, 2007 and effectively
reinstated the NLRC Resolutions insofar as it suspended the proceedings. But as PAL later
manifested that the rehabilitation proceedings have already been terminated, the court
proceeded to determine the remaining issue, which is, as earlier stated, whether petitioners
therein may collect their wages during the period between the Labor Arbiter’s order of
reinstatement pending appeal and the NLRC Resolution overturning that of the Labor
Arbiter.
In resolving the case, the Court examined its conflicting rulings with respect to the
application of paragraph 3 of Article 223 of the Labor Code, viz:
At the core of the seeming divergence is the application of paragraph 3 of Article 223 of the
Labor Code which reads:
‘In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, pending appeal. The employee shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal or separation or, at the option of
the employer, merely reinstated in the payroll. The posting of a bond by the employer shall
not stay the execution for reinstatement provided herein.’
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
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whatever salary he received for he is entitled to such, more so if he actually rendered
services during the period.
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 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.
x x x x’
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." (Emphasis, italics and underscoring in the original; citations omitted.)32
The Court then stressed that as opposed to the abovementioned Genuino v. National
Labor Relations Commission,33 the social justice principles of labor law outweigh or
render inapplicable the civil law doctrine of unjust enrichment. It then went on to
examine the precarious implication of the "refund doctrine" as enunciated in Genuino,
thus:

[T]he "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 reinstament and simply find work elsewhere in the interim, if
any is available. Notably, the option of payroll reinstatement belongs to the employer, even
if the employee is able and raring to return to work. Prior to Genuino, it is unthinkable for
one to refuse payroll reinstatement. In the face of the grim possibilities, the rise of
concerned employees declining payroll reinstatement is on the horizon.
Further, the Genuino ruling not only disregards the social justice principles behind the rule,
but also institutes a scheme unduly favorable to management. Under such scheme, the
salaries dispensed pendente lite merely serve as a bond posted in installment by the
employer. For in the event of a reversal of the Labor Arbiter’s decision ordering
reinstatement, the employer gets back the same amount without having to spend ordinarily
for bond premiums. This circumvents, if not directly contradicts, the proscription that the
"posting of a bond [even a cash bond] by the employer shall not stay the execution for
reinstatement. [Underscoring in the original]34
In view of this, the Court held this stance in Genuino as a stray posture and realigned the
proper course of the prevailing doctrine on reinstatement pending appeal vis-à-vis the effect
of a reversal on appeal, that is, 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 or tribunal. It likewise settled the view that the Labor Arbiter’s order of
reinstatement is immediately executory and the employer has to either re-admit them
to work under the same terms and conditions prevailing prior to their dismissal, or to
reinstate them in the payroll, and that failing to exercise the options in the alternative,
employer must pay the employee’s salaries.
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The discussion, however, did not stop there. The court went on to declare that after
the Labor Arbiter’s decision is reversed by a higher tribunal, the employee may
be barred from collecting the accrued wages, if it is shown that the delay in
enforcing the reinstatement pending appeal was without fault on the part of the
employer. It then provided for the two-fold test in determining whether an employee
is barred from recovering his accrued wages, to wit: (1) there must be actual delay or
that the order of reinstatement pending appeal was not executed prior to its reversal;
and (2) the delay must not be due to the employer’s unjustified act or omission. If the
delay is due to the employer’s unjustified refusal, the employer may still be required
to pay the salaries notwithstanding the reversal of the Labor Arbiter’s Decision. In
Garcia, after it had been established that there was clearly a delay in the execution of
the reinstatement order, the court proceeded to ascertain whether same was due to
PAL’s unjustified act or omission. In so doing, it upheld the CA’s finding that the
peculiar predicament of a corporate rehabilitation rendered it impossible for PAL,
under the circumstances, to exercise its option under Article 223 of the Labor Code.
The suspension of claims dictated by rehabilitation procedure therefore constitutes a
justification for PAL’s failure to exercise the alternative options of actual
reinstatement or payroll reinstatement. Because of this, the Court held that PAL’s
obligation to pay the salaries pending appeal, as the normal effect of the non-exercise
of the options, did not attach. Simply put, petitioners cannot anymore collect their
accrued salaries during the period between the Labor Arbiter’s order of reinstatement
pending appeal and the NLRC Resolution overturning that of the Labor Arbiter
because PAL’s failure to actually reinstate them or effect payroll reinstatement was
justified by the latter’s situation of being under corporate rehabilitation.
Application of the Two-Fold Test to the present case
As previously mentioned, the vital question that needs to be answered in the case at
bar is: Can respondents collect their accrued salaries for the period between the
Labor Arbiter’s order of reinstatement pending appeal and the NLRC Resolution
overturning that of the Labor Arbiter? If in the affirmative, the assailed CA Decision
and Resolution which affirmed the June 3, 2004 Order of Labor Arbiter Castillon

denying the Motion to Quash Writ of Execution and ordering the break-open of petitioner’s
premises as well as the issuance of the subject Writ of Execution itself, have to be upheld.
Otherwise, they need to be set aside as what petitioner would want us to do.
To come up with the answer to said question, we shall apply the two-fold test used
in Garcia.
Was there an actual delay or was the order of reinstatement pending appeal executed prior
to its reversal? As can be recalled, Labor Arbiter Gan issued his Decision ordering
respondents’ reinstatement on December 21, 2001, copy of which was allegedly received by
petitioner on February 21, 2002.35 On March 4, 2002, petitioner appealed said decision to
the NLRC. A few days later or on March 11, 2002, respondents filed an Ex-Parte Motion
for Issuance of Writ of Execution relative to the implementation of the reinstatement aspect
of the decision.36 On April 22, 2002, a Writ of Execution was issued by Labor Arbiter Gan.
However, until the issuance of the September 5, 2002 NLRC Resolution overturning Labor
Arbiter Gan’s Decision, petitioner still failed to reinstate respondents or effect payroll
reinstatement in accordance with Article 223 of the Labor Code. This was what actually
prompted respondents to file an Ex-Parte Motion to Set Case for Conference with Motion
wherein they also prayed for the issuance of a computation of the award of backwages and
Alias Writ of Execution for its enforcement. It cannot therefore be denied that there was an
actual delay in the execution of the reinstatement aspect of the Decision of Labor Arbiter
Gan prior to the issuance of the NLRC Resolution overturning the same.
Now, the next question is: Was the delay not due to the employer’s unjustified act or
omission? Unlike in Garciawhere PAL, as the employer, was then under corporate
rehabilitation, Islriz Trading here did not undergo rehabilitation or was under any analogous
situation which would justify petitioner’s non-exercise of the options provided under Article
223 of the Labor Code. Notably, what petitioner gave as reason in not immediately
effecting reinstatement after he was served with the Writ of Execution dated April 22, 2002
was that he would first refer the matter to his counsel as he could not effectively act on the
order of execution without the latter’s advice.37 He gave his word that upon conferment
with his lawyer, he will inform the Office of the Labor Arbiter of his action on the writ.
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Petitioner, however, without any satisfactory reason, failed to fulfill this promise and
respondents remained to be not reinstated until the NLRC resolved petitioner’s appeal.
Evidently, the delay in the execution of respondents’ reinstatement was due to
petitioner’s unjustified refusal to effect the same.
Hence, the conclusion is that respondents have the right to collect their accrued
salaries during the period between the Labor Arbiter’s Decision ordering their
reinstatement pending appeal and the NLRC Resolution overturning the same because
petitioner’s failure to reinstate them either actually or through payroll was due to
petitioner’s unjustified refusal to effect reinstatement. In order to enforce this, Labor
Arbiter Castillon thus correctly issued the Writ of Execution dated March 9, 2004 as
well as the Order dated June 3, 2004 denying petitioner’s Motion to Quash Writ of
Execution and granting respondents’ Urgent Motion for Issuance of Break-Open
Order. Consequently, we find no error on the part of the CA in upholding these
issuances and in dismissing the petition for certiorari before it.
Having settled this, we find it unnecessary to discuss further the issues raised by
petitioner except the one with respect to the computation of respondents’ accrued
salaries.
Correctness of the Computation of Respondents’ Accrued Salaries
Petitioner contends that respondents’ accrued salaries in the total amount of
₱1,110,665.60 have no factual and legal bases. This is because of his obstinate belief
that the NLRC’s reversal of Labor Arbiter Gan’s Decision has effectively removed the
basis for such award.
Although we do not agree with petitioner’s line of reasoning, we, however, find
incorrect the computation made by Fiscal Examiner Trinchera.
In Kimberly Clark (Phils.), Inc., v. Facundo,38 we held that:

[T]he Labor Arbiter’s order of reinstatement was immediately executory. After receipt of
the Labor Arbiter’s decision ordering private respondents’ reinstatement, petitioner 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. Failing to exercise the options in the
alternative, petitioner must pay private respondents’ salaries which automatically
accrued from notice of the Labor Arbiter’s order of reinstatement until its ultimate
reversal of the NLRC.
xxxx
x x x [S]ince private respondent’s reinstatement pending appeal was effective only
until its reversal by the NLRC on April 28, 1999, they are no longer entitled to salaries
from May 1, 1999 to March 15, 2001, as ordered by the Labor Arbiter. (Emphasis supplied)
To clarify, respondents are entitled to their accrued salaries only from the time petitioner
received a copy of Labor Arbiter Gan’s Decision declaring respondents’ termination illegal
and ordering their reinstatement up to the date of the NLRC Resolution overturning that of
the Labor Arbiter. This is because it is only during said period that respondents are deemed
to have been illegally dismissed and are entitled to reinstatement pursuant to Labor Arbiter
Gan’s Decision which was the one in effect at that time. Beyond that period, the NLRC
Resolution declaring that there was no illegal dismissal is already the one prevailing. From
such point, respondents’ salaries did not accrue not only because there is no more illegal
dismissal to speak of but also because respondents have not yet been actually reinstated and
have not rendered services to petitioner.
Fiscal Examiner Trinchera’s computation of respondents’ accrued salaries covered the
period January 1, 2002 to January 30, 2004. As there was no showing when petitioner
actually received a copy of Labor Arbiter Gan’s decision except for petitioner’s self-serving
claim that he received the same on February 21, 2002, 39 we are at a loss as to how Fiscal
Examiner Trinchera came up with January 1, 2002 as the reckoning point for computing
respondents’ accrued wages. We likewise wonder why it covered the period up to January
30, 2004 when on September 5, 2002, the NLRC already promulgated its Resolution
17
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reversing that of the Labor Arbiter. Hence, we deem it proper to remand the records of
this case to the Labor Arbiter for the correct computation of respondents’ accrued
wages which shall commence from petitioner’s date of receipt of the Labor Arbiter’s
Decision ordering reinstatement up to the date of the NLRC Resolution reversing the
same. Considering, however, that petitioner’s levied properties have already been
awarded to respondents and as alleged by the latter, have also already been sold to
third persons, respondents are ordered to make the proper restitution to petitioner for
whatever excess amount received by them based on the correct computation.
As a final note, since it appears that petitioner still failed to reinstate respondents
pursuant to the final and executory Resolution of the NLRC, respondents’ proper
recourse now is to move for the execution of the same. It is worthy to note that Labor
Arbiter Castillon stated in her questioned Order of June 3, 2004 that the Writ of
Execution she issued is for the sole purpose of enforcing the wages accruing to
respondents by reason of Labor Arbiter Gan’s order of reinstatement. Indeed, the last
paragraph of said writ provides only for the enforcement of said monetary award and
nothing on reinstatement, viz:
NOW THEREFORE, you are commanded to proceed to the premises of respondents
Islriz Trading/Victor Hugo C. Lu located at Brgy. Luciano Trece Martires[,] Cavite
City or wherever it may be found to collect the amount of One Million One Hundred
Eleven Thousand Seven Hundred Sixty One pesos & 60/100 (₱1,111,761.60)
inclusive [of] ₱1,096.00 as execution fees and turn over the said amount to the NLRC
Cashier for further disposition. In case you fail to collect the said amount in cash, you
are directed to cause the satisfaction of the same out of respondents’ chattels,
movable/immovable properties not exempt from execution. You are directed to return
these Writ One Hundred Eighty (180) days from receipt hereof, together with the
report of compliance.
SO ORDERED.40

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed March 18,
2005 Decision and June 16, 2005 Resolution of the Court of Appeals in CA-G.R. SP No.
84744 are AFFIRMED. The records of this case are ordered REMANDED to the Office of
the Labor Arbiter for the correct computation of respondents’ accrued salaries covering the
date of petitioner’s receipt of the December 21, 2001 Decision of the Labor Arbiter up to
the issuance of the NLRC Resolution on September 5, 2002. Respondents are ordered to
make the proper restitution to petitioner for whatever excess amount which may be
determined to have been received by them based on the correct computation.
SO ORDERED.
G.R. No. 196830 February 29, 2012
CESAR V. GARCIA, CARLOS RAZON, ALBERTO DE GUZMAN, TOMAS
RAZON, OMER E. PALO, RIZALDE VALENCIA, ALLAN BASA, JESSIE
GARCIA,JUANITO PARAS, ALEJANDRO ORAG, ROMMEL PANGAN, RUEL
SOLIMAN, and CENEN CANLAPAN, represented by SERENO, and CESAR V.
GARCIA, Petitioners,
vs.
KJ COMMERCIAL and REYNALDO QUE, Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition1 for review on certiorari under Rule 45 of the Rules of Court. The petition
challenges the 29 April 2011 Decision2 of the Court of Appeals in CA-G.R. SP No. 115851,
affirming the 8 February3 and 25 June4 2010 Resolutions of the National Labor Relations
18
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Commission (NLRC) in NLRC-LAC-No. 12-004061-08. The NLRC set aside the 30
October 2008 Decision5 of the Labor Arbiter in NLRC Case No.
RAB-III-02-9779-06.
The Facts
Respondent KJ Commercial is a sole proprietorship. It owns trucks and engages in the
business of distributing cement products. On different dates, KJ Commercial
employed as truck drivers and truck helpers petitioners Cesar V. Garcia, Carlos Razon,
Alberto De Guzman, Tomas Razon, Omer E. Palo, Rizalde Valencia, Allan Basa,
Jessie Garcia, Juanito Paras, Alejandro Orag, Rommel Pangan, Ruel Soliman, and
Cenen Canlapan (petitioners).
On 2 January 2006, petitioners demanded for a ₱40 daily salary increase. To pressure
KJ Commercial to grant their demand, they stopped working and abandoned their
trucks at the Northern Cement Plant Station in Sison, Pangasinan. They also blocked
other workers from reporting to work.
On 3 February 2006, petitioners filed with the Labor Arbiter a complaint6 for illegal
dismissal, underpayment of salary and non-payment of service incentive leave and
thirteenth month pay.
The Labor Arbiter’s Ruling
In his 30 October 2008 Decision, the Labor Arbiter held that KJ Commercial illegally
dismissed petitioners. The Labor Arbiter held:
After a careful examination and evaluation of the facts and evidences adduced by both
parties, we find valid and cogent reasons to declare that these complainants were
illegally dismissed from their work to be entitled to their separation in lieu of
reinstatement equivalent to their salary for one (1) month for every year of service and

backwages from the time that they were terminated on January 2, 2006 up to the date of this
Decision.
We carefully examined the defense set up by the respondents that these complainants were
not terminated from their employment but were the one [sic] who abandoned their work by
staging strike and refused to perform their work as drivers of the trucks owned by the
respondents on January 2, 2006, vis-á-vis, he [sic] allegations and claims of the
complainants that when they asked for an increase of their salary for ₱40.00, they were
illegally dismissed from their employment without due process, and we gave more credence
and value to the allegations of the complainants that they were illegally dismissed from
their employment without due process and did not abandoned [sic] their work as the
respondents wanted to project. We examined the narration of facts of the respondents in
their Position Paper and Supplemental Position Paper and we concluded that these
complainants were actually terminated on January 2, 2006 and did not abandoned [sic] their
jobs as claimed by the respondents when the respondents, in their Position Paper, admitted
that their cement plant was shutdown on January 3, 2006 and when it resumed its operation
on January 7, 2006, they ordered the other drivers to get the trucks in order that the hauling
of the cements will not incur further delay and that their business will not be prejudiced.
Granting for the sake of discussion that indeed these complainants abandoned their work on
January 2, 2006, why then that [sic] the cement plant was shutdown on January 3, 2006 and
resumed operation on January 7, 2006, when there are fifty (50) drivers of the respondents
and only thirteen (13) of them were allegedly stopped from working. Further, if these
complainants actually abandoned their work, as claimed by the respondents, they miserably
failed to show by substantial evidence that these complainants deliberately and unjustifiably
refused to resume their employment.
xxxx
The acts of these complainants in filing this instant case a month after they were terminated
from their work is more than sufficient evidence to prove and show that they do not have
the intention of abandoning their work. While we acknowledged the offer of the
19
Labor Law II Item 2 cases - NLRC
respondents for these complainants to return back to work during the mandatory
conference, the fact that these complainants were illegally terminated and prevented
from performing their work as truck drivers of the respondents and that there was no
compliance with the substantive and procedural due process of terminating an
employee, their subsequent offer to return to work will not cure the defect that there
was already illegal dismissal committed against these complainants.7
KJ Commercial appealed to the NLRC. It filed before the NLRC a motion to reduce
bond and posted a ₱50,000 cash bond.
The NLRC’s Ruling
In its 9 March 2009 Decision,8 the NLRC dismissed the appeal. The NLRC held:
Filed with respondents-appellants’ Appeal Memorandum is a Motion to Reduce
Appeal Bond and a cash bond of ₱50,000.00 only. x x x
We find no merit on [sic] the respondents-appellants’ Motion. It must be stressed that
under Section 6, Rule VI of the 2005 Revised Rules of this Commission, a motion to
reduce bond shall only be entertained when the following requisites concur:
1. The motion is founded on meritorious ground; and
2. A bond of reasonable amount in relation to the monetary award is posted.
We note that while respondents-appellants claim that they could not possibly produce
enough cash for the required appeal bond, they are unwilling to at least put up a
property to secure a surety bond. Understandably, no surety agency would normally
accept a surety obligation involving a substantial amount without a guarantee that it
would be indemnified in case the surety bond posted is forfeited in favor of a
judgment creditor. Respondents-appellants’ insinuation that no surety company can
finish the processing of a surety bond in ten days time is not worthy of belief as it is

contrary to ordinary business experience. What is obvious is that respondents-appellants are
not willing to accept the usual conditions of a surety agreement that is why no surety bond
could be processed. The reduction of the required bond is not a matter of right o[n] the part
of the movant but lies within the sound discretion of the NLRC upon showing of
meritorious grounds x x x. In this case, we find that the instant motion is not founded on a
meritorious ground. x x x Moreover, we note that the ₱50,000.00 cash bond posted by
respondents-appellants which represents less than two (2) percent of the monetary award is
dismally disproportionate to the monetary award of ₱2,612,930.00 and that the amount of
bond posted by respondents-appellants is not reasonable in relation to the monetary award.
x x x A motion to reduce bond that does not satisfy the conditions required under NLRC
Rules shall not stop the running of the period to perfect an appeal x x x.
Conversely, respondents-appellants failed to perfect an appeal for failure to post the
required bond.9
KJ Commercial filed a motion10 for reconsideration and posted a ₱2,562,930 surety bond.
In its 8 February 2010 Resolution, the NLRC granted the motion and set aside the Labor
Arbiter’s 30 October 2008 Decision. The NLRC held:
x x x [T]his Commission opts to resolve and grant the Motion for Reconsideration filed by
respondent-appellant seeking for reconsideration of Our Decision promulgated on March 9,
2009 dismissing the Appeal for non-perfection, there being an honest effort by the
appellants to comply with putting up the full amount of the required appeal bond. Moreover,
considering the merit of the appeal, by granting the motion for reconsideration, the
paramount interest of justice is better served in the resolution of this case.
xxxx
Going over the record of the case, this Commission noted that in respondents’ Supplemental
Position Paper, in denying complainants’ imputation of illegal dismissal, respondents
categorically alleged "..[.] that complainants were not illegally dismissed but on January 2,
2006, they abandoned their work by means of [‘]work stoppage[’] or they engaged in an
20
Labor Law II Item 2 cases - NLRC
[‘]illegal strike[’] when they demanded for a higher rate..[.] that while their respective
assigned trucks were all in the cement plant ready to be loaded, complainants
paralyzed respondents’ hauling or trucking operation by staging a work stoppage at
the premises of KJ Commercial compound by further blocking their co-drivers not to
report for work." We have observed that despite these damaging allegations,
complainants never bothered to dispute nor contradicted these material allegations.
Complainants’ silence on these material allegations consequently lends support to
respondents-appellants[’] contention that complainants were never dismissed at all but
had stopped driving the hauler truck assigned to each of them when their demand for
salary increase in the amount they wish was not granted by respondents-appellants.
Moreover, contrary to the findings of the Labor Arbiter, the purported shutdown of
the cement plant being cited by the Labor Arbiter a quo as the principal cause of
complainants’ purported dismissal cannot be attributed to respondents because it was
never established by evidence that respondents were the owner [sic] of the cement
plant where complainants as truck drivers were hauling cargoes of cement with trucks
owned by respondents whose business is confined to that of a cement distributor and
cargo truck hauler. Based on the undisputed account of respondents-appellants, it
appears that the cement plant was compelled to shut down because the hauling or
trucking operation was paralyzed due to complainants’ resort to work stoppage by
refusing to drive their hauler trucks despite the order of the management for them to
get the trucks which blockaded the cement plant.
Furthermore, a perusal of the complainants’ position paper and amended position
paper failed to allege the overt acts showing how they were in fact dismissed on 02
January 2006. The complainants had not even alleged that they were specifically told
that they were dismissed after they demanded for a salary increase or any statement to
that effect. Neither had they alleged that they were prevented from reporting for work.
This only shows there was never a dismissal to begin with.
xxxx

We cannot affirm the Labor Arbiter’s conclusions absent showing a fact of termination or
circumstances under which the dismissal was effected. Though only substantial evidence is
required in proceedings before the Labor Arbiter to support a litigant’s claim, the same still
requires evidence separate and different, and something which supports the allegations
affirmatively made. The complainants’ claim that they were dismissed on 02 January 2006,
absent proof thereof or any supporting evidence thereto is at best self serving.11
Petitioners filed a motion for reconsideration. In its 25 June 2010 Resolution, the NLRC
denied the motion for lack of merit. The NLRC held:
We stress that it is within the power and discretion of this Commission to grant or deny a
motion to reduce appeal bond. Having earlier denied the motion to reduce bond of the
respondents-appellants, this Commission is not precluded from reconsidering its earlier
Decision on second look when it finds meritorious ground to serve the ends of justice.
Settled is the norm in the matter of appeal bonds that letter-perfect rules must yield to the
broader interest of substantial justice x x x. In this case, the Decision of the Labor Arbiter
had not really become final and executory as respondents timely filed a Memorandum of
Appeal with a Motion to Reduce Appeal Bond and a partial appeal bond. Although the
respondents[’] appeal was dismissed, in the earlier decision, the same Decision was later
reconsidered on considerations that the Labor Arbiter committed palpable errors in his
findings and the monetary awards to the appellees are secured by a partial bond and then
later, by an appeal bond for the full amount of the monetary awards.12
13
Petitioners filed with the Court of Appeals a petition for certiorari under Rule 65 of the
Rules of Court.
The Court of Appeals’ Ruling
In its 29 April 2011 Decision, the Court of Appeals dismissed the petition and affirmed the
NLRC’s 8 February and 25 June 2010 Resolutions. The Court of Appeals held:
21
Labor Law II Item 2 cases - NLRC
After scrupulously examining the contrasting positions of the parties, and the
conflicting decisions of the labor tribunals, We find the records of the case bereft of
evidence to substantiate the conclusions reached by the Labor Arbiter that petitioners
were illegally dismissed from employment.
While petitioners vehemently argue that they were unlawfully separated from work,
records are devoid of evidence to show the fact of dismissal. Neither was there any
evidence offered by petitioners to prove that they were no longer allowed to perform
their duties as truck drivers or they were prevented from entering KJ Commercial’s
premises, except for their empty and general allegations that they were illegally
dismissed from employment. Such bare and sweeping statement contains nothing but
empty imputation of a fact that could hardly be given any evidentiary weight by this
Court. At the very least, petitioners should have detailed or elaborated the
circumstances surrounding their dismissal or substantiate their claims by submitting
evidence to butress such contention. Without a doubt, petitioners’ allegation of illegal
dismissal has no leg to stand on. Accordingly, they should not expect this Court to
swallow their asseveration hook, line and sinker in the absence of supporting proof.
Allegation that one was illegally dismissed from work is not a magic word that once
invoked will automatically sway this Court to rule in favor of the party invoking it.
There must first be substantial evidence to prove that indeed there was illegal
dismissal before the employer bears the burden to prove the contrary. 14
Hence, the present petition.
The Issue
Petitioners raise as issue that the Labor Arbiter’s 30 October 2008 Decision became
final and executory; thus, the NLRC’s 8 February and 25 June 2010 Resolutions and
the Court of Appeals’ 29 April 2011 Decision are void for lack of jurisdiction.
Petitioners claim that KJ Commercial failed to perfect an appeal since the motion to
reduce bond did not stop the running of the period to appeal.

The Court’s Ruling
The petition is unmeritorious.
When petitioners filed with the Court of Appeals a petition for certiorari, they did not raise
as issue that the Labor Arbiter’s 30 October 2008 Decision had become final and executory.
They enumerated the issues in their petition:
GROUNDS FOR THE PETITION
I.
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO
LACK OR EXCESS OF JURISDICTION WHEN IT REVERSED THE DECISION OF
THE LABOR ARBITER A QUO AND PRONOUNCED THAT THE PETITIONERS
WERE NOT ILLEGALLY DISMISSED DESPITE CLEAR AND SUBSTANTIAL
EVIDENCE ON THE RECORDS SHOWING THAT COMPLAINANTS WERE
REGULAR EMPLOYEES TO BE ENTITLED TO SECURITY OF TENURE AND
WERE ILLEGALLY DISMISSED FROM THEIR EMPLOYMENT.
II.
THE NLRC HAS COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT
TO LACK OR EXCESS OF JURISDICTION WHEN IT GIVE [sic] MUCH WEIGHT TO
PRIVATE RESPONDENTS[’] BASELESS ALLEGATIONS IN ITS [sic] MOTION FOR
RECONSIDERATION WHEN IT [sic] ALLEGED THAT COMPLAINANTS HAD
ABANDONED THEIR WORK BY MEANS OF "WORK STOPPAGE" OR THEY
ENGAGED IN AN "ILLEGAL STRIKE" WHEN THEY DEMANDED FOR A HIGHER
RATE.
III.
22
Labor Law II Item 2 cases - NLRC
THE NLRC GRAVELY ERRED TANTAMOUNT TO LACK OR EXCESS OF
JURISDICTION WHEN IT CONCLUDED THAT "COMPLAINANTS
PARALYZED HAULING OR TRUCKING OPERATION BY STAGING A WORK
STOPPAGE AT THE PREMISES OF KJ COMMERCIAL COMPOUND BY
FURTHER BLOCKING THEIR CO-DRIVERS NOT TO REPORT FOR WORK"
WITHOUT A SINGLE EVIDENCE TO SUPPORT SUCH ALLEGATIONS OF
PRIVATE RESPONDENTS.
IV.
THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT THE
PRINCIPAL CAUSE OF COMPLAINANTS’ DISMISSAL WAS DUE TO THE
PURPORTED SHUTDOWN OF THE CEMENT PLANT CITED BY THE LABOR
ARBITER IN HIS DECISION.15
Accordingly, the Court of Appeals limited itself to the resolution of the enumerated
issues. In its 29 April 2011 Decision, the Court of Appeals held:
Hence, petitioners seek recourse before this Court via this Petition
for Certiorari challenging the NLRC Resolutions and raising the following issues:
I.
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT
TO LACK OR EXCESS OF JURISDICTION WHEN IT REVERSED THE
DECISION OF THE LABOR ARBITER A QUO AND PRONOUNCED THAT
PETITIONERS WERE NOT ILLEGALLY DISMISSED DESPITE CLEAR AND
SUBSTANTIAL EVIDENCE ON THE RECORDS SHOWING THAT
PETITIONERS WERE REGULAR EMPLOYEES TO BE ENTITLED TO
SECURITY OF TENURE AND WERE ILLEGALLY DISMISSED FROM THEIR
EMPLOYMENT.

II.
THE NLRC HAS COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT
TO LACK OR EXCESS OF JURISDICTION WHEN IT GAVE MUCH WEIGHT TO
PRIVATE RESPONDENTS BASELESS ALLEGATIONS IN ITS [sic] MOTION FOR
RECONSIDERATION WHEN IT [sic] ALLEGED THAT PETITIONERS HAD
ABANDONED THEIR WORK BY MEANS OF "WORK STOPPAGE" OR THEY
ENGAGED IN AN "ILLEGAL STRIKE" WHEN THEY DEMANDED FOR A HIGHER
RATE.
III.
THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT "PETITIONERS
PARALYZED HAULING AND TRUCKING OPERATION BY STAGING A WORK
STOPPAGE AT THE PREMISES OF KJ COMMERCIAL COMPOUND BY FURTHER
BLOCKING THEIR CO-DRIVERS NOT TO REPORT FOR WORK" WITHOUT A
SINGLE EVIDENCE TO SUPPORT SUCH ALLEGATIONS OF PRIVATE
RESPONDENTS.
IV.
THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT THE PRINCIPAL
CAUSE OF PETITIONERS’ DISMISSAL WAS DUE TO THE PURPORTED
SHUTDOWN OF THE CEMENT PLANT CITED BY THE LABOR ARBITER IN HIS
DECISION.16
Petitoners cannot, for the first time, raise as issue in their petition filed with this Court that
the Labor Arbiter’s 30 October 2008 Decision had become final and executory. Points of
law, theories and arguments not raised before the Court of Appeals will not be considered
by this Court. Otherwise, KJ Commercial will be denied its right to due process. In Tolosa v.
National Labor Relations Commission,17 the Court held:
23
Labor Law II Item 2 cases - NLRC
Petitioner contends that the labor arbiter’s monetary award has already reached
finality, since private respondents were not able to file a timely appeal before the
NLRC.
This argument cannot be passed upon in this appeal, because it was not raised in
the tribunals a quo. Well-settled is the rule that issues not raised below cannot be
raised for the first time on appeal. Thus, points of law, theories, and arguments
not brought to the attention of the Court of Appeals need not — and ordinarily
will not — be considered by this Court. Petitioner’s allegation cannot be
accepted by this Court on its face; to do so would be tantamount to a denial of
respondent’s right to due process.
Furthermore, whether respondents were able to appeal on time is a question of fact
that cannot be entertained in a petition for review under Rule 45 of the Rules of Court.
In general, the jurisdiction of this Court in cases brought before it from the Court of
Appeals is limited to a review of errors of law allegedly committed by the court a
quo.18(Emphasis supplied)
KJ Commercial’s filing of a motion to reduce bond and delayed posting of the
₱2,562,930 surety bond did not render the Labor Arbiter’s 30 October 2008 Decision
final and executory. The Rules of Procedure of the NLRC allows the filing of a
motion to reduce bond subject to two conditions: (1) there is meritorious ground, and
(2) a bond in a reasonable amount is posted. Section 6 of Article VI states:
No motion to reduce bond shall be entertained except on meritorious grounds and
upon the posting of a bond in a reasonable amount in relation to the monetary award.
The mere filing of the motion to reduce bond without compliance with the requisites
in the preceding paragraph shall not stop the running of the period to perfect an
appeal.

The filing of a motion to reduce bond and compliance with the two conditions stop the
running of the period to perfect an appeal. In McBurnie v. Ganzon,19 the Court held:
x x x [T]he bond may be reduced upon motion by the employer, this is subject to the
conditions that (1) the motion to reduce the bond shall be based on meritorious grounds; and
(2) a reasonable amount in relation to the monetary award is posted by the appellant,
otherwise the filing of the motion to reduce bond shall not stop the running of the period to
perfect an appeal.20
The NLRC has full discretion to grant or deny the motion to reduce bond, 21 and it may rule
on the motion beyond the 10-day period within which to perfect an appeal. Obviously, at
the time of the filing of the motion to reduce bond and posting of a bond in a reasonable
amount, there is no assurance whether the appellant’s motion is indeed based on
"meritorious ground" and whether the bond he or she posted is of a "reasonable amount."
Thus, the appellant always runs the risk of failing to perfect an appeal.
Section 2, Article I of the Rules of Procedure of the NLRC states that, "These Rules shall be
liberally construed to carry out the objectives of the Constitution, the Labor Code of the
Philippines and other relevant legislations, and to assist the parties in obtaining just,
expeditious and inexpensive resolution and settlement of labor disputes." In order to give
full effect to the provisions on motion to reduce bond, the appellant must be allowed to wait
for the ruling of the NLRC on the motion even beyond the 10-day period to perfect an
appeal. If the NLRC grants the motion and rules that there is indeed meritorious ground and
that the amount of the bond posted is reasonable, then the appeal is perfected. If the NLRC
denies the motion, the appellant may still file a motion for reconsideration as provided
under Section 15, Rule VII of the Rules. If the NLRC grants the motion for reconsideration
and rules that there is indeed meritorious ground and that the amount of the bond posted is
reasonable, then the appeal is perfected. If the NLRC denies the motion, then the decision
of the labor arbiter becomes final and executory.
In the present case, KJ Commercial filed a motion to reduce bond and posted a ₱50,000
cash bond. When the NLRC denied its motion, KJ Commercial filed a motion for
24
Labor Law II Item 2 cases - NLRC
reconsideration and posted the full ₱2,562,930 surety bond. The NLRC then granted
the motion for reconsideration.
In any case, the rule that the filing of a motion to reduce bond shall not stop the
running of the period to perfect an appeal is not absolute. The Court may relax the rule.
In Intertranz Container Lines, Inc. v. Bautista,22 the Court held:
Jurisprudence tells us that in labor cases, an appeal from a decision involving a
monetary award may be perfected only upon the posting of a cash or surety bond. The
Court, however, has relaxed this requirement under certain exceptional circumstances
in order to resolve controversies on their merits. These circumstances include: (1)
fundamental consideration of substantial justice; (2) prevention of miscarriage of
justice or of unjust enrichment; and (3) special circumstances of the case combined
with its legal merits, and the amount and the issue involved. 23
In Rosewood Processing, Inc. v. NLRC,24 the Court held:
The perfection of an appeal within the reglementary period and in the manner
prescribed by law is jurisdictional, and noncompliance with such legal requirement is
fatal and effectively renders the judgment final and executory. The Labor Code
provides:
ART. 223. Appeal. — Decisions, awards or orders of the Labor
Arbiter are final and executory unless appealed to the Commission
by any or both parties within ten (10) calendar days from receipt of
such decisions, awards, or orders.
In case of a judgment involving a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.

Indisputable is the legal doctrine that the appeal of a decision involving a monetary award
in labor cases may be perfected "only upon the posting of a cash or surety bond." The
lawmakers intended the posting of the bond to be an indispensable requirement to perfect an
employer’s appeal.
However, in a number of cases, this Court has relaxed this requirement in order to bring
about the immediate and appropriate resolution of controversies on the merits. Some of
these cases include: "(a) counsel’s reliance on the footnote of the notice of the decision of
the labor arbiter that the aggrieved party may appeal within ten (10) working days; (b)
fundamental consideration of substantial justice; (c) prevention of miscarriage of justice or
of unjust enrichment, as where the tardy appeal is from a decision granting separation pay
which was already granted in an earlier final decision; and (d) special circumstances of the
case combined with its legal merits or the amount and the issue involved."
In Quiambao vs. National Labor Relations Commission, this Court ruled that a relaxation of
the appeal bond requirement could be justified by substantial compliance with the rule.
In Globe General Services and Security Agency vs. National Labor Relations
Commission, the Court observed that the NLRC, in actual practice, allows the reduction of
the appeal bond upon motion of the appellant and on meritorious grounds; hence,
petitioners in that case should have filed a motion to reduce the bond within the
reglementary period for appeal.
That is the exact situation in the case at bar. Here, petitioner claims to have received the
labor arbiter’s Decision on April 6, 1993. On April 16, 1993, it filed, together with its
memorandum on appeal and notice of appeal, a motion to reduce the appeal bond
accompanied by a surety bond for fifty thousand pesos issued by Prudential Guarantee and
Assurance, Inc. Ignoring petitioner’s motion (to reduce bond), Respondent Commission
rendered its assailed Resolution dismissing the appeal due to the late filing of the appeal
bond.
25
Labor Law II Item 2 cases - NLRC
The solicitor general argues for the affirmation of the assailed Resolution for
the sole reason that the appeal bond, even if it was filed on time, was defective, as it
was not in an amount "equivalent to the monetary award in the judgment appealed
from." The Court disagrees.
We hold that petitioner’s motion to reduce the bond is a substantial compliance with
the Labor Code. This holding is consistent with the norm that letter-perfect rules must
yield to the broader interest of substantial justice.25
In Ong v. Court of Appeals,26 the Court held that the bond requirement on appeals
may be relaxed when there is substantial compliance with the Rules of Procedure of
the NLRC or when the appellant shows willingness to post a partial bond. The Court
held that, "While the bond requirement on appeals involving monetary awards has
been relaxed in certain cases, this can only be done where there was substantial
compliance of the Rules or where the appellants, at the very least, exhibited
willingness to pay by posting a partial bond." 27
In the present case, KJ Commercial showed willingness to post a partial
bond.1âwphi1 In fact, it posted a ₱50,000 cash bond. In Ong, the Court held that,
"Petitioner in the said case substantially complied with the rules by posting a partial
surety bond of fifty thousand pesos issued by Prudential Guarantee and Assurance,
Inc. while his motion to reduce appeal bond was pending before the NLRC." 28
Aside from posting a partial bond, KJ Commercial immediately posted the full
amount of the bond when it filed its motion for reconsideration of the NLRC’s 9
March 2009 Decision. In Dr. Postigo v. Philippine Tuberculosis Society, Inc.,29 the
Court held:
x x x [T]he respondent immediately submitted a supersedeas bond with its motion for
reconsideration of the NLRC resolution dismissing its appeal. In Ong v. Court of
Appeals, we ruled that the aggrieved party may file the appeal bond within the ten-day
reglementary period following the receipt of the resolution of the NLRC to forestall

the finality of such resolution. Hence, while the appeal of a decision involving a monetary
award in labor cases may be perfected only upon the posting of a cash or surety bond and
the posting of the bond is an indispensable requirement to perfect such an appeal, a
relaxation of the appeal bond requirement could be justified by substantial compliance with
the rule.30
WHEREFORE, the Court DENIES the petition and AFFIRMS the 29 April 2011
Decision of the Court of Appeals in CA-G.R. SP No. 115851.
SO ORDERED.
G.R. No. 152494 September 22, 2004
MARIANO ONG, doing business under the name and style MILESTONE METAL
MANUFACTURING, petitioner,
vs.
THE COURT OF APPEALS, CONRADO DABAC, BERNABE TAYACTAC,
MANUEL ABEJUELLA, LOLITO ABELONG, RONNIE HERRERO, APOLLO
PAMIAS, JAIME ONGUTAN, NOEL ATENDIDO, CARLOS TABBAL, JOEL
ATENDIDO, BIENVENIDO EBBER, RENATO ABEJUELLA, LEONILO
ATENDIDO, JR., LODULADO FAA and JAIME LOZADA, respondents.
26
Labor Law II Item 2 cases - NLRC
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari assailing the decision1 of the Court of
Appeals in CA-G.R. SP No. 62129, dated October 10, 2001, which dismissed the
petition for certiorari for lack of merit, as well as the resolution, 2 dated March 7, 2002,
denying the motion for reconsideration.
Petitioner is the sole proprietor of Milestone Metal Manufacturing (Milestone), which
manufactures, among others, wearing apparels, belts, and umbrellas. 3 Sometime in
May 1998, the business suffered very low sales and productivity because of the
economic crisis in the country. Hence, it adopted a rotation scheme by reducing the
workdays of its employees to three days a week or less for an indefinite period. 4
On separate dates, the 15 respondents filed before the National Labor Relations
Commission (NLRC) complaints for illegal dismissal, underpayment of wages,
non-payment of overtime pay, holiday pay, service incentive leave pay, 13th month
pay, damages, and attorney’s fees against petitioner. These were consolidated and
assigned to Labor Arbiter Manuel Manasala.
Petitioner claimed that 9 of the 15 respondents were not employees of Milestone but
of Protone Industrial Corporation which, however, stopped its operation due to
business losses. Further, he claims that respondents Manuel Abuela, Lolita Abelong,
Ronnie Herrero, Carlos Tabbal, Conrado Dabac, and Lodualdo Faa were not
dismissed from employment; rather, they refused to work after the rotation scheme
was adopted. Anent their monetary claims, petitioner presented documents showing
that he paid respondents’ minimum wage, 13th month pay, holiday pay, and
contributions to the SSS, Medicare, and Pag-Ibig Funds.5
On November 25, 1999, the Labor Arbiter rendered a decision awarding to the
respondents the aggregate amount of P1,111,200.40 representing their wage

differential, holiday pay, service incentive leave pay and 13th month pay, plus 10% thereof
as attorney’s fees. Further, petitioner was ordered to pay the respondents separation pay
equivalent to ½ month salary for every year of service due to the indefiniteness of the
rotation scheme and strained relations caused by the filing of the complaints. 6
Petitioner filed with the NLRC a notice of appeal with a memorandum of appeal and paid
the docket fees therefor. However, instead of posting the required cash or surety bond, he
filed a motion to reduce the appeal bond. The NLRC, in a resolution dated April 28, 2000,
denied the motion to reduce bond and dismissed the appeal for failure to post cash or surety
bond within the reglementary period.7 Petitioner’s motion for reconsideration was likewise
denied.8
Petitioner filed a petition for certiorari with the Court of Appeals alleging that the NLRC
acted with grave abuse of discretion in dismissing the appeal for non-perfection of appeal
although a motion to reduce appeal bond was seasonably filed. However, the petition was
dismissed and thereafter the motion for reconsideration was likewise dismissed for lack of
merit.9
Hence, this petition for review on the following assignment of errors:
I.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR AND
GRAVE ABUSE OF DISCRETION IN AFFIRMING THE DECISION OF THE NLRC
DISMISSING THE APPEAL OF PETITIONERS (sic) FOR NON-PERFECTION WHEN
A MOTION TO REDUCE APPEAL BOND WAS SEASONABLY FILED WHICH IS
ALLOWED BY THE RULES OF PROCEDURE OF THE NLRC.
II.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR AND
GRAVE ABUSE OF DISCRETION IN AFFIRMING THE DISMISSAL BY NLRC OF
27
Labor Law II Item 2 cases - NLRC
PETITIONER’S APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS
DECISION OF THE LABOR ARBITER AWARDING SEPARATION PAY TO
PRIVATE RESPONDENTS DESPITE THE FINDING THAT THERE WAS NO
ILLEGAL DISMISSAL MADE BY MILESTONE.
III.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR
IN AFFIRMING THE NLRC’S DISMISSAL OF PETITIONER’S APPEAL AND IN
EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR
ARBITER THAT PETITIONER MILESTONE HAS VIOLATED THE MINIMUM
WAGE LAW AND THAT PRIVATE RESPONDENTS WERE UNDERPAID.
IV.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR
IN AFFIRMING THE NLRC’S DISMISSAL OF PETITIONER’S APPEAL AND IN
EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR
ARBITER THAT PETITIONER MILESTONE HAS NOT PAID PRIVATE
RESPONDENTS THEIR SERVICE INCENTIVE LEAVE PAY, 13th MONTH PAY,
AND HOLIDAY PAY.
V.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR
IN AFFIRMING THE NLRC’S DISMISSAL OF PETITIONER’S APPEAL AND IN
EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE LABOR
ARBITER THAT THE EVIDENCE SUBMITTED BY PRIVATE RESPONDENTS
IN SUPPORT OF THEIR CLAIMS ARE NOT SELF-SERVING, IRRELEVANT
AND IMMATERIAL TO THE FACTS AND LAW IN ISSUE IN THIS CASE.10
The petition lacks merit.

Time and again it has been held that the right to appeal is not a natural right or a part of due
process, it is merely a statutory privilege, and may be exercised only in the manner and in
accordance with the provisions of law. The party who seeks to avail of the same must
comply with the requirements of the rules. Failing to do so, the right to appeal is lost. 11
Article 223 of the Labor Code, as amended, sets forth the rules on appeal from the Labor
Arbiter’s monetary award:
ART. 223. Appeal. – Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. x x x.
xxx xxx 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. (Emphasis ours)
The pertinent provisions of Rule VI of the New Rules of Procedure of the NLRC, 12 which
were in effect when petitioner filed his appeal, provide:
Section 1. Periods of Appeal. – Decisions, awards or orders of the Labor Arbiter and the
POEA Administrator shall be 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 of the Labor Arbiter x x x.
xxx xxx xxx
Section 3. Requisites for Perfection of Appeal. – (a) The appeal shall be filed within the
reglementary period as provided in Section 1 of this Rule; shall be under oath with proof of
payment of the required appeal fee and the posting of a cash or surety bond as provided in
28
Labor Law II Item 2 cases - NLRC
Section 5 of this Rule; shall be accompanied by a memorandum of appeal which shall
state the grounds relied upon and the arguments in support thereof; the relief prayed
for; and a statement of the date when the appellant received the appealed decision,
order or award and proof of service on the other party of such appeal.
A mere notice of appeal without complying with the other requisite aforestated shall
not stop the running of the period for perfecting an appeal.
xxx xxx xxx
Section 6. Bond. – In case the decision of the Labor Arbiter, the Regional Director or
his duly authorized Hearing Officer involves a monetary award, an appeal by the
employer shall be perfected only upon the posting of a cash or surety bond, which
shall be in effect until final disposition of the case, issued by a reputable bonding
company duly accredited by the Commission or the Supreme Court in an amount
equivalent to the monetary award, exclusive of damages and attorney’s fees.
The employer, his counsel, as well as the bonding company, shall submit a joint
declaration under oath attesting that the surety bond posted is genuine.
The Commission may, in justifiable cases and upon Motion of the Appellant, reduce
the amount of the bond. The filing of the motion to reduce bond shall not stop the
running of the period to perfect appeal. (Emphasis ours)
In the case at bar, petitioner received the decision of the Labor Arbiter on January 6,
2000. He filed his notice of appeal with memorandum of appeal and paid the
corresponding appeal fees on January 17, 2000, the last day of filing the appeal.
However, in lieu of the required cash or surety bond, he filed a motion to reduce bond
alleging that the amount of P1,427,802,04 as bond is "unjustified and prohibitive" and
prayed that the same be reduced to a "reasonable level." The NLRC denied the motion
and consequently dismissed the appeal for non-perfection. Petitioner now contends

that he was deprived of the chance to post bond because the NLRC took 102 days to decide
his motion.
Petitioner’s argument is unavailing.
While, Section 6, Rule VI of the NLRC’s New Rules of Procedure allows the Commission
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 showing of
meritorious grounds.13 Petitioner’s motion reads:
1. The appeal bond which respondents-appellants will post in this case is P1,427,802.04.
They are precisely questioning this amount as being unjustified and prohibitive under the
premises.
2. The amount of this appeal bond must be reduced to a reasonable level by this Honorable
Office.
WHEREFORE, in view thereof, it is respectfully prayed of this Honorable Office that the
appeal bond of P1,427,802.04 be reduced.14
After careful scrutiny of the motion to reduce appeal bond, we agree with the Court of
Appeals that the NLRC did not act with grave abuse of discretion when it denied
petitioner’s motion for the same failed to either elucidate why the amount of the bond was
"unjustified and prohibitive" or to indicate what would be a "reasonable level."15
In Calabash Garments, Inc. v. NLRC,16 it was held that "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."
Even granting arguendo that petitioner has meritorious grounds to reduce the appeal bond,
the result would have been the same since he failed to post cash or surety bond within the
prescribed period.
29
Labor Law II Item 2 cases - NLRC
The above-cited provisions explicitly provide that an appeal from the Labor Arbiter to
the NLRC must be perfected within ten calendar days from receipt of such decisions,
awards or orders of the Labor Arbiter. In a judgment involving a monetary award, the
appeal shall be perfected only upon (1) proof of payment of the required appeal fee; (2)
posting of a cash or surety bond issued by a reputable bonding company; and (3)
filing of a memorandum of appeal. A mere notice of appeal without complying with
the other requisites mentioned shall not stop the running of the period for perfection of
appeal.17 The posting of cash or surety bond is not only mandatory but jurisdictional
as well, and non-compliance therewith is fatal and has the effect of rendering the
judgment final and executory.18 This requirement is intended to discourage employers
from using the appeal to delay, or even evade, their obligation to satisfy their
employee’s just and lawful claims.19
The intention of the lawmakers to make the bond an indispensable requisite for the
perfection of an appeal by the employer is underscored by the provision that an appeal
by the employer may be perfected only upon the posting of a cash or surety bond. The
word "only" makes it perfectly clear that the lawmakers intended the posting of a cash
or surety bond by the employer to be the exclusive means by which an employer’s
appeal may be perfected.20
The fact that the NLRC took 102 days to resolve the motion will not help petitioner’s
case. The NLRC Rules clearly provide that "the filing of the motion to reduce bond
shall not stop the running of the period to perfect appeal."Petitioner should have
seasonably filed the appeal bond within the ten-day reglementary period following the
receipt of the order, resolution or decision of the NLRC to forestall the finality of such
order, resolution or decision. In the alternative, he should have paid only a moderate
and reasonable sum for the premium, as was held in Biogenerics Marketing and
Research Corporation v. NLRC,21 to wit:
x x x The mandatory filing of a bond for the perfection of an appeal is evident from
the aforequoted provision that the appeal may be perfected only upon the posting of
cash or surety bond. It is not an excuse that the over P2 million award is too much for
 30

Labor Law II Item 2 cases - NLRC

a small business enterprise, like the petitioner company, to shoulder. The law does not
require its outright payment, but only the posting of a bond to ensure that the award
will be eventually paid should the appeal fail. What petitioners have to pay is a
moderate and reasonable sum for the premium for such bond. (Emphasis ours)

While the bond requirement on appeals involving monetary awards has been relaxed in
certain cases, this can only be done where there was substantial compliance of the Rules or
where the appellants, at the very least, exhibited willingness to pay by posting a partial
bond.22 Petitioner’s reliance on the case of Rosewood Processing, Inc. v. NLRC23 is
misplaced. Petitioner in the said case substantially complied with the rules by posting a
partial surety bond of fifty thousand pesos issued by Prudential Guarantee and Assurance,
Inc. while his motion to reduce appeal bond was pending before the NLRC.

In the case at bar, petitioner did not post a full or partial appeal bond within the prescribed
period, thus, no appeal was perfected from the decision of the Labor Arbiter. For this reason,
the decision sought to be appealed to the NLRC had become final and executory and
therefore immutable. Clearly, then, the NLRC has no authority to entertain the appeal, much
less to reverse the decision of the Labor Arbiter. Any amendment or alteration made which
substantially affects the final and executory judgment is null and void for lack of
G.R. Nos. 116476-84 May 21, 1998
jurisdiction, including the entire proceeding held for that purpose. 24
ROSEWOOD PROCESSING, INC., petitioner,
WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed decision
vs.
of the Court of Appeals in CA-G.R. SP No. 62129, dated October 10, 2001, dismissing the
NATIONAL LABOR RELATIONS COMMISSION, NAPOLEON C. MAMON,
petition for certiorari for lack of merit, is AFFIRMED.
ARSENIO GAZZINGAN, ROMEO C. VELASCO, ARMANDO L. BALLON,
VICTOR E. ALDEZA, JOSE L. CABRERA, VETERANS PHILIPPINE SCOUT
No pronouncement as to costs. SECURITY AGENCY, and/or ENGR. SERGIO JAMILA IV, respondents.

SO ORDERED.

PANGANIBAN, J.:
 31

Labor Law II Item 2 cases - NLRC

Under the Labor Code, an employer is solidarily liable for legal ages due security guards for
the period of time they were assigned to it by its contracted security agency. However, in
the absence of proof that the employer itself committed the acts constitutive of illegal
dismissal or conspired with the security agency in the performance of such acts, the
employer shall not be liable for back wages and/or separation pay arising as a consequence
of such unlawful termination.
The Case
These are the legal principles on which this Court bases its resolution of this special civil
action for certiorari, seeking the nullification of the April 28, 1994 Resolution and the July
12, 1994 Order of the National Labor Relations Commission, which dismissed petitioner's
appeal from the labor arbiter's Decision and denied its Motion for Reconsideration,
respectively, in NLRC NCR Case Nos. 00-05-02834-91, 00-08-04630-91, 00-07-03966-91,
00-09-05617-91, 00-07-03967-91, 00-07-04455-91, 00-08-05030-91, 00-11-06389-91, and
00-03-01642-92.
On May 13, 1991, a complaint for illegal dismissal; underpayment of wages; and for
nonpayment of overtime pay, legal holiday pay, premium pay for holiday and rest day,
thirteenth month pay, cash bond deposit, unpaid wages and damages was filed against
Veterans Philippine Scout Security Agency and/or Sergio Jamila IV (collectively referred to
as the "security agency," for brevity). Thereafter, petitioner was impleaded as a third-party
respondent by the security agency. In due course, Labor Arbiter Ricardo C. Nora rendered a
consolidated Decision dated March 26, 1993, which disposed as follows: 1
IN VIEW OF ALL THE FOREGOING, respondents Veterans Philippine Scout Security
Agency, Sergio Jamila IV, and third-party respondent Rosewood Processing, Inc. are
hereby ordered to pay jointly and severally complainants the following amounts, to wit:
1. Napoleon Mamon P126,411.10
2. Arsenio Gazzingan 128,639.71
3. Rodolfo Velasco 147,114.43
4. Armando Ballon 116,894.70
5. Jose L. Cabrera 133,047.81
6. Victor Aldeza 137,046.64
__________
TOTAL P789,154.39
=========
representing their monetary benefits in the amount of SEVEN HUNDRED EIGHTY
NINE THOUSAND ONE HUNDRED FIFTY FOUR PESOS AND 39/100
CENTAVOS (P789,154.39).
Respondents are likewise ordered to pay attorney's fees in the amount of P78,915.43
within ten (10) days from receipt of this Decision.
All other issues are hereby [d]ismissed for failure of the complainants to fully
substantiate their claims.
The appeal filed by petitioner was dismissed by the National Labor Relations
Commission2 in its Resolution promulgated April 28, 1994, for failure of the
petitioner to file the required appeal bond within the reglementary period. 3 Pertinent
portions of the challenged Resolution are herewith quoted:
It appears on record that [petitioner] received their copy of the [labor arbiter's]
decision on April 2, 1993 and subsequently filed a "Notice of Appeal with
Memorandum of Appeal" on April 26, 1993, in violation of Rule VI, Section 1, 3, and
6 of the 1990 New Rules of Procedure of the NLRC . . . .
xxx xxx xxx

Clearly, the appeal filed by the [petitioners] on April 12, 1993 was not perfected within the
reglementary period, and the decision dated March 26, 1993 became final and executory as
of April 23, 1993.
WHEREFORE, the appeal is hereby DISMISSED.
In its motion for reconsideration, petitioner contended that it received a copy of the labor
arbiter's Decision only on April 6, 1993, and that it filed on April 16, 1993 within the
prescribed time a Notice of Appeal with a Memorandum on Appeal, a Motion to Reduce
Appeal Bond and a surety bond issued by Prudential Guarantee and Assurance, Inc. in the
amount of P50,000.4 Though not opposed by the complainants and the security agency, the
arguments stated in the motion were not taken up by Respondent Commission.
Reconsideration was nonetheless denied by Respondent Commission in its Order of July 12,
1994, quoted below:5
Section 14, Rule VII of the NLRC New Rules of Procedure allows [u]s to entertain a
motion for reconsideration only on "palpable or patent" errors [w]e may have committed in
[o]ur disputed April 28, 1994 resolution.
There being no such assignment here, [petitioner's] motion for reconsideration dated May
19, 1994 is hereby DENIED for lack of merit.
Hence, this recourse. 6
In a Resolution dated March 20, 1995, this Court issued a temporary restraining order
enjoining the respondents and their agents from implementing and enforcing the assailed
Resolution and Order until further notice.7
The Facts
Undisputed are the facts of this case, narrated by the labor arbiter as follows:
32
Labor Law II Item 2 cases - NLRC
All the complainants were employed by the [security agency] as security guards:
Napoleon Mamon on October 7, 1989; Arsenio Gazzingan on September 25, 1988;
Rodolfo C. Velasco on January 5, 1987; Armando Ballon on June 28, 1990; Victor
Aldeza on March 21, 1990; and Jose L. Cabrera [in] January 1988.
Napoleon Mamon started working for the [security agency] on October 7, 1989 and
was assigned as office guard for three (3) days without any pay nor allowance as it
was allegedly an on[-the-]job training so there [was] no pay[.] On October 10, 1989,
he was transferred to the residence of Mr. Benito Ong with 12 hours duty a day
receiving a salary very much less than the minimum wage for eight (8) hours work
until February 3, 1990 when he received an order transferring him to Rosewood
Processing, Inc. effective that date . . . ; [a]t Rosewood Processing, Inc., he was
required to render also 12 hours duty every day with a salary of P2,600.00/month. He
was not given his pay for February 1 and 2 by the paymaster of [the security agency]
allegedly because the payroll could not be located so after 3 to 4 times of going back
and forth to [the security agency's] office to get his salary[;] [after] . . . two (2) days he
gave up because he was already spending more than what he could get thru
transportation alone. On May 16, 1991, Rosewood Processing, Inc. asked for the relief
of Mamon and other guards at Rosewood because they came to know that
complainants filed a complaint for underpayment on May 13, 1991 with the National
Labor Relations Commission[.] On May 18 to 19, 1991, [the security agency]
assigned him to their [m]ain [o]ffice. After that, complainant was floated until May 29,
1991 when he was assigned to Mead Johnson Philippines Corporation. [A]t about a
week later, [the security agency] received summons on complainant's complaint for
underpayment and he was called to [the security agency's] office. When he reported,
he was told to sign a "Quitclaim and Waiver['] by Lt. R. Rodriguez because according
to the latter, he [could] only get a measly sum from his complaint with the NLRC and
if he (complainant) [signed] the quitclaim and waiver he [would] be retained at his
present assignment which [was] giving quite a good salary and other benefits but if he
[did] not sign the quitclaim and waiver, he [would] be relieved from his post and
[would] no longer be given any assignment. . . . He was given up to the end of July
1991 to think it over. At the end of July 1991, h[e] was approached by the Security in

Charge A. Azuela and asked him to sign the quitclaim and waiver and when he refused to
sign, he was told that the following day August 1, 1991, he [would have] no more
assignment and should report to their office. Thinking that it was only a joke, he reported
the following day to the detachment commander Mr. A. Yadao and he was told that the
main office . . . relieved him because he did not sign the quitclaim and waiver. He reported
to their office asking for an assignment but he was told by R. Rodriguez that "I no longer
can be given an assignment so I had better resign". He went back several times to the office
of the [security agency] but every time the answer was the same[:] that he better tender his
resignation because he cannot be given any assignment although respondent was recruiting
new guards and posting them.
Arsenio Gazzingan started to work for the [security agency] on September 29, 1988. [Note:
the introductory paragraph stated September 25, 1988.] He was assigned to Purefoods
Breeding Farm at Calauan, Laguna and given a salary of P54.00 a day working eight (8)
hours. After three (3) months, he was given an examination and passed the same. On
December 26, 1988, he was given an increase and was paid P64.00/day working eight (8)
hours; [h]e remained at the same post for 8 months and transferred to Purefoods Feed Mill
at Sta. Rosa, Laguna, with the same salary and the same tour of duty, 8 hours[.] After four
(4) months, he was transferred to Purefoods Grand Perry at Sta. Rosa, Laguna, and after
eleven (11) days on June 1989, he was transferred to Rosewood Processing, Inc. at
Meycauayan, Bulacan and required to work for 12 hours at a salary of P94.00/day for one
year. [In] June 1990, he was assigned at Purefoods DELPAN [to] guard . . . a barge loaded
with corn and rendered 12 hours work/day with a salary of only P148.00/day and after 24
days, he was floated for one month. He reported to [the security agency's] office and was
assigned to Purefoods Breeder Farm in Canlubang rendering 8 hours work per day receiving
only P178.00/day. After 11 days, he asked to be transferred to Manila[.] [B]ecause of the
distance from his home . . . the transfer was approved but instead of being transferred to
Manila, he was assigned to Purefoods B-F-4 in Batangas rendering 12 hours duty/day and
receiving only P148.00 per day until January 28, 1991[;] and again he requested for transfer
which was also approved by the [security agency's] office[,] but since then he was told to
come back again and again. [U]p to the present he has not been given any assignment.
33
Labor Law II Item 2 cases - NLRC
Because of the fact that his family [was] in danger of going hungry, he sought relief
from the NLRC-NCR-Arbitration Branch.
Rodolfo Velasco started working for the [security agency] on January 5, 1987. He was
assigned to PCI Bank Elcano, Tondo Branch, as probationary, and [for] working 8
hours a day for 9 days he received only P400.00. On January 16, 1987, he was
assigned to [the security agency's] headquarters up to January 31, 1987, working 12
hours a day[; he] received only P650.00 for the 16 days. On September 1, 1988, he
was assigned to Imperial Synthetic Rubber Products rendering 12 hours duty per day
until December 31, 1988 and was given a salary of P1,600.00/month. He was later
transferred to various posts like Polypaper Products working 12 hours a day given a
salary of P1,800.00 a month; Paramount Electrical, Inc. working 12 hours a day given
P1,100.00 for 15 days; Rosewood Processing, Inc., rendering 12 hours duty per day
receiving P2,200.00/month until May 16, 1991[;] Alen Engineering rendering 12
hours duty/day receiving P1,100/month; Purefoods Corporation on Delta II rendering
12 hours duty per day received P4,200.00 a month. He was relieved on August 24 and
his salary for the period August 20 to 23 has not been paid by [the security agency.]
He was suspended for no cause at all.
Armando Ballon started as security guard with [the security agency] July 1990 [Note:
the introductory paragraph stated June 28, 1990] and was assigned to Purefoods
Corporation in Marikina for five (5) months and received a salary of P50.00 per day
for 8 hours. He was transferred to Rosewood Processing, Inc. on November 6, 1990
rendering 12 hours duty as [d]etachment [c]ommander and a salary of
P2,700.00/month including P200.00 officer's allowance until May 15, 1991. On May
16, 1991, he applied for sick leave on orders of his doctor for 15 days but the HRM,
Miss M. Andres[,] got angry and crumpled his application for sick leave, that [was]
why he was not able to forward it to the SSS. After 15 days, he came back to the
office of [the security agency] asking for an assignment and he was told that he [was]
already terminated. Complainant found out that the reason why Miss Andres crumpled
his application for sick leave was because of the complaint he previously filed and

was dismissed for failure to appear. He then refiled this case to seek redress from this
Office.
Jose L. Cabrera started working for the [security agency] as security guard January, 1988
and was assigned to Alencor Residence rendering 12 hours duty per day and received a
salary of P2,400.00 a month for 3 months[.] [I]n May, 1988, he was transferred to E & L
Restaurant rendering 12 hours duty per day and receiv[ing] a salary of P1,500.00 per month
for 6 months[.] [I]n January, 1989, he was transferred to Paramount rendering 12 hours duty
per day receiving only P1,800.00 per month for 6 months[.] [I]n July 1989, he was
transferred to Benito Ong['s] residence rendering 12 hours duty per day and receiving a
salary of P1,400.00 per month for 4 months[.] [I]n December, 1989, he was transferred to
Sea Trade International rendering . . . 12 hours duty per day and receiving a salary of
P1,900 per month for 6 months[.] [I]n July, 1990, he was transferred to Holland Pacific &
Paper Mills rendering 8 hours duty per day and receiving a salary of P2,400.00 per month
until September 1990[.] [In] October 1990, he was transferred to RMG residence rendering
12 hours duty per day receiving a salary of P2,200.00 per month for 3 months[.] [In]
February 1991, he was transferred to Purefoods Corporation at Mabini, Batangas rendering
12 hours duty per day with a salary of P3,600.00 per month for only one month because he
was hospitalized due to a stab wound inflicted by his [d]etachment [c]ommander. When he
was discharged from the hospital and after he was examined and declared "fit to work" by
the doctor, he reported back to [the security agency's] office but was given the run-around
[and was told to] "come back tomorrow[.]" [H]e [could] see that [the agency was] posting
new recruits. He then complained to this Honorable Office to seek redress, hiring the
services of a counsel.
Victor Aldeza started working for the [security agency] on March 21, 1990 and was
assigned to Meridian Condominium, rendering 12 hours work per day and receiving a
salary of P1,500.00 per month. Although he knew that the salary was below minimum yet
he persevered because he had spent much to get this job and stayed on until October 15,
1990[.] On October 16, 1990, he was transferred to Rosewood Processing, Inc., rendering
12 hours duty per day and receiving a salary of P2,600.00 per month up to May 15, 1991[.]
On the later part of May 1991, he was assigned to UPSSA (Sandoval Shipyard) rendering
34
Labor Law II Item 2 cases - NLRC
12 hours duty per day receiving a salary of P3,200.00 per month. [Aldeza] complained
to [the security agency] about the salary but [the agency] did not heed him; thus, he
filed his complaint for underpayment[.] [The agency] upon complainant's complaint
for underpayment . . . , instead of adjusting his salary to meet the minimum prescribed
by law[,] relieved him and left him floating[.] . . . When he complained of the
treatment, he was told to resign because he could no longer be given any assignment.
Because of this, complainant was forced to file another complaint for illegal dismissal.
Labor Arbiter's Ruling
The labor arbiter noted the failure of the security agency to present evidence to refute
the complainants' allegation. Instead, it impleaded the petitioner as third-party
respondent, contending that its actions were primarily caused by petitioner's
noncompliance with its obligations under the contract for security services, and the
subsequent cancellation of the said contract.
The labor arbiter held petitioner jointly and severally liable with the security agency
as the complainants' indirect employer under Articles 106, 107 and 109 of the Labor
Code, citing the case of Spartan Security & Detective Agency, Inc. vs. National Labor
Relations Commission.8
Although the security agency could lawfully place the complainants on floating status
for a period not exceeding six months, the act was "illegal" because the former had
issued a newspaper advertisement for new security guards. Since the relation between
the complainants and the agency was already strained, the labor arbiter ordered the
payment of separation pay in lieu of reinstatement.
The award for wage differential, limited back wages and separation pay contained the
following details:
1. Napoleon Mamon
 35

Labor Law II Item 2 cases - NLRC

Wage Differentials P45,959.02 6. Victor Aldeza

Backwages 72,764.38
Separation Pay 7,687.70 P126,411.10 Wage Differentials P49,406.86
_________ Backwages 83,795.93
Separation Pay 3,843.85 P137,046.64
2. Arsenio Gazzingan __________
P789, 154.39
Wage Differentials P24,855.76 ==========
Backwages 96,096.25
Separation Pay 7,687.70 P128,639.71 Ruling of Respondent Commission
__________
As earlier stated, Respondent Commission dismissed petitioner's appeal, because it
3. Rodolfo Velasco was allegedly not perfected within the reglementary ten-day period. Petitioner
received a copy of the labor arbiter's Decision on April 2, 1993, and it filed its
Wage Differentials P66,393.58 Memorandum of Appeal on April 12, 1993. However, it submitted the appeal bond on
Backwages 69,189.30 April 26, 1993, or twelve days after the expiration of the period for appeal per Rule VI,
Separation Pay 11,531.55 P147,114.43 Section 1, 3 and 6 of the 1990 Rules of Procedure of the National Labor Relations
__________ Commission. Thus, it ruled that the labor arbiter's Decision became final and
executory on April 13, 1993.
4. Armando Ballon
In the assailed Order, Respondent Commission denied reconsideration, because
Wage Differentials P31,176.85 petitioner allegedly failed to raise any palpable or patent error committed by said
Backwages 81,874.00 commission.
Separation Pay 3,843.85 P116,894.70
__________ Assignment of Errors

5. Jose Cabrera Petitioner imputes the following errors to Respondent Commission:

Wage Differentials P30,032.63 Respondent NLRC committed grave abuse of discretion amounting to lack of
Backwages 91,483.63 jurisdiction when it dismissed petitioner's appeal despite the fact that the same was
Separation Pay 11,531.55 P133,047.81 perfected within the reglementary period provided by law.
__________

Respondent NLRC committed grave abuse of discretion amounting to lack of jurisdiction
when it dismissed petitioner's appeal despite the clearly meritorious grounds relied upon
therein.
Otherwise stated, the petition raises these two issues: first, whether the appeal from the
labor arbiter to the NLRC was perfected on time; and second, whether petitioner is
solidarily liable with the security agency for the payment of back wages, wage differential
and separation pay.
The Court's Ruling
The petition is impressed with some merit and deserves partial grant.
First Issue: Substantial Compliance with the
Appeal Bond Requirement
The perfection of an appeal within the reglementary period and in the manner prescribed by
law is jurisdictional, and noncompliance with such legal requirement is fatal and effectively
renders the judgment final and executory. 9 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 xxx 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 xxx xxx
36
Labor Law II Item 2 cases - NLRC
Indisputable is the legal doctrine that the appeal of a decision involving a monetary
award in labor cases may be perfected "only upon the posting of a cash or surety
bond." 10 The lawmakers intended the posting of the bond to be an indispensable
requirement to perfect an employer's appeal. 11
However, in a number of cases, this Court has relaxed this requirement in order to
bring about the immediate and appropriate resolution of controversies on the
merits. 12 Some of these cases include: "(a) counsel's reliance on the footnote of the
notice of the decision of the labor arbiter that the aggrieved party may appeal . . .
within ten (10) working days; (b) fundamental consideration of substantial justice; (c)
prevention of miscarriage of justice or of unjust enrichment, as where the tardy appeal
is from a decision granting separation pay which was already granted in an earlier
final decision; and (d) special circumstances of the case combined with its legal merits
or the amount and the issue involved." 13
In Quiambao vs. National Labor Relations Commission, 14 this Court ruled that a
relaxation of the appeal bond requirement could be justified by substantial compliance
with the rule.
In Globe General Services and Security Agency vs. National Labor Relations
Commission, 15 the Court observed that the NLRC, in actual practice, allows the
reduction of the appeal bond upon motion of the appellant and on meritorious grounds;
hence, petitioners in that case should have filed a motion to reduce the bond within the
reglementary period for appeal.
That is the exact situation in the case at bar. Here, petitioner claims to have received
the labor arbiter's Decision on April 6, 1993. 16 On April 16, 1993, it filed, together
with its memorandum on appeal 17 and notice of appeal, a motion to reduce the
appeal bond 18 accompanied by a surety bond for fifty thousand pesos issued by
prudential Guarantee and Assurance, Inc. 19 Ignoring petitioner's motion (to
reduce bond), Respondent Commission rendered its assailed Resolution
dismissing the appeal due to the late filing of the appeal bond.

The solicitor general argues for the affirmation of the assailed Resolution for
the sole reason that the appeal bond, even if it was filed on time, was defective, as it
was not in an amount "equivalent to the monetary award in the judgment appealed
from." The Court disagrees.
We hold that petitioner's motion to reduce the bond is a substantial compliance with
the Labor Code. This holding is consistent with the norm that letter-perfect rules must
yield to the broader interest of substantial justice. 20
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 only be "secundum rationembut also secundum
caritatem." 21 A judicious reading of the memorandum of appeal would have made it
evident to Respondent Commission that the recourse was meritorious. Respondent
Commission acted with grave abuse of discretion in peremptorily dismissing the
appeal without passing upon — in fact, ignoring — the motion to reduce the appeal
bond.
We repeat: Considering the clear merits which appear, res ipsa loquitur, in the appeal
from the labor arbiter's Decision, and the petitioner's substantial compliance with
rules governing appeals, we hold that the NLRC gravely abused its discretion in
dismissing said appeal and in failing to pass upon the grounds alleged in the Motion
for Reconsideration.
Second Issue: Liability of an Indirect Employer
The overriding premise in the labor arbiter's Decision holding the security agency and
the petitioner liable was that said parties offered no evidence refuting or rebutting the
complainants' computation of their monetary claims. The arbiter ruled that petitioner
was liable in solidum with the agency for salary differentials based on Articles 106, 107
and 109 of the Labor Code which hold an employer jointly and severally liable with its
37
Labor Law II Item 2 cases - NLRC
contractor or subcontractor, as if it is the direct employer. We quote said
provisions below:
Art. 106. Contractor or subcontractor. — Whenever an employer enters into a
contract with another person for the performance of the former's work, the
employees of the contractor and of the latter's subcontractor, if any, shall be paid
in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
xxx xxx xxx
Art. 107. Indirect employer. — The provisions of the immediately preceding
Article shall likewise apply to any person, partnership, association or
corporation which, not being an employer, contracts with an independent
contractor for the performance of any work, task, job or project.
Art. 109. Solidary liability. — The provisions of existing laws to the contrary
notwithstanding, every employer or indirect employer shall be held responsible
with his contractor or subcontractor for any violation of any provision of this
Code. For purposes of determining the extent of their civil liability under this
Chapter, they shall be considered as direct employers.
Upon the other hand, back wages and separation pay were awarded because the
complainants were constructively and illegally dismissed by the security agency,
which placed them on floating status and at the same time gave assignments to
newly hired security guards. Noting that the relationship between the security

agency and the complainants was already strained, the labor arbiter granted
separation pay in lieu of reinstatement.
In its memorandum of appeal, petitioner controverts its liability for the mentioned
monetary awards on the following grounds: 22
A. Complainant Jose Cabrera never rendered security services to [petitioner] or was
[n]ever assigned as security guard [for] the latter's business establishment;
B. Complainants Napoleon Mamon, Arsenio Gazzingan, Rodolfo Velasco, Armando
Ballon and Victor Aldeza rendered security services to [petitioner] for a fixed period
and were thereafter assigned to other entities or establishments or were floated or
recalled to the headquarters of Veterans; and,
C. The relationship between [petitioner] and Veterans was governed by a Contract for
Guard Services under which [petitioner] dutifully paid a contract price of P3,500.00 a
month for 12 hour duty per guard and later increased to P4,250.00 a month for 12
hour duty per guard which are within the prevailing rates in the industry and in
accordance with labor standard laws.
The first two grounds are meritorious. Legally untenable, however, is the contention
that petitioner is not liable for any wage differential for the reason that it paid the
employees in accordance with the contract for security services which it had entered
into with the security agency. Notwithstanding the service contract between the
petitioner and the security agency, the former is still solidarily liable to the employees,
who were not privy to said contract, pursuant to the aforecited provisions of the Code.
Labor standard legislations are enacted to alleviate the plight of workers whose wages
barely meet the spiraling costs of their basic needs. They are considered written in
every contract, and stipulations in violation thereof are considered not written.
Similarly, legislated wage increases are deemed amendments to the contract. Thus,
employers cannot hide behind their contracts in order to evade their or their
38
Labor Law II Item 2 cases - NLRC
contractors' or subcontractors' liability for noncompliance with the statutory
minimum wage.
The joint and several liability of the employer or principal was enacted to ensure
compliance with the provisions of the Code, principally those on statutory
minimum wage. The contractor or subcontractor is made liable by virtue of his
or her status as a direct employer, and the principal as the indirect employer of
the contractor's employees. This liability facilitates, if not guarantees, payment of
the workers' compensation, thus, giving the workers ample protection as
mandated by the 1987 Constitution. 23 This is not unduly burdensome to the
employer. Should the indirect employer be constrained to pay the workers, it can
recover whatever amount it had paid in accordance with the terms of the service
contract between itself and the contractor. 24
Withal, fairness likewise dictates that the petitioner should not, however, be held
liable for wage differentials incurred while the complainants were assigned to
other companies. Under these cited provisions of the Labor Code, should the
contractor fail to pay the wages of its employees in accordance with law, the
indirect employer (the petitioner in this case), is jointly and severally liable with
the contractor, but such responsibility should be understood to be limited to the
extent of the work performed under the contract, in the same manner and extent
that he is liable to the employees directly employed by him. This liability of
petitioner covers the payment of the workers' performance of any work, task, job
or project. So long as the work, task, job or project has been performed for
petitioner's benefit or on its behalf, the liability accrues for such period even if,
later on, the employees are eventually transferred or reassigned elsewhere.
We repeat: The indirect employer's liability to the contractor's employees
extends only to the period during which they were working for the petitioner,
and the fact that they were reassigned to another principal necessarily ends such
responsibility. The principal is made liable to his indirect employees, because it
can protect itself from irresponsible contractors by withholding such sums and

paying them directly to the employees or by requiring a bond from the contractor or
subcontractor for this purpose.
Similarly, the solidary liability for payment of back wages and separation pay is
limited, under Article 106, "to the extent of the work performed under the contract";
under Article 107, to "the performance of any work, task, job or project"; and under
Article 109, to "the extent of their civil liability under this Chapter [on payment of
wages]."
These provisions cannot apply to petitioner, considering that the complainants were
no longer working for or assigned to it when they were illegally dismissed.
Furthermore, an order to pay back wages and separation pay is invested with a
punitive character, such that an indirect employer should not be made liable without a
finding that it had committed or conspired in the illegal dismissal.
The liability arising from an illegal dismissal is unlike an order to pay the statutory
minimum wage, because the workers' right to such wage is derived from law. The
proposition that payment of back wages and separation pay should be covered by
Article 109, which holds an indirect employer solidarily responsible with his
contractor or subcontractor for "any violation of any provision of this Code," would
have been tenable if there were proof — there was none in this case — that the
principal/employer had conspired with the contractor in the acts giving rise to the
illegal dismissal.
With the foregoing discussion in mind, we now take up in detail the petitioner's
liability to each of the complainants.
Case No. NCR-00-08-04630-91
Mamon worked for petitioner for a period of a little more than one year beginning
February 3, 1990 until May 16, 1991. Inasmuch as petitioner was his indirect employer
during such rime, it should thus be severally liable for wage differential from the time
39
Labor Law II Item 2 cases - NLRC
of his employment until his relief from duty. He was relieved upon the request of
petitioner, after it had learned of the complaint for underpayment of wages filed
by Mamon and several other security guards.
However, this was not a dismissal from work because Mamon was still working
for the security agency and was immediately assigned, on May 29, 1991, to its
other client, Mead Johnson Philippines. His dismissal came about later, when he
refused to sign a quitclaim and waiver in favor of the security agency. Thus, he
was illegally dismissed by the agency when he was no longer employed by
petitioner, which cannot thus be held liable for back wages and separation pay in
his case.
Napoleon Mamon . . . received an order transferring him to Rosewood
Processing, Inc. effective . . . February 3, 1990; . . . . On May 16, 1991, Rosewood
Processing, Inc. asked for the relief of Mamon and other guards at Rosewood
because they came to know that complainants filed a complaint for
underpayment on May 13, 1991 with the National Labor Relations
Commission[,] . . . After that, complainant was floated until May 29, 1991 when
he was assigned to Mead Johnson Philippines Corporation. . . . [A] week later,
[the security agency] received summons on complainant's complaint for
underpayment and he was called to [the security agency] office. When he
reported, he was told to sign a "Quitclaim and Waiver['] by Lt. R. Rodriguez . . .
and . . . if he [did] not sign the quitclaim and waiver, he [would] be relieved from
his post and [would] no longer be given any assignment. . . . At the end of July
1991, he was approached by the Security in Charge, A. Azuela, . . . [for him] to
sign the quitclaim and waiver[,] and when he refused to sign, he was told that . . .
he ha[d] no more assignment and should report to their office. . . . [H]e reported
the following day to the detachment commander, Mr. A. Yadao and he was told
that the main office ha[d] relieved him . . . . He reported to their office asking for
an assignment but he was told by R. Rodriguez that "I no longer can be given an
assignment so I had better resign." He went back several times to the office of the

[security agency] but every time the answer was the same . . . although respondent was
recruiting new guards and posting them. 25
Case No. NCR-00-07-03966-91
Gazzingan was assigned to petitioner as a security guard for a period of one year. For
said period, petitioner is solidarily liable with the agency for underpayment of wages
based on Articles 106, 107 and 109 of the Code.
Arsenio Gazzingan . . . after eleven (11) days on June 1989, . . . was transferred to
Rosewood Processing, Inc. . . . . [I]n June 1990, he was assigned at Purefoods
DELPAN . . . . After 11 days, he asked to be transferred to Manila because of the
distance from his home and the transfer was approved but instead of being
transferred to Manila, he was assigned to Purefoods B-F-4 in Batangas . . . again he
requested for transfer which was also approved by the [security agency] office but
since then he was told to come back again and again and up to the present he has not
been given any assignment. . . . . 26
His dismissal cannot be blamed on the petitioner. Like Mamon, Gazzingan had
already been assigned to another client of the agency when he was illegally dismissed.
Thus, Rosewood cannot be held liable, jointly and severally with the agency, for back
wages and separation pay.
Case No. NCR-00-07-03967-91
Rodolfo Velasco was assigned to petitioner from December 31, 1988 until May 16,
1991. Thus, petitioner is solidarily liable for wage differentials during such period.
Petitioner is not, however, liable for back wages and separation pay, because Velasco
was no longer working for petitioner at the time of his illegal dismissal.
Rodolfo Velasco started working for the [security agency] on January 5, 1987. . . . [On]
December 31, 1988 . . . he was . . . transferred to various posts like . . . Rosewood
40
Labor Law II Item 2 cases - NLRC
Processing, Inc., . . . until May 16, 1991 . . . . He was relieved on August 24 and
his salary for the period August 20 to 23 has not been paid by [the security
agency]; [h]e was suspended for no cause at all. 27
Case No. NCR-00-07-0445-91
Petitioner was the indirect employer of Ballon during the period beginning
November 6, 1990 until May 15, 1991; thus, it is liable for wage differentials for
said period. However, it is not liable for back wages and separation pay, as there
was no evidence presented to show that it participated in Ballon's illegal
dismissal.
. . . [H]e [Armando Ballon] was transferred to Rosewood Processing, Inc. on
November 6, 1990 rendering 12 hours duty as [d]etachment [c]ommander and
received a salary of P2,700.00/month including P200.00 officer's allowance until
May 15, 1991. On May 16, 1991, he applied for sick leave on orders of his doctor
for 15 days but the HRM, Miss M. Andres[,] got angry and crumpled his
application for sick leave that is why he was not able to forward it to the SSS.
After 15 days, he came back to the office of [the security agency] asking for an
assignment and he was told that he [was] already terminated. Complainant
found out that the reason why Miss Andres crumpled his application for sick
leave was because of the complaint he previously filed and was dismissed for
failure to appear. He then refiled this case to seek redress from this Office. 28
Case No. NCR-00-08-05030-91
Petitioner is liable for wage differentials in favor of Aldeza during the period he
worked with petitioner, that is, October 16, 1990 until May 15, 1991.
. . . On October 16, 1990, he [Aldeza] was transferred to Rosewood Processing,
Inc., . . . up to May 15, 1991[.] On the later part of May 1991, he was assigned to
UPSSA (Sandoval Shipyard) . . . . Complainant [sic] complained to [the security

agency] about the salary but [the security agency] did not heed him; thus, he filed his
complaint for underpayment[.] [The security agency] upon complainant's complaint
for underpayment reacted . . . , instead of adjusting his salary to meet the minimum
prescribed by law[,] relieved him and left him floating[;] and when he complained of
the treatment, he was told to resign because he could no longer be given any
assignment. Because of this, complainant was forced to file another complaint for
illegal dismissal. 29
The cause of Aldeza's illegal dismissal is imputable, not to petitioner, but solely to the
security agency. In Aldeza's case, the solidary liability for back wages and separation
pay arising from Articles 106, 107 and 109 of the Code has no application.
Case No. NCR-00-09-05617-91
Cabrera was an employee of the security agency, but he never rendered security
services to petitioner. This fact is evident in the labor arbiter's findings:
Jose L. Cabrera started working for the [security agency] as [a] security guard on
January, 1988 and was assigned to Alencor Residence . . . . [I]n May, 1988, he was
transferred to E & L, Restaurant . . . [.] [I]n January, 1989, he was transferred to
Paramount . . . [.] [I]n July 1989, he was transferred to Benito Ong['s] residence . . . [.]
[I]n December, 1989, he was transferred to Sea Trade International . . . [.] [I]n July,
1990, he was transferred to Holland Pacific & Paper Mills . . . [.] [I]n October 1990, he
was transferred to RMG [R]esidence . . . [.] [I]n February 1991, he was transferred to
Purefoods Corporation at Mabini, Batangas . . . . When he was discharged from the
hospital and after he was examined and declared "fit to work" by the doctor, he
reported back to [the security agency] office but was given the run-around [and was
told to] "come back tomorrow[,]" although he [could] see that [it was] posting new
recruits. He then complained to this Honorable Office to seek redress, hiring the
services of a counsel. 30
Hence, petitioner is not liable to Cabrera for anything.
41
Labor Law II Item 2 cases - NLRC
In all these cases, however, the liability of the security agency is without question,
as it did not appeal from the Decisions of the labor arbiter and Respondent
Commission.
WHEREFORE, the petition is partially GRANTED. The assailed Decision is
hereby MODIFIED, such that petitioner, with the Security agency, is solidarily
liable to PAY the complainants only wage differentials during the period that the
complainants were actually under its employ, as above detailed. Petitioner is
EXONERATED from the payment of back wages and separation pay.
The temporary restraining order issued earlier is LIFTED, but the petitioner is
deemed liable only for the aforementioned wage differentials, which Respondent
Commission is required to RECOMPUTE within fifteen days from the finality of
this Decision. No costs.
SO ORDERED.
G.R. No. 153859 December 11, 2003
FILIPINAS (Pre-fabricated Bldg.) SYSTEMS "FILSYSTEMS," INC. and
FELIPE A. CRUZ, JR., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and CRESENCIANO
BEBANCO, JUANITO R. BENZON, REY NUALLA, BONIFACIO TORRES,
ERNESTO SINCONEQUE and EMILIO ANEANO, respondents.

DECISION
PUNO, J.:
The facts reveal that a complaint for illegal dismissal and monetary claims for service
incentive leave, 13th month pay and night shift differential was filed by respondents against
petitioners before the National Labor Relations Commission. 1 The complaint was assigned
to Labor Arbiter Donato G. Quinto, Jr. who ordered the parties to file their position paper.
Respondents complied, but not the petitioners despite several warnings and time extensions.
The inaction was construed as a waiver by petitioners of their right to present evidence. 2
The Labor Arbiter decided the complaint on the merit and ruled in favor of respondents. He
sustained their claim of illegal dismissal as petitioners failed to adduce contrary evidence.
Petitioners were ordered to reinstate respondents. The monetary claims of the respondents
were likewise granted.3
Petitioners appealed to the National Labor Relations Commission. For the first time, they
submitted evidence that respondents were project employees and that their dismissal was
due to the discontinuation of the Jaka Tower I project where they were assigned.
Respondents, however, assailed the jurisdiction of the NLRC over the appeal for failure of
the petitioners to file the appeal bond within the ten (10)-day reglementary period. They
further contended that it was too late for petitioners to present evidence in the NLRC.
The NLRC nevertheless assumed jurisdiction over the appeal. Due to the evidence
presented by petitioners on the issue of illegal dismissal, it remanded the case to the Labor
Arbiter for further proceedings.4 Respondents’ motion for reconsideration was denied.5
Respondents then repaired to the Court of Appeals on a Petition for Certiorari. The
appellate court ruled that the NLRC did not have jurisdiction over the appeal since the
appeal bond of the petitioners was filed out of time. It reinstated the decision of the Labor
Arbiter.6 Petitioners’ motion for reconsideration proved futile.
42
Labor Law II Item 2 cases - NLRC
Hence this petition where petitioners raise the following issues:
1. Whether or not the Court of Appeals erred and committed grave abuse of discretion
in finding and ruling that the NLRC has not acquired jurisdiction on the appeal of the
petitioners for submitting an appeal bond seven (7) days beyond the ten (10)-day
reglamentary (sic) period in perfecting an appeal;
2. Whether or not the Court of Appeals erred and committed grave abuse of discretion
in finding and ruling that:
"The remand of the case to the Labor Arbiter due to the conflicting claims of the
parties, comes as a surprise to us. As a quasi-judicial agency vested with jurisdiction
to resolve labor disputes, it is but natural for the NLRC to encounter conflicting
claims while discharging its mandate. To insist on a policy of remanding a case to the
Labor Arbiter each time conflicting claims arise in a case would be an abdication of
duty by the NLRC as conflicts are inherent and integral in all disputes, whether labor
or otherwise.
xxx xxx x x x"
3. Whether or not the Court a quo erred and committed grave abuse of discretion in
giving due course to the private respondent’s petition for certiorari under Rule 65 of
the 1997 Rules on Civil Procedure; and in annulling and setting aside the Resolutions
(of) the NLRC, and reinstating the Decision of the Labor Arbiter ordering the
reinstatement of the private respondents, with full backwages, and monetary awards
for 13th month pay and Service Incentive Leave pay. 7
We affirm. The Labor Code provides a ten (10)-day period from receipt of the
decision of the Arbiter for the filing of an appeal together with an appeal bond if the
decision involves a monetary award in favor of the employees, viz:

ART. 223. Appeal. – Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. x x x
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 xxx xxx
(emphasis supplied)
The NLRC Rules of Procedure8 likewise require the appeal and the appeal bond to be filed
within the ten (10)-day reglementary period:
Section 1. Periods of Appeal. – Decisions, awards, or orders of the Labor Arbiter and the
POEA Administrator shall be 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 of the Labor Arbiter or of the Administrator, and in case of a decision or of the
Regional Director or his duly authorized Hearing Officer within five (5) calendar days from
receipt of such decisions, awards or orders. If the 10th or 5th day, as the case may be, falls
on a Saturday, Sunday or a holiday, the last day to perfect the appeal shall be the next
working day.
xxx xxx xxx
Section 3. Requisites for Perfection of Appeal. – (a) The appeal shall be filed within the
reglementary period as provided in Section 1 of this Rule; shall be under oath with proof of
payment of the required appeal fee and the posting of a cash surety bond as provided in
Section 5 of this Rule (which provides how much and where the appeal fee is to be paid);
shall be accompanied by a memorandum of appeal which shall state the grounds relied upon
43
Labor Law II Item 2 cases - NLRC
and the arguments in support thereof; the relief prayed for; and a statement of the date
when the appellant received the appealed decision, order or award and proof of
service on the other party of such appeal.
A mere notice of appeal without complying with the other requisite aforestated shall
not stop the running of the period for perfecting an appeal.
xxx xxx xxx
Section 7. No Extension of Period. – No motion or request for extension of the period
within which to perfect an appeal shall be allowed.
xxx xxx xxx
We have consistently ruled that payment of the appeal bond is a jurisdictional
requisite for the perfection of an appeal to the NLRC. 9 It is only in rare instances that
the court relaxes the rule upon a showing of substantial compliance with it and to
prevent patent injustice.
In the case at bar, petitioners alleged that they received a copy of the Arbiter’s
decision on October 31, 1998.10 Their memorandum of appeal was dated November 9,
1998, but their appeal bond to stay execution of the decision was executed only on
November 17, 1998.11 The records show no partial payment of the bond was made
during the reglementary period nor was there any explanation for its late filing. Given
these facts, the late filing of the bond divested the NLRC of its jurisdiction to entertain
petitioners’ appeal.
Likewise, we cannot countenance the late submission of petitioners’ evidence with the
NLRC.1âwphi1 Petitioners should have adduced their evidence on the issue of illegal
dismissal before the Labor Arbiter. They failed to do so despite the opportunities
given to them by the Arbiter. It was only when an adverse decision was rendered
against them by the Arbiter that they offered to submit their evidence before the

NLRC refuting respondents’ complaint of illegal dismissal. Such a practice cannot be
tolerated for it will defeat the speedy administration of justice involving our poor workers.
Moreover, it smacks of unfairness.
Yet, this is not all. Petitioners likewise ran roughshod of the procedural rules of the
appellate court. Respondents’ comment alleges that the appellate court already declared its
judgment final and executory. An entry of judgment was made after petitioners’ motion for
reconsideration of the appellate court’s decision was denied on October 31, 2001 and no
petition was filed before this Court. Atty. Rodolfo P. Orticio, however, moved for
cancellation of the entry of judgment on the ground that he is the new counsel of the
petitioners and that he received a copy of the denial of their motion for reconsideration only
on June 19, 2002. He contended that his request for cancellation was filed within the
allowable period. In a resolution dated August 20, 2002 denying the request, the Court of
Appeals ruled that:
From the records, it appears that when the decision and resolution denying the Motion for
Reconsideration dated 31 October 2001 were received, Atty. Orticio was not yet the counsel
for private respondent. In fact, he filed his notice of appearance on 23 November 2001 after
receipt on 9 November 2001 by private respondent’s former counsel, Atty. Louis Acosta, of
the resolution denying the motion for reconsideration. A judgment becomes final provided
there was proper service of notice thereof. In this case, the records clearly show there was
such proper service upon private respondent’s former counsel, Atty. Louis Acosta.
Therefore, the decision of 2 April 2001 did become final and executory, leaving Us no more
discretion to recall the entry of judgment.12
It is thus contended by respondents that the petition at bar should not be allowed as the
decision of the appellate court has already become final.
Again, we agree. Petitioners should have filed the present petition within fifteen days under
Rule 45 of the Rules of Court, viz:
44
Labor Law II Item 2 cases - NLRC
SECTION 1. Filing of petition with Supreme Court. – A party desiring to appeal by
certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on certiorari. The
petition shall raise only questions of law which must be distinctly set forth.
SECTION 2. Time for filing. – The petition shall be filed within fifteen (15) days
from notice of the judgment or final order or resolution appealed from, or of the denial
of the petitioner’s motion for new trial or reconsideration filed in due time after notice
of the judgment. x x x.
Petitioners received a copy of the denial of their motion for reconsideration of the
Court of Appeals’ decision on November 9, 2001. They filed an extension of time to
file the petition at bar on June 16, 2002, alleging that they have a new counsel. We
note, however, that petitioners obtained the services of present counsel on November
23, 2001. Thus, there was ample time for their counsel to appeal to this Court the
adverse ruling of the appellate court. The appeal was not seasonably made by said
counsel and such procedural lapse is binding on petitioners.
IN VIEW WHEREOF, the petition is dismissed. The decision of the Labor Arbiter is
reinstated with the modification that if reinstatement of respondents is not feasible,
they should be paid separation pay in accordance with law.
SO ORDERED.
G.R. No. 150147 January 20, 2004
LYDIA BUENAOBRA, JOSIELYN FIEL, MARGIE MADRID, ROWENA
MIRANDA, JUVY ENDAYA, JUDY CARONAN, JOSEPHINE BARTOLOME,
LITA MACALINAO, MARLITA AMBIL, RIZA AMBIL, ANENCIA RECANA,
LORENA REYES, JULIO BALAGTAS, SALVACION FELISMENA, GINA
SINLAO, MARITA CHAVEZ, JIMENA DRADA, YOLANDA ROLDAN,

RAFAELA OLICIA, ANGELEO FUENTES, EUFROCINA ALMERA, FELICISIMA
DE GUZMAN, ADELINA CALIM, SUSANITA SULAPAS, LOLITA MALICDEM,
TERESITA BORLAZA, ESTER OVERIO, IMELDA AGUIRRE, MARIBEL
BELTRAN, MYLENE TAMAYO, ANNIE GREGORIO, TERESA CLARINO,
TERESA VILLANUEVA, MARIETTA ARCAYA, MILAGROS DAGDAGAN,
PAULINO PREALDE, MONINA VALLEJO, RITA MAGSINO, SOLIDAD LABAY,
MARIA BINARAO, MELCHORA DELA CRUZ, SUSAN BITAS, EMELY
CAYETANO, EMILY DELA CRUZ, ZENAIDA SALAS, BITUIN VALDEZ,
AFRICA GUEVARRA, NELIA MORALES, ELOISA REYES, AIDA CAYETANO,
BENITA CAMPOSANO, ADELIA IGNACIO, NENITA SARCIA, VIOLETA
RONCAL, DOROTEA ALASKA, BLISELDA GALONGAN, SHIRLEY JOCSON,
MARITES VELOZ, ROGELIO CAPUZ, MARDIOLINA ALIOC, MARIETTA
MADRID, LOURDES MERCADO, ARACELLY CERDENOLA, REMEDIOS
TAGNONG, MARISSA SANTOS, JOSEFINA CANALDA, ZENAIDA
DAMANDANTE, CONCHITA BELARMINO, MARIVIC TRINIDAD,
MARGARITA GUMBAN, ANGELES FERNANDEZ, MARIA BERNAL,
MORALINDA DUARTE, IMELDA TUNGOL, ALONA INNOCENCIO, MA.
TERESA CRUZ, ANALIZA GABRIEL, MELODIEN CARANDANG, CRESENCIA
ACEBO, MARILYN CASIM, HERMINIA PINEDA, NORIE TORINO, ERLINDA
TADEO, CECILIA LLAVORE, ANA GINA GALMAN, IMELDA SALARDA,
LUISA SAROL, LOLITA MALICSE, AILEEN PAPANIO, EDITHA GANAL,
RESTIE VISTAL, LUCELYN QUISOY, ESTELA PABIO BRIONES, AUREA
TUBIS, SAMUEL MALICSE, AURORA MISSION, ANALYN CALICA, LEILANI
ALEJAGA, LILIA BRIZUELA, ROSITA FACTOR, MERCEDES MENDOZA,
WARLITO COLOMA, PERLEEN MUI, JOSEPHINE BALDRES, ELENA
MAGDANGAL, IRMA BENGCO, CRISTITA GERALDEZ, ROMEO PANDO,
ESTRELLITA ZILMAR, ANGELITA SANDIG, NENITA LARIOSA, MARITA
PANTI, AURORA HERNANDEZ, DINNA SILVA, EVANGELINE CASIM, LUISA
SOLAYAO, ANNABELLE SY, MARINA REBLENCA, MARITESS GERANDOY,
ELENA AGUDA, PERCY GARCIA, GERARDO TAPIT, AMADOR HADE, MYRA
BORJA, ELVIRA ALBAY, LELIOSA MORANO, VERONICA GUINDAY,
JULIETA ALMAYDA, VILMA SALDO, MAY ANN REPAYO, GLENDA SARAO,
45
Labor Law II Item 2 cases - NLRC
NELLY CARAGA, JOSEPHINE TAQUIQUI, TRINIDAD BARROCA, DULCE
ENDAYA, RIZA TADLIP, NENITA LAGAMAYO, EUFRENCINA ROLDAN,
ELENA VELASQUEZ, MARIVIC DEPANTI, MONINA LOCSIN, ANA
RAMOS, ANICIA LEUTIEJA, JOSEFINA MANUEL, AMALIA DAEP, JULIE
MANGANAAN, ROWENA ANYAYA, LUNINGNING ANYAYA,
CARMENCITA ANYAYA, ROWENA FIEL, VENAMEL BEA, NIDA PABLO,
LOLITA BLANCO, ROSEMARIE MORALES, NATIVIDAD CANETE,
CORAZON GOROSPE, MADONNA RAGONOT, GEMMA DACAL, and
CLARITA MENDOZA,Petitioners,
vs.
LIM KING GUAN, JOHNNY LIM, NGO CHAP, CRISTINA NGO,
GILBERTO LIM, CHENG SEN WANG, HUNG PANG CHING, CHEN HSIU
TSUNG as corporate officers of UNIX INTERNATIONAL EXPORT
CORPORATION, and CHEN HSIU TSUNG, LIM KING GUAN, HUNG PANG
CHING, WANG CHENG SEN, JOHNNY LIM, GILBERTO LIM, NGO CHIAP,
CRISTINA NGO, KATLEEN LIM, MARIE SOLEDAD CLEMENTE,
ROSALINA N. LO, KIM PO GONZALES, and AMELIA NGA as stockholders
of record of UNIX INTERNATIONAL EXPORT CORPORATION, and FUJI
ZIPPER MANUFACTURING CORPORATION, Respondents.
DECISION
CORONA, J.:
This is a petition for review seeking for the reversal of the decision1 of the Court of
Appeals dated May 29, 2001, dismissing the petition for certiorari of Lydia Buenaobra,
et. al. and affirming the orders of the National Labor Relations Commission (NLRC),
Third Division, dated November 27, 1998 and February 15, 1999, which respectively
directed private respondents to post a cash or surety bond and dismissed petitioners’
motion for reconsideration.
The facts follow.

Petitioners were employees of private respondent Unix International Export Corporation
(UNIX), a corporation engaged in the business of manufacturing bags, wallets and the like.
Sometime in 1991 and 1992, petitioners filed several cases against UNIX and its
incorporators and officers for unfair labor practice, illegal lockout/dismissal, underpayment
of wages, holiday pay, proportionate 13th month pay, unpaid wages, interest, moral and
exemplary damages and attorney’s fees.
The cases were consolidated and tried jointly. On February 23, 1993, labor arbiter Jose S.
de Vera rendered a decision:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered
ordering respondent Unix Export Corporation to pay complainants, as follows:
1. ₱5,821,838.40 as backwages;
2. ₱1,484,912.00 as separation pay;
3. ₱527,748.00 as wage differentials;
4. ₱33,830.00 as regular holiday pay differentials; and
5. ₱365,551.95 as proportionate 13th month pay for 1990.
All other claims of the complainants are hereby dismissed for lack of merit. Likewise, the
complaint of Angelina Dimasin is dismissed with prejudice.
There being no appeal by respondents or petitioners, the decision of labor arbiter de Vera
eventually became final and executory. However, petitioners complained that the decision
could not be executed because UNIX allegedly diverted, invested and transferred all its
money, assets and properties to respondent Fuji Zipper Manufacturing Corporation (FUJI)
whose stockholders and officers were also those of UNIX.
46
Labor Law II Item 2 cases - NLRC
Thus, on March 25, 1997, petitioners filed another complaint against respondents
UNIX, its corporate officers and stockholders of record, and FUJI. Petitioners mainly
prayed that respondents UNIX and FUJI be held jointly and severally held liable for
the payment of the monetary awards ordered by labor arbiter de Vera.
On May 31, 1998, labor arbiter Felipe Pati rendered a decision on the second
complaint:
WHEREFORE, judgment is hereby rendered piercing the veil of corporate fiction of
the two respondent sister corporations which by virtue of this Decision are now
considered as mere associations of persons jointly and severally pay the subject
amount of ₱8,233,880.30 out of the properties and unpaid subscription on subscribed
Capital Stock of the Board of Directors, Corporate Officers, Incorporators and
Stockholders of said respondent corporations, plus the amount of ₱3,000,000.00 and
₱1,000,000.00 in the form of moral and exemplary damages, respectively, as well as
10% attorney’s fees from any recoverable amounts.
Other claims are hereby dismissed for lack of merit.
On July 30, 1998, private respondents FUJI, its officers and stockholders filed a
memorandum on appeal and a motion to dispense with the posting of a cash or surety
appeal bond on the ground that they were not the employers of petitioners. They
alleged that they could not be held responsible for petitioners’ claims and to require
them to post the bond would be unjust and unfair, and not sanctioned by law.
On November 27, 1998, the NLRC, Third Division rendered the first assailed order2 :
PREMISES CONSIDERED, instant motion to exempt from filing appeal bond is
hereby DENIED for lack of merit. Respondents are hereby directed to post cash or
surety bond in the amount of ₱8,233,880.30 within an unextendible period of ten (10)
days upon receipt. Otherwise the appeal shall be dismissed.

Petitioners moved for reconsideration of the said order, arguing that the timely posting of an
appeal bond is mandatory for the perfection of an appeal and should be complied with.
On February 15, 1999, the NLRC, Third Division rendered the second assailed order:
WHEREFORE, premises considered, complainants’ Motion for Reconsideration is hereby
DISMISSED for lack of merit. Respondents’ Supplemental Memorandum of Appeal is
admitted. Respondents and counsel are likewise hereby directed to submit a joint
declaration under oath within five (5) days upon receipt. Otherwise the appeal shall be
dismissed.
Petitioners filed a petition in the Court of Appeals imputing grave abuse of discretion to the
NLRC, Third Division when it allowed private respondents to post the mandated cash or
surety bond four months after the filing of their memorandum on appeal.
On May 29, 2001, the Court of Appeals dismissed the petition for lack of merit. Hence, this
petition under Rule 45 of the Rules of Court, seeking to set aside the decision of the Court
of Appeals and praying that the orders dated February 15, 1999 and November 27, 1998 of
the NLRC, Third Division be set aside for having been issued without or in excess of its
jurisdiction and with grave abuse of discretion.
The petition has no merit.
The provision of Article 223 of the Labor Code requiring the posting of bond on appeals
involving monetary awards must be given liberal interpretation in line with the desired
objective of resolving controversies on the merits. 3 If only to achieve substantial justice,
strict observance of the reglementary periods may be relaxed if warranted. The NLRC,
Third Division could not be said to have abused its discretion in requiring the posting of
bond after it denied private respondents’ motion to be exempted therefrom.
It is true that the perfection of an appeal in the manner and within the period prescribed by
law is not only mandatory but jurisdictional, and failure to perfect an appeal has the effect
47
Labor Law II Item 2 cases - NLRC
of making the judgment final and executory. However, technicality should not be
allowed to stand in the way of equitably and completely resolving the rights and
obligations of the parties.4 We have allowed appeals from the decisions of the labor
arbiter to the NLRC, even if filed beyond the reglementary period, in the interest of
justice. The facts and circumstances of the instant case warrant liberality considering
the amount involved and the fact that petitioners already obtained a favorable
judgment on February 23, 1993 against their employer UNIX.1âwphi1
In the same decision which has already become final and executory, labor arbiter de
Vera held:
This Branch upholds and maintains in the absence of substantial evidence to the
contrary that both respondent corporations have legitimate distinct and separate
juridical personalities. Thus, respondent Fuji Zipper Manufacturing, Inc. has been
erroneously impleaded in this case.5
It is only fair and just that respondent FUJI be afforded the opportunity to be heard on
appeal before the NLRC, specially in the light of labor arbiter Pati’s later decision
holding FUJI jointly and severally liable with UNIX in the payment of the monetary
awards adjudged by labor arbiter de Vera against UNIX.
In the absence of any showing that the NLRC committed grave abuse of discretion, or
otherwise acted without or in excess of jurisdiction, this Court is bound by its findings.
Furthermore, the Court of Appeals upheld the assailed orders of the said Commission.
WHEREFORE, the petition is hereby DENIED.
SO ORDERED.
 48

Labor Law II Item 2 cases - NLRC

G.R. No. 166377 November 28, 2008

MA. ISABEL T. SANTOS, represented by ANTONIO P. SANTOS,petitioner,

vs.
SERVIER PHILIPPINES, INC. and NATIONAL LABOR RELATIONS
COMMISSION, respondents.

DECISION

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, seeking to set aside the Court of Appeals (CA) Decision, 1 dated August 12,
2004 and its Resolution2 dated December 17, 2004, in CA-G.R. SP No. 75706.

The facts, as culled from the records, are as follows:

Petitioner Ma. Isabel T. Santos was the Human Resource Manager of respondent
Servier Philippines, Inc. since 1991 until her termination from service in 1999. On
March 26 and 27, 1998, petitioner attended a meeting 3 of all human resource
managers of respondent, held in Paris, France. Since the last day of the meeting
coincided with the graduation of petitioner’s only child, she arranged for a European

vacation with her family right after the meeting. She, thus, filed a vacation leave effective
March 30, 1998.4
On March 29, 1998, petitioner, together with her husband Antonio P. Santos, her son, and
some friends, had dinner at Leon des Bruxelles, a Paris restaurant known for mussels5 as
their specialty. While having dinner, petitioner complained of stomach pain, then vomited.
Eventually, she was brought to the hospital known as Centre Chirurgical de L’Quest where
she fell into coma for 21 days; and later stayed at the Intensive Care Unit (ICU) for 52 days.
The hospital found that the probable cause of her sudden attack was "alimentary allergy," as
she had recently ingested a meal of mussels which resulted in a concomitant uticarial
eruption.6
During the time that petitioner was confined at the hospital, her husband and son stayed
with her in Paris. Petitioner’s hospitalization expenses, as well as those of her husband and
son, were paid by respondent.7
In June 1998, petitioner’s attending physicians gave a prognosis of the former’s condition;
and, with the consent of her family, allowed her to go back to the Philippines for the
continuation of her medical treatment. She was then confined at the St. Luke’s Medical
Center for rehabilitation.8 During the period of petitioner’s rehabilitation, respondent
continued to pay the former’s salaries; and to assist her in paying her hospital bills.
In a letter dated May 14, 1999, respondent informed the petitioner that the former had
requested the latter’s physician to conduct a thorough physical and psychological evaluation
of her condition, to determine her fitness to resume her work at the company. Petitioner’s
physician concluded that the former had not fully recovered mentally and physically. Hence,
respondent was constrained to terminate petitioner’s services effective August 31, 1999. 9
As a consequence of petitioner’s termination from employment, respondent offered a
retirement package which consists of:
49
Labor Law II Item 2 cases - NLRC
Retirement Plan Benefits: P 1,063,841.76
Insurance Pension at 20,000.00/month for 60
months from company-sponsored group life
policy: P 1,200,000.00
Educational assistance: P 465,000.00
Medical and Health Care: P 200,000.0010
Of the promised retirement benefits amounting to P1,063,841.76, only P701,454.89
was released to petitioner’s husband, the balance11 thereof was withheld allegedly for
taxation purposes. Respondent also failed to give the other benefits listed above. 12
Petitioner, represented by her husband, instituted the instant case for unpaid salaries;
unpaid separation pay; unpaid balance of retirement package plus interest; insurance
pension for permanent disability; educational assistance for her son; medical
assistance; reimbursement of medical and rehabilitation expenses; moral, exemplary,
and actual damages, plus attorney’s fees. The case was docketed as NLRC-NCR
(SOUTH) Case No. 30-06-02520-01.
On September 28, 2001, Labor Arbiter Aliman D. Mangandog rendered a
Decision13 dismissing petitioner’s complaint. The Labor Arbiter stressed that
respondent had been generous in giving financial assistance to the petitioner. 14 He
likewise noted that there was a retirement plan for the benefit of the employees. In
denying petitioner’s claim for separation pay, the Labor Arbiter ratiocinated that the
same had already been integrated in the retirement plan established by respondent.
Thus, petitioner could no longer collect separation pay over and above her retirement
benefits.15 The arbiter refused to rule on the legality of the deductions made by
respondent from petitioner’s total retirement benefits for taxation purposes, as the
issue was beyond the jurisdiction of the NLRC.16 On the matter of educational
assistance, the Labor Arbiter found that the same may be granted only upon the

submission of a certificate of enrollment.17 Lastly, as to petitioner’s claim for damages and
attorney’s fees, the Labor Arbiter denied the same as the former’s dismissal was not tainted
with bad faith.18
On appeal to the National Labor Relations Commission (NLRC), the tribunal set aside the
Labor Arbiter’s decision, ruling that:
WHEREFORE, premises considered, Complainant’s appeal is partly GRANTED. The
Labor Arbiter’s decision in the above-entitled case is hereby SET ASIDE. Respondent is
ordered to pay Complainant’s portion of her separation pay covering the following:
1) P200,000.00 for medical and health care from September 1999 to April 2001; and
2) P35,000.00 per year for her son’s high school (second year to fourth year) education
and P45,000.00 per semester for the latter’s four-year college education, upon presentation
of any applicable certificate of enrollment.
SO ORDERED.19
The NLRC emphasized that petitioner was not retired from the service pursuant to law,
collective bargaining agreement (CBA) or other employment contract; rather, she was
dismissed from employment due to a disease/disability under Article 284 20 of the Labor
Code.21 In view of her non-entitlement to retirement benefits, the amounts received by
petitioner should then be treated as her separation pay. 22 Though not legally obliged to give
the other benefits, i.e., educational assistance, respondent volunteered to grant them, for
humanitarian consideration. The NLRC therefore ordered the payment of the other benefits
promised by the respondent. 23 Lastly, it sustained the denial of petitioner’s claim for
damages for the latter’s failure to substantiate the same. 24
Unsatisfied, petitioner elevated the matter to the Court of Appeals which affirmed the
NLRC decision.25
Hence, the instant petition.
50
Labor Law II Item 2 cases - NLRC
At the outset, the Court notes that initially, petitioner raised the issue of whether she
was entitled to separation pay, retirement benefits, and damages. In support of her
claim for separation pay, she cited Article 284 of the Labor Code, as amended.
However, in coming to this Court via a petition for review on certiorari, she
abandoned her original position and alleged that she was, in fact, not dismissed from
employment based on the above provision. She argued that her situation could not be
characterized as a disease; rather, she became disabled. In short, in her petition before
us, she now changes her theory by saying that she is not entitled to separation pay but
to retirement pay pursuant to Section 4,26 Article V of the Retirement Plan, on
disability retirement. She, thus, prayed for the full payment of her retirement benefits
by giving back to her the amount deducted for taxation purposes.
In our Resolution27 dated November 23, 2005 requiring the parties to submit their
respective memoranda, we specifically stated:
No new issues may be raised by a party in the Memorandum and the issues raised in
the pleadings but not included in the Memorandum shall be deemed waived or
abandoned.
Being summations of the parties’ previous pleadings, the Court may consider the
Memoranda alone in deciding or resolving this petition.
Pursuant to the above resolution, any argument raised in her petition, but not raised in
her Memorandum,28 is deemed abandoned.29 Hence, the only issue proper for
determination is the propriety of deducting P362,386.87 from her total benefits, for
taxation purposes. Nevertheless, in order to resolve the legality of the deduction, it is
imperative that we settle, once and for all, the ground relied upon by respondent in
terminating the services of the petitioner, as well as the nature of the benefits given to
her after such termination. Only then can we decide whether the amount deducted by
the respondent should be paid to the petitioner.

Respondent dismissed the petitioner from her employment based on Article 284 of the
Labor Code, as amended, which reads:
Art. 284. DISEASE AS GROUND FOR TERMINATION
An employer may terminate the services of an employee who has been found to be suffering
from any disease and whose continued employment is prohibited by law or is prejudicial to
his health as well as to the health of his co-employees: Provided, That he is paid separation
pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every
year of service, whichever is greater, a fraction of at least six (6) months being considered
as one (1) whole year.
As she was dismissed on the abovementioned ground, the law gives the petitioner the right
to demand separation pay. However, respondent established a retirement plan in favor of all
its employees which specifically provides for "disability retirement," to wit:
Sec. 4. DISABILITY RETIREMENT
In the event that a Member is retired by the Company due to permanent total incapacity or
disability, as determined by a competent physician appointed by the Company, his disability
retirement benefit shall be the Full Member’s Account Balance determined as of the last
valuation date. x x x.30
On the basis of the above-mentioned retirement plan, respondent offered the petitioner a
retirement package which consists of retirement plan benefits, insurance pension, and
educational assistance.31The amount of P1,063,841.76 represented the disability retirement
benefit provided for in the plan; while the insurance pension was to be paid by their insurer;
and the educational assistance was voluntarily undertaken by the respondent as a gesture of
compassion to the petitioner.32
We have declared in Aquino v. National Labor Relations Commission 33 that the receipt of
retirement benefits does not bar the retiree from receiving separation pay. Separation pay is
51
Labor Law II Item 2 cases - NLRC
a statutory right designed to provide the employee with the wherewithal during the
period that he/she is looking for another employment. On the other hand, retirement
benefits are intended to help the employee enjoy the remaining years of his life,
lessening the burden of worrying about his financial support, and are a form of reward
for his loyalty and service to the employer.34 Hence, they are not mutually exclusive.
However, this is only true if there is no specific prohibition against the payment of
both benefits in the retirement plan and/or in the Collective Bargaining Agreement
(CBA).35
In the instant case, the Retirement Plan bars the petitioner from claiming additional
benefits on top of that provided for in the Plan. Section 2, Article XII of the
Retirement Plan provides:
Section 2. NO DUPLICATION OF BENEFITS
No other benefits other than those provided under this Plan shall be payable from the
Fund. Further, in the event the Member receives benefits under the Plan, he shall be
precluded from receiving any other benefits under the Labor Code or under any
present or future legislation under any other contract or Collective Bargaining
Agreement with the Company.36
There being such a provision, as held in Cruz v. Philippine Global Communications,
Inc.,37 petitioner is entitled only to either the separation pay under the law or
retirement benefits under the Plan, and not both.
Clearly, the benefits received by petitioner from the respondent represent her
retirement benefits under the Plan. The question that now confronts us is whether
these benefits are taxable. If so, respondent correctly made the deduction for tax
purposes. Otherwise, the deduction was illegal and respondent is still liable for the
completion of petitioner’s retirement benefits.

Respondent argues that the legality of the deduction from petitioner’s total benefits cannot
be taken cognizance of by this Court since the issue was not raised during the early stage of
the proceedings.38
We do not agree.
Records reveal that as early as in petitioner’s position paper filed with the Labor Arbiter,
she already raised the legality of said deduction, albeit designated as "unpaid balance of the
retirement package." Petitioner specifically averred that P362,386.87 was not given to her
by respondent as it was allegedly a part of the former’s taxable income.39 This is likewise
evident in the Labor Arbiter and the NLRC’s decisions although they ruled that the issue
was beyond the tribunal’s jurisdiction. They even suggested that petitioner’s claim for
illegal deduction could be addressed by filing a tax refund with the Bureau of Internal
Revenue.40
Contrary to the Labor Arbiter and NLRC’s conclusions, petitioner’s claim for illegal
deduction falls within the tribunal’s jurisdiction. It is noteworthy that petitioner demanded
the completion of her retirement benefits, including the amount withheld by respondent for
taxation purposes. The issue of deduction for tax purposes is intertwined with the main
issue of whether or not petitioner’s benefits have been fully given her. It is, therefore, a
money claim arising from the employer-employee relationship, which clearly falls within
the jurisdiction41 of the Labor Arbiter and the NLRC.
This is not the first time that the labor tribunal is faced with the issue of illegal deduction.
In Intercontinental Broadcasting Corporation (IBC) v. Amarilla,42 IBC withheld the salary
differentials due its retired employees to offset the tax due on their retirement benefits. The
retirees thus lodged a complaint with the NLRC questioning said withholding. They averred
that their retirement benefits were exempt from income tax; and IBC had no authority to
withhold their salary differentials. The Labor Arbiter took cognizance of the case, and this
Court made a definitive ruling that retirement benefits are exempt from income tax,
provided that certain requirements are met.
52
Labor Law II Item 2 cases - NLRC
Nothing, therefore, prevents us from deciding this main issue of whether the
retirement benefits are taxable.
We answer in the affirmative.
Section 32 (B) (6) (a) of the New National Internal Revenue Code (NIRC) provides
for the exclusion of retirement benefits from gross income, thus:
(6) Retirement Benefits, Pensions, Gratuities, etc. –
a) Retirement benefits received under Republic Act 7641 and those received by
officials and employees of private firms, whether individual or corporate, in
accordance with a reasonable private benefit plan maintained by the
employer: Provided, That the retiring official or employee has been in the service of
the same employer for at least ten (10) years and is not less than fifty (50) years of age
at the time of his retirement: Provided further, That the benefits granted under this
subparagraph shall be availed of by an official or employee only once. x x x.
Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer
is burdened to prove the concurrence of the following elements: (1) a reasonable
private benefit plan is maintained by the employer; (2) the retiring official or
employee has been in the service of the same employer for at least ten (10) years; (3)
the retiring official or employee is not less than fifty (50) years of age at the time of
his retirement; and (4) the benefit had been availed of only once. 43
As discussed above, petitioner was qualified for disability retirement. At the time of
such retirement, petitioner was only 41 years of age; and had been in the service for
more or less eight (8) years. As such, the above provision is not applicable for failure
to comply with the age and length of service requirements. Therefore, respondent
cannot be faulted for deducting from petitioner’s total retirement benefits the amount
of P362,386.87, for taxation purposes.

WHEREFORE, the petition is DENIED for lack of merit. The Court of Appeals Decision
dated August 12, 2004 and its Resolution dated December 17, 2004, in CA-G.R. SP No.
75706 are AFFIRMED.
SO ORDERED.
G.R. No. 152329 April 22, 2003
ALEJANDRO ROQUERO, petitioner,
vs.
PHILIPPINE AIRLINES, INC., 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
53
Labor Law II Item 2 cases - NLRC
he could smuggle inside the company premises and invited other employees to take
the prohibited drugs. Alipato was unsuccessful, until one day, he was able to persuade
Pabayo to join him in taking the drugs. They met Roquero along the way and he
agreed to join them. Inside the company premises, they locked the door and Alipato
lost no time in preparing the drugs to be used. When they started the procedure of
taking the drugs, armed men entered the room, arrested Roquero and Pabayo and
seized the drugs and the paraphernalia used.1 Roquero and Pabayo were subjected to a
physical examination where the results showed that they were positive of drugs. They
were also brought to the security office of PAL where they executed written
confessions without the benefit of counsel.2
On March 30, 1994, Roquero and Pabayo received a "notice of administrative
charge"3 for violating the PAL Code of Discipline. They were required to answer the
charges and were placed under preventive suspension.
Roquero and Pabayo, in their "reply to notice of administrative charge," 4 assailed their
arrest and asserted that they were instigated by PAL to take the drugs. They argued
that Alipato was not really a trainee of PAL but was placed in the premises to instigate
the commission of the crime. They based their argument on the fact that Alipato was
not arrested. Moreover, Alipato has no record of employment with PAL.
In a Memorandum dated July 14, 1994, Roquero and Pabayo were dismissed by
PAL.5 Thus, they filed a case for illegal dismissal.6
In the Labor Arbiter's decision, the dismissal of Roquero and Pabayo was upheld. The
Labor Arbiter found both parties at fault — PAL for applying means to entice the
complainants into committing the infraction and the complainants for giving in to the
temptation and eventually indulging in the prohibited activity. Nonetheless, the Labor
Arbiter awarded separation pay and attorney's fees to the complainants. 7
While the case was on appeal with the National Labor Relations Commission (NLRC),
the complainants were acquitted by the Regional Trial Court (RTC) Branch 114,

Pasay City, in the criminal case which charged them with "conspiracy for possession and
use of a regulated drug in violation of Section 16, Article III of Republic Act 6425," on the
ground of instigation.
The NLRC ruled in favor of complainants as it likewise found PAL guilty of instigation. It
ordered reinstatement to their former positions but without backwages. 8 Complainants did
not appeal from the decision but filed a motion for a writ of execution of the order of
reinstatement. The Labor Arbiter granted the motion but PAL refused to execute the said
order on the ground that they have filed a Petition for Review before this Court. 9 In
accordance with the case of St. Martin Funeral Home vs. NLRC and Bienvenido
Aricayos,10 PAL's petition was referred to the Court of Appeals.11
During the pendency of the case with the Court of Appeals, PAL, and Pabayo filed a
Motion to Withdraw/Dismiss the case with respect to Pabayo, after they voluntarily entered
into a compromise agreement.12 The motion was granted in a Resolution promulgated by
the Former Thirteenth Division of the Court of Appeals on January 29, 2002. 13
The Court of Appeals later reversed the decision of the NLRC and reinstated the decision of
the Labor Arbiter insofar as it upheld the dismissal of Roquero. However, it denied the
award of separation pay and attorney's fees to Roquero on the ground that one who has been
validly dismissed is not entitled to those benefits.14
The motion for reconsideration by Roquero was denied. In this Petition for Review on
Certiorari under Rule 45, he raises the following issues:
1. Whether or not the instigated employee shall be solely responsible for an action arising
from the instigation perpetrated by the employer;
2. Can the executory nature of the decision, more so the reinstatement aspect of a labor
tribunal's order be halted by a petition having been filed in higher courts without any
restraining order or preliminary injunction having been ordered in the meantime?
54
Labor Law II Item 2 cases - NLRC
3. Would the employer who refused to reinstate an employee despite a writ duly
issued be held liable to pay the salary of the subject employee from the time that he
was ordered reinstated up to the time that the reversed decision was handed down? 15
I
There is no question that petitioner Roquero is guilty of serious misconduct for
possessing and using shabu. He violated Chapter 2, Article VII, section 4 of the PAL
Code of Discipline which states:
"Any employee who, while on company premises or on duty, takes or is under the
influence of prohibited or controlled drugs, or hallucinogenic substances or narcotics
shall be dismissed."16
Serious misconduct is defined as "the transgression of some established and definite
rule of action, a forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment." 17 For serious misconduct to warrant
the dismissal of an employee, it (1) must be serious; (2) must relate to the
performance of the employee's duty; and (3) must show that the employee has become
unit to continue working for the employer.18
It is of public knowledge that drugs can damage the mental faculties of the user.
Roquero was tasked with the repair and maintenance of PAL's airplanes. He cannot
discharge that duty if he is a drug user. His failure to do his job can mean great loss of
lives and properties. Hence, even if he was instigated to take drugs he has no right to
be reinstated to his position. He took the drugs fully knowing that he was on duty and
more so that it is prohibited by company rules. Instigation is only a defense against
criminal liability. It cannot be used as a shield against dismissal from employment
especially when the position involves the safety of human lives.
Petitioner cannot complain he was denied procedural due process. PAL complied with
the twin-notice requirement before dismissing the petitioner. The twin-notice rule

requires (1) the notice which apprises the employee of the particular acts or omissions for
which his dismissal is being sought along with the opportunity for the employee to air his
side, and (2) the subsequent notice of the employer's decision to dismiss him. 19 Both were
given by respondent PAL.
II
Article 223 (3rd paragraph) of the Labor Code20 as amended by Section 12 of Republic Act
No. 6715,21 and Section 2 of the NLRC Interim Rules on Appeals under RA No. 6715,
Amending the Labor Code,22 provide that an order of reinstatement by the Labor Arbiter is
immediately executory even pending appeal. The rationale of the law has been explained
in Aris (Phil.) Inc. vs. NLRC:23
"In authorizing execution pending appeal of the reinstatement aspect of a decision of the
Labor Arbiter reinstating a dismissed or separated employee, the law itself has laid down a
compassionate policy which, once more, vivifies and enhances the provisions of the 1987
Constitution on labor and the working man.
xxx xxx xxx
These duties and responsibilities of the State are imposed not so much to express sympathy
for the workingman as to forcefully and meaningfully underscore labor as a primary social
and economic force, which the Constitution also expressly affirms with equal intensity.
Labor is an indispensable partner for the nation's progress and stability.
xxx xxx xxx
. . . In short, with respect to decisions reinstating employees, the law itself has determined a
sufficiently overwhelming reason for its execution pending appeal.
xxx xxx xxx
55
Labor Law II Item 2 cases - NLRC
. . . Then, by and pursuant to the same power (police power), the State may authorize
an immediate implementation, pending appeal, of a decision reinstating a dismissed or
separated employee since that saving act is designed to stop, although temporarily
since the appeal may be decided in favor of the appellant, a continuing threat or
danger to the survival or even the life of the dismissed or separated employee and his
family."
The order of reinstatement is immediately executory. The unjustified refusal of the
employer to reinstate a dismissed employee entitles him to payment of his salaries
effective from the time the employer failed to reinstate him despite the issuance of a
writ of execution.24 Unless there is a restraining order issued, it is ministerial upon the
Labor Arbiter to implement the order of reinstatement. In the case at bar, no
restraining order was granted. Thus, it was mandatory on PAL to actually reinstate
Roquero or reinstate him in the payroll. Having failed to do so, PAL must pay
Roquero the salary he is entitled to, as if he was reinstated, from the time of the
decision of the NLRC until the finality of the decision of this Court.
We reiterate the rule that technicalities have no room in labor cases where the Rules of
Court are applied only in a suppletory manner and only to effectuate the objectives of
the Labor Code and not to defeat them.25 Hence, even if the order of reinstatement of
the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during the period of appeal
until reversal by the higher court. On the other hand, if the employee has been
reinstated during the appeal period and such reinstatement order is reversed with
finality, the employee is not required to reimburse whatever salary he received for he
is entitled to such, more so if he actually rendered services during the period.
IN VIEW WHEREOF, the dismissal of petitioner Roquero is AFFIRMED, but
respondent PAL is ordered to pay the wages to which Roquero is entitled from the
time the reinstatement order was issued until the finality of this decision.
SO ORDERED.

G.R. NO. 148247 August 7, 2006
AIR PHILIPPINES CORPORATION, Petitioner,
vs.
ENRICO E. ZAMORA, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Only those pleadings, parts of case records and documents which are material and pertinent,
in that they may provide the basis for a determination of a prima facie case of abuse of
discretion, are required to be attached to a petition for certiorari. A petition lacking such
documents contravenes paragraph 2, Section 1, Rule 65 and may be dismissed outright
under Section 3, Rule 46. However, if it is shown that the omission has been rectified by the
subsequent submission of the documents required, the petition must be given due course or
reinstated, if it had been previously dismissed. 1
Other pleadings and portions of case records need not accompany the petition, unless the
court will require them in order to aid it in its review of the case. Omission of these
documents from the petition will not warrant its dismissal. 2
For being allegedly contrary to the foregoing rule, the Resolutions dated January 11, 2001
and May 23, 2001 of the Court of Appeals in CA G.R. SP No. 62388 entitled, "Air
56
Labor Law II Item 2 cases - NLRC
Philippines Corporation, Petitioner, versus, National Labor Relations Commission
(5th Division) and Enrico Zamora, Respondents" are sought to be annuled in the
Petition for Review on Certiorari under Rule 45 that is now before us. 3
The facts are not in dispute.
Enrico Zamora (Zamora) was employed with Air Philippines Corporation (APC) as a
B-737 Flight Deck Crew. 4 He applied for promotion to the position of airplane
captain and underwent the requisite training program. After completing training, he
inquired about his promotion but APC did not act on it; instead, it continued to give
him assignments as flight deck crew. Thus, Zamora filed a Complaint with the Labor
Arbiter. He argued that the act of APC of withholding his promotion rendered his
continued employment with it oppressive and unjust. He therefore asked that APC be
held liable for constructive dismissal. 5
APC denied that it dismissed complainant. It pointed out that, when the complaint was
filed on May 14, 1997, complainant was still employed with it. It was only on May 22,
1997 that complainant stopped reporting for work, not because he was forced to resign,
but because he had joined a rival airline, Grand Air. 6
In a Decision dated September 16, 1998, the Labor Arbiter ruled in favor of Zamora
and declared APC liable for constructive dismissal. It held:
WHEREFORE, judgment is hereby rendered finding respondent liable for illegal
dismissal and ordering the respondent to:
1. Reinstate complainant to his position as B-737 Captain without loss of seniority
right immediately upon receipt thereof (sic);
2. Pay complainant his full backwages from May 15, 1997 up to the promulgation of
this decision on (sic) the amount of P1,732,500 (sic);

3. Pay complainant the amount of TWO MILLION PESOS (P2,000,000.00) in the concept
of moral damages and ONE MILLION PESOS (P1,000,000.00) as exemplary damages;
4. Pay attorney’s fees equivalent to TEN PERCENT (10%) of the total award. (Emphasis
supplied)
SO ORDERED. 7
Zamora immediately filed a Motion for Execution of the order of reinstatement. On
November 6, 1998, the Labor Arbiter granted the motion and issued a writ of execution
directing APC to reinstate complainant to his former position. 8
Meanwhile, APC filed with the NLRC an appeal assailing the finding of the Labor Arbiter
that it was liable for constructive dismissal. 9
The NLRC granted the appeal in a Resolution dated February 10, 1999. It held that no
dismissal, constructive or otherwise, took place for it was Zamora himself who voluntarilly
terminated his employment by not reporting for work and by joining a competitor Grand
Air. 10
However, upon Motion for Reconsideration 11 filed by Zamora, the NLRC, in a Resolution
dated December 17, 1999, modified its earlier Resolution, thus:
WHEREFORE, the instant Motion for Reconsideration filed by complainant is DENIED for
lack of merit and the appealed decision AFFIRMED, while the instant petition for
injunction filed by respondent is GRANTED.
However, respondent Air Philippines Corporation is ordered to pay complainant his unpaid
salaries and allowances in the total amount of P198,502.30 within fifteen (15) days from
receipt of this resolution. 12 (Emphasis supplied)
57
Labor Law II Item 2 cases - NLRC
Displeased with the modification, APC sought a partial reconsideration of the
foregoing resolution 13 but the NLRC denied the same. In its Resolution of October 11,
2000, the NLRC justifed the award of unpaid salaries in this manner:
The grant of salaries and allowances to complainant arose from the order of his
reinstatement which is executory even pending appeal of respondent questioning the
same, pursuant to Article 223 of the Labor Code. In the eyes of the law, complainant
was as if actually working from the date respondent received the copy of the appealed
decision of the Labor Arbiter directing the reinstatement of complainant based on his
finding that the latter was illegally dismissed from employment. 14 (Emphasis
supplied)
This prompted APC (hereafter referred to as petitioner) to file a Petition
for Certiorari with the Court of Appeals to have the December 17, 1999 Resolution of
the NLRC partially annulled and its October 11, 2000 Resolution set aside on the
ground that these were issued with grave abuse of discretion. Petitioner attached to its
petition, certified true copies of the Resolutions of the NLRC dated February 10, 1999,
December 17, 1999 and October 11, 2000 and the Decision of the Labor Arbiter dated
September 16, 1998, and photocopies of the February 24, 1999 notice of garnishment,
March 11, 1999 Order of the Labor Arbiter authorizing Sheriff Fulgencio Lavarez to
implement the writ of execution, and March 23, 1999 Resolution of the NLRC
enjoining implementation of the writ of execution. 15
In a Resolution dated January 11, 2001, the Court of Appeals dismissed the petition
for failure of petitioner to "x x x attach copies of all pleadings (such complaint,
answer, position paper) and other material portions of the record as would support the
allegations therein x x x." 16
Petitioner filed a Motion for Reconsideration from the said Resolution and attached to
it the pleadings and portions of the case record required by the Court of
Appeals. 17 Zamora (hereafter referred to as respondent) filed an Opposition to Motion
for Reconsideration. 18

In a Resolution dated May 23, 2001, the Court of Appeals denied the motion for
reconsideration, thus:
Up for consideration is petitioner’s motion for reconsideration (pages 64-71 of the Rollo) of
this Court’s resolution of dismissal (page 54, id.), which was promulgated on January 11,
2001. Considering private respondent’s undisputed comment on said motion (pages
159-161. id.), the same is hereby DENIED. The resolution of dismissal stands. 19(Emphasis
supplied)
And so, herein Petition for Review on Certiorari under Rule 45. Petitioner would have us
annul and set aside the January 11, 2001 and May 23, 2001 Resolutions of the Court of
Appeals on the following grounds:
A. The Honorable Court of Appeals did not rule in accordance with prevailing laws and
jurisprudence when it dismissed the petition for certiorari filed by petitioner APC on the
ground that petitioner APC supposedly failed to attach copies of all pleadings (such as
complaint, answer, position papers) and other materials portions of the record as would
support the allegations therein.
B. The Honorable Court of Appeals did not rule in accordance with prevailing laws and
jurisprudence when it denied petitioner APC’s motion for reconsideration in spite of the fact
that petitioner APC submitted copies of all pleadings and documents mentioned in its
petition for certiorari.
C. The Honorable Court of Appeals did not rule in accordance with prevailing laws and
jurisprudence when it denied petitioner APC’s motion for reconsideration on a new ground
namely, the alleged failure of petitioner APC to dispute respondent Zamora’s comment
and/or opposition to motion for reconsideration ("Opposition"), in spite of the fact that (i)
the Honorable Court of Appeals did not order petitioner APC to reply to the said opposition;
and (ii) the said Opposition is patently unmeritorious. 20
Respondent filed his Comment to the petition. 21
58
Labor Law II Item 2 cases - NLRC
We grant the petition.
We agree with petitioner on the first and second issues.
In its Resolution of January 11, 2001, the Court of Appeals cited as ground for the
dismissal of the petition for certiorari its lack of certified true copies of the pleadings
and material portions of the case record. This is an erroneous ruling, petitioner insists,
for the deficiency was excusable: pleadings and other portions of the case records
were not attached to the petition because these documents had no bearing on the sole
issue raised therein, which was, whether the NLRC committed grave abuse of
discretion in awarding unpaid salaries to respondent despite having adjudged the latter
at fault for abandonment of employment. 22
Respondent disagrees. He argues that the requirements under Section 1, Rule 65 are
mandatory and jurisdictional; petitioner’s failure to comply with them was a valid
ground for the dismissal of its petition. 23
Both views are actually correct.
Certiorari, being an extraordinary remedy, the party seeking it must strictly observe
the requirements for its issuance. 24 Some of these requirements are found in
paragraph 2, Section 1 of Rule 65, which reads:
SECTION. 1. Petition for certiorari.–
xxxx
The petition shall be accompanied by a certified true copy of the judgment, order or
resolution subject thereof, copies of all pleadings and documents relevant and
pertinent thereto x x x.
These requirements are emphasized in Section 3, Rule 46, thus:

SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. –
xxxx
[The petition] shall be x x x accompanied by a clearly legible duplicate original or certified
true copy of the judgment, order, resolution, or ruling subject thereof, such material portions
of the record as are referred to therein, and other documents relevant or pertinent thereto x x
x.
xxxx
The failure of the petitioner to comply with any of the foregoing requirements shall be
sufficient ground for the dismissal of the petition.
Note that the foregoing rules speak of two sets of documents to be attached to the petition.
The first set consists of certified true copies of the judgment, order or resolution subject of
the petition. Duplicate originals or certified true copies thereof must be appended to enable
the reviewing court to determine whether the court, body or tribunal, which rendered the
same committed grave abuse of discretion. 25 The second set consists of the pleadings,
portions of the case record and other documents which are material and pertinent to the
petition. 26 Mere photocopies thereof may be attached to the petition. 27 It is this second set
of documents which is relevant to this case.
As a general rule, a petition lacking copies of essential pleadings and portions of the case
record may be dismissed.28 This rule, however, is not petrified. As the exact nature of the
pleadings and parts of the case record which must accompany a petition is not specified,
much discretion is left to the appellate court to determine the necessity for copies of
pleading and other documents. 29 There are, however, guideposts it must follow.
First, not all pleadings and parts of case records are required to be attached to the petition.
Only those which are relevant and pertinent must accompany it. The test of relevancy is
whether the document in question will support the material allegations in the petition,
59
Labor Law II Item 2 cases - NLRC
whether said document will make out a prima facie case of grave abuse of discretion
as to convince the court to give due course to the petition. 30
Second, even if a document is relevant and pertinent to the petition, it need not be
appended if it is shown that the contents thereof can also found in another document
already attached to the petition. Thus, if the material allegations in a position paper are
summarized in a questioned judgment, it will suffice that only a certified true copy of
the judgment is attached. 31
Third, a petition lacking an essential pleading or part of the case record may still be
given due course or reinstated (if earlier dismissed) upon showing that petitioner later
submitted the documents required, 32 or that it will serve the higher interest of justice
that the case be decided on the merits. 33
It is readily apparent in this case that the Court of Appeals was overzealous in its
enforcement of the rules.
To begin with, the pleadings and other documents it required of petitioner were not at
all relevant to the petition. It is noted that the only issue raised by petitioner was
whether the NLRC committed grave abuse of discretion in granting respondent unpaid
salaries while declaring him guilty of abandonment of employment. Certainly, copies
of the Resolutions of the NLRC dated February 10, 1999, December 17, 1999 and
October 11, 2000 would have sufficed as basis for the Court of Appeals to resolve this
issue. After all, it is in these Resolutions that the NLRC purportedly made contrary
findings.
There was no need at all for copies of the position papers and other pleadings of the
parties; these would have only cluttered the docket. Besides, a summary of the
material allegations in the position papers can be found in both the September 16,
1998 Decision of the Labor Arbiter and the February 10, 1999 Resolution of the
NLCR. Quick reference to copies of the decision and resolution would have already
satisfied any question the court may have had regarding the pleadings of the parties.

The attachments of petitioner to its petition for certiorari were already sufficient even
without the pleadings and portions of the case record. It was therefore unreasonable of the
Court of Appeals to have dismissed it. More so that petitioner later corrected the purported
deficiency by submitting copies of the pleadings and other documents.
This brings us to the third issue. Again, we agree with petitioner that the Court of Appeals
erred in denying its motion for reconsideration.
In its May 23, 2001 Resolution, the Court of Appeals cited as basis for denying the motion
for reconsideration of petitioner from the January 11, 2000 Resolution the latter’s purported
failure to contravene the Opposition filed by respondent. 34 This is certainly a curious
ground to deny a motion for reconsideration. As pointed out by petitioner, a reply to an
opposition to a motion for reconsideration is not filed as a matter of course. An order from
the court may issue though to direct the movant to file a reply. In this case, no such order
came from the Court of Appeals instructing petitioner to counter the Opposition filed by
respondent. Hence, it cannot be assumed that in failing to file a reply, petitioner, in effect,
conceded to the Opposition of respondent.
It is not as if the Opposition which respondent filed required any answer. The matters
discussed therein were not even germane to the issue raised in the motion for
reconsideration. It was as though respondent passed in silence petitioner’s arguments
against the January 11, 2000 Resolution. If we are to be technical about it, it was instead the
motion for reconsideration of petitioner which was not contravened by respondent. It was
error on the part of the Court of Appeals to have denied it.
In sum, we annul and set aside the January 11, 2000 and May 23, 2001 Resolutions of the
Court of Appeals. There is no more obstacle then to the petition for certiorari taking its
course. However, rather than remand it to the Court of Appeals for resolution, we resolve it
here and now to expedite matters. 35
We hold that the NLRC did not commit grave abuse of discretion in holding petitioner
liable to respondent for P198,502.30.
60
Labor Law II Item 2 cases - NLRC
The premise of the award of unpaid salary to respondent is that prior to the reversal by
the NLRC of the decision of the Labor Arbiter, the order of reinstatement embodied
therein was already the subject of an alias writ of execution even pending appeal.
Although petitioner did not comply with this writ of execution, its intransigence made
it liable nonetheless to the salaries of respondent pending appeal. There is logic in this
reasoning of the NLRC. In Roquerov. Philippine Airlines, Inc., we resolved the same
issue as follows:
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. [36][25] Hence, even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the
part of the employer to reinstate and pay the wages of the dismissed employee
during the period of appeal until reversal by the higher court. On the other hand,
if the employee has been reinstated during the appeal period and such reinstatement
order is reversed with finality, the employee is not required to reimburse whatever
salary he received for he is entitled to such, more so if he actually rendered services
during the period. 37
There is a policy elevated in this ruling. In Aris (Phil.) Inc. v. National Labor
Relations Commission, we held:
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
 61

Labor Law II Item 2 cases - NLRC

threat or danger to the survival or even the life of the dismissed or separated employee and
his family. 38
We cannot do less. The petition for certiorari in CA G.R. SP No. 62388 must be dismissed.
WHEREFORE, the petition is GRANTED.The January 11, 2000 and May 23, 2001
Resolutions of the Court of Appeals are ANNULLED AND SET ASIDE, and the Petition
for Certiorari docketed as CA G.R. SP No. 62388 is DISMISSED. The Resolutions dated
December 17, 1999 and October 11, 2000 of the National Labor Relations Commission
are AFFIRMED.
Costs against petitioner.
SO ORDERED.
An anonymous e-mail was sent to the General Manager of Amkor Technology
Philippines (respondent) detailing allegations of malfeasance on the part of its
supervisory employees Lunesa Lansangan and Rosita Cendaña (petitioners) for
"stealing company time."1 Respondent thus investigated the matter, requiring
petitioners to submit their written explanation. In handwritten letters,
petitioners admitted their wrongdoing.2 Respondent thereupon terminated petitioners
for "extremely serious offenses" as defined in its Code of Discipline, 3 prompting
petitioners to file a complaint for illegal dismissal against it. 4
Labor Arbiter Arthur L. Amansec, by Decision of October 20, 2004, 5 dismissed
petitioners’ complaint, he having found them guilty of
"[s]wiping another employees’ [sic] I.D. card or requesting another employee to swipe
one’s I.D. card to gain personal advantage and/or in the interest of cheating", an
offense of dishonesty punishable as a serious form of misconduct and fraud or breach
of trust under Article 282 of the Labor Code:

xxxx

G.R. No. 177026 January 30, 2009 which allows the dismissal of an employee for a valid cause. (Emphasis and
underscoring supplied)
LUNESA O. LANSANGAN AND ROCITA CENDAñA, Petitioners,
vs. The Arbiter, however, ordered the reinstatement of petitioners to their former
AMKOR TECHNOLOGY PHILIPPINES, INC., Respondent. positions without backwages "as a measure of equitable and compassionate relief"
owing mainly to petitioners’ prior unblemished employment records, show of remorse,
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x harshness of the penalty and defective attendance monitoring system of respondent.6

DECISION Respondent assailed the reinstatement aspect of the Arbiter’s order before the
National Labor Relations Commission (NLRC).
CARPIO MORALES, J.:
 62

Labor Law II Item 2 cases - NLRC

In the meantime, petitioners, without appealing the Arbiter’s finding them guilty of decision) up to June 30, 2005 (date of the NLRC Decision)," citing Article 223 of the
"dishonesty as a form of serious misconduct and fraud or breach of trust," moved for the Labor Code and Roquero v. Philippine Airlines.11
issuance of a "writ of reinstatement." 7
Both parties’ filed their respective motions for partial reconsideration which were
8
After a series of oppositions, motions and orders, the Arbiter issued an alias writ of denied.12 Only petitioners have come to this Court via the present petition for
execution following which respondent’s bank account at Equitable-PCI Bank was garnished. review,13 contending that:
Respondent thereupon moved for the quashal of the alias writ of execution and lifting of the
notice of garnishment, which the Arbiter denied by Order of January 26, 2005, drawing I
respondent to appeal to the NLRC.
WITH ALL DUE RESPECT, THE ORDER OF THE
After consolidating respondent’s appeal from the Labor Arbiter’s order of reinstatement and HONORABLE COURT OF APPEALS LIMITING THE
subsequent appeal/order denying the quashal of the alias writ of execution and lifting of the PAYMENT OF BACKWAGES [TO] THE PETITIONERS FROM
notice of garnishment, the NLRC, by Resolution of June 30, 2005,9 granted respondent’s OCTOBER 20, 2004 (ARBITER DECISION) UP TO JUNE 30,
appeals by deleting the reinstatement aspect of the Arbiter’s decision and setting aside the 2005 (NLRC DECISION) ONLY IS CONTRARY TO THE CASE
Arbiter’s Alias Writ of Execution and Notice of Garnishment. Thus the NLRC disposed as OF ALEJANDRO ROQUERO VS. PHILIPPINE AIRLINES,
follows: INC.[,] G.R. NO. 152329, APRIL [22,] 2003 [AND]

ACCORDINGLY, the appeal is hereby GRANTED. The Labor Arbiter’s Decision dated II
October 20, 2004 is hereby MODIFIED by DELETING the portion that ruled for
appelle[e]s’ reinstatement. Consequently, the Writ of Execution dated November 19, 2004, . . . THE HONORABLE COURT OF APPEALS COMMITTED
the subsequent Alias Writ of Execution dated January 26, 2005, and the Notice of GRAVE ABUSE OF DISCRETION IN CONCLUDING THAT
Garnishment dated January 14, 2005 served upon Equitable PCI Bank by Sheriff Agripina THE PETITIONERS COMMITTED SERIOUS MISCONDUCT,
Sangel are hereby ordered to be SET ASIDE. FRAUD, DISHONESTY AND BREACH OF TRUST. BUT EVEN
ASSUMING THAT THE PETITIONERS COMMITTED THE
SO ORDERED. (Underscoring supplied) SWIPING IN OF IDENTIFICATION CARD, THE PENALTY OF
DISMISSAL IS TOO SEVERE, HARSH AND CONTRARY TO
Petitioners’ motion for reconsideration of the NLRC Resolution having been denied, they ARTICLE 282 OF THE LABOR CODE OF THE PHILIPPINES
filed a petition for certiorari before the Court of Appeals which, by Decision 10 of September AND EXISTING JURISPRUDENCE.14
19, 2006, while affirming the finding that petitioners were guilty of misconduct and the
like, ordered respondent to "pay petitioners their corresponding backwageswithout Since respondent did not appeal from the appellate court’s decision, the said court’s
qualification and deduction for the period covering October 20, 2004 (date of the Arbiter’s order for it to pay backwages to petitioners for the therein specified period has
become final.
 63

Labor Law II Item 2 cases - NLRC

Petitioners highlight the Court’s ruling in Roquero v. Philippine Airlines15 where the therein
employer was ordered to pay the wages to which the therein employee was entitled from the
time the reinstatement order was issued until the finality of this Court’s decision16 in favor
of the therein employee. Thus, petitioners contend that the payment of backwages
should not be computed only up to the promulgation by the NLRC of its decision.
In its Comment,17 respondent asserts that, inter alia, petitioners’ reliance on Roquero is
misplaced in view of the glaring factual differences between said case and the present case.
rights and other privileges and to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement
(Emphasis, underscoring and italics supplied),
petitioners are not entitled to full backwages as their dismissal was not found to be
illegal. Agabon v. NLRC19 so states –– payment of backwages and other benefits is
justified only if the employee was unjustly dismissed.

The petition fails. WHEREFORE, the petition is DENIED.

The decision of the Arbiter finding that petitioners committed "dishonesty as a form of No costs.
serious misconduct and fraud, or breach of trust" had become final, petitioners not having
appealed the same before the NLRC as in fact they even moved for the execution of the SO ORDERED.
reinstatement aspect of the decision. It bears recalling that it was only respondent which
assailed the Arbiter’s decision to the NLRC – to solely question the propriety of the order G.R. Nos. 142732-33 December 4, 2007
for reinstatement, and it succeeded.1avvphil.zw+
MARILOU S. GENUINO, petitioner,
Roquero, as well as Article 22318 of the Labor Code on which the appellate court also vs.
relied, finds no application in the present case. Article 223 concerns itself with an interim NATIONAL LABOR RELATIONS COMMISSION, CITIBANK, N.A.,
relief, granted to a dismissed or separated employee while the case for illegal dismissal is WILLIAM FERGUSON, and AZIZ RAJKOTWALA, respondents.
pending appeal, as what happened in Roquero. It does not apply where there is no finding of
illegal dismissal, as in the present case. x - - - - - - - - - - - - - - - - - - - - - - -x

The Arbiter found petitioners’ dismissal to be valid. Such finding had, as stated earlier, G.R. Nos. 142753-54
become final, petitioners not having appealed it. Following Article 279 which provides:
CITIBANK, N.A., WILLIAM FERGUSON, and AZIZ
xxxx RAJKOTWALA, petitioners,
vs.
In cases of regular employment, the employer shall not terminate the services of an NATIONAL LABOR RELATIONS COMMISSION and MARILOU
employee except for a just cause or when authorized by this Title. An employee who is GENUINO, respondents.
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority

DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks to set aside the September 30,
1999 Decision1 and March 31, 2000 Resolution2 of the Court of Appeals (CA) in the
consolidated cases docketed as CA-G.R. SP Nos. 51532 and 51533. The appellate court
dismissed the parties' petitions involving the National Labor Relations Commission's
(NLRC's) Decision3 and Resolution,4 which held that Marilou S. Genuino was validly
dismissed by Citibank, N.A. (Citibank). The NLRC likewise ordered the payment of
salaries from the time that Genuino was reinstated in the payroll to the date of the NLRC
decision. Upon reconsideration, however, the CA modified its decision and held that
Citibank failed to observe due process in CA-G.R. SP No. 51532; hence, Citibank should
indemnify Genuino in the amount of PhP 5,000. Both parties are now before this Court
assailing portions of the CA's rulings. In G.R. Nos. 142732-33, Genuino assails the CA's
finding that her dismissal was valid. In G.R. Nos. 142753-54, Citibank questions the CA's
finding that Citibank violated Genuino's right to procedural due process and that Genuino
has a right to salaries.
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
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Labor Law II Item 2 cases - NLRC
On August 23, 1993, Citibank sent Genuino a letter charging her with "knowledge
and/or involvement" in transactions "which were irregular or even fraudulent." In the
same letter, Genuino was informed she was under preventive suspension.7
Genuino wrote Citibank on September 13, 1993 and asked the bank the following:
a. Confront our client with the factual and legal basis of your charges, and afford her
an opportunity to explain;
b. Substantiate your charge of fraudulent transactions against our client; or if the same
cannot be substantiated;
c. Correct/repair/compensate the damage you have caused our client.8
On September 13, 1993, Citibank, through Victorino P. Vargas, its Country Senior
Human Resources Officer, sent a letter to Genuino, the relevant portions of which
read:
As you are well aware, the bank served you a letter dated August 23, 1993 advising
you that ongoing investigations show that you are involved and/or know of irregular
transactions which are at the very least in conflict with the bank's interest, and, may
even be fraudulent in nature.
These transactions are those involving Global Pacific and/or Citibank and the
following bank clients, among others:
1. Norma T. de Jesus
2. Carmen Intengan/Romeo Neri
3. Mario Mamon
 65

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4. Vienna Ochoa/IETI violated the conflict of interest rule—either in writing (which could be in the form of a
letter-reply to the September 13, 1993 letter to Citibank, N.A.) or in person, in the
5. William Samara administrative investigation which is set for tomorrow afternoon vis-à-vis the bank
clients/parties mentioned in the letter of Citibank, N.A.
6. Roberto Estandarte
xxxx
7. Rita Browner
2.2. You will certainly not deny that we have already fully discussed with you what is
8. Ma. Redencion Sumpaico meant by the conflict with the bank's interest vis-à-vis the bank clients/parties named
in the September 13, 1993 letter of Citibank to Ms. Genuino. As we have repeatedly
9. Cesar Bautista 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
10. Teddy Keng 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
11. NDC-Guthrie 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
12. Olivia Sy
Genuino did not appear in the administrative investigation held on September 21,
In view of the foregoing, you are hereby directed to explain in writing three (3) days from 1993. Her lawyers wrote a letter to Citibank's counsel asking "what bank clients' funds
your receipt hereof why your employment should not be terminated in view of your were diverted from the bank and invested in other companies, the specific amounts
involvement in these irregular transactions. You are also directed to appear in an involved, the manner by which and the date when such diversions were purportedly
administrative investigation of the matter which is set on Tuesday, Sept. 21, 1993 at 2:00 affected." In reply, Citibank's counsel noted Genuino's failure to appear in the
P.M. at the HR Conference Room, 6th Floor, Citibank Center. You may bring your counsel investigation and gave Genuino up to September 23, 1993 to submit her written
if you so desire.9 explanation. Genuino did not submit her written explanation.11

Genuino's counsel replied through a letter dated September 17, 1993, demanding for a bill
of particulars regarding the charges against Genuino. Citibank's counsel replied on
September 20, 1993, as follows:
1.2. [T]he bank has no intention of converting the administrative investigation of this case
to a full blown trial. What it is prepared to do is give your client, as required by law and
Supreme Court decisions, an opportunity to explain her side on the issue of whether she
On September 27, 1993, Citibank informed Genuino of the result of their investigation.
It found that Genuino with Santos used "facilities of Genuino's family corporation,
namely, Global Pacific, personally and actively participated in the diversion of bank
clients' funds to products of other companies that yielded interests higher than what
Citibank products offered, and that Genuino and Santos realized substantial financial
gains, all in violation of existing company policy and the Corporation Code, which for
your information, carries a penal sanction." 12

Genuino's employment was terminated by Citibank on grounds of (1) serious misconduct,
(2) willful breach of the trust reposed upon her by the bank, and (3) commission of a crime
against the bank.13
On October 15, 1993, Genuino filed before the Labor Arbiter a Complaint 14 against
Citibank docketed as NLRC Case No. 00-10-06450-93 for illegal suspension and illegal
dismissal with damages and prayer for temporary restraining order and/or writ of
preliminary injunction. The Labor Arbiter rendered a Decision15 on May 2, 1994, the
dispositive portion of which reads:
WHEREFORE, finding the dismissal of the complainant Marilou S. Genuino to be without
just cause and in violation of her right to due process, respondent CITIBANK, N.A., and
any and all persons acting on its behalf or by or under their authority are hereby ordered to
reinstate complainant immediately to her former position as Treasury Sales Division Head
or its equivalent without loss of seniority rights and other benefits, with backwages from
August 23, 1993 up to April 30, 1994 in the amount of P493,800.00 (P60,000 x 8.23 mos.)
subject to adjustment until reinstated actually or in the payroll.
Respondents are likewise ordered to pay complainant the amount of 1.5 Million Pesos and
P500,000.00 by way of moral and exemplary damages plus 10% of the total monetary
award as attorney's fees.16
Both parties appealed to the NLRC. The NLRC, in its September 3, 1994 Decision in
NLRC-NCR Case No. 00-10-06450-93 (CA No. 006947-94), reversed the Labor Arbiter's
decision with the following modification:
WHEREFORE, Judgment is hereby rendered (1) SETTING ASIDE the appealed decision
of the Labor Arbiter; (2) DECLARING the dismissal of the complainant valid and legal on
the ground of serious misconduct and breach of trust and confidence and consequently
DISMISSING the complaint a quo; but (3) ORDERING the respondent bank to pay the
salaries due to the complainant from the date it reinstated complainant in the payroll
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(computed at P60,000.00 a month, as found by the Labor Arbiter) up to and until the
date of this decision.
SO ORDERED.17
The parties' motions for reconsideration were denied by the NLRC in a resolution
dated October 28, 1994.18
The Ruling of the Court of Appeals
On December 6, 1994, Genuino filed a petition for certiorari docketed as G.R. No.
118023 with this Court. Citibank's petition for certiorari, on the other hand, was
docketed as G.R. No. 118667. In the January 27, 1999 Resolution, we referred these
petitions to the CA pursuant to our ruling in St. Martin Funeral Home v. NLRC.19
Genuino's petition before the CA was docketed as CA-G.R. SP No. 51532 while
Citibank's petition was docketed as CA-G.R. SP No. 51533. Genuino prayed for the
reversal of the NLRC's decision insofar as it declared her dismissal valid and legal.
Meanwhile, Citibank questioned the NLRC's order to pay Genuino's salaries from the
date of reinstatement until the date of the NLRC's decision.
The CA promulgated its decision on September 30, 1999, denying due course to and
dismissing both petitions.20Both parties filed motions for reconsideration and on
March 31, 2000, the appellate court modified its decision and held:
WHEREFORE, save for the MODIFICATION ordering Citibank, N.A. to pay Ms.
Marilou S. Genuino five thousand pesos (P5,000.00) as indemnity for non-observance
of due process in CA-G.R. SP No. 51532, this Court's 30 September 1999 decision
is REITERATED and AFFIRMED in all other respects.
SO ORDERED.21

Hence, we have this petition.
The Issue
WHETHER OR NOT THE DISMISSAL OF GENUINO IS FOR A JUST CAUSE AND IN
ACCORDANCE WITH DUE PROCESS
In G.R. Nos. 142732-33, Genuino contends that Citibank failed to observe procedural due
process in terminating her employment. This failure is allegedly an indication that there
were no valid grounds in dismissing her. In G.R. Nos. 142753-54, Citibank questions the
ruling that Genuino has a right to reinstatement under Article 223 of the Labor Code.
Citibank contends that the Labor Arbiter's finding is not supported by evidence; thus, the
decision is void. Since a void decision cannot give rise to any rights, Citibank opines that
there can be no right to payroll reinstatement.
The dismissal was for just cause but lacked due process
We affirm that Genuino was dismissed for just cause but without the observance of due
process.
In a string of cases, 22 we have repeatedly said that the requirement of twin notices must be
met. In the recent case of King of Kings Transport, Inc. v. Mamac, we explained:
To clarify, the following should be considered in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees are given
the opportunity to submit their written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance that management
must accord to the employees to enable them to prepare adequately for their defense. This
should be construed as a period of at least five (5) calendar days from receipt of the notice
to give the employees an opportunity to study the accusation against them, consult a union
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Labor Law II Item 2 cases - NLRC
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 conferencewherein the employees will be given the opportunity to: (1)
explain and clarify their defenses to the charge against them; (2) present evidence in
support of their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the chance to
defend themselves personally, with the assistance of a representative or counsel of
their choice. Moreover, this conference or hearing could be used by the parties as an
opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall
serve the employees a written notice of termination indicating that: (1) all
circumstances involving the charge against the employees have been considered; and
(2) grounds have been established to justify the severance of their employment.23
The Labor Arbiter found that Citibank failed to adequately notify Genuino of the
charges against her. On the contrary, the NLRC held that "the function of a 'notice to
explain' is only to state the basic facts of the employer's charges, which x x x the
letters of September 13 and 17, 1993 in question have fully served." 24
We agree with the CA that the dismissal was valid and legal, and with its modification
of the NLRC ruling that PhP 5,000 is due Genuino for failure of Citibank to observe
due process.

The Implementing Rules and Regulations of the Labor Code provide that any employer
seeking to dismiss a worker shall furnish the latter a written notice stating the particular acts
or omissions constituting the grounds for dismissal. 25 The purpose of this notice is to
sufficiently apprise the employee of the acts complained of and enable him/her to prepare
his/her defense.
In this case, the letters dated August 23, September 13 and 20, 1993 sent by Citibank did
not identify the particular acts or omissions allegedly committed by Genuino. The August
23, 1993 letter charged Genuino with having "some knowledge and/or involvement" in
some transactions "which have the appearance of being irregular at the least and may even
be fraudulent." The September 13, 1993 letter, on the other hand, mentioned "irregular
transactions" involving Global Pacific and/or Citibank and 12 bank clients. Lastly, the
September 20, 1993 letter stated that Genuino and "Mr. Dante Santos, using the facilities of
their family corporations (Torrance and Global) appear to have participated in the diversion
of bank clients' funds from Citibank to, and investment thereof in, other companies and that
they made money in the process, in violation of the conflict of law rule [sic]." The extent of
Genuino's alleged knowledge and participation in the diversion of bank's clients' funds,
manner of diversion, and amounts involved; the acts attributed to Genuino that conflicted
with the bank's interests; and the circumstances surrounding the alleged irregular
transactions, were not specified in the notices/letters.
While the bank gave Genuino an opportunity to deny the truth of the allegations in writing
and participate in the administrative investigation, the fact remains that the charges were too
general to enable Genuino to intelligently and adequately prepare her defense.
The two-notice requirement of the Labor Code is an essential part of due process. The first
notice informing the employee of the charges should neither be pro-forma nor vague. It
should set out clearly what the employee is being held liable for. The employee should be
afforded ample opportunity to be heard and not mere opportunity. As explained in King of
Kings Transport, Inc., ample opportunity to be heard is especially accorded the employees
sought to be dismissed after they are specifically informed of the charges in order to give
them an opportunity to refute such accusations leveled against them. Since the notice of
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charges given to Genuino is inadequate, the dismissal could not be in accordance with
due process.
While we hold that Citibank failed to observe procedural due process, we nevertheless
find Genuino's dismissal justified.
Citibank maintains that Genuino was aware of the bank's Corporate Policy Manual
specifically Chapter 3 on "Principles and Policies" with regard to avoiding conflicts of
interest. She had even submitted a Conflict of Interest Survey to Citibank. In that
survey, she denied any knowledge of engaging in transactions in conflict with
Citibank's interests. Citibank, for its part, submitted evidence showing 99% ownership
of Global stocks by Genuino and Santos. In July 1993, Citibank discovered that
Genuino and Santos were instrumental in the withdrawal by bank depositors of PhP
120 million of investments in Citibank. This amount was subsequently invested in
another foreign bank, Internationale Nederlanden Bank, N.V., under the control of
Global and Torrance, another corporation controlled by Genuino and
Santos. 26 Citibank also filed two criminal complaints against Genuino and Santos for
violations of the conflict of interest rule provided in Sec. 31 in relation to Sec.
14427 of the Corporation Code.28
We note also that during the proceedings before the Labor Arbiter, Citibank presented
the following affidavits, with supporting documentary evidence against Genuino:
1) Vic Lim, an officer of Citibank who investigated the anomalies of Genuino and
Santos, concluded that Genuino and Santos realized substantial financial gains out of
the transfer of monies as supported by the following documents:
1) [S]ome of the Term Investment Applications (TIA), Applications for Money
Transfer, all filled up in the handwriting of Ms. Marilou Genuino. These documents
cover/show the transfer of the monies of the Citibank clients from their money
placements/deposits with Citibank, N.A. to Global and/or Torrance.

2) [S]ome of the checks that were drawn by Global and Torrance against their Citibank
accounts in favor of the other companies by which Global and Torrance transferred the
monies of the bank clients to the other companies.
3) [S]ome of the checks drawn by the other companies in favor of Global or Torrance by
which the other companies remitted back to Global and/or Torrance the monies of the bank
clients concerned.
4) [S]ome of the checks drawn by Global and Torrance against their Citibank accounts in
favor of Mr. Dante Santos and Ms. Marilou Genuino, covering the shares of the latter in the
spreads or margins Global and Torrance had derived from the investments of the monies of
the Citibank clients in the other companies.
5) [S]ome of the checks drawn by Torrance and Global in favor of Citibank clients by
which Global and Torrance remitted back to said bank clients their principal investments (or
portions thereof) and the rates of interests realized from their investment placed with the
other companies less the spreads made by Global and/or Torrance, Mr. Dante L. Santos and
Ms. Marilou Genuino.29
In Lim's Reply-Affidavit with attached supporting documents, he stated that out of the
competing money placement activities, Genuino and Santos derived financial gains
amounting to PhP 2,027,098.08 and PhP 2,134,863.80, respectively. 30
2) Marilyn Bautista, a Treasury Sales Specialist in the Treasury Department of the Global
Consumer Bank of Citibank and whose superiors were Genuino and Santos, stated that:
Based on documents that have subsequently come to my knowledge, I realized that the two
(Genuino and Dante L. Santos), with the active cooperation of Redencion Sumpaico (the
Accountant of Global) had … brokered for their own benefits and/or of Global the sale of
the financial products of Citibank called "Mortgage Backed Securities" or MBS and in the
process made money at the expense of the (Citibank) investors and the bank. 31
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Labor Law II Item 2 cases - NLRC
3) Patrick Cheng attested to other transactions from which Genuino, Santos, and
Global brokered the Mortgage Backed Securities (MBS), namely: ICC/Nemesio and
Olivia Sy transaction, San Miguel Corporation/ICC, CIPI/Asiatrust, FAPE, PERAA
and Union Bank, and NDC-Guthrie transactions.32
In her defense, Genuino asserts that Citibank has no evidence of any wrongful act or
omission imputable to her. According to her, she did not try to conceal from the bank
her participation in Global and she even disclosed the information when Global
designated Citibank as its depositary. She avers there was no conflict of interest
because Global was not engaged in Citibank's accepting deposits and granting loans,
nor in money placement activities that compete with Citibank's activities; and neither
does Citibank invest in the outlets used by Global. She claims that the controversy
between Santos and Global had already been amicably resolved in a Compromise
Agreement between the two parties.33
Genuino further asserts that the letter of termination did not indicate what existing
company policy had been violated, and what acts constituted serious misconduct or
willful breach of the trust reposed by the bank. She claims that Lim's testimony that
the checks issued by Global in her name were profits was malicious, hearsay, and
lacked factual basis. She also posits that as to the withdrawals of clients, she could not
possibly dictate on the depositors. She pointed out that the depositors even sent
Citibank a letter dated August 25, 1993 informing the bank that the withdrawals were
made upon their express instructions. Genuino avers the bank's loss of confidence
should have to be proven by substantial evidence, setting out the facts upon which
loss of confidence in the employee may be made to rest. 34
Contrary to the Labor Arbiter's finding, the NLRC found the following facts
supported by the records:
a) Respondent bank has a conflict of interest rule, embodied in Chapter 3 of its
Corporate Policy Manual, prohibiting the officers of the bank from engaging in

business activities, situations or circumstances that are in conflict with the interest of the
bank.
b) Complainant was familiar with said conflict of interest rule of the bank and of her duty to
disclose to the bank in writing any personal circumstances which conflicts or appears to be
in conflict with Citibank's interest.
c) Complainant is a substantial stockholder of Global Pacific, but she did not disclose fact
to the bank.
d) Global Pacific is engaged in money placement business like Citibank, N.A.; that in
carrying out its said money placement business, it used funds belonging to Citibank clients
which were withdrawn from Citibank with participation of complainant and Dante L.
Santos. In one transaction of this nature, P120,000,000.00 belonging to Citibank clients was
withdrawn from Citibank, N.A. and placed in another foreign bank, under the control of
Global Pacific. Said big investment money was returned to Citibank, N.A. only when
Citibank, N.A. filed an injunction suit.
e) Global Pacific also engaged in the brokering of the ABS or MBS, another financial
product of Citibank. It was the duty of complainant Genuino and Dante L. Santos to sell
said product on behalf of Citibank, N.A. and for Citibank N.A.'s benefit. In the brokering of
the ABS or MBS, Global Pacific made substantial profits which otherwise would have gone
to Citibank, N.A. if only they brokered the ABS or MBS for and on behalf of Citibank,
N.A.
Art. 282(c) of the Labor Code provides that an employer may terminate an employment for
fraud or willful breach by the employee of the trust reposed in him/her by his/her employer
or duly authorized representative. In order to constitute as just cause for dismissal, loss of
confidence should relate to acts inimical to the interests of the employer.35 Also, the act
complained of should have arisen from the performance of the employee's duties. 36 For loss
of trust and confidence to be a valid ground for an employee's dismissal, it must be
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substantial and not arbitrary, and must be founded on clearly established facts
sufficient to warrant the employee's separation from work.37 We also held that:
[L]oss of confidence is a valid ground for dismissing an employee and proof beyond
reasonable doubt of the employee's misconduct is not required. It is sufficient if there
is some basis for such loss of confidence or if the employer has reasonable ground to
believe or to entertain the moral conviction that the employee concerned is
responsible for the misconduct and that the nature of his participation therein rendered
him unworthy of the trust and confidence demanded by his position. 38
As Assistant Vice-President of Citibank's Treasury Department, Genuino was tasked
to solicit investments, and peso and dollar deposits for, and keep them in Citibank;
and to sell and/or push for the sale of Citibank's financial products, such as the MBS,
for the account and benefit of Citibank.39 She held a position of trust and confidence.
There is no way she could deny any knowledge of the bank's policies nor her
understanding of these policies as reflected in the survey done by the bank. She could
not likewise feign ignorance of the businesses of Citibank, and of Global and
Torrance. Assuming that Citibank did not engage in the same securities dealt with by
Global and Torrance; nevertheless, it is to the interests of Citibank to retain its clients
and continue investing in Citibank. Curiously, Genuino did not even dissuade the
depositors from withdrawing their monies from Citibank, and was even instrumental
in the transfers of monies from Citibank to a competing bank through Global and
Torrance, the corporations under Genuino's control.
All the pieces of evidence compel us to conclude that Genuino did not have her
employer's interest. The letter of the bank's clients which attested that the withdrawals
from Citibank were made upon their instructions is of no import. It did not explain
why they preferred to invest in Global and Torrance, nor did it mention that Genuino
tried to dissuade them from withdrawing their deposits. Genuino herself admitted her
relationship with some of the depositors in her affidavit, to wit:

6. Contrary to the allegations of Mr. Lim in par. 6.1 up to 8.1 concerning the alleged
scheme employed in the questioned transactions, insinuating an "in" and "out" movement of
funds of the seven (7) depositors, the truth is that after said "depositors"
instructed/authorized us to effect the withdrawal of their respective monies from
Citibank to attain the common goal of higher yields utilizing Global as the vehicle for
bulk purchases of securities or papers not dealt with/offered by Citibank, said pooled
investment remained with Global, and were managed through Global for over a year until
the controversy arose;
10. The seven (7) "depositors" mentioned in Mr. Lim's Affidavits are the long-time
friends of affiant Genuino who had formed a loosely constituted investment group for
purposes of realizing higher yields derivable from pooled investments, and as the advisor of
the group she had in effect chosen Citibank as the initial repository of their respective
monies prior to the implementation of plans for pooled investments under Global. Hence,
she had known and dealt with said "depositors" before they became substantial depositors
of Citibank. She did not come across them because of Citibank. 40 (Emphasis supplied.)
All told, Citibank had valid grounds to dismiss Genuino on ground of loss of confidence.
In view of Citibank's failure to observe due process, however, nominal damages are in order
but the amount is hereby raised to PhP 30,000 pursuant to Agabon v. NLRC. The NLRC's
order for payroll reinstatement is set aside.
In Agabon, we explained:
The violation of the petitioners' right to statutory due process by the private respondent
warrants the payment of indemnity in the form of nominal damages. The amount of such
damages is addressed to the sound discretion of the court, taking into account the relevant
circumstances. Considering the prevailing circumstances in the case at bar, we deem it
proper to fix it at P30,000.00. We believe this form of damages would serve to deter
employers from future violations of the statutory due process rights of employees. At the
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very least, it provides a vindication or recognition of this fundamental right granted to
the latter under the Labor Code and its Implementing Rules. 41
Thus, the award of PhP 5,000 to Genuino as indemnity for non-observance of due
process under the CA's March 31, 2000 Resolution in CA-G.R. SP No. 51532 is
increased to PhP 30,000.
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.
G.R. No. 164856 January 20, 2009
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JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners,
vs.
PHILIPPINE AIRLINES, INC., Respondent.
DECISION
CARPIO MORALES, J.:
Petitioners Juanito A. Garcia and Alberto J. Dumago assail the December 5, 2003
Decision and April 16, 2004 Resolution of the Court of Appeals 1 in CA-G.R. SP No.
69540 which granted the petition for certiorari of respondent, Philippine Airlines, Inc.
(PAL), and denied petitioners’ Motion for Reconsideration, respectively. The
dispositive portion of the assailed Decision reads:
WHEREFORE, premises considered and in view of the foregoing, the instant petition
is hereby GIVEN DUE COURSE. The assailed November 26, 2001 Resolution as
well as the January 28, 2002 Resolution of public respondent National Labor
Relations Commission [NLRC] is hereby ANNULLED and SET ASIDE for having
been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.
Consequently, the Writ of Execution and the Notice of Garnishment issued by the
Labor Arbiter are hereby likewise ANNULLED and SET ASIDE.
SO ORDERED.2
The case stemmed from the administrative charge filed by PAL against its
employees-herein petitioners3 after they were allegedly caught in the act of sniffing
shabu when a team of company security personnel and law enforcers raided the PAL
Technical Center’s Toolroom Section on July 24, 1995.
After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the
PAL Code of Discipline,4prompting them to file a complaint for illegal dismissal and
damages which was, by Decision of January 11, 1999, 5resolved by the Labor Arbiter

in their favor, thus ordering PAL to, inter alia, immediately comply with the reinstatement
aspect of the decision.
Prior to the promulgation of the Labor Arbiter’s decision, the Securities and Exchange
Commission (SEC) placed PAL (hereafter referred to as respondent), which was suffering
from severe financial losses, under an Interim Rehabilitation Receiver, who was
subsequently replaced by a Permanent Rehabilitation Receiver on June 7, 1999.
From the Labor Arbiter’s decision, respondent appealed to the NLRC which, by Resolution
of January 31, 2000, reversed said decision and dismissed petitioners’ complaint for lack of
merit.6
Petitioners’ Motion for Reconsideration was denied by Resolution of April 28, 2000 and
Entry of Judgment was issued on July 13, 2000.7
Subsequently or on October 5, 2000, the Labor Arbiter issued a Writ of Execution (Writ)
respecting the reinstatement aspect of his January 11, 1999 Decision, and on October 25,
2000, he issued a Notice of Garnishment (Notice). Respondent thereupon moved to quash
the Writ and to lift the Notice while petitioners moved to release the garnished amount.
In a related move, respondent filed an Urgent Petition for Injunction with the NLRC which,
by Resolutions of November 26, 2001 and January 28, 2002, affirmed the validity of the
Writ and the Notice issued by the Labor Arbiter but suspended and referred the action to the
Rehabilitation Receiver for appropriate action.
Respondent elevated the matter to the appellate court which issued the herein challenged
Decision and Resolution nullifying the NLRC Resolutions on two grounds, essentially
espousing that: (1) a subsequent finding of a valid dismissal removes the basis for
implementing the reinstatement aspect of a labor arbiter’s decision (the first ground),
and (2) the impossibility to comply with the reinstatement order due to corporate
rehabilitation provides a reasonable justification for the failure to exercise the options under
Article 223 of the Labor Code (the second ground).
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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 PAL’s appeal to the NLRC, the same should have been suspended
pending the rehabilitation proceedings. The Labor Arbiter, the NLRC, as well as the
Court of Appeals should have abstained from resolving petitioners’ case for illegal
dismissal and should instead have directed them to lodge their claim before PAL’s
receiver.
However, to still require petitioners at this time to re-file their labor claim against
PAL under peculiar circumstances of the case– that their dismissal was eventually
held valid with only the matter of reinstatement pending appeal being the issue– this
Court deems it legally expedient to suspend the proceedings in this case.
WHEREFORE, the instant petition is PARTIALLY GRANTED in that the instant
proceedings herein are SUSPENDED until further notice from this Court.
Accordingly, respondent Philippine Airlines, Inc. is hereby DIRECTED to quarterly
update the Court as to the status of its ongoing rehabilitation. No costs.
SO ORDERED.8 (Italics in the original; underscoring supplied)
By Manifestation and Compliance of October 30, 2007, respondent informed the
Court that the SEC, by Order of September 28, 2007, granted its request to exit from
rehabilitation proceedings.9
In view of the termination of the rehabilitation proceedings, the Court now proceeds
to resolve the remaining issuefor consideration, which is whether petitioners may
collect their wages during the period between the Labor Arbiter’s order of
reinstatement pending appeal and the NLRC decision overturning that of the Labor
Arbiter, now that respondent has exited from rehabilitation proceedings.

Amplification of the First Ground
The appellate court counted on as its first ground the view that a subsequent finding of a
valid dismissal removes the basis for implementing the reinstatement aspect of a labor
arbiter’s decision.
On this score, the Court’s attention is drawn to seemingly divergent decisions concerning
reinstatement pending appeal or, particularly, the option of payroll reinstatement. On the
one hand is the jurisprudential trend as expounded in a line of cases including Air
Philippines Corp. v. Zamora,10 while on the other is the recent case of Genuino v. National
Labor Relations Commission.11 At the core of the seeming divergence is the application of
paragraph 3 of Article 223 of the Labor Code which reads:
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be executory,
pending appeal. The employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the option of the
employer, merely reinstated in the payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided herein. (Emphasis and underscoring supplied)
The view as maintained in a number of cases is that:
x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it
is obligatory on the part of the employer to reinstate and pay the wages of the
dismissed employee during the period of appeal until reversal by the higher court. On
the other hand, if the employee has been reinstated during the appeal period and such
reinstatement order is reversed with finality, the employee is not required to reimburse
whatever salary he received for he is entitled to such, more so if he actually rendered
services during the period.12 (Emphasis in the original; italics and underscoring supplied)
In other words, a dismissed employee whose case was favorably decided by the Labor
Arbiter is entitled to receive wages pending appeal upon reinstatement, which is
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immediately executory. Unless there is a restraining order, it is ministerial upon the
Labor Arbiter to implement the order of reinstatement and it is mandatory on the
employer to comply therewith.13
The opposite view is articulated in Genuino which states:
If the decision of the labor arbiter is later reversed on appeal upon the finding that the
ground for dismissal is valid, then the employer has the right to require the
dismissed employee on payroll reinstatement to refund the salaries s/he
received while the case was pending appeal, or it can be deducted from the accrued
benefits that the dismissed employee was entitled to receive from his/her employer
under existing laws, collective bargaining agreement provisions, and company
practices. However, if the employee was reinstated to work during the pendency of the
appeal, then the employee is entitled to the compensation received for actual services
rendered without need of refund.
Considering that Genuino was not reinstated to work or placed on payroll
reinstatement, and her dismissal is based on a just cause, then she is not entitled to be
paid the salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC
Decision.14 (Emphasis, italics and underscoring supplied)
It has thus been advanced that there is no point in releasing the wages to petitioners
since their dismissal was found to be valid, and to do so would constitute unjust
enrichment.
Prior to Genuino, there had been no known similar case containing a dispositive
portion where the employee was required to refund the salaries received on payroll
reinstatement. In fact, in a catena of cases,15 the Court did not order the refund of
salaries garnished or received by payroll-reinstated employees despite a subsequent
reversal of the reinstatement order.

The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise
render inutile the rationale of reinstatement pending appeal.
x x x [T]he law itself has laid down a compassionate policy which, once more, vivifies and
enhances the provisions of the 1987 Constitution on labor and the working man.
xxxx
These duties and responsibilities of the State are imposed not so much to express sympathy
for the workingman as to forcefully and meaningfully underscore labor as a primary social
and economic force, which the Constitution also expressly affirms with equal intensity.
Labor is an indispensable partner for the nation's progress and stability.
xxxx
x x x In short, with respect to decisions reinstating employees, the law itself has determined
a sufficiently overwhelming reason for its execution pending appeal.
xxxx
x x x Then, by and pursuant to the same power (police power), the State may authorize an
immediate implementation, pending appeal, of a decision reinstating a dismissed or
separated employee since that saving act is designed to stop, although temporarily since the
appeal may be decided in favor of the appellant, a continuing threat or danger to the
survival or even the life of the dismissed or separated employee and his family.16
The social justice principles of labor law outweigh or render inapplicable the civil law
doctrine of unjust enrichment espoused by Justice Presbitero Velasco, Jr. in his Separate
Opinion. The constitutional and statutory precepts portray the otherwise "unjust" situation
as a condition affording full protection to labor.
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Even outside the theoretical trappings of the discussion and into the mundane realities
of human experience, the "refund doctrine" easily demonstrates how a favorable
decision by the Labor Arbiter could harm, more than help, a dismissed employee. The
employee, to make both ends meet, would necessarily have to use up the salaries
received during the pendency of the appeal, only to end up having to refund the sum
in case of a final unfavorable decision. It is mirage of a stop-gap leading the employee
to a risky cliff of insolvency.
Advisably, the sum is better left unspent. It becomes more logical and practical for the
employee to refuse payroll reinstatement and simply find work elsewhere in the
interim, if any is available. Notably, the option of payroll reinstatement belongs to the
employer, even if the employee is able and raring to return to work. Prior to Genuino,
it is unthinkable for one to refuse payroll reinstatement. In the face of the grim
possibilities, the rise of concerned employees declining payroll reinstatement is on the
horizon.
Further, the Genuino ruling not only disregards the social justice principles behind the
rule, but also institutes a scheme unduly favorable to management. Under such
scheme, the salaries dispensed pendente lite merely serve as a bond posted in
installment by the employer. For in the event of a reversal of the Labor Arbiter’s
decision ordering reinstatement, the employer gets back the same amount without
having to spend ordinarily for bond premiums. This circumvents, if not directly
contradicts, the proscription that the "posting of a bond [even a cash bond] by the
employer shall not stay the execution for reinstatement." 17
In playing down the stray posture in Genuino requiring the dismissed employee on
payroll reinstatement to refund the salaries in case a final decision upholds the validity
of the dismissal, the Court realigns the proper course of the prevailing doctrine on
reinstatement pending appeal vis-à-vis the effect of a reversal on appeal.
Respondent insists that with the reversal of the Labor Arbiter’s Decision, there is no
more basis to enforce the reinstatement aspect of the said decision. In his Separate

Opinion, Justice Presbitero Velasco, Jr. supports this argument and finds the prevailing
doctrine in Air Philippines and allied cases inapplicable because, unlike the present case,
the writ of execution therein was secured prior to the reversal of the Labor Arbiter’s
decision.
The proposition is tenuous. First, the matter is treated as a mere race against time. The
discussion stopped there without considering the cause of the delay. Second, it requires the
issuance of a writ of execution despite the immediately executory nature of the
reinstatement aspect of the decision. In Pioneer Texturing Corp. v. NLRC,18which was cited
in Panuncillo v. CAP Philippines, Inc.,19 the Court observed:
x x x The provision of Article 223 is clear that an award [by the Labor Arbiter] for
reinstatement shall be immediately executory even pending appeal and the posting of a bond
by the employer shall not stay the execution for reinstatement. The legislative intent is quite
obvious, i.e., to make an award of reinstatement immediately enforceable, even pending
appeal. To require the application for and issuance of a writ of execution as prerequisites for
the execution of a reinstatement award would certainly betray and run counter to the very
object and intent of Article 223, i.e., the immediate execution of a reinstatement order. The
reason is simple. An application for a writ of execution and its issuance could be delayed
for numerous reasons. A mere continuance or postponement of a scheduled hearing, for
instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the
issuance of the writ thereby setting at naught the strict mandate and noble purpose
envisioned by Article 223. In other words, if the requirements of Article 224 [including the
issuance of a writ of execution] were to govern, as we so declared in Maranaw, then the
executory nature of a reinstatement order or award contemplated by Article 223 will be
unduly circumscribed and rendered ineffectual. In enacting the law, the legislature is
presumed to have ordained a valid and sensible law, one which operates no further than
may be necessary to achieve its specific purpose. Statutes, as a rule, are to be construed in
the light of the purpose to be achieved and the evil sought to be remedied. x x x In
introducing a new rule on the reinstatement aspect of a labor decision under Republic Act
No. 6715, Congress should not be considered to be indulging in mere semantic exercise. x x
x20 (Italics in the original; emphasis and underscoring supplied)
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The Court reaffirms the prevailing principle that even if the order of reinstatement of
the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during the period of appeal
until reversal by the higher court.21 It settles the view that the Labor Arbiter's order of
reinstatement is immediately executory and the employer has to either re-admit them
to work under the same terms and conditions prevailing prior to their dismissal, or to
reinstate them in the payroll, and that failing to exercise the options in the alternative,
employer must pay the employee’s salaries.22
Amplification of the Second Ground
The remaining issue, nonetheless, is resolved in the negative on the strength of the
second ground relied upon by the appellate court in the assailed issuances. The Court
sustains the appellate court’s finding that the peculiar predicament of a corporate
rehabilitation rendered it impossible for respondent to exercise its option under the
circumstances.
The spirit of the rule on reinstatement pending appeal animates the proceedings once
the Labor Arbiter issues the decision containing an order of reinstatement. The
immediacy of its execution needs no further elaboration. Reinstatement pending
appeal necessitates its immediate execution during the pendency of the appeal, if the
law is to serve its noble purpose. At the same time, any attempt on the part of the
employer to evade or delay its execution, as observed in Panuncillo and as what
actually transpired in Kimberly,23 Composite,24 Air
25 26
Philippines, and Roquero, should not be countenanced.
After the labor arbiter’s decision is reversed by a higher tribunal, the employee
may be barred from collecting the accrued wages, if it is shown that the delay in
enforcing the reinstatement pending appeal was without fault on the part of the
employer.

The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement
pending appeal was not executed prior to its reversal; and (2) the delay must not be due to
the employer’s unjustified act or omission. If the delay is due to the employer’s unjustified
refusal, the employer may still be required to pay the salaries notwithstanding the reversal
of the Labor Arbiter’s decision.
In Genuino, there was no showing that the employer refused to reinstate the employee, who
was the Treasury Sales Division Head, during the short span of four months or from the
promulgation on May 2, 1994 of the Labor Arbiter’s Decision up to the promulgation on
September 3, 1994 of the NLRC Decision. Notably, the former NLRC Rules of Procedure
did not lay down a mechanism to promptly effectuate the self-executory order of
reinstatement, making it difficult to establish that the employer actually refused to comply.
In a situation like that in International Container Terminal Services, Inc. v. NLRC27 where it
was alleged that the employer was willing to comply with the order and that the employee
opted not to pursue the execution of the order, the Court upheld the self-executory nature of
the reinstatement order and ruled that the salary automatically accrued from notice of the
Labor Arbiter's order of reinstatement until its ultimate reversal by the NLRC. It was later
discovered that the employee indeed moved for the issuance of a writ but was not acted
upon by the Labor Arbiter. In that scenario where the delay was caused by the Labor
Arbiter, it was ruled that the inaction of the Labor Arbiter who failed to act upon the
employee’s motion for the issuance of a writ of execution may no longer adversely affect
the cause of the dismissed employee in view of the self-executory nature of the order of
reinstatement.28
The new NLRC Rules of Procedure, which took effect on January 7, 2006, now require the
employer to submit a report of compliance within 10 calendar days from receipt of the
Labor Arbiter’s decision,29 disobedience to which clearly denotes a refusal to reinstate. The
employee need not file a motion for the issuance of the writ of execution since the Labor
Arbiter shall thereafter motu proprio issue the writ. With the new rules in place, there is
hardly any difficulty in determining the employer’s intransigence in immediately
complying with the order.
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In the case at bar, petitioners exerted efforts30 to execute the Labor Arbiter’s order of
reinstatement until they were able to secure a writ of execution, albeit issued on
October 5, 2000 after the reversal by the NLRC of the Labor Arbiter’s decision.
Technically, there was still actual delay which brings to the question of whether the
delay was due to respondent’s unjustified act or omission.
It is apparent that there was inaction on the part of respondent to reinstate them, but
whether such omission was justified depends on the onset of the exigency of corporate
rehabilitation.
It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions
for claims before any court, tribunal or board against the corporation shall ipso jure be
suspended.31 As stated early on, during the pendency of petitioners’ complaint before
the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation
Receiver. After the Labor Arbiter rendered his decision, the SEC replaced the Interim
Rehabilitation Receiver with a 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 respondent’s non-compliance with the reinstatement order.
Respondent’s failure to exercise the alternative options of actual reinstatement and
payroll reinstatement was thus justified. Such being the case, respondent’s obligation
to pay the salaries pending appeal, as the normal effect of the non-exercise of the
options, did not attach.
While reinstatement pending appeal aims to avert the continuing threat or danger to
the survival or even the life of the dismissed employee and his family, it does not
contemplate the period when the employer-corporation itself is similarly in
a judicially monitored state of being resuscitated in order to survive.
 78

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The parallelism between a judicial order of corporation rehabilitation as a justification for

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

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

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

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.

G.R. No. 173076 October 10, 2007
MT. CARMEL COLLEGE, petitioner,
vs.
JOCELYN RESUENA, EDDIE VILLALON, SYLVIA SEDAYON and ZONSAYDA
EMNACE, respondents.
DECISION
CHICO-NAZARIO, J.:
In this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court,
petitioner seeks the reversal of the Decision1 dated 2 June 2006 of the Court of Appeals in
CA-G.R. CEB-SP No. 01615 entitled, Mt. Carmel College v. National Labor Relations
Commission, Labor Arbiter Phibun D. Pura, Jocelyn Resuena, et al. Petitioner seeks
remedy from this Court for an alleged illegal execution of the Decision 2 dated 30 October
2001 by the National Labor Relations Commission (NLRC) in NLRC CASE No.
V-000176-2000 (RAB CASE Nos. 06-06-10393-98; 06-06-10394-98; 06-06-10395-98;
06-06-10414-98) as affirmed by the Court of Appeals in CA-G.R. SP No. 80639 in a
Decision3 dated 17 March 2004, insisting it was not in accord with the dispositive portion
thereof. Petitioner is not appealing the judgment itself but the manner of execution of the
same.
The following are the factual antecedents of the instant Petition:
Petitioner Mt. Carmel College is a private educational institution. It is administered by the
Carmelite Fathers at New Escalante, Negros Occidental. Respondents were employees of
petitioner, namely: Jocelyn Resuena (Accounting Clerk), Eddie Villalon (Elementary
79
Labor Law II Item 2 cases - NLRC
Department Principal); Sylvia Sedayon (Treasurer), and Zonsayda Emnace (Secretary
to the Director).
On 21 November 1997, respondents, together with several faculty members,
non-academic personnel, and other students, participated in a protest action against
petitioner. Thereafter, petitioner’s Director, Rev. Fr. Modesto E. Malandac, issued a
Memorandum to each of the respondents. The Memorandum directed respondents to
explain in writing why they should not be dismissed for loss of trust and confidence
for joining the protest action against the school administration. Petitioner maintained
that respondents were occupying positions of highly confidential nature. After a
hearing conducted by petitioner’s Fact-Finding Committee and submission of its
Report on 25 April 1998, recommending dismissal or suspension of respondents,
petitioner issued written notices of termination to respondents on 7 May 1998.
Respondents were terminated by petitioner on 15 May 1998.
Separate complaints were filed by each of the four respondents against petitioner
before Regional Arbitration Branch VI of the NLRC in Bacolod City. Respondents
charged petitioner with illegal dismissal and claimed 13 thmonth pay, separation pay,
damages and attorney’s fees. The cases were docketed as RAB Cases No.
06-06-10393-98, 06-06-10394-98, 06-06-10395-98, and 06-06-10414-98. All four
cases were consolidated, and Labor Arbiter Ray T. Drilon thereafter issued a
Decision4 dated 25 May 1999 affirming the validity of respondents’ termination by
petitioner on the ground of loss of trust and confidence. Although the Decision found
respondents to have been legally dismissed, as equitable relief, however, they were
awarded separation pay computed at one month pay for every year of service, 5 their
proportionate 13th month pay, and attorney’s fees. Their claims for moral and
exemplary damages were denied. In issuing the aforesaid Decision, the Labor Arbiter
ruled:
WHEREFORE, premises considered, judgment is hereby rendered ordering [herein
petitioner] Mount Carmel College represented by Fr. Modesto Malandac to pay
[herein respondents] Jocelyn Resuena, Zonsayda Emnace, Eddie Villalon and Sylvia

Sedayon, their respective 13th month pay, separation pay and attorney’s fee in the total sum
of THREE HUNDRED THIRTY-FOUR THOUSAND EIGHT HUNDRED
SEVENTY-FIVE PESOS AND 67/100 (P334,875.47) to be deposited with this office
within ten (10) days from receipt of this decision.
The complaint for moral and exemplary damages is hereby dismissed for lack of legal basis.
All other claims are hereby dismissed for lack of merit. 6
On 9 September 1999, Labor Arbiter Drilon issued to the parties a Notice of
Judgment/Decision of his 25 May 1999 Decision. The notice indicated that a "decision of
the Labor Arbiter reinstating a dismissed or separated employee, in so far as the
reinstatement aspect is concerned, shall immediately be executory, even pending appeal.
The employee shall either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or at the option of the employee (sic) merely
reinstated in the payroll."7
In the meantime, petitioner appealed to the NLRC Fourth Division in Cebu City, seeking
the reversal of the portion of the Labor Arbiter’s Decision dated 25 May 1999 awarding
separation pay to respondents. The NLRC dismissed the appeal in its Decision dated 30
October 2001. In the same Decision dismissing the appeal, the NLRC reversed and
modified the 25 May 1999 Decision of the Labor Arbiter, and declared the termination of
respondents to be illegal. It ordered the reinstatement of respondents, with payment of
backwages or payment of separation pay in lieu thereof. The pertinent portion of the 30
October 2001 NLRC Decision reads:
We rule that complainants were illegally dismissed and must therefore be ordered reinstated
with payment of backwages from the time they were illegally dismissed up to the time of
their actual reinstatement.
All other claims are hereby dismissed for lack of merit.
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WHEREFORE, premises considered the instant appeal is hereby DISMISSED for
lack of merit and the appealed decision is hereby AFFIRMED with modification
ordering the [herein petitioner] the payment of the backwages of the [herein
respondents] from May 15, 1998 up to May 25, 1999, further directing the
reinstatement of the [respondents] to their original positions without loss of seniority
or in lieu thereof the payment of their separation pay as computed in the appealed
decision.8
Petitioner filed a Motion for Reconsideration of the 30 October 2001 Decision of the
NLRC. The said Motion was denied in the 19 June 2003 Resolution of the NLRC.
The case was elevated to the Court of Appeals via a Special Civil Action
for Certiorari and Prohibition, docketed as CA-G.R. SP No. 80639 where petitioner
assailed the aforementioned NLRC Decision dated 30 October 2001 and Resolution
dated 19 June 2003, arguing that there is more than enough basis for loss of trust and
confidence as ground for dismissing respondents. It also reiterated compliance with
the twin requirements of notice and hearing. The Court of Appeals denied the petition
in a Decision promulgated on 17 March 2004, ruling thus:
Consequently, we find no grave abuse of discretion committed by the NLRC in ruling
that [herein respondents] have been illegally dismissed. Likewise, said [NLRC]
correctly held that even if such participation of [respondents] in the protest picket is
rather improper under the circumstances or disappointing to the School Administrator
who had rightly expected them to take the side of the administration or at least stayed
neutral on the demand for ouster of Fr. Malandac and Barairo, dismissal is definitely
too harsh where a less punitive action such as reprimand or disciplinary action would
have been sufficient. Considering the long years of faithful service of [respondents] in
the School without previous record of misconduct, as duly noted by the NLRC in its
decision, their termination on the basis of alleged loss of confidence by taking part in
an otherwise legitimate and constitutionally-protected right to free speech and
peaceful assembly, is certainly illegal and unjustified.

xxxx
Having been illegally dismissed, [respondents] are entitled to back wages from the time of
their termination until reinstatement, and if reinstatement is no longer possible, the grant of
separation pay equivalent to one (1) month for every year of service. However, in this case
since the Labor Arbiter did not order reinstatement, the NLRC correctly excluded the period
of the appeal in the computation of back wages due to [respondents].
Finally, on the prayer for injunctive relief sought by petitioner on the ground that [public
respondent] Labor Arbiter exceeded his jurisdiction in issuing the writ of execution despite
the fact that his decision did not order reinstatement and that he is bereft of authority to
implement the decision of the NLRC (Fourth Division).
xxxx
Considering that there is already an entry of judgment on the Decision dated October 30,
2001, and in view of Our disposition of this petition, we find no more obstacle for the
enforcement of the said judgment even pending appeal, in accordance with Sections 1 and 2,
Rule VIII of the NLRC Rules of Procedure, as amended, as well as Sections 2, 4 and 6,
Rule III of the NLRC Manual on Execution of Judgment.
xxxx
WHEREFORE, premises considered, the present petition is hereby DENIED DUE
COURSE and accordingly DISMISSED for lack of merit. The assailed Decision and
Resolution are AFFIRMED.9
No Motion for Reconsideration of the afore-quoted Court of Appeals Decision in CA-G.R.
SP No. 80639 was filed and it became final and executory on 14 April 2004.
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At about the same time as the foregoing developments in CA-G.R. SP No. 80639,
Labor Arbiter Phibun D. Pura issued an Order on 19 May 2003 opining on the
self-executory nature of a reinstatement order:
To be sure the Court has not been consistent in its interpretation of Art. 223. The
nagging issue has always been whether the reinstatement order is self-executory.
Citing the divergent views of the court beginning with Inciong v. NLRC followed by
the deviation in interpretation in Maranaw Hotel Corporation (Century Park Sheraton
Manila) v. NLRC, as reiterated and adopted in Archilles Manufacturing Corporation v.
NLRC and Purificacion Ram v. NLRC, the Court in the 1997 Pioneer case has laid
down the doctrine that henceforth 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, as maintained by petitioner. x x x.
Successive writs of execution pertaining to the backwages and accrued salaries of the
respondents were issued by Labor Arbiter Pura on these dates: 9 June 2003, 10 10
December 2003,11 and 20 January 2004.12
The first writ of execution, issued on 9 June 2003, directed the sheriff to collect from
petitioner, the amount of P503,028.05 representing backwages from 15 May 1998 to
25 May 1999. Based on the Sheriff’s Report dated 25 June 2003, reinstatement had
not been effected. There was a Notice of Garnishment issued to the Equitable-PCI
Bank Escalante Branch. Labor Arbiter Pura ordered the release of the garnished
amount of P508,168.05 with the said bank for deposit to the Cashier of NLRC
Regional Arbitration Branch VI in Bacolod City. Petitioner moved to quash the Writ
of Execution dated 9 June 2003. It was denied.
By 4 December 2003, the NLRC entered in its Book of Entries of Judgment its
Decision dated 30 October 2001. The records of the case were endorsed back to
NLRC Regional Arbitration Branch VI for the execution of its final and executory
decision, as no restraining order was issued by the Court of Appeals.

After an exchange of pleadings, respondents filed an Ex-Parte Motion for Issuance of Writ
of Execution with the Labor Arbiter considering that the Entry of Judgment was already
issued by the NLRC. On 10 December 2003, the Labor Arbiter granted the Motion and
issued the second Writ of Execution. On motion of respondents, the Labor Arbiter ordered
the release to them of the garnished amount of P503,028.05 deposited with the Cashier of
NLRC Regional Arbitration Branch VI.
However, the foregoing amount was considered to be only a partial payment of the
monetary awards due the respondents and the unpaid balance thereof continued to grow
to P1,307,806.50. Respondents thus filed a motion for partial writ of execution, which the
Labor Arbiter granted by issuing the third Writ of Execution on 20 January 2004. 13 Under
the foregoing writs of execution, the aggregate amount of P1,736.592.0814 was garnished by
Bailiff/Acting Sheriff Romeo D. Pasustento, representing respondents’ accrued salaries,
backwages, attorney’s fees and sheriff’s fees computed from the promulgation of the NLRC
Decision 30 October 2001.
Respondents filed on 14 July 2004 yet another Motion to Issue a Writ of Execution to
collect backwages from 1 January 2004 to 30 June 2004. Petitioner opposed the motion, but
the Motion to Issue a Writ of Execution was granted.
On 31 January 2005, Labor Arbiter Pura issued an Order 15 adopting the computation of the
Fiscal Examiner of NLRC Regional Arbitration Branch VI and issuing a writ of execution
to enforce the NLRC Decision dated 30 October 2001. The dispositive portion of the said
Order reads:
In light of the foregoing, we have no choice but to adopt the computation of the RAB Fiscal
Examiner, hereto attached and forming part of the record of these cases and conformably
thereto, we grant the Motion to Issue Writ of Execution on backwages for the period stated
in this computation, taking into consideration the grant of differentials as there are benefits
which accrued to the [herein respondents] and which they should have enjoyed had they
been employed and/or reinstated, as the case may be, and such other amount as may accrue
until actually reinstated or in lieu of reinstatement, to pay [respondents] separation pay to be
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computed at one (1) month salary for every year of service in addition to backwages
the formula adopted by the Labor Arbiter in the Decision dated May 25, 1999, page 7,
paragraph 1.
Let therefore a Writ of Execution be, as it is hereby issued to enforce judgment in the
above entitled cases.16
On 8 February 2005, petitioner filed a Motion for Reconsideration of the foregoing
Order contending that the judgment of the NLRC mandated the payment of separation
pay as computed in the appealed decision. Respondents likewise filed a Manifestation
and Motion to include the month of November 2004 in the computation. In an Order
dated 10 February 2005, the Labor Arbiter denied the petitioner’s Motion for
Reconsideration. On 22 February 2005, he issued an Alias Writ of Execution 17 for the
collection from petitioner of the amount of P1,131,035.00 representing respondents’
backwages, separation pay, and attorney’s fees. Petitioner filed a Motion to Quash the
Alias Writ of Execution on 17 March 2005.18
On 15 April 2005, the Labor Arbiter issued an Order where it found no compelling
reason to warrant the grant of the Motion to Quash the Alias Writ of Execution. The
afore-stated Order thus reads:
WHEREFORE, for lack of merit the Motion to Quash the Alias Writ dated March 17,
2005 is denied. [Respondents’] Motion to Include February and March 2005 in the
Computation of wages is hereby GRANTED. The entry of appearance of the
collaborating counsel is duly noted.19
From the said Order of the Labor Arbiter, petitioner filed with the NLRC an appeal
with an application for issuance of a writ of preliminary injunction on the execution of
judgment, docketed as NLRC Case No. V-000377-05. Petitioner assailed the 15 April
2005 Order of the Labor Arbiter averring that the latter seriously committed errors
when he ordered the payment and garnishment of backwages beyond the period 15
May 1998 to 25 May 1999. The NLRC dismissed the petitioner’s appeal in a

Resolution20 dated 15 August 2005 for lack of merit. Petitioner filed a Motion for
Reconsideration but it was denied by the NLRC in a Resolution dated 30 November 2005,
disposed of as follows:
WHEREFORE, premises considered, the appeal of respondents is hereby DISMISSED for
lack of merit. The 15 April 2005 Order of Labor Arbiter Phibun Pura is AFFIRMED. 21
From the foregoing, petitioner filed with the Court of Appeals a Special Civil Action
for Certiorari and Prohibition, docketed as CA-G.R. CEB-SP No. 01615, praying for the
setting aside and nullification of the Resolutions dated 15 August 2005 and 30 November
2005 of the NLRC in NLRC Case No. V-000377-05. Petitioner contended that the NLRC
acted with grave abuse of discretion when it denied its appeal and motion for
reconsideration and in not ruling that there was already satisfaction of judgment. The crux
of petitioner’s case, as succinctly worded by the Court of Appeals in CA-G.R. CEB-SP No.
01615:
[P]etitioner seeks to annul and set aside the resolutions dated August 15, 2005 and
November 30, 2005 of the respondent NLRC in NLRC Case No. V-000377-05 when the
latter refuses to invalidate the various writs of executions and to refund petitioner of
whatever excess there might be on the theory that the execution done by the respondent
Labor Arbiter was illegal and in fact goes beyond what is stated in the decision dated
October 30, 2001 of the respondent NLRC in NLRC Case No. V-000176-2000.22
The Court of Appeals eventually dismissed CA-G.R. CEB-SP No. 01615, ruling as follows:
Thus, petitioner’s avowal that their liability for private respondents’ backwages is limited
from May 15, 1998 up to May 25, 1999 is untenable on these grounds:
First, there is no showing, in the case at bench, that petitioner exercised its option to
reinstate private respondents to their former position or to grant them separation pay.
Accordingly, backwages have to be granted to private respondents until their reinstatement
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to their former position is effected or upon petitioner’s payment of separation pay to
private respondents if reinstatement is no longer feasible; and
Second, the decision dated March 17, 2004 of the 17th Division of the Court of
Appeals in CA-G.R. SP No. 80639 acquiesced the propriety of the issuance of the
writs of execution by the respondent labor arbiter on June 9, 2003, December 10,
2003 and January 30, 2004. On April 14, 2004, the said decision which sanctioned the
payment of backwages even beyond May 25, 1999, became final and executory x x x.
xxxx
In light of the foregoing disquisition, we hereby find public respondent NLRC to have
acted accordingly and without grave abuse of discretion when it issued the questioned
Resolutions dated August 15, 2005 and November 30, 2005, respectively. Grave
abuse of discretion means such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, or, in other words where the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and it must be
so patent and gross as to amount to an evasion of positive duty or to a virtual refusal
to perform the duty enjoined or to act at all in contemplation of law. It is not sufficient
that a tribunal, in the exercise of power, abused its discretion; such abuse must be
grave.
WHEREFORE, in view of the foregoing, the present petition is hereby DISMISSED
and the assailed Resolutions dated August 15, 2005 and November 30, 2005,
respectively, issued by the respondent NLRC in NLRC Case No. V-000377-05 are
hereby AFFIRMED.23
Hence, petitioner filed the instant Petition for Review on Certiorari, raising the
following issues:
I.

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE LABOR
ARBITER AND THE NLRC THAT THE AWARD OF BACKWAGES GOES BEYOND
THE PERIOD FROM 15 MAY 1998 UP TO 25 MAY 1999 ON THE SUPPOSITION
THAT REINSTATEMENT IS SELF-EXECUTORY AND DOES NOT NEED A WRIT
OF EXECUTION FOR ITS ENFORCEMENT.
II.
THE HONORABLE COURT OF APPEALS ERRED IN NOT FINIDING THAT THE
CONTINUING GRANT AND AWARD OF BACKWAGES UP TO THE PRESENT IS
CONTRARY TO LAW AND JURISPRUDENCE AS LAID DOWN BY THIS
HONORABLE SUPREME COURT.
Petitioner prays that this Court render judgment (a) annulling and setting aside the assailed
Decision on 02 June 2006 of the Court of Appeals in CA-G.R. CEB-SP No. 01615 and all
its orders and issuances; (b) ordering that backwages be computed and executed
corresponding only to the period from 15 May 1998 to 25 May 1999; (c) ordering that
separation pay be computed based on the computation as originally submitted by the Labor
Arbiter, P344,875.47, which corresponds to the date of respondents’ employment until 15
May 1998; (d) that no other award except for backwages for the period 15 May 1998 to 25
May 1999 and separation pay amounting to P344,875.47 shall be paid by petitioner; and (e)
that the respondents be ordered to refund and pay the alleged excess in the amounts
garnished by virtue of the Writs of Execution dated 9 June 2003, 10 December 2003, and 30
January 2004.
In sum, the resolution of this petition hinges on the following issues: (1) whether
reinstatement in the instant case is self-executory and does not need a writ of execution for
its enforcement; and (2) whether the continuing award of backwages is proper.
Petitioner insists that what is at issue is the manner of execution of the NLRC Decision
dated 30 October 2001 in NLRC CASE No. V-000176-2000 (RAB CASE Nos.
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06-06-10393-98; 06-06-10394-98; 06-06-10395-98; 06-06-10414-98), as affirmed by
the Decision dated 17 March 2004 of the Court of Appeals in CA-G.R. No. 80639.
In ruling on the consolidated complaints filed by the four respondents, Labor Arbiter
Drilon found that they were not illegally dismissed but ordered that they be awarded
13th month pay, separation pay and attorney’s fees in the amount of P334,875.47.
Upon appeal to the NLRC, the NLRC reversed the findings of the Labor Arbiter
ruling that the termination of respondents was illegal and ordering the payment of
backwages of respondents from 15 May 1998 up to 25 May 1999. It further directed
the reinstatement of respondents or payment of separation pay, with backwages. This
was affirmed by the Court of Appeals.
While petitioner concedes that the case pertaining to the complaints for illegal
dismissal filed by the respondents before the Labor Arbiter had been resolved with
finality by the Court of Appeals in CA-G.R. No. 80639, no other remedy having been
taken therefrom, it however assails the correctness and validity of the execution of the
judgment therein. Petitioner avers that the Court of Appeals erred in upholding the
Labor Arbiter and the NLRC that the award of backwages goes beyond the period 15
May 1998 to 25 May 1999 on the supposition that reinstatement is self-executory and
does not need a writ of execution for its enforcement. Petitioner postulates that the
Labor Arbiter went beyond the terms of the NLRC Decision, as affirmed by the Court
of Appeals, and erroneously used as bases inapplicable law24 and jurisprudence25 in
the execution of the same. Petitioner contends that the Labor Arbiter’s reliance
on Pioneer Texturizing Corp. v. National Labor Relations Commission 26 is misplaced,
for it applied Article 223 of the Labor Code 27 since reinstatement was ordered at the
Labor Arbiter’s level while in the instant case, reinstatement was ordered upon appeal
to the NLRC. Petitioner argues that the relevant statutory and regulatory provisions
herein are Article 224 of the Labor Code,28 and Rule III of the NLRC Manual for
Execution of Judgment,29 given that there was no order of reinstatement at the Labor
Arbiter level but only at the NLRC level. Petitioner insists that, applying Article 224
of the Labor Code in the instant case, any reinstatement aspect of the NLRC Decision,
as affirmed by the Court of Appeals, should have been done through the issuance of a

Writ of Execution as it is no longer self-executory. It furthermore contends that it was
impossible to reinstate respondents, whether by way of an immediate execution or by way
of a self-executory nature, since there was nothing to execute pending appeal because there
was no order for reinstatement.
Petitioner vehemently raises the argument that the award of backwages subject to execution
is limited to the period prior to the appeal and does not include the period during the
pendency of the appeal, on the contention that reinstatement during appeal is warranted
only when the Labor Arbiter rules that the dismissed employee should be reinstated. In
support of its foregoing argument, petitioner invokes Filflex Industrial & Manufacturing
Corporation v. National Labor Relations Commission 30 where this Court ruled:
In other words, reinstatement during appeal is warranted only when the labor arbiter (LA)
himself rules that the dismissed employee should be reinstated. In the present case, neither
the dispositive portion nor the text of the labor arbiter’s decision ordered the reinstatement
of private respondent. Further, the back wages granted to private respondent were
specifically limited to the period prior to the filing of the appeal with Respondent NLRC. In
fact, the LA’s decision ordered her separation from service for the parties’ "mutual
advantage and most importantly to physical and health welfare of the complainant." Hence,
it is an error and an abuse of discretion for the NLRC to hold that the award of limited back
wages, by implication, included an order for private respondent’s reinstatement.
An order for reinstatement must be specifically declared and cannot be presumed; like back
wages, it is a separate and distinct relief given to an illegally dismissed employee. There
being no specific order for reinstatement and the order being for complainant’s separation,
there can be no basis for the award of salaries/back wages during the pendency of appeal.
Petitioner’s reliance on Filflex is misplaced and inapplicable to the case at bar. Indeed in
Filflex, this Court ruled that the award of backwages is limited to the period prior to the
filing of the appeal with the NLRC. This Court had declared in the aforesaid case that
reinstatement during appeal is warranted only when the Labor Arbiter himself rules that the
dismissed employee should be reinstated. But this was precisely because on appeal to the
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NLRC, it found that there was no illegal dismissal; thus, neither reinstatement nor
backwages may be awarded. In fact, Filfexdeleted the award of backwages granted
during appeal, reiterating that an award of backwages by the NLRC during the period
of appeal is totally inconsistent with its finding of a valid dismissal. In the instant
petition, the NLRC Decision dated 30 October 2001 finding the termination of
respondents illegal, had the effect of reversing Labor Arbiter Drilon’s Decision dated
25 May 1999.
This Court sees no cogent reason as to the relevance of a discussion on whether or not
reinstatement is self-executory. However, since petitioner raised this issue, this Court
has opted to discuss it. Verily, Article 223 of the Labor Code is not applicable in the
instant case. The said provision stipulates that 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.
Petitioner contends that the statutory provision applicable is Article 224 of the Labor
Code, as well as Rule III, Section 2(b) of the NLRC Manual on Execution of
Judgment, because the case was decided on appeal. Furthermore, it is a decision
which is of a final and executory nature. The provisions invoked by petitioner reads:
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 x x x.31
If the execution be for the reinstatement of any person to any position, office or
employment, such writ shall be served by the sheriff upon the losing party or upon
any other person required by law to obey the same, and such party or person may be
punished for contempt if he disobeys such decisions, order for reinstatement. 32

The records of the case indicate that when Labor Arbiter Drilon issued its 25 May 1999
Decision, there was no order of reinstatement yet although the dispositive portion of the 31
January 2005 Order issued by Labor Arbiter Pura already provided for reinstatement or
payment of separation pay, to wit:
In light of the foregoing, we have no choice but to adopt the computation of the RAB Fiscal
Examiner, hereto attached and forming part of the record of these cases and conformably
thereto, we grant the Motion to Issue Writ of Execution on backwages for the period stated
in this computation, taking into consideration the grant of differentials as there are benefits
which accrued to the complainants and which they should have enjoyed had they been
employed and/or reinstated, as the case may be, and such other amount as may accrue until
actually reinstated or in lieu of reinstatement, to pay complainants separation pay to be
computed at one (1) month salary for every year of service in addition to backwages the
formula adopted by the Labor Arbiter in the Decision dated May 25, 1999, page 7,
paragraph 1.
Let therefore a Writ of Execution be, as it is hereby issued to enforce judgment in the above
entitled cases.33
Art. 223 of the Labor Code provides that reinstatement is immediately executory even
pending appeal only when the Labor Arbiter himself ordered the reinstatement. In this case,
the original Decision of Labor Arbiter Drilon did not order reinstatement. Reinstatement in
this case was actually ordered by the NLRC, affirmed by the Court of Appeals. The order of
Labor Arbiter Pura on 31 January 2005 directing reinstatement was issued after the Court of
Appeals Decision dated 17 March 2004 which affirmed the NLRC’s order of reinstatement.
Thus, Art. 223 finds no application in the instant case. Considering that the order for
reinstatement was first decided upon appeal to the NLRC and affirmed with finality by the
Court of Appeals in CA-G.R. SP 80369 on 17 March 2004, petitioner rightly invoked Art.
224 of the Labor Code. As contemplated by Article 224 of the Labor Code, 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
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and executory. Consequently, under Rule III of the NLRC Manual on the Execution
of Judgment, it is provided that if the execution be for the reinstatement of any person
to a position, an office or an employment, such writ shall be served by the sheriff
upon the losing party or upon any other person required by law to obey the same, and
such party or person may be punished for contempt if he disobeys such decision or
order for reinstatement.34
However, as we can glean from the succeeding discussion, the above findings will not
affect the award of backwages for the period beyond 25 May 1999.
Anent the second issue, petitioner contends that the 25 May 1999 Decision of Labor
Arbiter Drilon did not order the reinstatement of respondents. Petitioner posits that
since there was no finding of illegal dismissal at the Labor Arbiter’s level, then it
follows that there was no reinstatement aspect, and its liability for backwages is
limited to the period from 15 May 1998 up to 25 May 1999, i.e., from dismissal to
promulgation of the Labor Arbiter’s Decision only, as allegedly determined by the
NLRC in its Decision dated 30 October 2001. It argues that while the said NLRC
Decision awarded backwages from 15 May 1998 to 25 May 1999 only, the Writs of
Execution issued pursuant thereto ordered the payment of backwages way beyond the
period stated in the Decision35 it is supposed to execute.
Petitioner’s argument is absurd. Abbott v. National Labor Relations Commission,36 as
cited by petitioner, declared that there exists a big difference when what is sought to
be reviewed is the manner of execution of a decision and not the decision itself.
"While it is true that the decision itself has become final and executory and so can no
longer be challenged, there is no question that it must be enforced in accordance with
its terms and conditions. Any deviation therefrom can be the subject of a proper
appeal."37 In the instant case, however, the manner of execution falls squarely within
the terms of the Decision it seeks to implement.
The 30 October 2001 NLRC Decision ruled as follows:

We rule that complainants were illegally dismissed and must therefore be ordered reinstated
with payment of backwages from the time they were illegally dismissed up to the time of
their actual reinstatement.
All other claims are hereby dismissed for lack of merit.
WHEREFORE, premises considered the instant appeal is hereby DISMISSED for lack of
merit and the appealed decision is hereby AFFIRMED with modification ordering the
respondents the payment of the backwages of the complainants from May 15, 1998 up to
May 25, 1999, further directing the reinstatement of the complainants to their original
positions without loss of seniority or in lieu thereof the payment of their separation pay as
computed in the appealed decision.38
When the afore-quoted NLRC Decision was appealed to the Court of Appeals in CA-G.R.
SP No. 80639, there seemed to be a contradiction between the body and the fallo of the
appellate court’s Decision dated 17 March 2004. Petitioner cites the following from the text
of the Court of Appeals Decision:
However, in this case since the Labor Arbiter did not order reinstatement, the NLRC
correctly excluded the period of the appeal in the computation of back wages due to private
respondents.39
The dispositive portion of the same Decision, however, concludes:
WHEREFORE, premises considered, the present petition is hereby DENIED DUE
COURSE and accordingly DISMISSED for lack of merit. The assailed Decision and
Resolution are AFFIRMED.40
The general rule is that where there is conflict between the dispositive portion or
the fallo and the body of the decision, the fallo controls. This rule rests on the theory that
the fallo is the final order while the opinion in the body is merely a statement ordering
nothing.41 Clearly, the award of backwages to respondents does not merely cover the period
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from 15 May 1998 up to 25 May 1999 alone. 42 The findings of the NLRC, which were
affirmed with finality in CA-G.R. SP No. 80639, and subject of execution in the
instant petition, pronounced:
We rule that [respondents] were illegally dismissed and must therefore be ordered
reinstated with payment of backwages from the time they were illegally dismissed up
to the time of their actual reinstatement.
All other claims are hereby dismissed for lack of merit.
WHEREFORE, premises considered the instant appeal is hereby DISMISSED for
lack of merit and the appealed decision is hereby AFFIRMED with modification
ordering the [petitioner] payment of the backwages of the [respondents] from May 15,
1998 up to May 25, 1999, further directing the reinstatement of the [respondents] to
their original positions without loss of seniority or in lieu thereof the payment of their
separation pay as computed in the appealed decision.43
The above ruling of the NLRC in its Decision dated 30 October 2001 had the effect of
reversing and modifying the findings of the Labor Arbiter. Under Article 218(c) of the
Labor Code, the Commission is empowered to "correct, amend, or waive any error,
defect or irregularity whether in substance or form," in the exercise of its appellate
jurisdiction.44 The dispositive portion of the Labor Arbiter’s Decision as worded is
clear and needs no further interpretation. The NLRC found respondents to have been
illegally dismissed by petitioner, and ordered reinstatement and payment of
backwages. Additionally, it stated that where reinstatement is not possible, separation
pay as computed in the appealed decision should be awarded to respondents.
Petitioner interprets the dispositive portion of the NLRC Decision to mean that it is
ordered to pay respondents backwages from 15 May 1998 to 25 May 1999 only.
Petitioner seems to have missed that the aforestated NLRC Decision also directed it to
reinstate respondents, or in lieu thereof, pay separation pay. This, petitioner failed to
do. Petitioner did not exercise the option of either reinstatement or paying the
separation pay of respondents.

Backwages are to be computed from the time of illegal dismissal until reinstatement or
upon petitioner’s payment of separation pay to respondents if reinstatement is no longer
possible. Article 279 of the Labor Code, as amended, states:
Art. 279. Security of Tenure. – x x x
In cases of regular employment the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and
reinstatement. The two reliefs provided are separate and distinct. In instances where
reinstatement is no longer feasible because of strained relations between the employee and
the employer, separation pay is granted. In effect, an illegally dismissed employee is
entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer
viable, and backwages.45
The normal consequences of respondents’ illegal dismissal, then, are reinstatement without
loss of seniority rights, and payment of backwages computed from the time compensation
was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable
as an option, separation pay equivalent to one (1) month salary for every year of service
should be awarded as an alternative.46 The payment of separation pay is in addition to
payment of backwages.
Concomitantly, it is evident that respondents’ backwages should not be limited to the period
from 15 May 1998 to 25 May 1999. The backwages due respondents must be computed
from the time they were unjustly dismissed until their actual reinstatement to their former
position or upon petitioner’s payment of separation pay to them if reinstatement is no longer
feasible. Thus, until petitioner actually implements the reinstatement aspect of the NLRC
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Decision dated 30 October 2001, as affirmed in the Court of Appeals Decision dated
17 March 2004 in CA-G.R. SP No. 80639, its obligation to respondents, insofar as
accrued backwages and other benefits are concerned, continues to accumulate.
This Court takes this occasion to reiterate that execution is the final stage of litigation,
the end of the suit. It can not and should not be frustrated except for serious reasons
demanded by justice and equity.47 "Litigation must end sometime and somewhere. An
effective and efficient administration of justice requires that, once a judgment has
become final, the winning party be not, through a mere subterfuge, be deprived of the
fruits of the verdicts. Courts must, therefore, guard against any scheme calculated to
bring about that result. Constituted as they are to put an end to controversies, courts
should frown upon any attempt to prolong them." 48
WHEREFORE, the instant petition is dismissed. The Decision dated 2 June 2006 of
the Court of Appeals in CA-G.R. CEB-SP No. 01615 is AFFIRMED. Petitioner
is ORDERED to (1) reinstate respondents to their original positions without loss of
seniority rights, with payment of (a) backwages computed from 15 May 1998, the
time compensation of respondents was withheld from them when they were unjustly
terminated, up to the time of reinstatement; and (b) accrued 13 th month pay for the
same period; OR in lieu of reinstatement, (2) pay respondents (a) separation pay, in
the amount equivalent to one (1) month pay for every year of service; and (b)
backwages, computed from 15 May 1998, the time compensation of respondents was
withheld from them when they were unjustly terminated, up to the time of payment
thereof; and (c) the accrued 13th month pay for the same period. For this purpose, the
records of this case are hereby REMANDED to the Labor Arbiter for proper
computation of the subject money claims as discussed above. Costs against petitioner.
SO ORDERED.

G.R. No. 147806 November 12, 2002
NERISSA BUENVIAJE, SONIA FLORES, BELMA OLIVIO,
GENALYN PELOBELLO, MARY JANE MENOR, JOSIE RAQUERO,
ESTRELITA MANAHAN, REBECCA EBOL, and ERLINDA ARGA, petitioners,
vs.
THE HONORABLE COURT OF APPEALS (SPECIAL FORMER SEVENTH
DIVISION),
HONORABLE ARBITER ROMULUS PROTASIO, COTTONWAY MARKETING
CORPORATION and MICHAEL G. TONG, President and General Manager,
respondents.
DECISION
PUNO, J.:
This petition seeks to set aside the Decision dated March 13, 2000 and Resolution dated
February 13, 2001 of the Court of Appeals in CA-G.R. SP No. 53204 entitled "Cottonway
Marketing Corp. vs. National Labor Relations Commission, et al."
The facts are as follows:
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Petitioners were former employees of Cottonway Marketing Corp. (Cottonway), hired
as promo girls for their garment products. In October, 1994, after their services were
terminated as the company was allegedly suffering business losses, petitioners filed
with the National Labor Relations Commission (NLRC) a complaint for illegal
dismissal, underpayment of salary, and non-payment of premium pay for rest day,
service incentive leave pay and thirteenth month pay against Cottonway Marketing
Corp. and Network Fashion Inc./JCT International Trading.1
On December 19, 1995, Labor Arbiter Romulus S. Protasio issued a Decision finding
petitioners' retrenchment valid and ordering Cottonway to pay petitioners' separation
pay and their proportionate thirteenth month pay. 2
On appeal, the NLRC, in its Decision dated March 26, 1996, reversed the Decision of
the Labor Arbiter and ordered the reinstatement of petitioners without loss of seniority
rights and other privileges. It also ordered Cottonway to pay petitioners their
proportionate thirteenth month pay and their full backwages inclusive of allowances
and other benefits, or their monetary equivalent computed from the time their salaries
were withheld from them up to the date of their actual reinstatement. 3
Cottonway filed a motion for reconsideration which was denied by the Commission in
a Resolution dated July 31, 1996.4
On August 30, 1996, Cottonway filed with the NLRC a manifestation stating that they
have complied with the order of reinstatement by sending notices dated June 5, 1996
requiring the petitioners to return to work, but to no avail; and consequently, they sent
letters to petitioners dated August 1, 1996 informing them that they have lost their
employment for failure to comply with the return to work order. 5 Cottonway also filed
a petition for certiorari with the Supreme Court which was dismissed on October 14,
1996.6
On November 6, 1997, petitioners filed with the NLRC a motion for execution of its
Decision on the ground that it had become final and executory. 7

On December 4, 1996, the Research and Investigation Unit of the NLRC issued a
computation of the monetary award in accordance with the March 26 Decision of the
NLRC.8
Meanwhile, Cottonway filed a motion for reconsideration of the Supreme Court Resolution
of October 14, 1996 dismissing the petition for certiorari. The motion for reconsideration
was denied with finality on January 13, 1997.9
On March 4, 1997, Cottonway filed a manifestation with the NLRC reiterating their
allegations in their manifestation dated August 30, 1996, and further alleging that
petitioners have already found employment elsewhere. 10
On March 13, 1997, the Research and Investigation Unit of the NLRC issued an additional
computation of petitioners' monetary award in accordance with the March 26 NLRC
decision.11
On the same date, Cottonway filed with the NLRC a supplemental manifestation praying
that the Commission allow the reception of evidence with respect to their claim that
petitioners have found new employment. The Commission denied Cottonway’s prayer in an
Order dated March 24, 199712 and Resolution dated July 24, 1997.13
Nonetheless, on April 8, 1998, Labor Arbiter Romulus S. Protasio issued an Order declaring
that the award of backwages and proportionate thirteenth month pay to petitioners should be
limited from the time of their illegal dismissal up to the time they received the notice of
termination sent by the company upon their refusal to report for work despite the order of
reinstatement. He cited the fact that petitioners failed to report to their posts without
justifiable reason despite respondent's order requiring them to return to work immediately.
The Labor Arbiter ordered the Research and Investigation Unit to recompute the monetary
award in accordance with its ruling.14
The April 8 Order of the Labor Arbiter, however, was set aside by the Commission in its
Resolution dated September 21, 1998. The Commission ruled that its Decision dated March
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26, 1996 has become final and executory and it is the ministerial duty of the Labor
Arbiter to issue the corresponding writ of execution to effect full and unqualified
implementation of said decision.15 The Commission thus ordered that the records of
the case be remanded to the Labor Arbiter for execution. Cottonway moved for
reconsideration of said resolution, to no avail.
Hence, Cottonway filed a petition for certiorari with the Court of Appeals seeking the
reversal of the ruling of the NLRC and the reinstatement of the Order dated April 8,
1998 issued by Labor Arbiter Romulus S. Protasio.
The appellate court granted the petition in its Decision dated March 13, 2000. 16 It
ruled that petitioners' reinstatement was no longer possible as they deliberately
refused to return to work despite the notice given by Cottonway. The Court of
Appeals thus held that the amount of backwages due them should be computed only
up to the time they received their notice of termination. It said:
"Petitioner's termination of private respondents' employment by reason of their failure
to report for work despite due notice being valid, it would change the substance of the
questioned March 26, 1996 decision which awards backwages to the complainants up
to their reinstatement. Again, private respondents' reinstatement is no longer possible
because of the supervening event which is their valid termination. The deliberate
failure to report for work after notice to return bars reinstatement. It would be unjust
and inequitable then to require petitioner to pay private respondents their backwages
even after the latter were validly terminated when in fact petitioner dutifully complied
with the reinstatement aspect of the decision. Thus, the period within which the
monetary award of private respondents should be based is limited up to the time of
private respondents' receipt of the respective notices of termination on August 27,
1998."17
The Court of Appeals denied petitioners' motion for reconsideration in a Resolution
issued on February 13, 2001.18

Petitioners now question the Decision and Resolution of the Court of Appeals. They impute
the following errors:
"I. That the Honorable Court of Appeals gravely abused its discretion amounting to lack of
and/or in excess of jurisdiction in rendering the assailed decision in CA-G.R. No. SP 53204
without first performing its ministerial duty of taking initial judicial action thereon
unlawfully depriving the petitioners the opportunity to comment and/or file responsive
pleadings to the petition resulting to their being unlawfully denied a day in court;
II. That the Honorable Court of Appeals gravely abused its discretion amounting to lack of
and/or in excess of jurisdiction in rendering a decision in CA-G.R. No. SP 53204 reversing
and setting aside the lawful and appropriate September 21, 1998 and March 31, 1999
resolutions of the Honorable NLRC and reinstating the irregular and illegal April 8, 1998
Order of Honorable Arbiter Romulus Protasio; and
III. That the Honorable Court of Appeals gravely abused its discretion amounting to lack of
and/or in excess of jurisdiction in issuing the February 13, 2001 Resolution which denied
petitioners' motion for reconsideration from the decision of March 13, 2000 without stating
the legal basis therefor."19
We proceed directly to the central issue in this case which is the computation of petitioners'
backwages—whether it should be limited from the time they were illegally dismissed until
they received the notice of termination sent by Cottonway on August 1, 1996 as argued by
respondent company, or whether it should be computed from the time of their illegal
dismissal until their actual reinstatement as argued by the petitioners.
We agree with the petitioners.
The issue of the legality of the termination of petitioners’ services has been settled in the
NLRC decision dated March 26, 1996. Thus, Cottonway was ordered to reinstate petitioners
to their former position without loss of seniority rights and other privileges and to pay them
full backwages. The dispositive portion of the decision read:
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"WHEREFORE, the decision appealed from is hereby REVERSED. Respondent
Cottonway Marketing Corporation is hereby ordered to reinstate the complainants
without loss of seniority rights and other privileges and to pay them the following: (1)
their proportionate 13th month pay for 1994; and (2) their full backwages inclusive of
allowances and other benefits, or their monetary equivalent computed from the time
their salaries were withheld from them up to the date of their actual reinstatement.
SO ORDERED."
These are the reliefs afforded to employees whose employment is unlawfully severed.
Reinstatement restores the employee to the position from which he was removed, i.e.,
to his status quo ante dismissal, while the grant of backwages allows the same
employee to recover from the employer that which he lost by way of wages because of
his dismissal.20
Under R.A. 6715, employees who are illegally dismissed are entitled to full
backwages, inclusive of allowances and other benefits or their monetary equivalent,
computed from the time their actual compensation was withheld from them up to the
time of their actual reinstatement. If reinstatement is no longer possible, the
backwages shall be computed from the time of their illegal termination up to the
finality of the decision.21 The Court explained the meaning of "full backwages" in the
case of Bustamante vs. NLRC:22
"The Court deems it appropriate, however, to reconsider such earlier ruling on the
computation of backwages as enunciated in said Pines City Educational Center case,
by now holding that conformably with the evident legislative intent as expressed in
Rep. Act No. 6715, above-quoted, backwages to be awarded to an illegally dismissed
employee, should not, as a general rule, be diminished or reduced by the earnings
derived by him elsewhere during the period of his illegal dismissal. The underlying
reason for this ruling is that the employee, while litigating the legality (illegality) of
his dismissal, must still earn a living to support himself and family, while full
backwages have to be paid by the employer as part of the price or penalty he has to

pay for illegally dismissing his employee. The clear legislative intent of the amendment in
Rep. Act No. 6715 is to give more benefits to workers than was previously given them
under the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer
adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as
meaning exactly that, i.e., without deducting from backwages the earnings derived
elsewhere by the concerned employee during the period of his illegal dismissal. In other
words, the provision calling for "full backwages" to illegally dismissed employees is clear,
plain and free from ambiguity and, therefore, must be applied without attempted or strained
interpretation. Index animi sermo est." (emphasis supplied)
The Court does not see any reason to depart from this rule in the case of herein petitioners.
The decision of the NLRC dated March 26, 1996 has become final and executory upon the
dismissal by this Court of Cottonway’s petition for certiorari assailing said decision and the
denial of its motion for reconsideration. Said judgment may no longer be disturbed or
modified by any court or tribunal. It is a fundamental rule that when a judgment becomes
final and executory, it becomes immutable and unalterable, and any amendment or
alteration which substantially affects a final and executory judgment is void, including the
entire proceedings held for that purpose. Once a judgment becomes final and executory, the
prevailing party can have it executed as a matter of right, and the issuance of a writ of
execution becomes a ministerial duty of the court. A decision that has attained finality
becomes the law of the case regardless of any claim that it is erroneous. The writ of
execution must therefore conform to the judgment to be executed and adhere strictly to the
very essential particulars.23
To justify the modification of the final and executory decision of the NLRC dated March 26,
1996, the Court of Appeals cited the existence of a supervening event, that is, the valid
termination of petitioners' employment due to their refusal to return to work despite notice
from respondents reinstating them to their former position.
We cannot concur with said ruling. Petitioners' alleged failure to return to work cannot be
made the basis for their termination. Such failure does not amount to abandonment which
would justify the severance of their employment. To warrant a valid dismissal on the
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ground of abandonment, the employer must prove the concurrence of two elements: (1)
the failure to report for work or absence without valid or justifiable reason, and (2) a
clear intention to sever the employer-employee relationship.24
The facts of this case do not support the claim of Cottonway that petitioners have
abandoned their desire to return to their previous work at said company. It appears
that three months after the NLRC had rendered its decision ordering petitioners’
reinstatement to their former positions, Cottonway sent individual notices to
petitioners mandating them to immediately report to work. The standard letter, signed
by the company’s legal counsel, Atty. Ambrosio B. De Luna, and sent to each of the
petitioners read:
"June 5, 1996
Dear Ms. Alivid,25
By virtue of the decision of the National Labor Relation(s)
Commission dated March 26, 1996 in Belma Alivid vs. Network
Fashion, Inc., JCT Int’l Trading and, Cotton Mktg., Corp., NLRC
CASE NO. NCR-010210-96 and NLRC NCR-00-10-07238-94, you
are hereby ordered to report for work within five (5) days from
receipt of this letter, otherwise, your failure will be deemed lack of
interest to continue and considered to have abandoned your
employment with the company.
Please give this matter your utmost attention.
Very truly your(s),
(Sgd) AMBROSIO B. DE LUNA
Legal Counsel"
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The petitioners, however, were not able to promptly comply with the order. Instead, their Very truly yours,
counsel, Atty. Roberto LL. Peralta, sent a reply letter to Atty. De Luna stating that his
clients were not in a position to comply with said order since the NLRC has not yet finally (Sgd) ROBERTO LL. PERALTA
disposed of the case. The reply letter stated:26 Counsel For The Complainants"

"June 20, 1996 Consequently, Cottonway sent the petitioners individual notices of termination. The
standard letter of termination which was likewise signed by counsel and individually
ATTY. AMBROSIO B. DE LUNA addressed to petitioners stated:
Unit 2-D Bouganvilla (sic) Mansions
91 P. Tuazon Street, Cubao "August 1, 1996
Quezon City
BELMA ALIVID
Compañero, c/o Sonia Flores
#1256-A St. Nino Street
Your letter dated June 5, 1996 to our clients, Erlinda Arga, et al., Tondo(,) Manila
complainants in NLRC NCR CASE NO. 00-10-07238-94, Genalyn
Pelobello, et al. vs. Network Fashion, et al., was referred to us for reply. Dear Ms. Alivid,27

Please be informed that our said clients are not in a position now to For your failure to report for work as per letter dated June 5, 1996
comply with your order for them to report for work within five (5) days within the period of five days from receipt of the same, you are
from receipt thereof since the National Labor Relations Commission, First considered to have lost your employment status effective this date
Division, has yet to finally disposed off (sic) the case. with the company on the ground of failure to report for work.

However, if it is now a case that your client, Mr. Michael Tong, is Please be guided accordingly.
yielding to the Decision dated March 26, 1996 of the NLRC, we are then
willing to sit down with you relative to the satisfaction of the same to Very truly yours,
avoid said decision from being enforced by the sheriff.
(Sgd) Ambrosio B. De Luna
Trusting your cooperation on this matter. Legal Counsel of
Network Fashion(,) Inc."
Thank you.

We note that Cottonway, before finally deciding to dispense with their services, did not give
the petitioners the opportunity to explain why they were not able to report to work. The
records also do not bear any proof that all the petitioners received a copy of the letters.
Cottonway merely claimed that some of them have left the country and some have found
other employment. This, however, does not necessarily mean that petitioners were no longer
interested in resuming their employment at Cottonway as it has not been shown that their
employment in the other companies was permanent. It should be expected that petitioners
would seek other means of income to tide them over during the time that the legality of their
termination is under litigation. Furthermore, petitioners never abandoned their suit against
Cottonway. While the case was pending appeal before the NLRC, the Court of Appeals and
this Court, petitioners continued to file pleadings to ensure that the company would comply
with the directive of the NLRC to reinstate them and to pay them full backwages in case
said decision is upheld. Moreover, in his reply to the company’s first letter, petitioners’
counsel expressed willingness to meet with the company’s representative regarding the
satisfaction of the NLRC decision.
It appears that the supposed notice sent by Cottonway to the petitioners demanding that they
report back to work immediately was only a scheme to remove the petitioners for good.
Petitioners’ failure to instantaneously abide by the directive gave them a convenient reason
to dispense with their services. This the Court cannot allow. Cottonway cited Article 223 of
the Labor Code providing that the decision ordering the reinstatement of an illegally
dismissed employee is immediately executory even pending appeal as basis for its decision
to terminate the employment of petitioners. We are not convinced. Article 223 of the Labor
Code provides:
"ART. 223. Appeal. – Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. x x x
xxxxxxxxx
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Labor Law II Item 2 cases - NLRC
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or,
at the option of the employer, merely reinstated in the payroll. The posting of a bond
by the employer shall not stay the execution for reinstatement provided herein. x x x
x x x x x x x x x."
The foregoing provision is intended for the benefit of the employee and cannot be
used to defeat their own interest. The law mandates the employer to either admit the
dismissed employee back to work under the same terms and conditions prevailing
prior to his dismissal or to reinstate him in the payroll to abate further loss of income
on the part of the employee during the pendency of the appeal. But we cannot stretch
the language of the law as to give the employer the right to remove an employee who
fails to immediately comply with the reinstatement order, especially when there is
reasonable explanation for the failure. If Cottonway were really sincere in its offer to
immediately reinstate petitioners to their former positions, it should have given them
reasonable time to wind up their current preoccupation or at least to explain why they
could not return to work at Cottonway at once. Cottonway did not do either. Instead, it
gave them only five days to report to their posts and when the petitioners failed to do
so, it lost no time in serving them their individual notices of termination. We are,
therefore, not impressed with the claim of respondent company that petitioners have
been validly dismissed on August 1, 1996 and hence their backwages should only be
computed up to that time. We hold that petitioners are entitled to receive full
backwages computed from the time their compensation was actually withheld until
their actual reinstatement, or if reinstatement is no longer possible, until the finality of
the decision, in accordance with the Decision of the NLRC dated March 26, 1996
which has attained finality.28
IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Court of
Appeals dated March 13, 2000 and Resolution dated February 13, 2001 in CA-G.R.

SP No. 53204 are REVERSED and SET ASIDE. Let the records of this case be remanded
to the Labor Arbiter for execution in accordance with the Decision of the NLRC dated
March 26, 1996.
SO ORDERED.
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.
DECISION
LEONARDO-DE CASTRO, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure to
annul and set aside the Resolution1 dated October 23, 2006 as well as the Resolution2 dated
April 10, 2007 both issued by the Court of Appeals in CA-G.R. SP No. 88987 entitled,
"Pfizer, Inc. and/or Rey Gerardo Bacarro, and/or Ferdinand Cortes, and/or Alfred
Magallon, and/or Aristotle Arce v. National Labor Relations Commission Second Division
and Geraldine Velasco." The October 23, 2006 Resolution modified upon respondent’s
motion for reconsideration the Decision3 dated November 23, 2005 of the Court of Appeals
by requiring PFIZER, Inc. (PFIZER) to pay respondent’s wages from the date of the Labor
Arbiter’s Decision4 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
PFIZER’s motion for partial reconsideration.
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Labor Law II Item 2 cases - NLRC
The facts of this case, as stated in the Court of Appeals Decision dated November 23,
2005, are as follows:
Private respondent Geraldine L. Velasco was employed with petitioner PFIZER, INC.
as Professional Health Care Representative since 1 August 1992. Sometime in April
2003, Velasco had a medical work up for her high-risk pregnancy and was
subsequently advised bed rest which resulted in her extending her leave of absence.
Velasco filed her sick leave for the period from 26 March to 18 June 2003, her
vacation leave from 19 June to 20 June 2003, and leave without pay from 23 June to
14 July 2003.
On 26 June 2003, while Velasco was still on leave, PFIZER through its Area Sales
Manager, herein petitioner Ferdinand Cortez, personally served Velasco a
"Show-cause Notice" dated 25 June 2003. Aside from mentioning about an
investigation on her possible violations of company work rules regarding
"unauthorized deals and/or discounts in money or samples and unauthorized
withdrawal and/or pull-out of stocks" and instructing her to submit her explanation on
the matter within 48 hours from receipt of the same, the notice also advised her that
she was being placed under "preventive suspension" for 30 days or from that day to 6
August 2003 and consequently ordered to surrender the following "accountabilities;"
1) Company Car, 2) Samples and Promats, 3)
CRF/ER/VEHICLE/SOA/POSAP/MPOA and other related Company Forms, 4) Cash
Card, 5) Caltex Card, and 6) MPOA/TPOA Revolving Travel Fund. The following
day, petitioner Cortez together with one Efren Dariano retrieved the above-mentioned
"accountabilities" from Velasco’s 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 ₱23,980.00 was
merely to accommodate two undisclosed patients of a certain Dr. Renato Manalo. In
support thereto, Velasco attached the Doctor’s letter and the affidavit of the latter’s
secretary.
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On 12 July 2003, Velasco received a "Second Show-cause Notice" informing her of without loss of seniority rights and with full backwages and to pay the complainant
additional developments in their investigation. According to the notice, a certain Carlito the following:
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
1. Full backwages (basic salary, company benefits, all
from Velasco’s company issued cellphone referring to the printing of the said coupons.
allowances
Again, Velasco was given 48 hours to submit her written explanation on the matter. On 16
as of December 5, 2003 in the amount of ₱572,780.00);
July 2003, Velasco sent a letter to PFIZER via Aboitiz courier service asking for additional
time to answer the second Show-cause Notice.
2. 13th Month Pay, Midyear, Christmas and performance
That same day, Velasco filed a complaint for illegal suspension with money claims before bonuses
the Regional Arbitration Branch. The following day, 17 July 2003, PFIZER sent her a letter in the amount of ₱105,300.00;
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 3. Moral damages of ₱50,000.00;
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 4. Exemplary damages in the amount of ₱30,000.00;
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 5. Attorney’s Fees of 10% of the award excluding damages
hours. Finally, on 29 July 2003, PFIZER informed Velasco of its "Management Decision" in the
terminating her employment. amount of ₱67,808.00.

On 5 December 2003, the Labor Arbiter rendered its decision declaring the dismissal of
The total award is in the amount of ₱758,080.00.6
Velasco illegal, ordering her reinstatement with backwages and further awarding moral and
exemplary damages with attorney’s fees. On appeal, the NLRC affirmed the same but
deleted the award of moral and exemplary damages.5
PFIZER appealed to the National Labor Relations Commission (NLRC) but its appeal
The dispositive portion of the Labor Arbiter’s Decision dated December 5, 2003 is as was denied via the NLRC Decision7 dated October 20, 2004, which affirmed the
follows: Labor Arbiter’s ruling but deleted the award for damages, the dispositive portion of
which 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 WHEREFORE, premises considered, the instant appeal and the motion praying for
the deposit in escrow of complainant’s 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 attorney’s 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 respondent’s 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. Velasco’s 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
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 respondent’s
dismissal from employment but modified its earlier ruling by directing PFIZER to pay
respondent her wages from the date of the Labor Arbiter’s 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
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Labor Law II Item 2 cases - NLRC
docketed as G.R. No. 175122. Respondent’s petition, questioning the Court of
Appeals’ dismissal of her complaint, was denied by this Court’s Second Division in a
minute Resolution12 dated December 5, 2007, the pertinent portion of which states:
Considering the allegations, issues and arguments adduced in the petition for review
on certiorari, the Court resolves to DENY the petition for failure to sufficiently show
any reversible error in the assailed judgment to warrant the exercise of this Court’s
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 Arbiter’s decision
ordering her reinstatement until November 23, 2005, when the Court of Appeals
rendered its decision declaring Velasco’s 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 PFIZER’s 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
PFIZER, through counsel, that she was opting to receive her separation pay and to avail of
PFIZER’s early retirement program.
In PFIZER’s view, it should no longer be required to pay wages considering that (1) it had
already previously paid an enormous sum to respondent under the writ of execution issued
by the Labor Arbiter; (2) it was allegedly ready to reinstate respondent as of July 1, 2005
but it was respondent who unjustifiably refused to report for work; (3) it would purportedly
be tantamount to allowing respondent to choose "payroll reinstatement" when by law it was
the employer which had the right to choose between actual and payroll reinstatement; (4)
respondent should be deemed to have "resigned" and therefore not entitled to additional
backwages or separation pay; and (5) this Court should not mechanically apply Roquero but
rather should follow the doctrine in Genuino v. National Labor Relations
Commission18 which was supposedly "more in accord with the dictates of fairness and
justice."19
We do not agree.
At the outset, we note that PFIZER’s previous payment to respondent of the amount of
₱1,963,855.00 (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
Arbiter’s 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 PFIZER’s unreasonable delay in complying with the
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Labor Law II Item 2 cases - NLRC
reinstatement order of the Labor Arbiter. A perusal of the records, including
PFIZER’s own submissions, confirmed that it only required respondent to report for
work on July 1, 2005, as shown by its Letter 20 dated June 27, 2005, which is almost
two years from the time the order of reinstatement was handed down in the Labor
Arbiter’s 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 223 22 of the Labor
Code. In that case, we discussed in length the rationale for that doctrine, to wit:
The provision of Article 223 is clear that an award [by the Labor Arbiter] for
reinstatement shall be immediately executory even pending appeal and the posting of
a bond by the employer shall not stay the execution for reinstatement. The legislative
intent is quite obvious, i.e., to make an award of reinstatement immediately
enforceable, even pending appeal. To require the application for and issuance of a writ
of execution as prerequisites for the execution of a reinstatement award would
certainly betray and run counter to the very object and intent of Article 223, i.e., the
immediate execution of a reinstatement order. The reason is simple. An application
for a writ of execution and its issuance could be delayed for numerous reasons. A
mere continuance or postponement of a scheduled hearing, for instance, or an inaction
on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the
writ thereby setting at naught the strict mandate and noble purpose envisioned by
Article 223. In other words, if the requirements of Article 224 [including the issuance
of a writ of execution] were to govern, as we so declared in Maranaw, then the
executory nature of a reinstatement order or award contemplated by Article 223 will
be unduly circumscribed and rendered ineffectual. In enacting the law, the legislature
is presumed to have ordained a valid and sensible law, one which operates no further
than may be necessary to achieve its specific purpose. Statutes, as a rule, are to be
construed in the light of the purpose to be achieved and the evil sought to be
prevented. x x x In introducing a new rule on the reinstatement aspect of a labor

decision under Republic Act No. 6715, Congress should not be considered to be indulging
in mere semantic exercise. x x x23 (Italics in the original; emphasis and underscoring
supplied.)
In the case at bar, PFIZER did not immediately admit respondent back to work which,
according to the law, should have been done as soon as an order or award of reinstatement
is handed down by the Labor Arbiter without need for the issuance of a writ of execution.
Thus, respondent was entitled to the wages paid to her under the aforementioned writ of
execution. At most, PFIZER’s 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 ₱1,963,855.00
representing respondent’s 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 respondent’s 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 PFIZER’s view, the return-to-work order it sent to
respondent was adequate to satisfy the jurisprudential requisites concerning the
reinstatement of an illegally dismissed employee.
It would be useful to reproduce here the text of PFIZER’s 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
99
Labor Law II Item 2 cases - NLRC
Arbiter Vito C. Bose, you are required to report for work on 1 July
2005, at 9:00 a.m., at Pfizer’s main office at the 23rd Floor, Ayala
Life–FGU Center, 6811 Ayala Avenue, Makati City, Metro Manila.
Please report to the undersigned for a briefing on your work
assignments and other responsibilities, including the appropriate
relocation benefits.
For your information and compliance.
Very truly yours,
(Sgd.)
Ma. Eden Grace Sagisi
Labor and Employee Relations Manager24
To reiterate, under Article 223 of the Labor Code, an employee entitled to
reinstatement "shall either be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or, at the option of the
employer, merely reinstated in the payroll."
It is established in jurisprudence that reinstatement means restoration to a state or
condition from which one had been removed or separated. The person reinstated
assumes the position he had occupied prior to his dismissal. Reinstatement
presupposes that the previous position from which one had been removed still exists,
or that there is an unfilled position which is substantially equivalent or of similar
nature as the one previously occupied by the employee.25
Applying the foregoing principle to the case before us, it cannot be said that with
PFIZER’s June 27, 2005 Letter, in belated fulfillment of the Labor Arbiter’s
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 PFIZER’s
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 respondent’s previous job had her
stationed in Baguio City (respondent’s place of residence) and it was still necessary for
respondent to be briefed regarding her work assignments and responsibilities, including her
relocation benefits.
The Court is cognizant of the prerogative of management to transfer an employee from one
office to another within the business establishment, provided that there is no demotion in
rank or diminution of his salary, benefits and other privileges and the action is not
motivated by discrimination, made in bad faith, or effected as a form of punishment or
demotion without sufficient cause.26 Likewise, the management prerogative to transfer
personnel must be exercised without grave abuse of discretion and putting to mind the basic
elements of justice and fair play. There must be no showing that it is unnecessary,
inconvenient and prejudicial to the displaced employee. 27
The June 27, 2005 return-to-work directive implying that respondent was being relocated to
PFIZER’s 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
respondent’s 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.
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Labor Law II Item 2 cases - NLRC
In view of PFIZER’s failure to effect respondent's actual or payroll reinstatement, it is
indubitable that the Roqueroruling is applicable to the case at bar. The circumstance
that respondent opted for separation pay in lieu of reinstatement as manifested in her
counsel’s Letter28 dated July 18, 2005 is of no moment. We do not see respondent’s
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 PFIZER’s
ambivalent return-to-work order. To uphold PFIZER’s view that it was respondent
who unjustifiably refused to work when PFIZER did not reinstate her to her former
position, and worse, required her to report for work under conditions prejudicial to her,
is to open the doors to potential employer abuse. Foreseeably, an employer may
circumvent the immediately enforceable reinstatement order of the Labor Arbiter by
crafting return-to-work directives that are ambiguous or meant to be rejected by the
employee and then disclaim liability for backwages due to non-reinstatement by
capitalizing on the employee’s 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 employer’s 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 employee’s 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, respondent’s decision to claim separation pay over reinstatement had no
legal effect, not only because there was no genuine compliance by the employer to the
reinstatement order but also because the employer chose not to act on said claim. If it was
PFIZER’s position that respondent’s 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 respondent’s demand at all. As it
was, PFIZER’s failure to effect reinstatement and accept respondent’s offer to terminate her
employment relationship with the company meant that, prior to the Court of Appeals’
reversal in the November 23, 2005 Decision, PFIZER’s 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:
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Labor Law II Item 2 cases - NLRC
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 ₱60,000.00 a month, as found by the Labor Arbiter) up to
and until the date of this decision," the Court hereby cancels said award in view of its
finding that the dismissal of Genuino is for a legal and valid ground.
Ordinarily, the employer is required to reinstate the employee during the pendency of
the appeal pursuant to Art. 223, paragraph 3 of the Labor Code, which states:
xxxx
If the decision of the labor arbiter is later reversed on appeal upon the finding that the
ground for dismissal is valid, then the employer has the right to require the dismissed
employee on payroll reinstatement to refund the salaries s/he received while the case
was pending appeal, or it can be deducted from the accrued benefits that the dismissed
employee was entitled to receive from his/her employer under existing laws,
collective bargaining agreement provisions, and company practices. However, if the
employee was reinstated to work during the pendency of the appeal, then the
employee is entitled to the compensation received for actual services rendered without
need of refund.
Considering that Genuino was not reinstated to work or placed on payroll
reinstatement, and her dismissal is based on a just cause, then she is not entitled to be
paid the salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC
Decision.34 (Emphases supplied.)
Thus, PFIZER implores the Court to annul the award of backwages and separation
pay as well as to require respondent to refund the amount that she was able to collect
by way of garnishment from PFIZER as her accrued salaries.
The contention cannot be given merit since this question has been settled by the Court
en banc.

In the recent milestone case of Garcia v. Philippine Airlines, Inc.,35 the Court wrote finis to
the stray posture 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 the principle of reinstatement pending appeal due to the
emergence of differing rulings on the issue, to wit:
On this score, the Court's attention is drawn to seemingly divergent decisions concerning
reinstatement pending appeal or, particularly, the option of payroll reinstatement. On the
one hand is the jurisprudential trend as expounded in a line of cases including Air
Philippines Corp. v. Zamora, while on the other is the recent case 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:
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Labor Law II Item 2 cases - NLRC
If the decision of the labor arbiter is later reversed on appeal upon the finding that the
ground for dismissal is valid, then the employer has the right to require the
dismissed employee on payroll reinstatement to refund the salaries [he]
received while the case was pending appeal, or it can be deducted from the accrued
benefits that the dismissed employee was entitled to receive from [his] employer
under existing laws, collective bargaining agreement provisions, and company
practices. However, if the employee was reinstated to work during the pendency of the
appeal, then the employee is entitled to the compensation received for actual services
rendered without need of refund.
Considering that Genuino was not reinstated to work or placed on payroll
reinstatement, and her dismissal is based on a just cause, then she is not entitled to be
paid the salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC
Decision. (Emphasis, italics and underscoring supplied)
It has thus been advanced that there is no point in releasing the wages to petitioners
since their dismissal was found to be valid, and to do so would constitute unjust
enrichment.
Prior to Genuino, there had been no known similar case containing a dispositive
portion where the employee was required to refund the salaries received on payroll
reinstatement. In fact, in a catena of cases, the Court did not order the refund of
salaries garnished or received by payroll-reinstated employees despite a subsequent
reversal of the reinstatement order.
The dearth of authority supporting Genuino is not difficult to fathom for it would
otherwise render inutile the rationale of reinstatement pending appeal.
xxxx
x x x Then, by and pursuant to the same power (police power), the State may
authorize an immediate implementation, pending appeal, of a decision reinstating a

dismissed or separated employee since that saving act is designed to stop, although
temporarily since the appeal may be decided in favor of the appellant, a continuing threat or
danger to the survival or even the life of the dismissed or separated employee and his
family.36
Furthermore, in Garcia, the Court went on to discuss the illogical and unjust effects of the
"refund doctrine" erroneously espoused in Genuino:
Even outside the theoretical trappings of the discussion and into the mundane realities of
human experience, the "refund doctrine" easily demonstrates how a favorable decision by
the Labor Arbiter could harm, more than help, a dismissed employee. The employee, to
make both ends meet, would necessarily have to use up the salaries received during the
pendency of the appeal, only to end up having to refund the sum in case of a final
unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff of
insolvency.1avvphi1
Advisably, the sum is better left unspent. It becomes more logical and practical for the
employee to refuse payroll reinstatement and simply find work elsewhere in the interim, if
any is available. Notably, the option of payroll reinstatement belongs to the employer, even
if the employee is able and raring to return to work. Prior to Genuino, it is unthinkable for
one to refuse payroll reinstatement. In the face of the grim possibilities, the rise of
concerned employees declining payroll reinstatement is on the horizon.
Further, the Genuino ruling not only disregards the social justice principles behind the rule,
but also institutes a scheme unduly favorable to management. Under such scheme, the
salaries dispensed pendente lite merely serve as a bond posted in installment by the
employer. For in the event of a reversal of the Labor Arbiter's decision ordering
reinstatement, the employer gets back the same amount without having to spend ordinarily
for bond premiums. This circumvents, if not directly contradicts, the proscription that the
"posting of a bond [even a cash bond] by the employer shall not stay the execution for
reinstatement."
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Labor Law II Item 2 cases - NLRC
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-à-vis the effect of a reversal on appeal.
xxxx
The Court reaffirms the prevailing principle that even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the
part of the employer to reinstate and pay the wages of the dismissed employee
during the period of appeal until reversal by the higher court. x x x.37 (Emphasis
supplied.)
In sum, the Court reiterates the principle that reinstatement pending appeal
necessitates that it must be immediately self-executory without need for a writ of
execution during the pendency of the appeal, if the law is to serve its noble purpose,
and any attempt on the part of the employer to evade or delay its execution should not
be allowed. Furthermore, we likewise restate our ruling that an order for reinstatement
entitles an employee to receive his accrued backwages from the moment the
reinstatement order was issued up to the date when the same was reversed by a higher
court without fear of refunding what he had received. It cannot be denied that, under
our statutory and jurisprudential framework, respondent is entitled to payment of her
wages for the period after December 5, 2003 until the Court of Appeals Decision
dated November 23, 2005, notwithstanding the finding therein that her dismissal was
legal and for just cause. Thus, the payment of such wages cannot be deemed as unjust
enrichment on respondent’s 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.

G.R. No. 182915 December 12, 2011
MARIALY O. SY, VIVENCIA PENULLAR, AURORA AGUINALDO, GINA
ANIANO,o GEMMA DELA PEÑA, EFREMIAoMATIAS, ROSARIO BALUNSAY,
ROSALINDA PARUNGAO, ARACELIoRUAZA, REGINA RELOX, TEODORA
VENTURA, AMELIA PESCADERO, LYDIA DE GUZMAN, HERMINIA
HERNANDEZ, OLIVIA ABUAN, CARMEN PORTUGUEZ, LYDIA
o o
PENNULAR, EMERENCIANA WOOD, PRISCILLA ESPINEDA, NANCY
FERNANDEZ, EVAo MANDURIAGA, CONSOLACION SERRANO, SIONY
CASILLAN, LUZVIMINDA GABUYA, MYRNA TAMIN, EVELYN REYES, EVA
AYENG, EDNA YAP, RIZAo DELA CRUZ ZUÑIGA, TRINIDAD RELOX,
MARLON FALLA, MARICEL OCON, and ELVIRA MACAPAGAL, Petitioners,
vs.
FAIRLAND KNITCRAFT CO., INC., Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 189658
SUSAN T. DE LEON, Petitioner,
vs.
FAIRLAND KNITCRAFT CO., INC., MARIALY O. SY, VIVENCIA PENULLAR,
AURORA AGUINALDO, GINA ANIANO, GEMMA DELA PEÑA, EFREMIA
MATIAS, ROSARIO BALUNSAY, ROSALINDA PARUNGAO, ARACELI RUAZA,
REGINA RELOX, TEODORA VENTURA, AMELIA PESCADERO, RICHON
APARRE, LYDIA DE GUZMAN, HERMINIA HERNANDEZ, OLIVIA ABUAN,
CARMEN PORTUGUEZ, LYDIA PENNULAR, EMERENCIANA WOOD,
PRISCILLA ESPINEDA, NANCY FERNANDEZ, EVA MANDURIAGA,
CONSOLACION SERRANO, SIONY CASILLAN, LUZVIMINDA GABUYA,
MYRNA TAMIN, EVELYN REYES, EVA AYENG, EDNA YAP, RIZA DELA
CRUZ ZUÑIGA, TRINIDAD RELOX, MARLON FALLA, MARICEL OCON, and
ELVIRA MACAPAGAL, Respondents.
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Labor Law II Item 2 cases - NLRC
DECISION
DEL CASTILLO, J.:
The issues of labor-only contracting and the acquisition of a labor tribunal of
jurisdiction over the person of a respondent are the matters up for consideration in
these consolidated Petitions for Review on Certiorari.
Assailed in G.R. No. 182915 is the May 9, 2008 Resolution1 of the Special Ninth
Division of the Court of Appeals (CA) in CA-G.R. SP No. 93204 which reversed and
set aside the July 25, 2007 Decision2 of the CA’s First Division and ordered the
exclusion of Fairland Knitcraft Co., Inc. (Fairland) from the decisions of the labor
tribunals. Said July 25, 2007 Decision, on the other hand, affirmed the November 30,
2004 Decision3 and August 26, 2005 Resolution4of the National Labor Relations
Commission (NLRC) which, in turn, reversed and set aside the November 26, 2003
Decision5 of the Labor Arbiter finding the dismissal as valid.
On the other hand, assailed in G.R. No. 189658 is the July 20, 2009 Decision 6 of the
CA’s Special Former Special Eighth Division in CA-G.R. SP No. 93860, which
affirmed the aforesaid November 30, 2004 Decision and August 26, 2005 Resolution
of the NLRC. Likewise assailed is the October 1, 2009 CA Resolution7 denying the
Motion for Reconsideration thereto.
Factual Antecedents
Fairland is a domestic corporation engaged in garments business, while Susan de
Leon (Susan) is the owner/proprietress of Weesan Garments (Weesan).
On the other hand, the complaining workers (the workers) are sewers, trimmers,
helpers, a guard and a secretary who were hired by Weesan as follows:
 105

Labor Law II Item 2 cases - NLRC

NAME DATE HIRED SALARIES Aurora Aguinaldo Jan-00 1,000.00/week

Marialy O. Sy 6/23/1997 P 1,500.00/week Amelia Pescadero Jan-96 1,000.00/week

Lydia Penullar Apr-99 1,000.00/week Siony Casillan May-02 1,000.00/week

Lydia De Guzman 8/1/1998 1,000.00/week Consolacion Serrano Oct-01 900.00/week

Olivia Abuan Aug-95 1,300.00/week Teodora Ventura Jan-00 1,000.00/week

Evelyn Reyes Nov-00 1,000.00/week Regina Relox May-97 1,500.00/week

Myrna Tamin Nov-00 1,000.00/week Eufemia Matias Mar-00 1,000.00/week

Elvira Macapagal 4/1/2002 1,000.00/week Herminia Hernandez Aug-95 1,000.00/week

Edna Yap 10/24/1999 700.00/week Richon Aparre Jul-99 1,200.00/week

Rosario Balunsay 1/21/1998 1,400.00/week Eve Manduriaga Feb-00 1,000.00/week

Rosalinda P. Parungao 3/2/2001 1,000.00/week Priscila Espineda Nov-00 1,300.00/week

Gemma Dela Peña 11/24/1999 1,000.00/week Aracelli Ruaza Mar-00 1,000.00/week

Emerenciana Wood Jan-98 1,400.00/week Nancy Fernandez Nov-00 1,400.00/week

Carmen Portuguez Nov-00 800.00/week Eva Ayeng Nov-00 1,000.00/week

Gina G. Anano Sep-98 1,500.00/week Luzviminda Gabuya Nov-00 1,000.00/week

 106

Labor Law II Item 2 cases - NLRC

Liza Dela Cuz Zuñiga Oct-01 1,200.00/week next hearing on April 28, 2003, Atty. Geronimo also entered his appearance for
Fairland and again requested for an extension of time to file position paper. 14
Vivencia Penullar Jan-00 1,500.00/week
On May 16, 2003, Atty. Geronimo filed two separate position papers – one for
Fairland15 and another for Susan/Weesan.16 The Position Paper for Fairland was
Trinidad Relox Aug-96 1,200.00/week
verified by Debbie while the one for Susan/Weesan was verified by Susan. To these
pleadings, the workers filed a Reply.17
Marlon Falla 6/24/2000 840.00/week
Atty. Geronimo then filed a Consolidated Reply18 verified19 both by Susan and
Maricel Ocon 1/15/2001 1,500.00/week8 Debbie.

On November 25, 2003, the workers submitted their Rejoinder. 20

On December 23, 2002, workers Marialy O. Sy, Vivencia Penullar, Aurora Aguinaldo, Gina
Aniano, Gemma dela Peña and Efremia Matias filed with the Arbitration Branch of the Ruling of the Labor Arbiter
NLRC a Complaint9 for underpayment and/or non-payment of wages, overtime pay,
premium pay for holidays, 13th month pay and other monetary benefits against On November 26, 2003, Labor Arbiter Reyes rendered his Decision, 21 the dispositive
Susan/Weesan. In January 2003, the rest of the aforementioned workers also filed similar portion of which reads:
complaints. Eventually all the cases were consolidated as they involved the same causes of
action.
WHEREFORE, premises all considered, judgment is hereby rendered, as follows:

On February 5, 2003, Weesan filed before the Department of Labor and

Dismissing the complaint for lack of merit; and ordering the respondents to pay each
Employment-National Capital Region (DOLE-NCR) a report on its temporary closure for a
complainant ₱5,000.00 by way of financial assistance.
period of not less than six months. As the workers were not anymore allowed to work on
that same day, they filed on February 18, 2003 an Amended Complaint, 10 and on March 13,
SO ORDERED.22
2003, another pleading entitled Amended Complaints and Position Paper for
Complainants,11 to include the charge of illegal dismissal and impleaded Fairland and its
Ruling of the National Labor Relations Commission
manager, Debbie Manduabas (Debbie), as additional respondents.

The workers filed their appeal which was granted by the NLRC. The dispositive
A Notice of Hearing12 was thereafter sent to Weesan requesting it to appear before Labor
portion of the NLRC Decision23reads:
Arbiter Ramon Valentin C. Reyes (Labor Arbiter Reyes) on April 3, 2003, at 10:00 a.m. On
said date and time, Atty. Antonio A. Geronimo (Atty. Geronimo) appeared as counsel for
WHEREFORE, premises considered, the appealed decision is hereby set aside and
Weesan and requested for an extension of time to file his client’s position paper. 13 On the
the dismissal of complainants is declared illegal.

Respondents are, therefore, ordered to reinstate complainants to their original or equivalent
position with full backwages with legal interests thereon from February 5, 2003, until
actually reinstated and fully paid, with retention of seniority rights and are further ordered
to pay solidarily to the complainants the difference of their underpaid/unpaid wages, unpaid
holidays, unpaid 13th month pays and unpaid service incentive leaves with legal interests
thereon, to wit:
xxxx
In the event that reinstatement is not possible, respondents are ordered to pay solidarily to
complainants their respective separation pays computed as follows:
xxxx
Respondents are likewise ordered to pay ten (10%) percent of the gross award as and by
way of attorney’s fees.
SO ORDERED.24
Hence, Atty. Geronimo filed a Motion for Reconsideration.25 However, Fairland filed
another Motion for Reconsideration26 through Atty. Melina O. Tecson (Atty. Tecson)
assailing the jurisdiction of the Labor Arbiter and the NLRC over it, claiming that it was
never summoned to appear, attend or participate in all the proceedings conducted therein. It
also denied that it engaged the services of Atty. Geronimo.
The NLRC however, denied both motions for lack of merit. 27
Fairland and Susan thus filed their separate Petitions for Certiorari before the CA docketed
as CA-G.R. SP No. 93204 and CA-G.R. SP No. 93860, respectively.
Ruling of the Court of Appeals in CA-G.R. SP No. 93204
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Labor Law II Item 2 cases - NLRC
On July 25, 2007, the CA’s First Division denied Fairland’s petition. 28 It affirmed the
NLRC’s ruling that the workers were illegally dismissed and that Weesan and
Fairland are solidarily liable to them as labor-only contractor and principal,
respectively.
Fairland filed its Motion for Reconsideration29 as well as a Motion for Voluntary
Inhibition30 of Associate Justices Celia C. Librea-Leagogo and Regalado E.
Maambong from handling the case. As the Motion for Voluntary Inhibition was
granted through a Resolution31 dated November 8, 2007, the case was transferred to
the CA’s Special Ninth Division for resolution of Fairland’s Motion for
Reconsideration.32
On May 9, 2008, the CA’s Special Ninth Division reversed 33 the First Division’s
ruling. It held that the labor tribunals did not acquire jurisdiction over the person of
Fairland, and even assuming they did, Fairland is not liable to the workers since
Weesan is not a mere labor-only contractor but a bona fide independent contractor.
The Special Ninth Division thus annulled and set aside the assailed NLRC Decision
and Resolution insofar as Fairland is concerned and excluded the latter therefrom. The
dispositive portion of said Resolution reads:
WHEREFORE, the Motion for Reconsideration filed by the movant is GRANTED.
The July 25, 2007 Decision of the First Division of this Court finding that the NLRC
did not act with grave abuse of discretion amounting to lack or excess of jurisdiction
and denying the Petition is REVERSED and SET ASIDE.
Consequently, the Decision and Resolution issued by the public respondent on
November 30, 2004 and August 26, 2005, respectively, are hereby ANNULLED and
SET ASIDE insofar as [it] concerns the petitioner Fairland Knitcraft Co., Inc. [which]
is hereby ordered dropped and excluded therefrom.
SO ORDERED.34

Aggrieved, the workers filed before us their Petition for Review on Certiorari docketed as
G.R. No. 182915.
Ruling of the Court of Appeals in CA-G.R. SP No. 93860
With regard to Susan’s petition, the CA Special Ninth Division issued on May 11, 2006 a
Resolution35 temporarily restraining the NLRC from enforcing its assailed November 30,
2004 Decision and thereafter the CA Special Eighth Division issued a writ of preliminary
prohibitory injunction.36 On July 20, 2009, the Special Former Special Eighth Division of
the CA resolved the case through a Decision,37 the dispositive portion of which reads:
WHEREFORE, premises considered, the present petition is hereby DENIED DUE
COURSE and accordingly DISMISSED for lack of merit. The Decision dated November 30,
2004 and Resolution dated August 26, 2005 of the National Labor Relations Commission
(NLRC) in CA No. 039375-04 (NLRC NCR 00-12-11294-02, 00-01-00027-03,
00-01-00131-03, 00-01-00820-03 and 00-01-01249-03) are hereby AFFIRMED and
UPHELD.
The writ of preliminary prohibitory injunction issued by this Court on July 13, 2006 is
hereby LIFTED and SET ASIDE.
With cost against petitioner.
SO ORDERED.38
39
Susan moved for reconsideration which was denied by the CA in its October 1, 2009
Resolution.40
Hence, she filed before this Court a Petition for Review on Certiorari docketed as G.R. No.
189658 which was denied in this Court’s December 16, 2009 Resolution 41 on technicality
and for failure to sufficiently show any reversible error in the assailed judgment.
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Susan and Fairland filed their respective Motions for Reconsideration.42 But before
said motions could be resolved, the Court ordered the consolidation of Susan’s
petition with that of the workers.43
Susan’s Motion for Reconsideration of this Court’s December 16, 2009 Resolution in
G.R No. 189658 is granted. Consequently, her Petition for Review on Certiorari is
reinstated.
With Susan and Fairland’s respective Motions for Reconsideration still unresolved,
this Court shall first address them.
One of the grounds for the denial of Susan’s petition was her failure to indicate the
date of filing her Motion for Reconsideration with the CA as required under Section
4(b),44 Rule 45 of the Rules of Court. However, "failure to comply with the rule on a
statement of material [date] in the petition may be excused [if] the [date is] evident
from the records."45 In the case of Susan, records show that she received the copy of
the Decision of the CA on July 24, 2009. She then timely filed her Motion for
Reconsideration via registered mail on August 7, 2009 as shown by the
envelope46 with stamped receipt of the Batangas City Post Office bearing the date
August 7, 2009. The fact of such filing was also stated in the Motion for Extension of
Time to File Petition for Review47 that she filed before this Court which forms part of
the records of this case. Hence, it is clear that Susan seasonably filed her Motion for
Reconsideration.
Moreover, while we note that Susan’s petition was also denied on the ground of no
reversible error committed by the CA, we deem it proper, in the interest of justice, to
take a second look on the merits of Susan’s petition and reinstate G.R. No. 189658.
This is also to harmonize our ruling in these consolidated petitions and avoid
confusion that may arise in their execution. Hence, we grant Susan’s Motion for
Reconsideration and consequently, reinstate her Petition for Review on Certiorari.

As to Fairland’s Motion for Reconsideration, we shall treat the same as its comment to
Susan’s petition, Fairland being one of the respondents therein.
Issues
In G.R. No. 189658, Susan imputes upon the CA the following errors:
I.
The Court of Appeals erred in finding that petitioner is a labor-only contractor acting as an
agent of respondent Fairland.
II.
The Court of Appeals erred in finding that the individual private respondents were illegally
dismissed.
III.
The Court of Appeals erred in not resolving the issue raised by petitioner in her reply
DATED JULY 8, 2006 regarding the propriety of the appeal taken by private respondent
Richon Cainoy Aparre who was already dead prior to the filing of the memorandum of
appeal before the NLRC.48
Susan’s Arguments
Susan insists that the CA erred in ruling that Weesan is a labor-only contractor based on the
finding that its workplace is owned by Fairland. She maintains that the place is owned by
De Luxe Shirt Factory, Inc. (De Luxe) and not by Fairland as shown by the Contracts of
Lease between Weesan and De Luxe.
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Susan also avers that the CA erred in ruling that Weesan was guilty of illegal
dismissal. She maintains that the termination of the workers was due to financial
losses suffered by Weesan as shown by various documents submitted by the latter to
the tribunals below. In fact, Weesan submitted its Establishment Termination Report
with the DOLE-NCR and same was duly received by the latter.
Lastly, Susan argues that the appeal of one of the workers, Richon Cainoy Aparre
(Richon), should not have been given due course because in the Notice of Appeal with
Appeal Memorandum filed with the NLRC, a certain Luzvilla A. Rayon (Luzvilla),
whose identity was never established, signed for and on his behalf. However, there is
no information submitted before the NLRC that Richon is already dead, and in any
event, no proper substitution was ever made.
The Workers’ Arguments
The workers claim that Weesan is a labor-only contractor because it does not have
substantial capital or investment in the form of tools, equipment, machineries, and
work premises, among others, and that the workers it recruited are performing
activities which are directly related to the garments business of Fairland. Hence,
Weesan should be considered as a mere agent of Fairland, who shall be responsible to
the workers as if they were directly employed by it (Fairland). 49
The workers also allege that the temporary suspension of operations of Weesan was
motivated not by a desire to prevent further losses, but to discourage the workers from
ventilating their claims for non-payment/underpayment of wages and benefits. The
fact that Weesan was experiencing serious business losses was not sufficiently
established and therefore the termination of the workers due to alleged business losses
is invalid.50
Fairland’s Arguments

Fairland maintains that it was never served with summons to appear in the proceedings
before the Labor Arbiter nor furnished copies of the Labor Arbiter’s Decision and
Resolution on the workers’ complaints for illegal dismissal; that it never voluntarily
appeared before the labor tribunals through Atty. Geronimo; 51 that it is a separate and
distinct business entity from Weesan; that Weesan is a legitimate job contractor, hence, the
workers were actually its (Weesan’s) employees; and that, consequently, the workers have
no cause of action against Fairland.52
At any rate, assuming that the workers have a cause of action against Fairland, their claims
are already barred by prescription. Of the 34 individual complainants (the workers), only six
were employees of Weesan during the period of its contractual relationship with Fairland in
1996 and 1997. They were Marialy Sy, Olivia Abuan, Amelia Pescadero, Regina Relox,
Hermina Hernandez and Trinidad Relox. These workers filed their complaints in December
2002 and January 2003 or more than four years from the expiration of Weesan’s contractual
arrangement with Fairland in 1997. Article 291 of the Labor Code provides that all money
claims arising from employer-employee relationship shall be filed within three years from
the time the cause of action accrued; otherwise, they shall be forever barred. Illegal
dismissal prescribes in four years and damages due to separation from employment for
alleged unjustifiable causes injuring a plaintiff’s right must likewise be brought within four
years under the Civil Code. Clearly, the claims of said six employees are already barred by
prescription.53
In G.R. No. 182915, the workers advance the following issues:
I.
Whether x x x the National Labor Relations Commission acquired jurisdiction over the
[person of the] respondent[;]
II.
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Whether x x x the decision of the National Labor Relations Commission became final
and executory[; and]
III.
Whether x x x respondent is solidarily liable with WEESAN GARMENT/ SUSAN
DE LEON[.]54
The Workers’ Arguments
The workers contend that the Labor Arbiter and the NLRC properly acquired
jurisdiction over the person of Fairland because the latter voluntarily appeared and
actively participated in the proceedings below when Atty. Geronimo submitted on its
behalf a Position Paper verified by its manager, Debbie. As manager, Debbie knew of
all the material and significant events which transpired in Fairland since she had
constant contact with the people in the day-to-day operations of the company. Thus,
the workers maintain that the Labor Arbiter and the NLRC acquired jurisdiction over
the person of Fairland and the Decisions rendered by the said tribunals are valid and
binding upon it.
Lastly, the workers aver that Fairland is solidarily liable with Susan/ Weesan because
it was shown that the latter was indeed the sewing arm of the former and is a mere
"labor-only contractor".
Fairland’s Arguments
In gist, Fairland contests the labor tribunals’ acquisition of jurisdiction over its person
either through service of summons or voluntary appearance. It denies that it engaged
the services of Atty. Geronimo and asserts that it has its own legal counsel, Atty.
Tecson, who would have represented it had it known of the pendency of the
complaints against Fairland.

Fairland likewise emphasizes that when it filed its Motion for Reconsideration with the
NLRC, it made an express reservation that the same was without prejudice to its right to
question the jurisdiction over its person and the binding effect of the assailed decision. In
the absence, therefore, of a valid service of summons or voluntary appearance, the
proceedings conducted and the judgment rendered by the labor tribunals are null and void
as against it. Hence, Fairland cannot be held solidarily liable with Susan/Weesan.
Our Ruling
We grant the workers’ petition (G.R. No. 182915) but deny the petition of Susan (G.R. No.
189658).
G.R. No. 189658
Susan/Weesan is a mere labor-only contractor.
"There is labor-only contracting when the contractor or subcontractor merely recruits,
supplies or places workers to perform a job, work or service for a principal. In labor-only
contracting, the following elements are present:
(a) The person supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among others; and
(b) The workers recruited and placed by such person are performing activities which are
directly related to the principal business of the employer." 55
Here, there is no question that the workers, majority of whom are sewers, were recruited by
Susan/Weesan and that they performed activities which are directly related to Fairland’s
principal business of garments. What must be determined is whether Susan/Weesan has
substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others.
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We have examined the records but found nothing therein to show that Weesan has
investment in the form of tools, equipment or machineries. The records show that
Fairland has to furnish Weesan with sewing machines for it to be able to provide the
sewing needs of the former.56 Also, save for the Balance Sheets57 purportedly
submitted by Weesan to the Bureau of Internal Revenue (BIR) indicating its fixed
assets (factory equipment) in the amount of ₱243,000.00, Weesan was unable to show
that apart from the borrowed sewing machines, it owned and possessed any other tools,
equipment, and machineries necessary to its being a contractor or sub-contractor for
garments. Neither was Weesan able to prove that it has substantial capital for its
business.
Likewise significant is the fact that there is doubt as to who really owns the work
premises occupied by Weesan. As may be recalled, the workers emphasized in their
Appeal Memorandum58 filed with the NLRC that Susan/Weesan was a labor-only
contractor and that Fairland was its principal. To buttress this, they alleged that the
work premises utilized by Weesan is owned by Fairland, which significantly, was not
in the business of renting properties. They also advanced that there was no showing
that Susan/Weesan paid any rentals for the use of the premises. They contended that
all that Susan had was a Mayor’s Permit for
Weesan indicating 715 Ricafort Street, Tondo, Manila as its address.
Susan failed to refute these allegations before the NLRC and attributed such failure to
her former counsel, Atty. Geronimo. But when Susan’s petition for certiorari was
given due course by the CA, she finally had the chance to answer the same by denying
that Fairland owned the work premises. Susan instead claimed that Weesan rented the
premises from another entity, De Luxe. To support this, she attached to her petition
two Contracts of Lease59purportedly entered into by her and De Luxe for the lease of
the premises covering the periods August 1, 1997 to July 31, 2000 and January 1,
2001 to December 31, 2004.

On the other hand, the workers in their Comment60 filed in CA-G.R. SP No. 93204
(Fairland’s petition for certiorari before the CA), pointed out that in Fairland’s Amended
Articles of Incorporation,61 five out of the seven incorporators listed therein appeared to be
residents of the same 715 Ricafort St., Tondo, Manila. To the workers, this is a clear
indication that Fairland indeed owned Weesan’s work premises. Fairland, for its part, tried
to explain this by saying that its incorporators, just like Weesan, were also mere lessees of a
portion of the multi-storey building owned by De Luxe located at 715 Ricafort St., Tondo,
Manila. It also claimed that two years prior to Weesan’s occupation of said premises in
1996, the five incorporators alluded to already transferred. 62
We cannot, however, ignore the apt observation on the matter made by the CA’s Special
Former Special Eighth Division in its Decision in CA-G.R. SP No. 93860, viz:
The work premises are likewise owned by Fairland, which petitioner tried to disprove by
presenting a purported Contract of Lease with another entity, De Luxe Shirt Factory Co.,
Inc. However, there is no competent proof it paid the supposed rentals to said
‘owner’. Curiously, under the item ‘Rent Expenses’ in its audited financial statement,
only equipment rental was listed therein without any disbursement/expense for rental
of factory premises, which only buttressed the claim of private respondents that the place
where they reported to and performed sewing jobs for petitioner [Susan] and Fairland at No.
715 Ricafort St., Tondo, Manila, belonged to Fairland. 63 (Emphasis supplied.)
Susan contests this pronouncement by pointing out that although only sewing machines
were specified under the entry "Rent Expenses" in its financial statement, the rent for the
factory premises is already deemed included therein since the contracts of lease she entered
into with De Luxe referred to both the factory premises and machineries.
We, however, find this contention implausible.
We went over the said contracts of lease and noted that same were principally for the lease
of the premises in 715 Ricafort St., Tondo, Manila. Only incidental thereto is the inclusion
therein of the equipment found in said premises. Hence, we cannot see why the rentals for
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the work premises, for which Susan even went to the extent of executing a contract
with the purported lessor, was not included in the entry for rent expenses in Weesan’s
financial statement. Even if we are to concede to Susan’s claim that the entry for rent
expenses already includes the rentals for the work premises, we wonder why the rental
expenses for the year 2000 which was ₱396,000.00 is of the same amount with the
rental expenses for the year 2001. As borne out by the Contract of Lease covering the
period August 1, 1997 to July 31, 2000, the monthly rent for the work premises was
pegged at ₱25,000.00.64 However, in January to December 2001, same was increased
to ₱27,500.00.65 There being an increase in the rentals for the work premises, how
come that Weesan’s rental expenses for the year 2001 is still ₱396,000.00? This could
only mean that said entry really only refers to the rentals of sewing machines and does
not include the rentals for the work premises. Moreover, we note that Susan could
have just simply submitted receipts for her payments of rentals to De Luxe. However,
she failed to present even a single receipt evidencing such payment.
In an attempt to prove that it is De Luxe and not Fairland which owned the work
premises, Susan attached to her petition the following: (1) a plain copy of Transfer
Certificate of Title (TCT) No. 13979066 and Declaration of Real Property67 both under
the name of De Luxe; and, (2) Real Property Tax receipts issued to De Luxe for the
years 2000-2004.68 However, the Court finds these documents wanting. Nowhere
from the said TCT and Declaration of Real Property can it be inferred that the
property they refer to is the same property as that located at 715 Ricafort St., Tondo,
Manila. Although in said Declaration, 715 Ricafort St., Tondo is the indicated address
of the declarant (De Luxe), the address of the property declared is merely "Ricafort,
Tondo I-A". The same thing can also be said with regard to the real property tax
receipts. The entry under the box Location of Property in the receipt for 2001 is "I -
718 Ricafort" and in the receipts for 2002, 2003, and 2004, the entries are either "I –
Ricafort St., Tondo" or merely "I-Ricafort St."
In sum, the Court finds that Susan’s effort to negate Fairland’s ownership of the work
premises is futile. The logical conclusion now is that Weesan does not have its own

workplace and is only utilizing the workplace of Fairland to whom it supplied workers for
its garment business.
Suffice it to say that "[t]he presumption is that a contractor is a labor-only contractor unless
such contractor overcomes the burden of proving that it has substantial capital, investment,
tools and the like."69 As Susan/Weesan was not able to adduce evidence that Weesan had
any substantial capital, investment or assets to perform the work contracted for, the
presumption that Weesan is a labor-only contractor stands.70
The National Labor Relations Commission and the Court of Appeals did not err in their
findings of illegal dismissal.
To negate illegal dismissal, Susan relies on the due closure of Weesan pursuant to the
Establishment Termination Report it submitted to the DOLE-NCR.
Indeed, Article 28371 of the Labor Code allows as a mode of termination of employment the
closure or termination of business. "Closure or cessation of business is the complete or
partial cessation of the operations and/or shut-down of the establishment of the employer. It
is carried out to either stave off the financial ruin or promote the business interest of the
employer."72 "The decision to close business [or to temporarily suspend operation] is a
management prerogative exclusive to the employer, the exercise of which no court or
tribunal can meddle with, except only when the employer fails to prove compliance with the
requirements of Art. 283, to wit: a) that the closure/cessation of business is bona fide, i.e.,
its purpose is to advance the interest of the employer and not to defeat or circumvent the
rights of employees under the law or a valid agreement; b) that written notice was served on
the employees and the DOLE at least one month before the intended date of closure or
cessation of business; and c) in case of closure/cessation of business not due to financial
losses, that the employees affected have been given separation pay equivalent to ½ month
pay for every year of service or one month pay, whichever is higher." 73
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Here, Weesan filed its Establishment Termination Report74 allegedly due to serious
business losses and other economic reasons. However, we are mindful of the doubtful
character of Weesan’s application for closure given the circumstances surrounding the
same.
First, workers Marialy Sy, Vivencia Penullar, Aurora Aguinaldo, Gina Aniano,
Gemma Dela Peña and Efremia Matias filed before the Labor Arbiter their complaint
for underpayment of salary, non-payment of benefits, damages and attorney’s fees
against Weesan on December 23, 2002.75 Summons76 was accordingly issued and
same was received by Susan on January 15, 2003. 77 Meanwhile, other workers
followed suit and filed their respective complaints on January 2, 6, 17 and 28,
2003.78 Shortly thereafter or merely eight days after the filing of the last complaint,
Weesan filed with the DOLE-NCR its Establishment Termination Report.
Second, the Income Tax Returns79 for the years 2000, 2001 and 2002 attached to the
Establishment Termination Report, although bearing the stamped receipt of the
Revenue District Office where they were purportedly filed, contain no signature or
initials of the receiving officer. The same holds true with Weesan’s audited financial
statements.80 This engenders doubt as to whether these documents were indeed filed
with the proper authorities.
Third, there was no showing that Weesan served upon the workers written notice at
least one month before the intended date of closure of business, as required under Art.
283 of the Labor Code. In fact, the workers alleged that when Weesan filed its
Establishment Termination Report on February 5, 2003, it already closed the work
premises and did not anymore allow them to report for work. This is the reason why
the workers on February 18, 2003 amended their complaint to include the charge of
illegal dismissal.81
It bears stressing that "[t]he burden of proving that x x x a temporary suspension
is bona fide falls upon the employer."82 Clearly here, Susan/Weesan was not able to
discharge this burden. The documents Weesan submitted to support its claim of severe

business losses cannot be considered as proof of financial crisis to justify the temporary
suspension of its operations since they clearly appear to have not been duly filed with the
BIR. Weesan failed to satisfactorily explain why the Income Tax Returns and financial
statements it submitted do not bear the signature of the receiving officers. Also hard to
ignore is the absence of the mandatory 30-day prior notice to the workers.
Hence, the Court finds that Susan failed to prove that the suspension of operations of
Weesan was bona fide and that it complied with the mandatory requirement of notice under
the law. Susan likewise failed to discharge her burden of proving that the termination of the
workers was for a lawful cause. Therefore, the NLRC and the CA, in CA-G.R. SP No.
93860, did not err in their findings that the workers were illegally dismissed by
Susan/Weesan.
The formal substitution of the deceased
worker Richon Aparre is not necessary as his heir voluntarily appeared and participated in
the proceedings before the National Labor Relations Commission.
In Sarsaba v. Fe Vda. de Te, we held that:83
The rule on substitution of parties is governed by Section 16, 84 Rule 3 of the [Rules of
Court].
Strictly speaking, the rule on substitution by heirs is not a matter of jurisdiction, but a
requirement of due process. The rule on substitution was crafted to protect every party's
right to due process. It was designed to ensure that the deceased party would continue to be
properly represented in the suit through his heirs or the duly appointed legal representative
of his estate. Moreover, non-compliance with the Rules results in the denial of the right to
due process for the heirs who, though not duly notified of the proceedings, would be
substantially affected by the decision rendered therein. Thus, it is only when there is a
denial of due process, as when the deceased is not represented by any legal representative or
heir, that the court nullifies the trial proceedings and the resulting judgment therein.
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Here, the lack of formal substitution of the deceased worker Richon did not result to
denial of due process as to affect the validity of the proceedings before the NLRC
since his heir, Luzvilla, was aware of the proceedings therein. In fact, she is
considered to have voluntarily appeared before the said tribunal when she signed the
workers’ Memorandum of Appeal filed therewith. "This Court has ruled that formal
substitution of parties is not necessary when the heirs themselves voluntarily appeared,
participated, and presented evidence during the proceedings." 85Hence, the NLRC did
not err in giving due course to the appeal with respect to Richon.
Fairland’s claim of prescription deserves scant consideration.
Fairland asserts that assuming that the workers have valid claims against it, same only
pertain to six out of the 34 workers-complainants. According to Fairland, these six
workers were the only ones who were in the employ of Weesan at the time Fairland
and Weesan had existing contractual relationship in 1996 to 1997. But then, Fairland
contends that the claims of these six workers have already been barred by prescription
as they filed their complaint more than four years from the expiration of the alleged
contractual relationship in 1997. However, the Court notes that the records are bereft
of anything that provides for such alleged contractual relationship and the period
covered by it. Absent anything to support Fairland’s claim, same deserves scant
consideration.
Interestingly, we noticed Fairland’s letter86 dated January 31, 2003 informing Weesan
that it would temporarily not be availing of the latter’s sewing services and at the
same time requesting for the return of the sewing machines it lent to Weesan.
Assuming said letter to be true, why was Fairland terminating Weesan’s services only
on January 31, 2003 when it is now claiming that its contractual relationship with the
latter only lasted until 1997? Thus, we find the contentions rather abstruse.
G.R. No. 182915

"It is basic that the Labor Arbiter cannot acquire jurisdiction over the person of the
respondent without the latter being served with summons." 87 However, "if there is no valid
service of summons, the court can still acquire jurisdiction over the person of the defendant
by virtue of the latter’s voluntary appearance." 88
Although not served with summons, jurisdiction over Fairland and Debbie was acquired
through their voluntary appearance.
It can be recalled that the workers’ original complaints for non-payment/ underpayment of
wages and benefits were only against Susan/Weesan. For these complaints, the Labor
Arbiter issued summons89 to Susan/Weesan which was received by the latter on January 15,
2003.90 The workers thereafter amended their then already consolidated complaints to
include illegal dismissal as an additional cause of action as well as Fairland and Debbie as
additional respondents. We have, however, scanned the records but found nothing to
indicate that summons with respect to the said amended complaints was ever served upon
Weesan, Susan, or Fairland. True to their claim, Fairland and Debbie were indeed never
summoned by the Labor Arbiter.
The crucial question now is: Did Fairland and Debbie voluntarily appear before the Labor
Arbiter as to submit themselves to its jurisdiction?
Fairland argued before the CA that it did not engage Atty. Geronimo as its counsel.
However, the Court held in Santos v. National Labor Relations Commission,91 viz:
In the instant petition for certiorari, petitioner Santos reiterates that he should not have been
adjudged personally liable by public respondents, the latter not having validly acquired
jurisdiction over his person whether by personal service of summons or by substituted
service under Rule 19 of the Rules of Court.
Petitioner’s contention is unacceptable. The fact that Atty. Romeo B. Perez has been able to
timely ask for a deferment of the initial hearing on 14 November 1986, coupled with his
subsequent active participation in the proceedings, should disprove the supposed want of
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service of legal processes. Although as a rule, modes of service of summons are
strictly followed in order that the court may acquire jurisdiction over the person of a
defendant, such procedural modes, however, are liberally construed in quasi-judicial
proceedings, substantial compliance with the same being considered adequate.
Moreover, jurisdiction over the person of the defendant in civil cases is acquired not
only by service of summons but also by voluntary appearance in court and submission
to its authority. ‘Appearance’ by a legal advocate is such ‘voluntary submission to a
court’s jurisdiction’. It may be made not only by actual physical appearance but
likewise by the submission of pleadings in compliance with the order of the court or
tribunal.
To say that petitioner did not authorize Atty. Perez to represent him in the case is to
unduly tax credulity. Like the Solicitor General, the Court likewise considers it
unlikely that Atty. Perez would have been so irresponsible as to represent petitioner if
he were not, in fact, authorized. Atty. Perez is an officer of the court, and he must be
presumed to have acted with due propriety. The employment of a counsel or the
authority to employ an attorney, it might be pointed out, need not be proved in writing;
such fact could [be] inferred from circumstantial evidence. x x x92 (Citations omitted.)
From the records, it appears that Atty. Geronimo first entered his appearance on
behalf of Susan/Weesan in the hearing held on April 3, 2003. 93 Being then newly
hired, he requested for an extension of time within which to file a position paper for
said respondents. On the next scheduled hearing on April 28, 2003, Atty. Geronimo
again asked for another extension to file a position paper for all the respondents
considering that he likewise entered his appearance for Fairland.94 Thereafter, said
counsel filed pleadings such as Respondents’ Position Paper 95 and Respondents’
Consolidated Reply96 on behalf of all the respondents namely, Susan/Weesan,
Fairland and Debbie. The fact that Atty. Geronimo entered his appearance for Fairland
and Debbie and that he actively defended them before the Labor Arbiter raised the
presumption that he is authorized to appear for them. As held in Santos, it is unlikely
that Atty. Geronimo would have been so irresponsible as to represent Fairland and
Debbie if he were not in fact authorized. As an officer of the Court, Atty. Geronimo is

presumed to have acted with due propriety. Moreover, "[i]t strains credulity that a counsel
who has no personal interest in the case would fight for and defend a case with persistence
and vigor if he has not been authorized or employed by the party concerned." 97
We do not agree with the reasons relied upon by the CA’s Special Ninth Division in its May
9, 2008 Resolution in CA-G.R. No. 93204 when it ruled that Fairland, through Atty.
Geronimo, did not voluntarily submit itself to the Labor Arbiter’s jurisdiction.
In so ruling, the CA noted that Atty. Geronimo has no prior authorization from the board of
directors of Fairland to handle the case. Also, the alleged verification signed by Debbie,
who is not one of Fairland’s duly authorized directors or officers, is defective as no board
resolution or secretary’s certificate authorizing her to sign the same was attached thereto.
Because of these, the Special Ninth Division held that the Labor Arbiter committed grave
abuse of discretion in not requiring Atty. Geronimo to show his proof of authority to
represent Fairland considering that the latter is a corporation.
The presumption of authority of counsel to appear on behalf of a client is found both in the
Rules of Court and in the New Rules of Procedure of the NLRC. 98
Sec. 21, Rule 138 of the Rules of Court provides:
Sec. 21. Authority of attorney to appear – An attorney is presumed to be properly
authorized to represent any cause in which he appears, and no written power of attorney is
required to authorize him to appear in court for his client, but the presiding judge may, on
motion of either party and reasonable grounds therefor being shown, require any attorney
who assumes the right to appear in a case to produce or prove the authority under which he
appears, and to disclose whenever pertinent to any issue, the name of the person who
employed him, and may thereupon make such order as justice requires. An attorney
willfully appearing in court for a person without being employed, unless by leave of the
court, may be punished for contempt as an officer of the court who has misbehaved in his
official transactions.
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On the other hand, Sec. 8, Rule III of the New Rules of Procedure of the
NLRC,99 which is the rules prevailing at that time, states in part:
SECTION 8. APPEARANCES. - An attorney appearing for a party is presumed to be
properly authorized for that purpose. However, he shall be required to indicate in his
pleadings his PTR and IBP numbers for the current year.
Between the two provisions providing for such authority of counsel to appear, the
Labor Arbiter is primarily bound by the latter one, the NLRC Rules of Procedure
being specifically applicable to labor cases. As Atty. Geronimo consistently indicated
his PTR and IBP numbers in the pleadings he filed, there is no reason for the Labor
Arbiter not to extend to Atty. Geronimo the presumption that he is authorized to
represent Fairland.
Even if we are to apply Sec. 21, Rule 138 of the Rules of Court, the Labor Arbiter
cannot be expected to require Atty. Geronimo to prove his authority under said
provision since there was no motion to that effect from either party showing
reasonable grounds therefor. Moreover, the fact that Debbie signed the verification
attached to the position paper filed by Atty. Geronimo, without a secretary’s
certificate or board resolution attached thereto, is not sufficient reason for the Labor
Arbiter to be on his guard and require Atty. Geronimo to prove his authority. Debbie,
as General Manager of Fairland is one of the officials of the company who can sign
the verification without need of a board resolution because as such, she is in a position
to verify the truthfulness and correctness of the
allegations in the petition.100
Although we note that Fairland filed a disbarment case against Atty. Geronimo due to
the former’s claim of unauthorized appearance, we hold that same is not sufficient to
overcome the presumption of authority. Such mere filing is not proof of Atty.
Geronimo’s alleged unauthorized appearance. Suffice it to say that an attorney’s
presumption of authority is a strong one. 101 "A mere denial by a party that he

authorized an attorney to appear for him, in the absence of a compelling reason, is
insufficient to overcome the presumption, especially when the denial comes after the
rendition of an adverse judgment," 102 such as in the present case.
Citing PNOC Dockyard and Engineering Corporation v. National Labor Relations
Commission,103 the CA likewise emphasized that in labor cases, both the party and his
counsel must be duly served their separate copies of the order, decision or resolution unlike
in ordinary proceedings where notice to counsel is deemed notice to the party. It then
quoted Article 224 of the Labor Code as follows:
ARTICLE 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 [R]egional
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 decision, orders or
awards. Failure to comply with the duty prescribed herein shall subject such responsible
officer to appropriate administrative sanctions x x x (Emphasis in the original). 104
The CA then concluded that since Fairland and its counsel were not separately furnished
with a copy of the August 26, 2005 NLRC Resolution denying the motions for
reconsideration of its November 30, 2004 Decision, said Decision cannot be enforced
against Fairland. The CA likewise concluded that because of this, said November 30, 2004
Decision which held Susan/Weesan and Fairland solidarily liable to the workers, has not
attained finality.
We cannot agree. In Ginete v. Sunrise Manning Agency105 we held that:
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The case of PNOC Dockyard and Engineering Corporation vs. NLRC cited by
petitioner enunciated that ‘in labor cases, both the party and its counsel must be duly
served their separate copies of the order, decision or resolution; unlike in ordinary
judicial proceedings where notice to counsel is deemed notice to the party.’ Reference
was made therein to Article 224 of the Labor Code. But, as correctly pointed out by
private respondent in its Comment to the petition, Article 224 of the Labor Code does
not govern the procedure for filing a petition for certiorari with the Court of Appeals
from the decision of the NLRC but rather, it refers to the execution of ‘final decisions,
orders or awards’ and requires the sheriff or a duly deputized officer to furnish both
the parties and their counsel with copies of the decision or award for that purpose.
There is no reference, express or implied, to the period to appeal or to file a petition
for certiorari as indeed the caption is ‘execution of decisions, orders or awards’.
Taken in proper context, Article 224 contemplates the furnishing of copies of ‘final
decisions, orders or awards’ and could not have been intended to refer to the period
for computing the period for appeal to the Court of Appeals from a non-final
judgment or order. The period or manner of ‘appeal’ from the NLRC to the Court of
Appeals is governed by Rule 65 pursuant to the ruling of the Court in the case of St.
Martin Funeral Homes vs. NLRC. Section 4 of Rule 65, as amended, states that the
‘petition may be filed not later than sixty (60) days from notice of the judgment, or
resolution sought to be assailed’.
Corollarily, Section 4, Rule III of the New Rules of Procedure of the NLRC expressly
mandates that ‘(F)or the purposes of computing the period of appeal, the same shall be
counted from receipt of such decisions, awards or orders by the counsel of record.’
Although this rule explicitly contemplates an appeal before the Labor Arbiter and the
NLRC, we do not see any cogent reason why the same rule should not apply to
petitions for certiorari filed with the Court of Appeals from decisions of the
NLRC. This procedure is in line with the established rule that notice to counsel is
notice to party and when a party is represented by counsel, notices should be
made upon the counsel of record at his given address to which notices of all kinds
emanating from the court should be sent. It is to be noted also that Section 7 of
the NLRC Rules of Procedure provides that ‘(A)ttorneys and other

representatives of parties shall have authority to bind their clients in all matters of
procedure’’ a provision which is similar to Section 23, Rule 138 of the Rules of Court.
More importantly, Section 2, Rule 13 of the 1997 Rules of Civil Procedure analogously
provides that if any party has appeared by counsel, service upon him shall be made
upon his counsel. (Citations omitted; emphasis supplied)
To stress, Article 224 contemplates the furnishing of copies of final decisions, orders or
awards both to the parties and their counsel in connection with the execution of such final
decisions, orders or awards. However, for the purpose of computing the period for filing an
appeal from the NLRC to the CA, same shall be counted from receipt of the decision, order
or award by the counsel of record pursuant to the established rule that notice to counsel is
notice to party. And since the period for filing of an appeal is reckoned from the counsel’s
receipt of the decision, order or award, it necessarily follows that the reckoning period for
their finality is likewise the counsel’s date of receipt thereof, if a party is represented by
counsel. Hence, the date of receipt referred to in Sec. 14, Rule VII of the then in force New
Rules of Procedure of the NLRC106 which provides that decisions, resolutions or orders of
the NLRC shall become executory after 10 calendar days from receipt of the same, refers to
the date of receipt by counsel. Thus contrary to the CA’s conclusion, the said NLRC
Decision became final, as to Fairland, 10 calendar days after Atty. Tecson’s
receipt107 thereof.108 In sum, we hold that the Labor Arbiter had validly acquired jurisdiction
over Fairland and its manager, Debbie, through the appearance of Atty. Geronimo as their
counsel and likewise, through the latter’s filing of pleadings on their behalf.
Fairland is Weesan’s principal. In addition to our discussion in G.R. No. 189658 with
respect to the finding that Susan/Weesan is a mere labor-only contractor which we find to
be likewise significant here, a careful examination of the records reveals other telling facts
that Fairland is Susan/Weesan’s principal, to wit: (1) aside from sewing machines, Fairland
also lent Weesan other equipment such as fire extinguishers, office tables and chairs, and
plastic chairs;109 (2) no proof evidencing the contractual arrangement between Weesan and
Fairland was ever submitted by Fairland; (3) while both Weesan and Fairland assert that the
former had other clients aside from the latter, no proof of Weesan’s contractual relationship
with its other alleged client is extant on the records; and (4) there is no showing that any of
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the workers were assigned to other clients aside from Fairland. Moreover, as found by
the NLRC and affirmed by both the Special Former Special Eighth Division in
CA-G.R. SP No. 93860 and the First Division in CA-G.R. SP No. 93204, the
activities, the manner of work and the movement of the workers were subject to
Fairland’s control. It bears emphasizing that "factual findings of quasi-judicial
agencies like the NLRC, when affirmed by the Court of Appeals, as in the present
case, are conclusive upon the parties and binding on this Court." 110
Viewed in its entirety, we thus declare that Fairland is the principal of the labor-only
contractor, Weesan.
Fairland, therefore, as the principal employer, is solidarily liable with Susan/Weesan,
the labor-only contractor, for the rightful claims of the employees. Under this set-up,
Susan/Weesan, as the "labor-only" contractor, is deemed an agent of the principal,
Fairland, and the law makes the principal responsible to the employees of the
"labor-only" contractor as if the principal itself directly hired or employed the
employees.111
WHEREFORE, the Court,
1) in G.R. No. 189658, denies the Petition for Review on Certiorari. The assailed
Decision dated July 20, 2009 and Resolution dated October 1, 2009 of the Special
Former Special Eighth Division of the Court of Appeals in CA-G.R. No. 93860 are
AFFIRMED.
2) in G.R. No. 182915, grants the Petition for Review on Certiorari. The assailed
Resolution dated May 9, 2008 of the Special Ninth Division of the Court of Appeals
in CA-G.R. No. 93204 is hereby REVERSED and SET ASIDE and the Decision
dated July 25, 2007 of the First Division of the Court of Appeals is REINSTATED
and AFFIRMED.
SO ORDERED.

G.R. No. 126322 January 16, 2002
YUPANGCO COTTON MILLS, INC., petitioner,
vs.
COURT OF APPEALS, HON. URBANO C. VICTORIO, SR., Presiding Judge, RTC
Branch 50, Manila, RODRIGO SY MENDOZA, SAMAHANG MANGGAGAWA NG
ARTEX (SAMAR-ANGLO) represented by its Local President RUSTICO CORTEZ,
and WESTERN GUARANTY CORPORATION, respondents.
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PARDO, J.:
The Case
The case is a petition for review on certiorari of the decision of the Court of Appeals1
dismissing the petition ruling that petitioner was guilty of forum shopping and that the
proper remedy was appeal in due course, not certiorari or mandamus.
In its decision, the Court of Appeals sustained the trial court's ruling that the remedies
granted under Section 17, Rule 39 of the Rules of Court are not available to the
petitioner because the Manual of Instructions for Sheriffs of the NLRC does not
include the remedy of an independent action by the owner to establish his right to his
property.
The Facts
The facts, as found by the Court of Appeals, are as follows:
"From the records before us and by petitioner's own allegations and admission, it has
taken the following actions in connection with its claim that a sheriff of the National
Labor Relations Commission "erroneously and unlawfully levied" upon certain
properties which it claims as its own.
"1. It filed a notice of third-party claim with the Labor Arbiter on May 4, 1995.
"2. It filed an Affidavit of Adverse Claim with the National Labor Relations
Commission (NLRC) on July 4, 1995, which was dismissed on August 30, 1995, by
the labor Arbiter.
"3. It filed a petition for certiorari and prohibition with the Regional Trial Court of
Manila, Branch 49, docketed as Civil Case No. 95-75628 on October 6, 1995. The
Regional Trial Court dismissed the case on October 11, 1995 for lack of merit.

"4. It appealed to the NLRC the order of the Labor Arbiter dated August 13, 1995 which
dismissed the appeal for lack of merit on December 8, 1995.
"5. It filed an original petition for mandatory injunction with the NLRC on November 16,
1995. This was docketed as Case No. NLRC-NCR-IC. 0000602-95. This case is still
pending with that Commission.
"6. It filed a complaint in the Regional Trial Court in Manila which was docketed as Civil
Case No. 95-76395. The dismissal of this case by public respondent triggered the filing of
the instant petition.
"In all of the foregoing actions, petitioner raised a common issue, which is that it is the
owner of the properties located in the compound and buildings of Artex Development
Corporation, which were erroneously levied upon by the sheriff of the NLRC as a
consequence of the decision rendered by the said Commission in a labor case docketed as
NLRC-NCR Case No. 00-05-02960-90."2
On March 29, 1996, the Court of Appeals promulgated a decision3 dismissing the petition
on the ground of forum shopping and that petitioner's remedy was to seek relief from this
Court.
On April 18, 1996, petitioner filed with the Court of Appeals a motion for reconsideration
of the decision.4 Petitioner argued that the filing of a complaint for accion
reinvindicatoria with the Regional Trial Court was proper because it is a remedy
specifically granted to an owner (whose properties were subjected to a writ of execution to
enforce a decision rendered in a labor dispute in which it was not a party) by Section 17
(now 16), Rule 39, Revised Rules of Court and by the doctrines laid down in Sy v.
Discaya,5 Santos v. Bayhon6 and Manliguez v. Court of Appeals.7
In addition, petitioner argued that the reliefs sought and the issues involved in the complaint
for recovery of property and damages filed with the Regional Trial Court of Manila,
presided over by respondent judge, were entirely distinct and separate from the reliefs
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sought and the issues involved in the proceedings before the Labor Arbiter and the
NLRC. Besides, petitioner pointed out that neither the NLRC nor the Labor Arbiter is
empowered to adjudicate matters involving ownership of properties.
On August 27, 1996, the Court of Appeals denied petitioner's motion for
reconsideration.8
Hence, this appeal.9
The Issues
The issues raised are (1) whether the Court of Appeals erred in ruling that petitioner
was guilty of forum shopping, and (2) whether the Court of Appeals erred in
dismissing the petitioner's accion reinvindicatoria on the ground of lack of
jurisdiction of the trial court.
The Court's Ruling
On the first issue raised, we rule that there was no forum shopping:
In Golangco v. Court of Appeals,10 we held:
"What is truly important to consider in determining whether forum shopping exists or
not is the vexation caused the courts and parties-litigant by a party who asks different
courts and/or administrative agencies to rule on the same on related caused and/or
grant the same or substantially the same reliefs, in the process creating possibility of
conflicting decisions being rendered by the different for a upon the same issues.
"xxx xxx xxx

"There is no forum-shopping where two different orders were questioned, two distinct
causes of action and issues were raised, and two objectives were sought." (Underscoring
ours)
In the case at bar, there was no identity of parties, rights and causes of action and reliefs
sought.
The case before the NLRC where Labor Arbiter Reyes issued a labor dispute between Artex
and Samar-Anglo. Petitioner was not a party to the case. The only issue petitioner raised
before the NLRC was whether or not the writ of execution issued by the labor arbiter could
be satisfied against the property of petitioner, not a party to the labor case.
On the other hand, the accion reinvindicatoria filed by petitioner in the trial court was to
recover the property illegally levied upon and sold at auction. Hence, the causes of action in
these cases were different.
The rule is that "for forum-shopping to exist both actions must involve the same
transactions, the same circumstances. The actions must also raise identical causes of action,
subject matter and issues.11
In Chemphil Export & Import Corporation v. Court of Appeals, 12 we ruled that:
"Forum-shopping or the act of a party against whom an adverse judgment has been rendered
in one forum, of seeking another (and possible) opinion in another forum (other than by
appeal or the special civil action of certiorari), or the institution of two (2) or more actions
or proceedings grounded on the same cause on the supposition that one or the other would
make a favorable disposition."
On the second issue, a third party whose property has been levied upon by a sheriff to
enforce a decision against a judgment debtor is afforded with several alternative remedies to
protect its interests. The third party may avail himself of alternative remedies cumulatively,
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and one will not preclude the third party from availing himself of the other alternative
remedies in the event he failed in the remedy first availed of.
Thus, a third party may avail himself of the following alternative remedies:
a) File a third party claim with the sheriff of the Labor Arbiter, and
b) If the third party claim is denied, the third party may appeal the denial to the
NLRC.13
Even if a third party claim was denied, a third party may still file a proper action with
a competent court to recover ownership of the property illegally seized by the sheriff.
This finds support in Section 17 (now 16), Rule 39, Revised Rules of Court, to wit:
"SEC. 17 (now 16). Proceedings where property claimed by third person. - If property
claimed by any other person than the judgment debtor or his agent, and such person
makes an affidavit of his title thereto or right to the possession thereof, stating the
grounds of such right or title, and serve the same upon the officer making the levy,
and a copy thereof upon the judgment creditor, the officer shall not be bound to keep
the property, unless such judgment creditor or his agent, on demand of the officer,
indemnify the officer against such claim by a bond in a sum not greater than the value
of the property levied on. In case of disagreement as to such value, the same shall be
determined by the court issuing the writ of execution. 1âwphi1.nêt
"The officer is not liable for damages, for the taking or keeping of the property, to any
third-party claimant unless a claim is made by the latter and unless an action for
damages is brought by him against the officer within one hundred twenty (120) days
from the date of the filing of the bond. But nothing herein contained shall prevent
such claimant or any third person from vindicating his claim to the property by any
proper action.

"When the party in whose favor the writ of execution runs, is the Republic of the
Philippines, or any officer duly representing it, the filing of such bond shall not be required,
and in case the sheriff or levying officer is sued for damages as a result of the levy, he shall
be represented by the Solicitor General and if held liable therefor, the actual damages
adjudged by the court shall be paid by the National Treasurer out of such funds as may be
appropriated for the purpose." (Underscoring ours)
In Sy v. Discaya,14 we ruled that:
"The right of a third-party claimant to file an independent action to vindicate his claim of
ownership over the properties seized is reserved by Section 17 (now 16), Rule 39 of the
Rules of Court, x x x :
"xxx xxx xxx
"As held in the case of Ong v. Tating, et. al., construing the aforecited rule, a third person
whose property was seized by a sheriff to answer for the obligation of a judgment debtor
may invoke the supervisory power of the court which authorized such execution. Upon due
application by the third person and after summary hearing, the court may command that the
property be released from the mistaken levy and restored to the rightful owner or
possession. What said court do in these instances, however, is limited to a determination of
whether the sheriff has acted rightful or wrongly in the performance of his duties in the
execution of judgment, more specifically, if he has indeed take hold of property not
belonging to the judgment debtor. The court does not and cannot pass upon the question
of title to the property, with any character of finality. It can treat of the matter only insofar
as may be necessary to decide if the sheriff has acted correctly or not. It can require the
sheriff to restore the property to the claimant's possession if warranted by the evidence.
However, if the claimant's proof do not persuade the court of the validity of his title or right
of possession thereto, the claim will be denied.
"Independent of the above-stated recourse, a third-party claimant may also avail of the
remedy known as "terceria', provided in Section 17 (now 16), Rule 39, by serving on the
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officer making the levy an affidavit of his title and a copy thereof upon the judgment
creditor. The officer shall not be bound to keep the property, unless such judgment
creditor or his agent, on demand of the officer, indemnifies the officer against such
claim by a bond in a sum not greater than the value of the property levied on. An
action for damages may be brought against the sheriff within one hundred twenty (120)
days from the filing of the bond.
"The aforesaid remedies are nevertheless without prejudice to 'any proper action' that
a third-party claimant may deem suitable to vindicate 'his claim to the property.' Such
a 'proper action' is, obviously, entirely distinct from that explicitly prescribed in
Section 17 of Rule 39, which is an action for damages brought by a third-party
claimant against the officer within one hundred twenty (120) days from the date of the
filing of the bond for the taking or keeping of the property subject of the 'terceria'.
"Quite obviously, too, this 'proper action' would have for its object the recovery of
ownership or possession of the property seized by the sheriff, as well as damages
resulting from the allegedly wrongful seizure and detention thereof despite the
third-party claim; and it may be brought against the sheriff and such other parties as
may be alleged to have colluded with him in the supposedly wrongful execution
proceedings, such as the judgment creditor himself. Such 'proper action', as above
pointed out, is and should be an entirely separate and distinct action from that in
which execution has issued, if instituted by a stranger to the latter suit.
"The remedies above mentioned are cumulative and may be resorted to by a
third-party claimant independent of or separately from and without need of
availing of the others. If a third-party claimant opted to file a proper action to
vindicate his claim of ownership, he must institute an action, distinct and separate
from that in which the judgment is being enforced, with the court of competent
jurisdiction even before or without need of filing a claim in the court which issued the
writ, the latter not being a condition sine qua non for the former. In such proper action,
the validity and sufficiency of the title of the third-party claimant will be resolved and

a writ of preliminary injunction against the sheriff may be issued." (Emphasis and
underscoring ours)
In light of the above, the filing of a third party claim with the Labor Arbiter and the NLRC
did not preclude the petitioner from filing a subsequent action for recovery of property and
damages with the Regional Trial Court. And, the institution of such complaint will not
make petitioner guilty of forum shopping.15
In Santos v. Bayhon,16 wherein Labor Arbiter Ceferina Diosana rendered a decision in
NLRC NCR Case No. 1-313-85 in favor of Kamapi, the NLRC affirmed the decision.
Thereafter, Kamapi obtained a writ of execution against the properties of Poly-Plastic
Products or Anthony Ching. However, respondent Priscilla Carrera filed a third-party claim
alleging that Anthony Ching had sold the property to her. Nevertheless, upon posting by the
judgment creditor of an indemnity bond, the NLRC Sheriff proceeded with the public
auction sale. Consequently, respondent Carrera filed with Regional Trial Court, Manila an
action to recover the levied property and obtained a temporary restraining order against
Labor Arbiter Diosana and the NLRC Sheriff from issuing a certificate of sale over the
levied property. Eventually, Labor Arbiter Santos issued an order allowing the execution to
proceed against the property of Poly-Plastic Products. Also, Labor Arbiter Santos and the
NLRC Sheriff filed a motion to dismiss the civil case instituted by respondent Carrera on
the ground that the Regional Trial Court did not have jurisdiction over the labor case. The
trial court issued an order enjoining the enforcement of the writ of execution over the
properties claimed by respondent Carrera pending the determination of the validity of the
sale made in her favor by the judgment debtor Poly-Plastic Products and Anthony Ching.
In dismissing the petition for certiorari filed by Labor Arbiter Santos, we ruled that:
"x x x. The power of the NLRC to execute its judgments extends only to properties
unquestionably belonging to the judgment debtor (Special Servicing Corp. v. Centro La Paz,
121 SCRA 748).
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"The general rule that no court has the power to interfere by injunction with the
judgments or decrees of another court with concurrent or coordinate jurisdiction
possessing equal power to grant injunctive relief, applies only when no third-party
claimant is involved (Traders Royal Bank v. Intermediate Appellate Court, 133 SCRA
141 [1984]). When a third-party, or a stranger to the action, asserts a claim over the
property levied upon, the claimant may vindicate his claim by an independent action
in the proper civil court which may stop the execution of the judgment on property not
belonging to the judgment debtor." (Underscoring ours)
in Consolidated Bank and Trust Corp. v. Court of Appeals, 193 SCRA 158 [1991], we
ruled that:
"The well-settled doctrine is that a 'proper levy' is indispensable to a valid sale on
execution. A sale unless preceded by a valid levy is void. Therefore, since there was
no sufficient levy on the execution in question, the private respondent did not take any
title to the properties sold thereunder x x x.
"A person other than the judgment debtor who claims ownership or right over the
levied properties is not precluded, however, from taking other legal remedies."
(Underscoring ours)
Jurisprudence is likewise replete with rulings that since the third-party claimant is not
one of the parties to the action, he could not, strictly speaking, appeal from the order
denying his claim, but should file a separate reinvindicatory action against the
execution creditor or the purchaser of the property after the sale at public auction, or a
complaint for damages against the bond filed by the judgment creditor in favor of the
sheriff.17
And in Lorenzana v. Cayetano,18 we ruled that:
"The rights of a third-party claimant should not be decided in the action where the
third-party claim has been presented, but in a separate action to be instituted by the

third person. The appeal that should be interposed if the term 'appeal' may properly be
employed, is a separate reinvidincatory action against the execution creditor or the
purchaser of the property after the sale at public auction, or complaint for damages to be
charged against the bond filed by the judgment creditor in favor of the sheriff. Such
reinvindicatory action is reserved to the third-party claimant."
A separate civil action for recovery of ownership of the property would not constitute
interference with the powers or processes of the Arbiter and the NLRC which rendered the
judgment to enforce and execute upon the levied properties. The property levied upon being
that of a stranger is not subject to levy. Thus, a separate action for recovery, upon a claim
and prima-facie showing of ownership by the petitioner, cannot be considered as
interference.
The Fallo
WHEREFORE, the Court REVERSES the decision of the Court of Appeals and the
resolution denying reconsideration.19 In lieu thereof, the Court renders
judgment ANNULLING the sale on execution of the subject property conducted by NLRC
Sheriff Anam Timbayan in favor of respondent SAMAR-ANGLO and the subsequent sale
of the same to Rodrigo Sy Mendoza. The Court declares the petitioner to be the rightful
owner of the property involved and remands the case to the trial court to determine the
liability of respondents SAMAR-ANGLO, Rodrigo Sy Mendoza, and WESTERN
GUARANTY CORPORATION to pay actual damages that petitioner claimed.
Costs against respondents, except the Court of Appeals.1âwphi1.nêt
SO ORDERED.
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G.R. No. 184007 February 16, 2011
PAQUITO V. ANDO, Petitioner,
vs.
ANDRESITO Y. CAMPO, ET AL., Respondents.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of
Court. Petitioner Paquito V. Ando (petitioner) is assailing the Decision2 dated
February 21, 2008 and the Resolution3 dated July 25, 2008 of the Court of Appeals
(CA) in CA-G.R. CEB-SP. No. 02370.
Petitioner was the president of Premier Allied and Contracting Services, Inc. (PACSI),
an independent labor contractor. Respondents were hired by PACSI as pilers or
haulers tasked to manually carry bags of sugar from the warehouse of Victorias
Milling Company and load them on trucks.4 In June 1998, respondents were dismissed
from employment. They filed a case for illegal dismissal and some money claims with
the National Labor Relations Commission (NLRC), Regional Arbitration Branch No.
VI, Bacolod City.5
On June 14, 2001, Labor Arbiter Phibun D. Pura (Labor Arbiter)
promulgated a decision, ruling in respondents’ favor. 6 PACSI and

petitioner were directed to pay a total of ₱422,702.28, representing
respondents’ separation pay and the award of attorney’s fees. 7
Petitioner and PACSI appealed to the NLRC. In a decision8 dated October 20, 2004, the
NLRC ruled that petitioner failed to perfect his appeal because he did not pay the
supersedeas bond. It also affirmed the Labor Arbiter’s decision with modification of the
award for separation pay to four other employees who were similarly situated. Upon finality
of the decision, respondents moved for its execution.9
To answer for the monetary award, NLRC Acting Sheriff Romeo Pasustento issued a
Notice of Sale on Execution of Personal Property10 over the property covered by Transfer
Certificate of Title (TCT) No. T-140167 in the name of "Paquito V. Ando x x x married to
Erlinda S. Ando."
This prompted petitioner to file an action for prohibition and damages with prayer for the
issuance of a temporary restraining order (TRO) before the Regional Trial Court (RTC),
Branch 50, Bacolod City. Petitioner claimed that the property belonged to him and his wife,
not to the corporation, and, hence, could not be subject of the execution sale. Since it is the
corporation that was the judgment debtor, execution should be made on the latter’s
properties.11
On December 27, 2006, the RTC issued an Order 12 denying the prayer for a TRO, holding
that the trial court had no jurisdiction to try and decide the case. The RTC ruled that,
pursuant to the NLRC Manual on the Execution of Judgment, petitioner’s remedy was to
file a third-party claim with the NLRC Sheriff. Despite lack of jurisdiction, however, the
RTC went on to decide the merits of the case.
Petitioner did not file a motion for reconsideration of the RTC Order. Instead, he filed a
petition for certiorari under Rule 6513 before the CA. He contended that the RTC acted
without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or
excess of jurisdiction in issuing the Order. Petitioner argued that the writ of execution was
issued improvidently or without authority since the property to be levied belonged to him –
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in his personal capacity – and his wife. The RTC, respondent contended, could stay
the execution of a judgment if the same was unjust.14 He also contended that, pursuant
to a ruling of this Court, a third party who is not a judgment creditor may choose
between filing a third-party claim with the NLRC sheriff or filing a separate action
with the courts.15
In the Decision now assailed before this Court, the CA affirmed the RTC Order in so
far as it dismissed the complaint on the ground that it had no jurisdiction over the case,
and nullified all other pronouncements in the same Order. Petitioner moved for
reconsideration, but the motion was denied.lawph!l
Petitioner then filed the present petition seeking the nullification of the CA Decision.
He argues that he was never sued in his personal capacity, but in his representative
capacity as president of PACSI. Neither was there any indication in the body of the
Decision that he was solidarily liable with the corporation. 16 He also concedes that the
Labor Arbiter’s decision has become final. Hence, he is not seeking to stop the
execution of the judgment against the properties of PACSI. He also avers, however,
that there is no evidence that the sheriff ever implemented the writ of execution
against the properties of PACSI.17
Petitioner also raises anew his argument that he can choose between filing a
third-party claim with the sheriff of the NLRC or filing a separate action. 18 He
maintains that this special civil action is purely civil in nature since it "involves the
manner in which the writ of execution in a labor case will be implemented against the
property of petitioner which is not a corporate property of PACSI." 19 What he is
seeking to be restrained, petitioner maintains, is not the Decision itself but the manner
of its execution.20 Further, he claims that the property levied has been constituted as a
family home within the contemplation of the Family Code. 21
The petition is meritorious.

Initially, we must state that the CA did not, in fact, err in upholding the RTC’s lack of
jurisdiction to restrain the implementation of the writ of execution issued by the Labor
Arbiter.
The Court has long recognized that regular courts have no jurisdiction to hear and decide
questions which arise from and are incidental to the enforcement of decisions, orders, or
awards rendered in labor cases by appropriate officers and tribunals of the Department of
Labor and Employment. To hold otherwise is to sanction splitting of jurisdiction which is
obnoxious to the orderly administration of justice.22
Thus, it is, first and foremost, the NLRC Manual on the Execution of Judgment that governs
any question on the execution of a judgment of that body. Petitioner need not look further
than that. The Rules of Court apply only by analogy or in a suppletory character. 23
Consider the provision in Section 16, Rule 39 of the Rules of Court on third-party claims:
SEC. 16. Proceedings where property claimed by third person.—If the property levied on is
claimed by any person other than the judgment obligor or his agent, and such person makes
an affidavit of his title thereto or right to the possession thereof, stating the grounds of such
right or title, and serves the same upon the officer making the levy and a copy thereof upon
the judgment obligee, the officer shall not be bound to keep the property, unless such
judgment obligee, on demand of the officer, files a bond approved by the court to indemnify
the third-party claimant in a sum not less than the value of the property levied on. In case of
disagreement as to such value, the same shall be determined by the court issuing the writ of
execution. No claim for damages for the taking or keeping of the property may be enforced
against the bond unless the action therefor is filed within one hundred twenty (120) days
from the date of the filing of the bond.
The officer shall not be liable for damages for the taking or keeping of the property, to any
third-party claimant if such bond is filed. Nothing herein contained shall prevent such
claimant or any third person from vindicating his claim to the property in a separate action,
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or prevent the judgment obligee from claiming damages in the same or a separate
action against a third-party claimant who filed a frivolous or plainly spurious claim.
When the writ of execution is issued in favor of the Republic of the Philippines, or
any officer duly representing it, the filing of such bond shall not be required, and in
case the sheriff or levying officer is sued for damages as a result of the levy, he shall
be represented by the Solicitor General and if held liable therefor, the actual damages
adjudged by the court shall be paid by the National Treasurer out of such funds as
may be appropriated for the purpose.
On the other hand, the NLRC Manual on the Execution of Judgment deals specifically
with third-party claims in cases brought before that body. It defines a third-party claim
as one where a person, not a party to the case, asserts title to or right to the possession
of the property levied upon.24 It also sets out the procedure for the filing of a
third-party claim, to wit:
SECTION 2. Proceedings. — If property levied upon be claimed by any person other
than the losing party or his agent, such person shall make an affidavit of his title
thereto or right to the possession thereof, stating the grounds of such right or title and
shall file the same with the sheriff and copies thereof served upon the Labor Arbiter or
proper officer issuing the writ and upon the prevailing party. Upon receipt of the third
party claim, all proceedings with respect to the execution of the property subject of the
third party claim shall automatically be suspended and the Labor Arbiter or proper
officer issuing the writ shall conduct a hearing with due notice to all parties concerned
and resolve the validity of the claim within ten (10) working days from receipt thereof
and his decision is appealable to the Commission within ten (10) working days from
notice, and the Commission shall resolve the appeal within same period.
There is no doubt in our mind that petitioner’s complaint is a third- party claim within
the cognizance of the NLRC. Petitioner may indeed be considered a "third party" in
relation to the property subject of the execution vis-à-vis the Labor Arbiter’s decision.
There is no question that the property belongs to petitioner and his wife, and not to the

corporation. It can be said that the property belongs to the conjugal partnership, not to
petitioner alone. Thus, the property belongs to a third party, i.e., the conjugal partnership.
At the very least, the Court can consider that petitioner’s wife is a third party within
contemplation of the law.
The Court’s pronouncements in Deltaventures Resources, Inc. v. Hon. Cabato25 are
instructive:
Ostensibly the complaint before the trial court was for the recovery of possession and
injunction, but in essence it was an action challenging the legality or propriety of the
levy vis-a-vis the alias writ of execution, including the acts performed by the Labor Arbiter
and the Deputy Sheriff implementing the writ. The complaint was in effect a motion to
quash the writ of execution of a decision rendered on a case properly within the jurisdiction
of the Labor Arbiter, to wit: Illegal Dismissal and Unfair Labor Practice. Considering the
factual setting, it is then logical to conclude that the subject matter of the third party claim is
but an incident of the labor case, a matter beyond the jurisdiction of regional trial courts.
xxxx
x x x. Whatever irregularities attended the issuance an execution of the alias writ of
execution should be referred to the same administrative tribunal which rendered the
decision. This is because any court which issued a writ of execution has the inherent power,
for the advancement of justice, to correct errors of its ministerial officers and to control its
own processes.
The broad powers granted to the Labor Arbiter and to the National Labor Relations
Commission by Articles 217, 218 and 224 of the Labor Code can only be interpreted as
vesting in them jurisdiction over incidents arising from, in connection with or relating to
labor disputes, as the controversy under consideration, to the exclusion of the regular
courts.26
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There is no denying that the present controversy arose from the complaint for illegal
dismissal. The subject matter of petitioner’s complaint is the execution of the NLRC
decision. Execution is an essential part of the proceedings before the NLRC.
Jurisdiction, once acquired, continues until the case is finally terminated,27 and there
can be no end to the controversy without the full and proper implementation of the
commission’s directives.
Further underscoring the RTC’s lack of jurisdiction over petitioner’s complaint is
Article 254 of the Labor Code, to wit:
ART. 254. INJUNCTION PROHIBITED. – No temporary or permanent injunction or
restraining order in any case involving or growing out of labor disputes shall be issued
by any court or other entity, except as otherwise provided in Articles 218 and 264 of
this Code.
That said, however, we resolve to put an end to the controversy right now, considering
the length of time that has passed since the levy on the property was made.
Petitioner claims that the property sought to be levied does not belong to PACSI, the
judgment debtor, but to him and his wife. Since he was sued in a representative
capacity, and not in his personal capacity, the property could not be made to answer
for the judgment obligation of the corporation.
The TCT28 of the property bears out that, indeed, it belongs to petitioner and his wife.
Thus, even if we consider petitioner as an agent of the corporation – and, therefore,
not a stranger to the case – such that the provision on third-party claims will not apply
to him, the property was registered not only in the name of petitioner but also of his
wife. She stands to lose the property subject of execution without ever being a party to
the case. This will be tantamount to deprivation of property without due process.
Moreover, the power of the NLRC, or the courts, to execute its judgment extends only
to properties unquestionably belonging to the judgment debtor alone. 29 A sheriff,
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therefore, has no authority to attach the property of any person except that of the judgment
debtor.30 Likewise, there is no showing that the sheriff ever tried to execute on the
properties of the corporation.

In sum, while petitioner availed himself of the wrong remedy to vindicate his rights,
nonetheless, justice demands that this Court look beyond his procedural missteps and grant
the petition.

WHEREFORE, the foregoing premises considered, the petition is GRANTED. The

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

SO ORDERED.