Republic

 of  the  Philippines  

SUPREME  COURT  
Manila  

EN  BANC  

   

G.R.  No.  118651  October  16,  1997  

PIONEER  TEXTURIZING  CORP.  and/or  JULIANO  LIM,  petitioner,    

vs.  
NATIONAL  LABOR  RELATIONS  COMMISSION,  PIONEER  TEXTURIZING  WORKERS  UNION  and  
LOURDES  A.  DE  JESUS,  respondents.  

   

FRANCISCO,  J.:  

The  facts  are  as  follows:  

Private  respondent  Lourdes  A.  de  Jesus  is  petitioners'  reviser/trimmer  since  1980.  As  
reviser/trimmer,  de  Jesus  based  her  assigned  work  on  a  paper  note  posted  by  petitioners.  The  posted  
paper  which  contains  the  corresponding  price  for  the  work  to  be  accomplished  by  a  worker  is  
identified  by  its  P.O.  Number.  On  August  15,  1992,  de  Jesus  worked  on  P.O.  No.  3853  by  trimming  the  
cloths'  ribs.  She  thereafter  submitted  tickets  corresponding  to  the  work  done  to  her  supervisor.  
Three  days  later,  de  Jesus  received  from  petitioners'  personnel  manager  a  memorandum  requiring  
her  to  explain  why  no  disciplinary  action  should  be  taken  against  her  for  dishonesty  and  tampering  
of  official  records  and  documents  with  the  intention  of  cheating  as  P.O.  No.  3853  allegedly  required  
no  trimming.  The  memorandum  also  placed  her  under  preventive  suspension  for  thirty  days  starting  
from  August  19,  1992.  In  her  handwritten  explanation,  de  Jesus  maintained  that  she  merely  
committed  a  mistake  in  trimming  P.O.  No.  3853  as  it  has  the  same  style  and  design  as  P.O.  No.  3824  
which  has  an  attached  price  list  for  trimming  the  ribs  and  admitted  that  she  may  have  been  negligent  
in  presuming  that  the  same  work  was  to  be  done  with  P.O.  No.  3853,  but  not  for  dishonesty  or  
tampering.  Petitioners'  personnel  department,  nonetheless,  terminated  her  from  employment  and  
sent  her  a  notice  of  termination  dated  September  18,  1992.  

On  September  22,  1992,  de  Jesus  filed  a  complaint  for  illegal  dismissal  against  petitioners.  The  Labor  
Arbiter  who  heard  the  case  noted  that  de  Jesus  was  amply  accorded  procedural  due  process  in  her  
termination  from  service.  Nevertheless,  after  observing  that  de  Jesus  made  some  further  trimming  on  
P.O.  No.  3853  and  that  her  dismissal  was  not  justified,  the  Labor  Arbiter  held  petitioners  guilty  of  
illegal  dismissal.  Petitioners  were  accordingly  ordered  to  reinstate  de  Jesus  to  her  previous  position  
without  loss  of  seniority  rights  and  with  full  backwages  from  the  time  of  her  suspension  on  August  
19,  1992.  Dissatisfied  with  the  Labor  Arbiter's  decision,  petitioners  appealed  to  public  respondent  
National  Labor  Relations  Commission  (NLRC).  In  its  July  21,  1994  decision,  the  NLRC  1  ruled  that  de  
Jesus  was  negligent  in  presuming  that  the  ribs  of  P.O.  No.  3853  should  likewise  be  trimmed  for  
having  the  same  style  and  design  as  P.O.  No.  3824,  thus  petitioners  cannot  be  entirely  faulted  for  
dismissing  de  Jesus.  The  NLRC  declared  that  the  status  quo  between  them  should  be  maintained  and  
affirmed  the  Labor  Arbiter's  order  of  reinstatement,  but  without  backwages.  The  NLRC  further  
"directed  petitioner  to  pay  de  Jesus  her  back  salaries  from  the  date  she  filed  her  motion  for  execution  
on  September  21,  1993  up  to  the  date  of  the  promulgation  of  [the]  decision."  2  Petitioners  filed  their  
partial  motion  for  reconsideration  which  the  NLRC  denied,  hence  this  petition  anchored  substantially  
on  the  alleged  NLRC's  error  in  holding  that  de  Jesus  is  entitled  to  reinstatement  and  back  salaries.  On  
March  6,  1996,  petitioners  filed  its  supplement  to  the  petition  amplifying  further  their  arguments.  In  
a  resolution  dated  February  20,  1995,  the  Court  required  respondents  to  comment  thereon.  Private  
respondent  de  Jesus  and  the  Office  of  the  Solicitor  General,  in  behalf  of  public  respondent  NLRC,  
subsequently  filed  their  comments.  Thereafter,  petitioners  filed  two  rejoinders  [should  be  replies]  to  
respondents'  respective  comments.  Respondents  in  due  time  filed  their  rejoinders.  

There  are  two  interrelated  and  crucial  issues,  namely:  (1)  whether  or  not  de  Jesus  was  illegally  
dismissed,  and  (2)  whether  or  not  an  order  for  reinstatement  needs  a  writ  of  execution.  

Petitioners  insist  that  the  NLRC  gravely  abused  its  discretion  in  holding  that  de  Jesus  is  entitled  to  
reinstatement  to  her  previous  position  for  she  was  not  illegally  dismissed  in  the  first  place.  In  
support  thereof,  petitioners  quote  portions  of  the  NLRC  decision  which  stated  that  "respondents  
[petitioners  herein]  cannot  be  entirely  faulted  for  dismissing  the  complainant"  3  and  that  there  was  
"no  illegal  dismissal  to  speak  of  in  the  case  at  bar".  4  Petitioners  further  add  that  de  Jesus  breached  
the  trust  reposed  in  her,  hence  her  dismissal  from  service  is  proper  on  the  basis  of  loss  of  confidence,  
citing  as  authority  the  cases  of  Ocean  Terminal  Services,  Inc.  v.  NLRC,  197  SCRA  491;  Coca-­‐Cola  
Bottlers  Phil.,  Inc.  v.  NLRC,  172  SCRA  751,  and  Piedad  v.  Lanao  del  Norte  Electric  Cooperative,  5  154  
SCRA  500.  

The  arguments  lack  merit.  

The  entire  paragraph  which  comprises  the  gist  of  the  NLRC's  decision  from  where  petitioners  
derived  and  isolated  the  aforequoted  portions  of  the  NLRC's  observation  reads  in  full  as  follows:  

We  cannot  fully  subscribe  to  the  complainant's  claim  that  she  trimmed  the  ribs  of  PO3853  in  
the  light  of  the  sworn  statement  of  her  supervisor  Rebecca  Madarcos  (Rollo,  p.  64)  that  no  
trimming  was  necessary  because  the  ribs  were  already  of  the  proper  length.  The  
complainant  herself  admitted  in  her  sinumpaang  salaysay  (Rollo,  p.  45)  that  "Aking  napansin  
na  hindi  pantay-­‐pantay  ang  lapad  ng  mga  ribs  PO3853  —  mas  maigsi  ang  nagupit  ko  sa  mga  
ribs  ng  PO3853  kaysa  sa  mga  ribs  ng  mga  nakaraang  PO's.  The  complainant  being  an  
experienced  reviser/trimmer  for  almost  twelve  (12)  years  should  have  called  the  attention  
of  her  supervisor  regarding  her  observation  of  PO3853.  It  should  be  noted  that  complainant  
was  trying  to  claim  as  production  output  447  pieces  of  trimmed  ribs  of  PO3853  which  
respondents  insists  that  complainant  did  not  do  any.  She  was  therefore  negligent  in  
presuming  that  the  ribs  of  PO3853  should  likewise  be  trimmed  for  having  the  same  style  and  
design  as  PO3824.  Complainant  cannot  pass  on  the  blame  to  her  supervisor  whom  she  
claimed  checked  the  said  tickets  prior  to  the  submission  to  the  Accounting  Department.  As  
explained  by  respondent,  what  the  supervisor  does  is  merely  not  the  submission  of  tickets  
and  do  some  checking  before  forwarding  the  same  to  the  Accounting  Department.  It  was  
never  disputed  that  it  is  the  Accounting  Department  who  does  the  detailed  checking  and  
computation  of  the  tickets  as  has  been  the  company  policy  and  practice.  Based  on  the  
foregoing  and  considering  that  respondent  cannot  be  entirely  faulted  for  dismissing  
complainant  as  the  complainant  herself  was  also  negligent  in  the  performance  of  her  job,  We  
hereby  rule  that  status  quo  between  them  should  be  maintained  as  a  matter  of  course.  We  
thus  affirm  the  decision  of  Labor  Arbiter  reinstating  the  complainant  but  without  backwages.  
The  award  of  backwages  in  general  are  granted  on  grounds  of  equity  for  earnings  which  a  
worker  or  employee  has  lost  due  to  his  illegal  dismissal.  (Indophil  Acrylic  Mfg.  Corporation  
vs.  NLRC,  G.R.  No.  96488  September  27,  1993)  There  being  no  illegal  dismissal  to  speak  in  
the  case  at  bar,  the  award  for  backwages  should  necessarily  be  deleted.  6  

We  note  that  the  NLRC's  decision  is  quite  categorical  in  finding  that  de  Jesus  was  merely  negligent  in  
the  performance  of  her  duty.  Such  negligence,  the  Labor  Arbiter  delineated,  was  brought  about  by  the  
petitioners'  plain  improvidence.  Thus:  
 After  careful  assessment  of  the  allegations  and  documents  available  on  record,  we  are  
convinced  that  the  penalty  of  dismissal  was  not  justified.  

At  the  outset,  it  is  remarkable  that  respondents  did  not  deny  nor  dispute  that  P.O.  3853  has  
the  same  style  and  design  as  P.O.  3824;  that  P.O.  3824  was  made  as  guide  for  the  work  done  
on  P.O.  3853;  and,  most  importantly,  that  the  notation  correction  on  P.O.  3824  was  made  
only  after  the  error  was  discovered  by  respondents'  Accounting  Department.  

Be  that  as  it  may,  the  factual  issue  in  this  case  is  whether  or  not  complainant  trimmed  the  
ribs  of  P.O.  3853?  

Respondents  maintained  that  she  did  not  because  the  record  in  Accounting  Department  
allegedly  indicates  that  no  trimming  is  to  be  done  on  P.O.  3853.  Basically,  this  allegation  is  
unsubstantiated.  

It  must  be  emphasized  that  in  termination  cases  the  burden  of  proof  rests  upon  the  
employer.  

In  the  instant  case,  respondents'  mere  allegation  that  P.O.  3853  need  not  be  trimmed  does  
not  satisfy  the  proof  required  to  warrant  complainant's  dismissal.  

Now,  granting  that  the  Accounting  record  is  correct,  we  still  believe  that  complainant  did  
some  further  trimming  on  P.O.  3853  based  on  the  following  grounds:  

Firstly,  Supervisor  Rebecca  Madarcos  who  ought  to  know  the  work  to  be  performed  because  
she  was  in-­‐charged  of  assigning  jobs,  reported  no  anomally  when  the  tickets  were  submitted  
to  her.  

Incidentally,  supervisor  Madarcos  testimony  is  suspect  because  if  she  could  recall  what  she  
ordered  the  complainant  to  do  seven  (7)  months  ago  (to  revise  the  collars  and  plackets  of  
shirts)  there  was  no  reason  for  her  not  to  detect  the  alleged  tampering  at  the  time  
complainant  submitted  her  tickets,  after  all,  that  was  part  of  her  job,  if  not  her  main  job.  

Secondly,  she  did  not  exceed  her  quota,  otherwise  she  could  have  simply  asked  for  more.  

That  her  output  was  remarkably  big  granting  it  is  true,  is  well  explained  in  that  the  parts  she  
had  trimmed  were  lesser  compared  to  those  which  she  had  cut  before.  

In  this  connection,  respondents  misinterpreted  the  handwritten  explanation  of  the  

complainant  dated  20  August  1992,  because  the  letter  never  admits  that  she  never  trimmed  
P.O.  3853,  on  the  contrary  the  following  sentence,  

Sa  katunayan  nakapagbawas  naman  talaga  ako  na  di  ko  inaasahang  inalis  na  
pala  ang  presyo  ng  Sec.  9  P.O.  3853  na  ito.  

is  crystal  clear  that  she  did  trim  the  ribs  on  P.O.  3853.  7  

Gleaned  either  from  the  Labor  Arbiter's  observations  or  from  the  NLRC's  assessment,  it  distinctly  
appears  that  petitioners'  accusation  of  dishonesty  and  tampering  of  official  records  and  documents  
with  intention  of  cheating  against  de  Jesus  was  not  substantiated  by  clear  and  convincing  evidence.  
Petitioners  simply  failed,  both  before  the  Labor  Arbiter  and  the  NLRC,  to  discharge  the  burden  of  
proof  and  to  validly  justify  de  Jesus'  dismissal  from  service.  The  law,  in  this  light,  directs  the  
employers,  such  as  herein  petitioners,  not  to  terminate  the  services  of  an  employee  except  for  a  just  
or  authorized  cause  under  the  Label  Code.  8  Lack  of  a  just  cause  in  the  dismissal  from  service  of  an  
employee,  as  in  this  case,  renders  the  dismissal  illegal,  despite  the  employer's  observance  of  
procedural  due  process.  9  And  while  the  NLRC  stated  that  "there  was  no  illegal  dismissal  to  speak  of  
in  the  case  at  bar"  and  that  petitioners  cannot  be  entirely  faulted  therefor,  said  statements  are  
inordinate  pronouncements  which  did  not  remove  the  assailed  dismissal  from  the  realm  of  illegality.  
Neither  can  these  pronouncements  preclude  us  from  holding  otherwise.  

We  also  find  the  imposition  of  the  extreme  penalty  of  dismissal  against  de  Jesus  as  certainly  harsh  
and  grossly  disproportionate  to  the  negligence  committed,  especially  where  said  employee  holds  a  
faithful  and  an  untarnished  twelve-­‐year  service  record.  While  an  employer  has  the  inherent  right  to  
discipline  its  employees,  we  have  always  held  that  this  right  must  always  be  exercised  humanely,  and  
the  penalty  it  must  impose  should  be  commensurate  to  the  offense  involved  and  to  the  degree  of  its  
infraction.  10  The  employer  should  bear  in  mind  that,  in  the  exercise  of  such  right,  what  is  at  stake  is  
not  only  the  employee's  position  but  her  livelihood  as  well.  

Equally  unmeritorious  is  petitioners'  assertion  that  the  dismissal  is  justified  on  the  basis  of  loss  of  
confidence.  While  loss  of  confidence,  as  correctly  argued  by  petitioners,  is  one  of  the  valid  grounds  
for  termination  of  employment,  the  same,  however,  cannot  be  used  as  a  pretext  to  vindicate  each  and  
every  instance  of  unwarranted  dismissal.  To  be  a  valid  ground,  it  must  be  shown  that  the  employee  
concerned  is  responsible  for  the  misconduct  or  infraction  and  that  the  nature  of  his  participation  
therein  rendered  him  absolutely  unworthy  of  the  trust  and  confidence  demanded  by  his  position.  11  
In  this  case,  petitioners  were  unsuccessful  in  establishing  their  accusations  of  dishonesty  and  
tampering  of  records  with  intention  of  cheating.  Indeed,  even  if  petitioners'  allegations  against  de  
Jesus  were  true,  they  just  the  same  failed  to  prove  that  her  position  needs  the  continued  and  
unceasing  trust  of  her  employers.  The  breach  of  trust  must  be  related  to  the  performance  of  the  
employee's  
functions.  12  Surely,  de  Jesus  who  occupies  the  position  of  a  reviser/trimmer  does  not  require  the  
petitioners'  perpetual  and  full  confidence.  In  this  regard,  petitioners'  reliance  on  the  cases  of  Ocean  
Terminal  Services,  Inc.  v.  NLRC;  Coca-­‐Cola  Bottlers  Phil.,  Inc.  v.  NLRC;  and  Piedad  v.  Lanao  del  Norte  
Electric  Cooperative,  which  when  perused  involve  positions  that  require  the  employers'  full  trust  and  
confidence,  is  wholly  misplaced.  In  Ocean  Terminal  Services,  for  instance,  the  dismissed  employee  
was  designated  as  expediter  and  canvasser  whose  responsibility  is  mainly  to  make  emergency  
procurements  of  tools  and  equipments  and  was  entrusted  with  the  necessary  cash  for  buying  them.  
The  case  of  Coca-­‐Cola  Bottlers,  on  the  other  hand,  involves  a  sales  agent  whose  job  exposes  him  to  the  
everyday  financial  transactions  involving  the  employer's  goods  and  funds,  while  that  of  Piedad  
concerns  a  bill  collector  who  essentially  handles  the  employer's  cash  collections.  Undoubtedly,  the  
position  of  a  reviser/trimmer  could  not  be  equated  with  that  of  a  canvasser,  sales  agent,  or  a  bill  
collector.  Besides,  the  involved  employees  in  the  three  aforementioned  cases  were  clearly  proven  
guilty  of  infractions  unlike  private  respondent  in  the  case  at  bar.  Thus,  petitioners  dependence  on  
these  cited  cases  is  inaccurate,  to  say  the  least.  More,  whether  or  not  de  Jesus  meets  the  day's  quota  
of  work  she,  just  the  same,  is  paid  the  daily  minimum  wage.  13  

Corollary  to  our  determination  that  de  Jesus  was  illegally  dismissed  is  her  imperative  entitlement  to  
reinstatement  and  backwages  as  mandated  by  
law.  14  Whence,  we  move  to  the  second  issue,  i.e.,  whether  or  not  an  order  for  reinstatement  needs  a  
writ  of  execution.  

Petitioners'  theory  is  that  an  order  for  reinstatement  is  not  self-­‐executory.  They  stress  that  there  
must  be  a  writ  of  execution  which  may  be  issued  by  the  NLRC  or  by  the  Labor  Arbiter  motu  proprio  or  
on  motion  of  an  interested  party.  They  further  maintain  that  even  if  a  writ  of  execution  was  issued,  a  
timely  appeal  coupled  by  the  posting  of  appropriate  supersedeas  bond,  which  they  did  in  this  case,  
effectively  forestalled  and  stayed  execution  of  the  reinstatement  order  of  the  Labor  Arbiter.  As  
supporting  authority,  petitioners  emphatically  cite  and  bank  on  the  case  of  Maranaw  Hotel  Resort  
Corporation  (Century  Park  Sheraton  Manila)  v.  NLRC,  238  SCRA  190.  

Private  respondent  de  Jesus,  for  her  part,  maintains  that  petitioners  should  have  reinstated  her  
immediately  after  the  decision  of  the  Labor  Arbiter  ordering  her  reinstatement  was  promulgated  
since  the  law  mandates  that  an  order  for  reinstatement  is  immediately  executory.  An  appeal,  she  
says,  could  not  stay  the  execution  of  a  reinstatement  order  for  she  could  either  be  admitted  back  to  
work  or  merely  reinstated  in  the  payroll  without  need  of  a  writ  of  execution.  De  Jesus  argues  that  a  
writ  of  execution  is  necessary  only  for  the  enforcement  of  decisions,  orders,  or  awards  which  have  
acquired  finality.  In  effect,  de  Jesus  is  urging  the  Court  to  re-­‐examine  the  ruling  laid  down  in  
Maranaw.  

Article  223  of  the  Labor  Code,  as  amended  by  R.A.  No.  6715  which  took  effect  on  March  21,  1989,  
pertinently  provides:  

Art.  223.  Appeal.  —  Decision,  awards,  or  orders  of  the  Labor  Arbiter  are  final  and  executory  
unless  appealed  to  the  Commission  by  any  or  both  parties  within  ten  (10)  calendar  days  
from  receipt  of  such  decisions,  awards,  or  orders.  Such  appeal  may  be  entertained  only  on  
any  of  the  following  grounds:  

xxx  xxx  xxx  

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

xxx  xxx  xxx  

We  initially  interpreted  the  aforequoted  provision  in  Inciong  v.  NLRC.  15  The  Court  16  made  this  brief  
comment:  

The  decision  of  the  Labor  Arbiter  in  this  case  was  rendered  on  December  18,  1988,  or  three  
(3)  months  before  Article  223  of  the  Labor  Code  was  amended  by  Republic  Act  6715  (which  
became  law  on  March  21,  1989),  providing  that  a  decision  of  the  Labor  Arbiter  ordering  the  
reinstatement  of  a  dismissed  or  separated  employee  shall  be  immediately  executory  insofar  
as  the  reinstatement  aspect  is  concerned,  and  the  posting  of  an  appeal  bond  by  the  employer  
shall  not  stay  such  execution.  Since  this  new  law  contains  no  provision  giving  it  retroactive  
effect  (Art.  4,  Civil  Code),  the  amendment  may  not  be  applied  to  this  case.  

which  the  Court  adopted  and  applied  in  Callanta  v.  NLRC.  17  In  Zamboanga  City  Water  District  v.  Buat,  
18  the  Court  construed  Article  223  to  mean  exactly  what  it  says.  We  said:  

Under  the  said  provision  of  law,  the  decision  of  the  Labor  Arbiter  reinstating  a  dismissed  or  
separated  employee  insofar  as  the  reinstatement  aspect  is  concerned,  shall  be  immediately  
executory,  even  pending  appeal.  The  employer  shall  reinstate  the  employee  concerned  either  
by:  (a)  actually  admitting  him  back  to  work  under  the  same  terms  and  conditions  prevailing  
prior  to  his  dismissal  or  separation;  or  (b)  at  the  option  of  the  employer,  merely  reinstating  
him  in  the  payroll.  Immediate  reinstatement  is  mandated  and  is  not  stayed  by  the  fact  that  the  
employer  has  appealed,  or  has  posted  a  cash  or  surety  bond  pending  appeal.  19  
We  expressed  a  similar  view  a  year  earlier  in  Medina  v.  Consolidated  Broadcasting  System  (CBS)  —  
DZWX  20  and  laid  down  the  rule  that  an  employer  who  fails  to  comply  with  an  order  of  reinstatement  
makes  him  liable  for  the  employee's  salaries.  Thus:  

Petitioners  construe  the  above  paragraph  to  mean  that  the  refusal  of  the  employer  to  
reinstate  an  employee  as  directed  in  an  executory  order  of  reinstatement  would  make  it  
liable  to  pay  the  latter's  salaries.  This  interpretation  is  correct.  Under  Article  223  of  the  
Labor  Code,  as  amended,  an  employer  has  two  options  in  order  for  him  to  comply  with  an  
order  of  reinstatement,  which  is  immediately  executory,  even  pending  appeal.  Firstly,  he  can  
admit  the  dismissed  employee  back  to  work  under  the  same  terms  and  conditions  prevailing  
prior  to  his  dismissal  or  separation  or  to  a  substantially  equivalent  position  if  the  former  
position  is  already  filled  up  as  we  have  ruled  in  Union  of  Supervisors  (RB)  NATU  vs.  Sec.  of  
Labor,  128  SCRA  442  [1984];  and  Pedroso  vs.  Castro,  141  SCRA  252  [1986].  Secondly,  he  can  
reinstate  the  employee  merely  in  the  payroll.  Failing  to  exercise  any  of  the  above  options,  the  
employer  can  be  compelled  under  pain  of  contempt,  to  pay  instead  the  salary  of  the  
employee.  This  interpretation  is  more  in  consonance  with  the  constitutional  protection  to  
labor  (Section  3,  Art.  XIII,  1987  Constitution).  The  right  of  a  person  to  his  labor  is  deemed  to  
be  property  within  the  meaning  of  the  constitutional  guaranty  that  no  one  shall  be  deprived  
of  life,  liberty,  and  property  without  due  process  of  law.  Therefore,  he  should  be  protected  
against  any  arbitrary  and  unjust  deprivation  of  his  job  (Bondoc  vs.  People's  Bank  and  Trust  
Co.,  Inc.,  103  SCRA  599  [1981]).  The  employee  should  not  be  left  without  any  remedy  in  case  
the  employer  unreasonably  delays  reinstatement.  Therefore,  we  hold  that  the  unjustified  
refusal  of  the  employer  to  reinstate  an  illegally  dismissed  employee  entitles  the  employee  to  
payment  of  his  salaries  .  .  .  .  21  

The  Court,  however,  deviated  from  this  construction  in  the  case  of  Maranaw.  Reinterpreting  the  
import  of  Article  223  in  Maranaw,  the  Court  22  declared  that  the  reinstatement  aspect  of  the  Labor  
Arbiter's  decision  needs  a  writ  of  execution  as  it  is  not  self-­‐executory,  a  declaration  the  Court  
recently  reiterated  and  adopted  in  Archilles  Manufacturing  Corp.  v.  NLRC.  23  

We  note  that  prior  to  the  enactment  of  R.A.  No.  6715,  Article  223  24  of  the  Labor  Code  contains  no  
provision  dealing  with  the  reinstatement  of  an  illegally  dismissed  employee.  The  amendment  
introduced  by  R.A.  No.  6715  is  an  innovation  and  a  far  departure  from  the  old  law  indicating  thereby  
the  legislature's  unequivocal  intent  to  insert  a  new  rule  that  will  govern  the  reinstatement  aspect  of  a  
decision  or  resolution  in  any  given  labor  dispute.  In  fact,  the  law  as  now  worded  employs  the  phrase  
"shall  immediately  be  executory"  without  qualification  emphasizing  the  need  for  prompt  compliance.  
As  a  rule,  "shall"  in  a  statute  commonly  denotes  an  imperative  obligation  and  is  inconsistent  with  the  
idea  of  discretion  25  and  that  the  presumption  is  that  the  word  "shall",  when  used  in  a  statute,  is  
mandatory.  26  An  appeal  or  posting  of  bond,  by  plain  mandate  of  the  law,  could  not  even  forestall  nor  
stay  the  executory  nature  of  an  order  of  reinstatement.  The  law,  moreover,  is  unambiguous  and  clear.  
Thus,  it  must  be  applied  according  to  its  plain  and  obvious  meaning,  according  to  its  express  terms.  
In  Globe-­‐Mackay  Cable  and  Radio  Corporation  v.  NLRC,  27  we  held  that:  

Under  the  principles  of  statutory  construction,  if  a  statute  is  clear,  plain  and  free  from  
ambiguity,  it  must  be  given  its  literal  meaning  and  applied  without  attempted  interpretation.  
This  plain-­‐meaning  rule  or  verba  legis  derived  from  the  maxim  index  animi  sermo  est  (speech  
is  the  index  of  intention)  rests  on  the  valid  presumption  that  the  words  employed  by  the  
legislature  in  a  statute  correctly  express  its  intent  or  will  and  preclude  the  court  from  
construing  it  differently.  The  legislature  is  presumed  to  know  the  meaning  of  the  words,  to  
have  used  words  advisedly,  and  to  have  expressed  its  intent  by  the  use  of  such  words  as  are  
found  in  the  statute.  Verba  legis  non  est  recedendum,  or  from  the  words  of  a  statute  there  
should  be  no  departure.  28  
And  in  conformity  with  the  executory  nature  of  the  reinstatement  order,  Rule  V,  Section  16  (3)  of  the  
New  Rules  of  Procedure  of  the  NLRC  strictly  requires  the  Labor  Arbiter  to  direct  the  employer  to  
immediately  reinstate  the  dismissed  employee.  Thus:  

In  case  the  decision  includes  an  order  of  reinstatement,  the  Labor  Arbiter  shall  direct  the  
employer  to  immediately  reinstate  the  dismissed  or  separated  employee  even  pending  
appeal.  The  order  of  reinstatement  shall  indicate  that  the  employee  shall  either  be  admitted  
back  to  work  under  the  same  terms  and  conditions  prevailing  prior  to  his  dismissal  or  
separation  or,  at  the  option  of  the  employer,  merely  reinstated  in  the  payroll.  

In  declaring  that  reinstatement  order  is  not  self-­‐executory  and  needs  a  writ  of  execution,  the  Court,  in  
Maranaw,  adverted  to  the  rule  provided  under  Article  224.  We  said:  

It  must  be  stressed,  however,  that  although  the  reinstatement  aspect  of  the  decision  is  
immediately  executory,  it  does  not  follow  that  it  is  self-­‐executory.  There  must  be  a  writ  of  
execution  which  may  be  issued  motu  proprio  or  on  motion  of  an  interested  party.  Article  224  
of  the  Labor  Code  provides:  

Art.  224.  Execution  of  decision,  orders  or  awards.  —  (a)  The  Secretary  of  Labor  and  
Employment  or  any  Regional  Director,  the  Commission  or  any  Labor  Arbiter,  or  med-­‐arbitter  
or  voluntary  arbitrator  may,  motu  proprio  or  on  motion  of  any  interested  party,  issue  a  writ  of  
execution  on  a  judgment  within  five  (5)  years  from  the  date  it  becomes  final  and  executory  .  .  
.  (emphasis  supplied)  

The  second  paragraph  of  Section  1,  Rule  VIII  of  the  New  Rules  of  Procedure  of  the  NLRC  also  
provides:  

The  Labor  Arbiter,  POEA  Administrator,  or  the  Regional  Director,  or  his  duly  authorized  
hearing  officer  of  origin  shall,  motu  proprio  or  on  motion  of  any  interested  party,  issue  a  writ  
of  execution  on  a  judgment  only  within  five  (5)  years  from  the  date  it  becomes  final  and  
executory  .  .  .  .  No  motion  for  execution  shall  be  entertained  nor  a  writ  he  issued  unless  the  
Labor  Arbiter  is  in  possession  of  the  records  of  the  case  which  shall  include  an  entry  of  
judgment.  (emphasis  supplied)  

xxx  xxx  xxx  

In  the  absence  then  of  an  order  for  the  issuance  of  a  writ  of  execution  on  the  reinstatement  
aspect  of  the  decision  of  the  Labor  Arbiter,  the  petitioner  was  under  no  legal  obligation  to  
admit  back  to  work  the  private  respondent  under  the  terms  and  conditions  prevailing  prior  
to  her  dismissal  or,  at  the  petitioner's  option,  to  merely  reinstate  her  in  the  payroll.  An  
option  is  a  right  of  election  to  exercise  a  privilege,  and  the  option  in  Article  223  of  the  Labor  
Code  is  exclusively  granted  to  the  employer.  The  event  that  gives  rise  for  its  exercise  is  not  
the  reinstatement  decree  of  a  Labor  Arbiter,  but  the  writ  for  its  execution  commanding  the  
employer  to  reinstate  the  employee,  while  the  final  act  which  compels  the  employer  to  
exercise  the  option  is  the  service  upon  it  of  the  writ  of  execution  when,  instead  of  admitting  
the  employee  back  to  his  work,  the  employer  chooses  to  reinstate  the  employee  in  the  
payroll  only.  If  the  employer  does  not  exercise  this  option,  it  must  forthwith  admit  the  
employee  back  to  work,  otherwise  it  may  be  punished  for  contempt.  29  

A  closer  examination,  however,  shows  that  the  necessity  for  a  writ  of  execution  under  Article  224  
applies  only  to  final  and  executory  decisions  which  are  not  within  the  coverage  of  Article  223.  For  
comparison,  we  quote  the  material  portions  of  the  subject  articles:  
 Art.  223.  Appeal.  .  .  .  

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

xxx  xxx  xxx  

Art.  224.  Execution  of  decisions,  orders,  or  awards.  —  (a)  The  Secretary  of  Labor  and  
Employment  or  any  Regional  Director,  the  Commission  or  any  Labor  Arbiter,  or  med-­‐arbiter  
or  voluntary  arbitrator  may,  motu  propio  or  on  motion  of  any  interested  party,  issue  a  writ  of  
execution  on  a  judgment  within  five  (5)  years  from  the  date  it  becomes  final  and  executory,  
requiring  a  sheriff  or  a  duly  deputized  officer  to  execute  or  enforce  final  decisions,  orders  or  
awards  of  the  Secretary  of  Labor  and  Employment  or  regional  director,  the  Commission,  the  
Labor  Arbiter  or  med-­‐arbiter,  or  voluntary  arbitrators.  In  any  case,  it  shall  be  the  duty  of  the  
responsible  officer  to  separately  furnish  immediately  the  counsels  of  record  and  the  parties  
with  copies  of  said  decisions,  orders  or  awards.  Failure  to  comply  with  the  duty  prescribed  
herein  shall  subject  such  responsible  officer  to  appropriate  administrative  sanctions.  

Article  224  states  that  the  need  for  a  writ  of  execution  applies  only  within  five  (5)  years  from  the  date  
a  decision,  an  order  or  award  becomes  final  and  executory.  It  can  not  relate  to  an  award  or  order  of  
reinstatement  still  to  be  appealed  or  pending  appeal  which  Article  223  contemplates.  The  provision  
of  Article  223  is  clear  that  an  award  for  reinstatement  shall  be  immediately  executory  even  pending  
appeal  and  the  posting  of  a  bond  by  the  employer  shall  not  stay  the  execution  for  reinstatement.  The  
legislative  intent  is  quite  obvious,  i.e.,  to  make  an  award  of  reinstatement  immediately  enforceable,  
even  pending  appeal.  To  require  the  application  for  and  issuance  of  a  writ  of  execution  as  
prerequisites  for  the  execution  of  a  reinstatement  award  would  certainly  betray  and  run  counter  to  
the  very  object  and  intent  of  Article  223,  i.e.,  the  immediate  execution  of  a  reinstatement  order.  The  
reason  is  simple.  An  application  for  a  writ  of  execution  and  its  issuance  could  be  delayed  for  
numerous  reasons.  A  mere  continuance  or  postponement  of  a  scheduled  hearing,  for  instance,  or  an  
inaction  on  the  part  of  the  Labor  Arbiter  or  the  NLRC  could  easily  delay  the  issuance  of  the  writ  
thereby  setting  at  naught  the  strict  mandate  and  noble  purpose  envisioned  by  Article  223.  In  other  
words,  if  the  requirements  of  Article  224  were  to  govern,  as  we  so  declared  in  Maranaw,  then  the  
executory  nature  of  a  reinstatement  order  or  award  contemplated  by  Article  223  will  be  unduly  
circumscribed  and  rendered  ineffectual.  In  enacting  the  law,  the  legislature  is  presumed  to  have  
ordained  a  valid  and  sensible  law,  one  which  operates  no  further  than  may  be  necessary  to  achieve  
its  specific  purpose.  Statutes,  as  a  rule,  are  to  be  construed  in  the  light  of  the  purpose  to  be  achieved  
and  the  evil  sought  to  be  remedied.  30  And  where  the  statute  is  fairly  susceptible  of  two  or  more  
constructions,  that  construction  should  be  adopted  which  will  most  tend  to  give  effect  to  the  manifest  
intent  of  the  lawmaker  and  promote  the  object  for  which  the  statute  was  enacted,  and  a  construction  
should  be  rejected  which  would  tend  to  render  abortive  other  provisions  of  the  statute  and  to  defeat  
the  object  which  the  legislator  sought  to  attain  by  its  enactment.  31  In  introducing  a  new  rule  on  the  
reinstatement  aspect  of  a  labor  decision  under  R.A.  No.  6715,  Congress  should  not  be  considered  to  
be  indulging  in  mere  semantic  exercise.  On  appeal,  however,  the  appellate  tribunal  concerned  may  
enjoin  or  suspend  the  reinstatement  order  in  the  exercise  of  its  sound  discretion.  

Furthermore,  the  rule  is  that  all  doubts  in  the  interpretation  and  implementation  of  labor  laws  should  
be  resolved  in  favor  of  labor.  32  In  ruling  that  an  order  or  award  for  reinstatement  does  not  require  a  
writ  of  execution  the  Court  is  simply  adhering  and  giving  meaning  to  this  rule.  Henceforth,  we  rule  
that  an  award  or  order  for  reinstatement  is  self-­‐executory.  After  receipt  of  the  decision  or  resolution  
ordering  the  employee's  reinstatement,  the  employer  has  the  right  to  choose  whether  to  re-­‐admit  the  
employee  to  work  under  the  same  terms  and  conditions  prevailing  prior  to  his  dismissal  or  to  
reinstate  the  employee  in  the  payroll.  In  either  instance,  the  employer  has  to  inform  the  employee  of  
his  choice.  The  notification  is  based  on  practical  considerations  for  without  notice,  the  employee  has  
no  way  of  knowing  if  he  has  to  report  for  work  or  not.  

WHEREFORE,  the  petition  is  DENIED  and  the  decision  of  the  Labor  Arbiter  is  hereby  REINSTATED.  

Costs  against  petitioner.  

SO  ORDERED.  

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

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 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?

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

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

. . . 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.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

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 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)

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

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, 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.

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 Roquero v. 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 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.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 177026 January 30, 2009

LUNESA O. LANSANGAN AND ROCITA CENDAñA, Petitioners,

vs.
AMKOR TECHNOLOGY PHILIPPINES, INC., Respondent.

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CARPIO MORALES, J.:

An anonymous e-mail was sent to the General Manager of Amkor Technology Philippines (respondent)
detailing allegations of malfeasance on the part of its supervisory employees Lunesa Lansangan and Rosita
Cendaña (petitioners) for "stealing company time."1 Respondent thus investigated the matter, requiring
petitioners to submit their written explanation. In handwritten letters, petitioners admitted their
wrongdoing.2 Respondent thereupon terminated petitioners for "extremely serious offenses" as defined in
its Code of Discipline,3 prompting petitioners to file a complaint for illegal dismissal against it.4

Labor Arbiter Arthur L. Amansec, by Decision of October 20, 2004,5 dismissed petitioners’ complaint, he
having found them guilty of

"[s]wiping another employees’ [sic] I.D. card or requesting another employee to swipe one’s I.D. card to
gain personal advantage and/or in the interest of cheating", an offense of dishonesty punishable as a serious
form of misconduct and fraud or breach of trust under Article 282 of the Labor Code:

xxxx

which allows the dismissal of an employee for a valid cause. (Emphasis and underscoring supplied)

The Arbiter, however, ordered the reinstatement of petitioners to their former positions without backwages
"as a measure of equitable and compassionate relief" owing mainly to petitioners’ prior unblemished
employment records, show of remorse, harshness of the penalty and defective attendance monitoring
system of respondent.6

Respondent assailed the reinstatement aspect of the Arbiter’s order before the National Labor Relations
Commission (NLRC).
In the meantime, petitioners, without appealing the Arbiter’s finding them guilty of "dishonesty as a form
of serious misconduct and fraud or breach of trust," moved for the issuance of a "writ of reinstatement."7

After a series of oppositions, motions and orders,8 the Arbiter issued an alias writ of execution following
which respondent’s bank account at Equitable-PCI Bank was garnished. Respondent thereupon moved for
the quashal of the alias writ of execution and lifting of the notice of garnishment, which the Arbiter denied
by Order of January 26, 2005, drawing respondent to appeal to the NLRC.

After consolidating respondent’s appeal from the Labor Arbiter’s order of reinstatement and subsequent
appeal/order denying the quashal of the alias writ of execution and lifting of the notice of garnishment, the
NLRC, by Resolution of June 30, 2005,9 granted respondent’s appeals by deleting the reinstatement aspect
of the Arbiter’s decision and setting aside the Arbiter’s Alias Writ of Execution and Notice of Garnishment.
Thus the NLRC disposed as follows:

ACCORDINGLY, the appeal is hereby GRANTED. The Labor Arbiter’s Decision dated October 20, 2004
is hereby MODIFIED by DELETING the portion that ruled for appelle[e]s’ reinstatement. Consequently,
the Writ of Execution dated November 19, 2004, the subsequent Alias Writ of Execution dated January 26,
2005, and the Notice of Garnishment dated January 14, 2005 served upon Equitable PCI Bank by Sheriff
Agripina Sangel are hereby ordered to be SET ASIDE.

SO ORDERED. (Underscoring supplied)

Petitioners’ motion for reconsideration of the NLRC Resolution having been denied, they filed a petition
for certiorari before the Court of Appeals which, by Decision10 of September 19, 2006, while affirming the
finding that petitioners were guilty of misconduct and the like, ordered respondent to "pay petitioners their
corresponding backwages without qualification and deduction for the period covering October 20, 2004
(date of the Arbiter’s decision) up to June 30, 2005 (date of the NLRC Decision)," citing Article 223 of the
Labor Code and Roquero v. Philippine Airlines.11

Both parties’ filed their respective motions for partial reconsideration which were denied.12 Only petitioners
have come to this Court via the present petition for review,13 contending that:

WITH ALL DUE RESPECT, THE ORDER OF THE HONORABLE COURT OF APPEALS LIMITING
THE PAYMENT OF BACKWAGES [TO] THE PETITIONERS FROM OCTOBER 20, 2004 (ARBITER
DECISION) UP TO JUNE 30, 2005 (NLRC DECISION) ONLY IS CONTRARY TO THE CASE OF
ALEJANDRO ROQUERO VS. PHILIPPINE AIRLINES, INC.[,] G.R. NO. 152329, APRIL [22,] 2003
[AND]

II

. . . THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN

CONCLUDING THAT THE PETITIONERS COMMITTED SERIOUS MISCONDUCT, FRAUD,
DISHONESTY AND BREACH OF TRUST. BUT EVEN ASSUMING THAT THE PETITIONERS
COMMITTED THE SWIPING IN OF IDENTIFICATION CARD, THE PENALTY OF DISMISSAL IS
TOO SEVERE, HARSH AND CONTRARY TO ARTICLE 282 OF THE LABOR CODE OF THE
PHILIPPINES AND EXISTING JURISPRUDENCE.14

Since respondent did not appeal from the appellate court’s decision, the said court’s order for it to pay
backwages to petitioners for the therein specified period has become final.
Petitioners highlight the Court’s ruling in Roquero v. Philippine 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.

The petition fails.

The decision of the Arbiter finding that petitioners committed "dishonesty as a form of serious misconduct
and fraud, or breach of trust" had become final, petitioners not having appealed the same before the NLRC
as in fact they even moved for the execution of the reinstatement aspect of the decision. It bears recalling
that it was only respondent which assailed the Arbiter’s decision to the NLRC – to solely question the
propriety of the order for reinstatement, and it succeeded.1avvphil.zw+

Roquero, as well as Article 22318 of the Labor Code on which the appellate court also relied, finds no
application in the present case. Article 223 concerns itself with an interim relief, granted to a dismissed or
separated employee while the case for illegal dismissal is pending appeal, as what happened in Roquero. It
does not apply where there is no finding of illegal dismissal, as in the present case.

The Arbiter found petitioners’ dismissal to be valid. Such finding had, as stated earlier, become final,
petitioners not having appealed it. Following Article 279 which provides:

xxxx

In cases of regular employment, the employer shall not terminate the services of an employee except for a
just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement (Emphasis, underscoring
and italics supplied),

petitioners are not entitled to full backwages as their dismissal was not found to be illegal. Agabon v.
NLRC19 so states –– payment of backwages and other benefits is justified only if the employee was unjustly
dismissed.

WHEREFORE, the petition is DENIED.

No costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. Nos. 142732-33 December 4, 2007

MARILOU S. GENUINO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CITIBANK, N.A., WILLIAM FERGUSON,
and AZIZ RAJKOTWALA, respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. Nos. 142753-54

CITIBANK, N.A., WILLIAM FERGUSON, and AZIZ RAJKOTWALA, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and MARILOU GENUINO, respondents.

DECISION

VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari under Rule 45 seeks to set aside the September 30, 1999 Decision1
and March 31, 2000 Resolution2 of the Court of Appeals (CA) in the consolidated cases docketed as CA-
G.R. SP Nos. 51532 and 51533. The appellate court dismissed the parties' petitions involving the National
Labor Relations Commission's (NLRC's) Decision3 and Resolution,4 which held that Marilou S. Genuino
was validly dismissed by Citibank, N.A. (Citibank). The NLRC likewise ordered the payment of salaries
from the time that Genuino was reinstated in the payroll to the date of the NLRC decision. Upon
reconsideration, however, the CA modified its decision and held that Citibank failed to observe due process
in CA-G.R. SP No. 51532; hence, Citibank should indemnify Genuino in the amount of PhP 5,000. Both
parties are now before this Court assailing portions of the CA's rulings. In G.R. Nos. 142732-33, Genuino
assails the CA's finding that her dismissal was valid. In G.R. Nos. 142753-54, Citibank questions the CA's
finding that Citibank violated Genuino's right to procedural due process and that Genuino has a right to
salaries.

Citibank is an American banking corporation duly licensed to do business in the Philippines. William
Ferguson was the Manila Country Corporate Officer and Business Head of the Global Finance Bank of
Citibank while Aziz Rajkotwala was the International Business Manager for the Global Consumer Bank of
Citibank.5

Genuino was employed by Citibank sometime in January 1992 as Treasury Sales Division Head with the
rank of Assistant Vice-President. She received a monthly compensation of PhP 60,487.96, exclusive of
benefits and privileges.6

On August 23, 1993, Citibank sent Genuino a letter charging her with "knowledge and/or involvement" in
transactions "which were irregular or even fraudulent." In the same letter, Genuino was informed she was
under preventive suspension.7

Genuino wrote Citibank on September 13, 1993 and asked the bank the following:

a. Confront our client with the factual and legal basis of your charges, and afford her an
opportunity to explain;

b. Substantiate your charge of fraudulent transactions against our client; or if the same cannot be
substantiated;
 c. Correct/repair/compensate the damage you have caused our client.8

On September 13, 1993, Citibank, through Victorino P. Vargas, its Country Senior Human Resources
Officer, sent a letter to Genuino, the relevant portions of which read:

As you are well aware, the bank served you a letter dated August 23, 1993 advising you that
ongoing investigations show that you are involved and/or know of irregular transactions which are
at the very least in conflict with the bank's interest, and, may even be fraudulent in nature.

These transactions are those involving Global Pacific and/or Citibank and the following bank
clients, among others:

1. Norma T. de Jesus

2. Carmen Intengan/Romeo Neri

3. Mario Mamon

4. Vienna Ochoa/IETI

5. William Samara

6. Roberto Estandarte

7. Rita Browner

8. Ma. Redencion Sumpaico

9. Cesar Bautista

10. Teddy Keng

11. NDC-Guthrie

12. Olivia Sy

In view of the foregoing, you are hereby directed to explain in writing three (3) days from your
receipt hereof why your employment should not be terminated in view of your involvement in
these irregular transactions. You are also directed to appear in an administrative investigation of
the matter which is set on Tuesday, Sept. 21, 1993 at 2:00 P.M. at the HR Conference Room, 6th
Floor, Citibank Center. You may bring your counsel if you so desire.9

Genuino's counsel replied through a letter dated September 17, 1993, demanding for a bill of particulars
regarding the charges against Genuino. Citibank's counsel replied on September 20, 1993, as follows:

1.2. [T]he bank has no intention of converting the administrative investigation of this case to a full
blown trial. What it is prepared to do is give your client, as required by law and Supreme Court
decisions, an opportunity to explain her side on the issue of whether she violated the conflict of
interest rule—either in writing (which could be in the form of a letter-reply to the September 13,
1993 letter to Citibank, N.A.) or in person, in the administrative investigation which is set for
tomorrow afternoon vis-à-vis the bank clients/parties mentioned in the letter of Citibank, N.A.
 xxxx

2.2. You will certainly not deny that we have already fully discussed with you what is meant by
the conflict with the bank's interest vis-à-vis the bank clients/parties named in the September 13,
1993 letter of Citibank to Ms. Genuino. As we have repeatedly explained to you, what the bank
meant by it is that your client and Mr. Dante Santos, using the facilities of their family
corporations (Torrance and Global) appear to have participated in the diversion of bank clients'
funds from Citibank to, and investment thereof in, other companies and that they made money in
the process, in violation of the conflict of law rule. It is her side of this issue that Citibank, N.A. is
waiting to receive/hear from Ms. Genuino.10

Genuino did not appear in the administrative investigation held on September 21, 1993. Her lawyers wrote
a letter to Citibank's counsel asking "what bank clients' funds were diverted from the bank and invested in
other companies, the specific amounts involved, the manner by which and the date when such diversions
were purportedly affected." In reply, Citibank's counsel noted Genuino's failure to appear in the
investigation and gave Genuino up to September 23, 1993 to submit her written explanation. Genuino did
not submit her written explanation.11

On September 27, 1993, Citibank informed Genuino of the result of their investigation. It found that
Genuino with Santos used "facilities of Genuino's family corporation, namely, Global Pacific, personally
and actively participated in the diversion of bank clients' funds to products of other companies that yielded
interests higher than what Citibank products offered, and that Genuino and Santos realized substantial
financial gains, all in violation of existing company policy and the Corporation Code, which for your
information, carries a penal sanction."12

Genuino's employment was terminated by Citibank on grounds of (1) serious misconduct, (2) willful
breach of the trust reposed upon her by the bank, and (3) commission of a crime against the bank.13

On October 15, 1993, Genuino filed before the Labor Arbiter a Complaint14 against Citibank docketed as
NLRC Case No. 00-10-06450-93 for illegal suspension and illegal dismissal with damages and prayer for
temporary restraining order and/or writ of preliminary injunction. The Labor Arbiter rendered a Decision15
on May 2, 1994, the dispositive portion of which reads:

WHEREFORE, finding the dismissal of the complainant Marilou S. Genuino to be without just
cause and in violation of her right to due process, respondent CITIBANK, N.A., and any and all
persons acting on its behalf or by or under their authority are hereby ordered to reinstate
complainant immediately to her former position as Treasury Sales Division Head or its equivalent
without loss of seniority rights and other benefits, with backwages from August 23, 1993 up to
April 30, 1994 in the amount of P493,800.00 (P60,000 x 8.23 mos.) subject to adjustment until
reinstated actually or in the payroll.

Respondents are likewise ordered to pay complainant the amount of 1.5 Million Pesos and
P500,000.00 by way of moral and exemplary damages plus 10% of the total monetary award as
attorney's fees.16

Both parties appealed to the NLRC. The NLRC, in its September 3, 1994 Decision in NLRC-NCR Case
No. 00-10-06450-93 (CA No. 006947-94), reversed the Labor Arbiter's decision with the following
modification:

WHEREFORE, Judgment is hereby rendered (1) SETTING ASIDE the appealed decision of the
Labor Arbiter; (2) DECLARING the dismissal of the complainant valid and legal on the ground of
serious misconduct and breach of trust and confidence and consequently DISMISSING the
complaint a quo; but (3) ORDERING the respondent bank to pay the salaries due to the
 complainant from the date it reinstated complainant in the payroll (computed at P60,000.00 a
month, as found by the Labor Arbiter) up to and until the date of this decision.

SO ORDERED.17

The parties' motions for reconsideration were denied by the NLRC in a resolution dated October 28, 1994.18

The Ruling of the Court of Appeals

On December 6, 1994, Genuino filed a petition for certiorari docketed as G.R. No. 118023 with this Court.
Citibank's petition for certiorari, on the other hand, was docketed as G.R. No. 118667. In the January 27,
1999 Resolution, we referred these petitions to the CA pursuant to our ruling in St. Martin Funeral Home v.
NLRC.19

Genuino's petition before the CA was docketed as CA-G.R. SP No. 51532 while Citibank's petition was
docketed as CA-G.R. SP No. 51533. Genuino prayed for the reversal of the NLRC's decision insofar as it
declared her dismissal valid and legal. Meanwhile, Citibank questioned the NLRC's order to pay Genuino's
salaries from the date of reinstatement until the date of the NLRC's decision.

The CA promulgated its decision on September 30, 1999, denying due course to and dismissing both
petitions.20 Both parties filed motions for reconsideration and on March 31, 2000, the appellate court
modified its decision and held:

WHEREFORE, save for the MODIFICATION ordering Citibank, N.A. to pay Ms. Marilou S.
Genuino five thousand pesos (P5,000.00) as indemnity for non-observance of due process in CA-
G.R. SP No. 51532, this Court's 30 September 1999 decision is REITERATED and AFFIRMED
in all other respects.

SO ORDERED.21

Hence, we have this petition.

The Issue

WHETHER OR NOT THE DISMISSAL OF GENUINO IS FOR A JUST CAUSE AND IN

ACCORDANCE WITH DUE PROCESS

In G.R. Nos. 142732-33, Genuino contends that Citibank failed to observe procedural due process in
terminating her employment. This failure is allegedly an indication that there were no valid grounds in
dismissing her. In G.R. Nos. 142753-54, Citibank questions the ruling that Genuino has a right to
reinstatement under Article 223 of the Labor Code. Citibank contends that the Labor Arbiter's finding is not
supported by evidence; thus, the decision is void. Since a void decision cannot give rise to any rights,
Citibank opines that there can be no right to payroll reinstatement.

The dismissal was for just cause but lacked due process

We affirm that Genuino was dismissed for just cause but without the observance of due process.

In a string of cases, 22 we have repeatedly said that the requirement of twin notices must be met. In the
recent case of King of Kings Transport, Inc. v. Mamac, we explained:

To clarify, the following should be considered in terminating the services of employees:

 (1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity
to submit their written explanation within a reasonable period. "Reasonable opportunity" under the
Omnibus Rules means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as a period of at
least five (5) calendar days from receipt of the notice to give the employees an opportunity to
study the accusation against them, consult a union official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the complaint. Moreover, in order to enable the
employees to intelligently prepare their explanation and defenses, the notice should contain a
detailed narration of the facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are violated and/or which among the grounds
under Art. 282 is being charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify their
defenses to the charge against them; (2) present evidence in support of their defenses; and (3)
rebut the evidence presented against them by the management. During the hearing or conference,
the employees are given the chance to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or hearing could be used by
the parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the
charge against the employees have been considered; and (2) grounds have been established to
justify the severance of their employment.23

The Labor Arbiter found that Citibank failed to adequately notify Genuino of the charges against her. On
the contrary, the NLRC held that "the function of a 'notice to explain' is only to state the basic facts of the
employer's charges, which x x x the letters of September 13 and 17, 1993 in question have fully served."24

We agree with the CA that the dismissal was valid and legal, and with its modification of the NLRC ruling
that PhP 5,000 is due Genuino for failure of Citibank to observe due process.

The Implementing Rules and Regulations of the Labor Code provide that any employer seeking to dismiss
a worker shall furnish the latter a written notice stating the particular acts or omissions constituting the
grounds for dismissal.25 The purpose of this notice is to sufficiently apprise the employee of the acts
complained of and enable him/her to prepare his/her defense.

In this case, the letters dated August 23, September 13 and 20, 1993 sent by Citibank did not identify the
particular acts or omissions allegedly committed by Genuino. The August 23, 1993 letter charged
Genuino with having "some knowledge and/or involvement" in some transactions "which have the
appearance of being irregular at the least and may even be fraudulent." The September 13, 1993 letter, on
the other hand, mentioned "irregular transactions" involving Global Pacific and/or Citibank and 12 bank
clients. Lastly, the September 20, 1993 letter stated that Genuino and "Mr. Dante Santos, using the facilities
of their family corporations (Torrance and Global) appear to have participated in the diversion of bank
clients' funds from Citibank to, and investment thereof in, other companies and that they made money in
the process, in violation of the conflict of law rule [sic]." The extent of Genuino's alleged knowledge and
participation in the diversion of bank's clients' funds, manner of diversion, and amounts involved; the acts
attributed to Genuino that conflicted with the bank's interests; and the circumstances surrounding the
alleged irregular transactions, were not specified in the notices/letters.
While the bank gave Genuino an opportunity to deny the truth of the allegations in writing and participate
in the administrative investigation, the fact remains that the charges were too general to enable Genuino to
intelligently and adequately prepare her defense.

The two-notice requirement of the Labor Code is an essential part of due process. The first notice
informing the employee of the charges should neither be pro-forma nor vague. It should set out clearly
what the employee is being held liable for. The employee should be afforded ample opportunity to be heard
and not mere opportunity. As explained in King of Kings Transport, Inc., ample opportunity to be heard is
especially accorded the employees sought to be dismissed after they are specifically informed of the
charges in order to give them an opportunity to refute such accusations leveled against them. Since the
notice of charges given to Genuino is inadequate, the dismissal could not be in accordance with due
process.

While we hold that Citibank failed to observe procedural due process, we nevertheless find Genuino's
dismissal justified.

Citibank maintains that Genuino was aware of the bank's Corporate Policy Manual specifically Chapter 3
on "Principles and Policies" with regard to avoiding conflicts of interest. She had even submitted a Conflict
of Interest Survey to Citibank. In that survey, she denied any knowledge of engaging in transactions in
conflict with Citibank's interests. Citibank, for its part, submitted evidence showing 99% ownership of
Global stocks by Genuino and Santos. In July 1993, Citibank discovered that Genuino and Santos were
instrumental in the withdrawal by bank depositors of PhP 120 million of investments in Citibank. This
amount was subsequently invested in another foreign bank, Internationale Nederlanden Bank, N.V., under
the control of Global and Torrance, another corporation controlled by Genuino and Santos. 26 Citibank also
filed two criminal complaints against Genuino and Santos for violations of the conflict of interest rule
provided in Sec. 31 in relation to Sec. 14427 of the Corporation Code.28

We note also that during the proceedings before the Labor Arbiter, Citibank presented the following
affidavits, with supporting documentary evidence against Genuino:

1) Vic Lim, an officer of Citibank who investigated the anomalies of Genuino and Santos,
concluded that Genuino and Santos realized substantial financial gains out of the transfer of
monies as supported by the following documents:

1) [S]ome of the Term Investment Applications (TIA), Applications for Money Transfer, all filled
up in the handwriting of Ms. Marilou Genuino. These documents cover/show the transfer of the
monies of the Citibank clients from their money placements/deposits with Citibank, N.A. to
Global and/or Torrance.

2) [S]ome of the checks that were drawn by Global and Torrance against their Citibank accounts
in favor of the other companies by which Global and Torrance transferred the monies of the bank
clients to the other companies.

3) [S]ome of the checks drawn by the other companies in favor of Global or Torrance by which
the other companies remitted back to Global and/or Torrance the monies of the bank clients
concerned.

4) [S]ome of the checks drawn by Global and Torrance against their Citibank accounts in favor of
Mr. Dante Santos and Ms. Marilou Genuino, covering the shares of the latter in the spreads or
margins Global and Torrance had derived from the investments of the monies of the Citibank
clients in the other companies.
 5) [S]ome of the checks drawn by Torrance and Global in favor of Citibank clients by which
Global and Torrance remitted back to said bank clients their principal investments (or portions
thereof) and the rates of interests realized from their investment placed with the other companies
less the spreads made by Global and/or Torrance, Mr. Dante L. Santos and Ms. Marilou
Genuino.29

In Lim's Reply-Affidavit with attached supporting documents, he stated that out of the competing money
placement activities, Genuino and Santos derived financial gains amounting to PhP 2,027,098.08 and PhP
2,134,863.80, respectively.30

2) Marilyn Bautista, a Treasury Sales Specialist in the Treasury Department of the Global Consumer Bank
of Citibank and whose superiors were Genuino and Santos, stated that:

Based on documents that have subsequently come to my knowledge, I realized that the two
(Genuino and Dante L. Santos), with the active cooperation of Redencion Sumpaico (the
Accountant of Global) had … brokered for their own benefits and/or of Global the sale of the
financial products of Citibank called "Mortgage Backed Securities" or MBS and in the process
made money at the expense of the (Citibank) investors and the bank.31

3) Patrick Cheng attested to other transactions from which Genuino, Santos, and Global brokered the
Mortgage Backed Securities (MBS), namely: ICC/Nemesio and Olivia Sy transaction, San Miguel
Corporation/ICC, CIPI/Asiatrust, FAPE, PERAA and Union Bank, and NDC-Guthrie transactions.32

In her defense, Genuino asserts that Citibank has no evidence of any wrongful act or omission imputable to
her. According to her, she did not try to conceal from the bank her participation in Global and she even
disclosed the information when Global designated Citibank as its depositary. She avers there was no
conflict of interest because Global was not engaged in Citibank's accepting deposits and granting loans, nor
in money placement activities that compete with Citibank's activities; and neither does Citibank invest in
the outlets used by Global. She claims that the controversy between Santos and Global had already been
amicably resolved in a Compromise Agreement between the two parties.33

Genuino further asserts that the letter of termination did not indicate what existing company policy had
been violated, and what acts constituted serious misconduct or willful breach of the trust reposed by the
bank. She claims that Lim's testimony that the checks issued by Global in her name were profits was
malicious, hearsay, and lacked factual basis. She also posits that as to the withdrawals of clients, she could
not possibly dictate on the depositors. She pointed out that the depositors even sent Citibank a letter dated
August 25, 1993 informing the bank that the withdrawals were made upon their express instructions.
Genuino avers the bank's loss of confidence should have to be proven by substantial evidence, setting out
the facts upon which loss of confidence in the employee may be made to rest.34

Contrary to the Labor Arbiter's finding, the NLRC found the following facts supported by the records:

a) Respondent bank has a conflict of interest rule, embodied in Chapter 3 of its Corporate Policy
Manual, prohibiting the officers of the bank from engaging in business activities, situations or
circumstances that are in conflict with the interest of the bank.

b) Complainant was familiar with said conflict of interest rule of the bank and of her duty to
disclose to the bank in writing any personal circumstances which conflicts or appears to be in
conflict with Citibank's interest.

c) Complainant is a substantial stockholder of Global Pacific, but she did not disclose fact to the
bank.
 d) Global Pacific is engaged in money placement business like Citibank, N.A.; that in carrying out
its said money placement business, it used funds belonging to Citibank clients which were
withdrawn from Citibank with participation of complainant and Dante L. Santos. In one
transaction of this nature, P120,000,000.00 belonging to Citibank clients was withdrawn from
Citibank, N.A. and placed in another foreign bank, under the control of Global Pacific. Said big
investment money was returned to Citibank, N.A. only when Citibank, N.A. filed an injunction
suit.

e) Global Pacific also engaged in the brokering of the ABS or MBS, another financial product of
Citibank. It was the duty of complainant Genuino and Dante L. Santos to sell said product on
behalf of Citibank, N.A. and for Citibank N.A.'s benefit. In the brokering of the ABS or MBS,
Global Pacific made substantial profits which otherwise would have gone to Citibank, N.A. if only
they brokered the ABS or MBS for and on behalf of Citibank, N.A.

Art. 282(c) of the Labor Code provides that an employer may terminate an employment for fraud or willful
breach by the employee of the trust reposed in him/her by his/her employer or duly authorized
representative. In order to constitute as just cause for dismissal, loss of confidence should relate to acts
inimical to the interests of the employer.35 Also, the act complained of should have arisen from the
performance of the employee's duties.36 For loss of trust and confidence to be a valid ground for an
employee's dismissal, it must be substantial and not arbitrary, and must be founded on clearly established
facts sufficient to warrant the employee's separation from work.37 We also held that:

[L]oss of confidence is a valid ground for dismissing an employee and proof beyond reasonable
doubt of the employee's misconduct is not required. It is sufficient if there is some basis for such
loss of confidence or if the employer has reasonable ground to believe or to entertain the moral
conviction that the employee concerned is responsible for the misconduct and that the nature of his
participation therein rendered him unworthy of the trust and confidence demanded by his
position.38

As Assistant Vice-President of Citibank's Treasury Department, Genuino was tasked to solicit investments,
and peso and dollar deposits for, and keep them in Citibank; and to sell and/or push for the sale of
Citibank's financial products, such as the MBS, for the account and benefit of Citibank.39 She held a
position of trust and confidence. There is no way she could deny any knowledge of the bank's policies nor
her understanding of these policies as reflected in the survey done by the bank. She could not likewise feign
ignorance of the businesses of Citibank, and of Global and Torrance. Assuming that Citibank did not
engage in the same securities dealt with by Global and Torrance; nevertheless, it is to the interests of
Citibank to retain its clients and continue investing in Citibank. Curiously, Genuino did not even dissuade
the depositors from withdrawing their monies from Citibank, and was even instrumental in the transfers of
monies from Citibank to a competing bank through Global and Torrance, the corporations under Genuino's
control.

All the pieces of evidence compel us to conclude that Genuino did not have her employer's interest. The
letter of the bank's clients which attested that the withdrawals from Citibank were made upon their
instructions is of no import. It did not explain why they preferred to invest in Global and Torrance, nor did
it mention that Genuino tried to dissuade them from withdrawing their deposits. Genuino herself admitted
her relationship with some of the depositors in her affidavit, to wit:

6. Contrary to the allegations of Mr. Lim in par. 6.1 up to 8.1 concerning the alleged scheme
employed in the questioned transactions, insinuating an "in" and "out" movement of funds of the
seven (7) depositors, the truth is that after said "depositors" instructed/authorized us to
effect the withdrawal of their respective monies from Citibank to attain the common goal of
higher yields utilizing Global as the vehicle for bulk purchases of securities or papers not
dealt with/offered by Citibank, said pooled investment remained with Global, and were
managed through Global for over a year until the controversy arose;
 10. The seven (7) "depositors" mentioned in Mr. Lim's Affidavits are the long-time friends of
affiant Genuino who had formed a loosely constituted investment group for purposes of realizing
higher yields derivable from pooled investments, and as the advisor of the group she had in effect
chosen Citibank as the initial repository of their respective monies prior to the implementation of
plans for pooled investments under Global. Hence, she had known and dealt with said "depositors"
before they became substantial depositors of Citibank. She did not come across them because of
Citibank.40 (Emphasis supplied.)

All told, Citibank had valid grounds to dismiss Genuino on ground of loss of confidence.

In view of Citibank's failure to observe due process, however, nominal damages are in order but the amount
is hereby raised to PhP 30,000 pursuant to Agabon v. NLRC. The NLRC's order for payroll reinstatement is
set aside.

In Agabon, we explained:

The violation of the petitioners' right to statutory due process by the private respondent warrants
the payment of indemnity in the form of nominal damages. The amount of such damages is
addressed to the sound discretion of the court, taking into account the relevant circumstances.
Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at
P30,000.00. We believe this form of damages would serve to deter employers from future
violations of the statutory due process rights of employees. At the very least, it provides a
vindication or recognition of this fundamental right granted to the latter under the Labor Code and
its Implementing Rules.41

Thus, the award of PhP 5,000 to Genuino as indemnity for non-observance of due process under the CA's
March 31, 2000 Resolution in CA-G.R. SP No. 51532 is increased to PhP 30,000.

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.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 164856 January 20, 2009

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

vs.
PHILIPPINE AIRLINES, INC., Respondent.

DECISION

CARPIO MORALES, J.:

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

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

SO ORDERED.2

The case stemmed from the administrative charge filed by PAL against its employees-herein petitioners3
after they were allegedly caught in the act of sniffing shabu when a team of company security personnel
and law enforcers raided the PAL Technical Center’s Toolroom Section on July 24, 1995.
After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL Code of
Discipline,4 prompting them to file a complaint for illegal dismissal and damages which was, by Decision
of January 11, 1999,5 resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter alia,
immediately comply with the reinstatement aspect of the decision.

Prior to the promulgation of the Labor Arbiter’s decision, the Securities and Exchange Commission (SEC)
placed PAL (hereafter referred to as respondent), which was suffering from severe financial losses, under
an Interim Rehabilitation Receiver, who was subsequently replaced by a Permanent Rehabilitation Receiver
on June 7, 1999.

From the Labor Arbiter’s decision, respondent appealed to the NLRC which, by Resolution of January 31,
2000, reversed said decision and dismissed petitioners’ complaint for lack of merit.6

Petitioners’ Motion for Reconsideration was denied by Resolution of April 28, 2000 and Entry of Judgment
was issued on July 13, 2000.7

Subsequently or on October 5, 2000, the Labor Arbiter issued a Writ of Execution (Writ) respecting the
reinstatement aspect of his January 11, 1999 Decision, and on October 25, 2000, he issued a Notice of
Garnishment (Notice). Respondent thereupon moved to quash the Writ and to lift the Notice while
petitioners moved to release the garnished amount.

In a related move, respondent filed an Urgent Petition for Injunction with the NLRC which, by Resolutions
of November 26, 2001 and January 28, 2002, affirmed the validity of the Writ and the Notice issued by the
Labor Arbiter but suspended and referred the action to the Rehabilitation Receiver for appropriate action.

Respondent elevated the matter to the appellate court which issued the herein challenged Decision and
Resolution nullifying the NLRC Resolutions on two grounds, essentially espousing that: (1) a subsequent
finding of a valid dismissal removes the basis for implementing the reinstatement aspect of a labor arbiter’s
decision (the first ground), and (2) the impossibility to comply with the reinstatement order due to
corporate rehabilitation provides a reasonable justification for the failure to exercise the options under
Article 223 of the Labor Code (the second ground).

By Decision of August 29, 2007, this Court PARTIALLY GRANTED the present petition and effectively
reinstated the NLRC Resolutions insofar as it suspended the proceedings, viz:

Since petitioners’ claim against PAL is a money claim for their wages during the pendency of PAL’s
appeal to the NLRC, the same should have been suspended pending the rehabilitation proceedings. The
Labor Arbiter, the NLRC, as well as the Court of Appeals should have abstained from resolving
petitioners’ case for illegal dismissal and should instead have directed them to lodge their claim before
PAL’s receiver.

However, to still require petitioners at this time to re-file their labor claim against PAL under peculiar
circumstances of the case– that their dismissal was eventually held valid with only the matter of
reinstatement pending appeal being the issue– this Court deems it legally expedient to suspend the
proceedings in this case.

WHEREFORE, the instant petition is PARTIALLY GRANTED in that the instant proceedings herein are
SUSPENDED until further notice from this Court. Accordingly, respondent Philippine Airlines, Inc. is
hereby DIRECTED to quarterly update the Court as to the status of its ongoing rehabilitation. No costs.

SO ORDERED.8 (Italics in the original; underscoring supplied)

By Manifestation and Compliance of October 30, 2007, respondent informed the Court that the SEC, by
Order of September 28, 2007, granted its request to exit from rehabilitation proceedings.9

In view of the termination of the rehabilitation proceedings, the Court now proceeds to resolve the
remaining issue for consideration, which is whether petitioners may collect their wages during the period
between the Labor Arbiter’s order of reinstatement pending appeal and the NLRC decision overturning that
of the Labor Arbiter, now that respondent has exited from rehabilitation proceedings.

Amplification of the First Ground

The appellate court counted on as its first ground the view that a subsequent finding of a valid dismissal
removes the basis for implementing the reinstatement aspect of a labor arbiter’s decision.

On this score, the Court’s attention is drawn to seemingly divergent decisions concerning reinstatement
pending appeal or, particularly, the option of payroll reinstatement. On the one hand is the jurisprudential
trend as expounded in a line of cases including Air Philippines Corp. v. Zamora,10 while on the other is the
recent case of Genuino v. National Labor Relations Commission.11 At the core of the seeming divergence is
the application of paragraph 3 of Article 223 of the Labor Code which reads:

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

The view as maintained in a number of cases is that:

x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory
on the part of the employer to reinstate and pay the wages of the dismissed employee during the
period of appeal until reversal by the higher court. On the other hand, if the employee has been
reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is
not required to reimburse whatever salary he received for he is entitled to such, more so if he actually
rendered services during the period.12 (Emphasis in the original; italics and underscoring supplied)

In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to
receive wages pending appeal upon reinstatement, which is immediately executory. Unless there is a
restraining order, it is ministerial upon the Labor Arbiter to implement the order of reinstatement and it is
mandatory on the employer to comply therewith.13

The opposite view is articulated in Genuino which states:

If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal
is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to
refund the salaries s/he received while the case was pending appeal, or it can be deducted from the
accrued benefits that the dismissed employee was entitled to receive from his/her employer under existing
laws, collective bargaining agreement provisions, and company practices. However, if the employee was
reinstated to work during the pendency of the appeal, then the employee is entitled to the compensation
received for actual services rendered without need of refund.

Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal
is based on a just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the
September 3, 1994 NLRC Decision.14 (Emphasis, italics and underscoring supplied)
It has thus been advanced that there is no point in releasing the wages to petitioners since their dismissal
was found to be valid, and to do so would constitute unjust enrichment.

Prior to Genuino, there had been no known similar case containing a dispositive portion where the
employee was required to refund the salaries received on payroll reinstatement. In fact, in a catena of
cases,15 the Court did not order the refund of salaries garnished or received by payroll-reinstated employees
despite a subsequent reversal of the reinstatement order.

The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise render inutile
the rationale of reinstatement pending appeal.

x x x [T]he law itself has laid down a compassionate policy which, once more, vivifies and enhances the
provisions of the 1987 Constitution on labor and the working man.

xxxx

These duties and responsibilities of the State are imposed not so much to express sympathy for the
workingman as to forcefully and meaningfully underscore labor as a primary social and economic force,
which the Constitution also expressly affirms with equal intensity. Labor is an indispensable partner for the
nation's progress and stability.

xxxx

x x x In short, with respect to decisions reinstating employees, the law itself has determined a sufficiently
overwhelming reason for its execution pending appeal.

xxxx

x x x Then, by and pursuant to the same power (police power), the State may authorize an immediate
implementation, pending appeal, of a decision reinstating a dismissed or separated employee since that
saving act is designed to stop, although temporarily since the appeal may be decided in favor of the
appellant, a continuing threat or danger to the survival or even the life of the dismissed or separated
employee and his family.16

The social justice principles of labor law outweigh or render inapplicable the civil law doctrine of unjust
enrichment espoused by Justice Presbitero Velasco, Jr. in his Separate Opinion. The constitutional and
statutory precepts portray the otherwise "unjust" situation as a condition affording full protection to labor.

Even outside the theoretical trappings of the discussion and into the mundane realities of human
experience, the "refund doctrine" easily demonstrates how a favorable decision by the Labor Arbiter could
harm, more than help, a dismissed employee. The employee, to make both ends meet, would necessarily
have to use up the salaries received during the pendency of the appeal, only to end up having to refund the
sum in case of a final unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff
of insolvency.

Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse
payroll reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option
of payroll reinstatement belongs to the employer, even if the employee is able and raring to return to work.
Prior to Genuino, it is unthinkable for one to refuse payroll reinstatement. In the face of the grim
possibilities, the rise of concerned employees declining payroll reinstatement is on the horizon.

Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also
institutes a scheme unduly favorable to management. Under such scheme, the salaries dispensed pendente
lite merely serve as a bond posted in installment by the employer. For in the event of a reversal of the
Labor Arbiter’s decision ordering reinstatement, the employer gets back the same amount without having to
spend ordinarily for bond premiums. This circumvents, if not directly contradicts, the proscription that the
"posting of a bond [even a cash bond] by the employer shall not stay the execution for reinstatement."17

In playing down the stray posture in Genuino requiring the dismissed employee on payroll reinstatement to
refund the salaries in case a final decision upholds the validity of the dismissal, the Court realigns the
proper course of the prevailing doctrine on reinstatement pending appeal vis-à-vis the effect of a reversal
on appeal.

Respondent insists that with the reversal of the Labor Arbiter’s Decision, there is no more basis to enforce
the reinstatement aspect of the said decision. In his Separate Opinion, Justice Presbitero Velasco, Jr.
supports this argument and finds the prevailing doctrine in Air Philippines and allied cases inapplicable
because, unlike the present case, the writ of execution therein was secured prior to the reversal of the Labor
Arbiter’s decision.

The proposition is tenuous. First, the matter is treated as a mere race against time. The discussion stopped
there without considering the cause of the delay. Second, it requires the issuance of a writ of execution
despite the immediately executory nature of the reinstatement aspect of the decision. In Pioneer Texturing
Corp. v. NLRC,18 which was cited in Panuncillo v. CAP Philippines, Inc.,19 the Court observed:

x x x The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be
immediately executory even pending appeal and the posting of a bond by the employer shall not stay the
execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement
immediately enforceable, even pending appeal. To require the application for and issuance of a writ of
execution as prerequisites for the execution of a reinstatement award would certainly betray and run
counter to the very object and intent of Article 223, i.e., the immediate execution of a reinstatement order.
The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous
reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the
part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught
the strict mandate and noble purpose envisioned by Article 223. In other words, if the requirements of
Article 224 [including the issuance of a writ of execution] were to govern, as we so declared in Maranaw,
then the executory nature of a reinstatement order or award contemplated by Article 223 will be unduly
circumscribed and rendered ineffectual. In enacting the law, the legislature is presumed to have ordained a
valid and sensible law, one which operates no further than may be necessary to achieve its specific purpose.
Statutes, as a rule, are to be construed in the light of the purpose to be achieved and the evil sought to be
remedied. x x x In introducing a new rule on the reinstatement aspect of a labor decision under Republic
Act No. 6715, Congress should not be considered to be indulging in mere semantic exercise. x x x20 (Italics
in the original; emphasis and underscoring supplied)

The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the
dismissed employee during the period of appeal until reversal by the higher court.21 It settles the view that
the Labor Arbiter's order of reinstatement is immediately executory and the employer has to either re-admit
them to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate them in
the payroll, and that failing to exercise the options in the alternative, employer must pay the employee’s
salaries.22

Amplification of the Second Ground

The remaining issue, nonetheless, is resolved in the negative on the strength of the second ground relied
upon by the appellate court in the assailed issuances. The Court sustains the appellate court’s finding that
the peculiar predicament of a corporate rehabilitation rendered it impossible for respondent to exercise its
option under the circumstances.
The spirit of the rule on reinstatement pending appeal animates the proceedings once the Labor Arbiter
issues the decision containing an order of reinstatement. The immediacy of its execution needs no further
elaboration. Reinstatement pending appeal necessitates its immediate execution during the pendency of the
appeal, if the law is to serve its noble purpose. At the same time, any attempt on the part of the employer to
evade or delay its execution, as observed in Panuncillo and as what actually transpired in Kimberly,23
Composite,24 Air Philippines,25 and Roquero,26 should not be countenanced.

After the labor arbiter’s decision is reversed by a higher tribunal, the employee may be barred from
collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending
appeal was without fault on the part of the employer.

The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal
was not executed prior to its reversal; and (2) the delay must not be due to the employer’s unjustified act or
omission. If the delay is due to the employer’s unjustified refusal, the employer may still be required to pay
the salaries notwithstanding the reversal of the Labor Arbiter’s decision.

In Genuino, there was no showing that the employer refused to reinstate the employee, who was the
Treasury Sales Division Head, during the short span of four months or from the promulgation on May 2,
1994 of the Labor Arbiter’s Decision up to the promulgation on September 3, 1994 of the NLRC Decision.
Notably, the former NLRC Rules of Procedure did not lay down a mechanism to promptly effectuate the
self-executory order of reinstatement, making it difficult to establish that the employer actually refused to
comply.

In a situation like that in International Container Terminal Services, Inc. v. NLRC27 where it was alleged
that the employer was willing to comply with the order and that the employee opted not to pursue the
execution of the order, the Court upheld the self-executory nature of the reinstatement order and ruled that
the salary automatically accrued from notice of the Labor Arbiter's order of reinstatement until its ultimate
reversal by the NLRC. It was later discovered that the employee indeed moved for the issuance of a writ
but was not acted upon by the Labor Arbiter. In that scenario where the delay was caused by the Labor
Arbiter, it was ruled that the inaction of the Labor Arbiter who failed to act upon the employee’s motion for
the issuance of a writ of execution may no longer adversely affect the cause of the dismissed employee in
view of the self-executory nature of the order of reinstatement.28

The new NLRC Rules of Procedure, which took effect on January 7, 2006, now require the employer to
submit a report of compliance within 10 calendar days from receipt of the Labor Arbiter’s decision,29
disobedience to which clearly denotes a refusal to reinstate. The employee need not file a motion for the
issuance of the writ of execution since the Labor Arbiter shall thereafter motu proprio issue the writ. With
the new rules in place, there is hardly any difficulty in determining the employer’s intransigence in
immediately complying with the order.

In the case at bar, petitioners exerted efforts30 to execute the Labor Arbiter’s order of reinstatement until
they were able to secure a writ of execution, albeit issued on October 5, 2000 after the reversal by the
NLRC of the Labor Arbiter’s decision. Technically, there was still actual delay which brings to the
question of whether the delay was due to respondent’s unjustified act or omission.

It is apparent that there was inaction on the part of respondent to reinstate them, but whether such omission
was justified depends on the onset of the exigency of corporate rehabilitation.

It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any
court, tribunal or board against the corporation shall ipso jure be suspended.31 As stated early on, during the
pendency of petitioners’ complaint before the Labor Arbiter, the SEC placed respondent under an Interim
Rehabilitation Receiver. After the Labor Arbiter rendered his decision, the SEC replaced the Interim
Rehabilitation Receiver with a 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.

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.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

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
Decision2 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 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 13th month 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.

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.

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 Order15 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 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 Execution17 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 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. 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 Commission26 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 Commission30 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 NLRC, it found that there was no illegal dismissal; thus, neither reinstatement nor
backwages may be awarded. In fact, Filfex deleted 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 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 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 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 13th 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.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 147806 November 12, 2002

NERISSA BUENVIAJE, SONIA FLORES, BELMA OLIVIO,

GENALYN PELOBELLO, MARY JANE MENOR, JOSIE RAQUERO,
ESTRELITA MANAHAN, REBECCA EBOL, and ERLINDA ARGA, petitioners,
vs.
THE HONORABLE COURT OF APPEALS (SPECIAL FORMER SEVENTH DIVISION),
HONORABLE ARBITER ROMULUS PROTASIO, COTTONWAY MARKETING
CORPORATION and MICHAEL G. TONG, President and General Manager, respondents.

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:

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 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:

"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 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"

The petitioners, however, were not able to promptly comply with the order. Instead, their counsel, Atty.
Roberto LL. Peralta, sent a reply letter to Atty. De Luna stating that his clients were not in a position to
comply with said order since the NLRC has not yet finally disposed of the case. The reply letter stated:26

"June 20, 1996

ATTY. AMBROSIO B. DE LUNA

Unit 2-D Bouganvilla (sic) Mansions
91 P. Tuazon Street, Cubao
Quezon City

Compañero,

Your letter dated June 5, 1996 to our clients, Erlinda Arga, et al., complainants in NLRC NCR CASE NO.
00-10-07238-94, Genalyn Pelobello, et al. vs. Network Fashion, et al., was referred to us for reply.

Please be informed that our said clients are not in a position now to comply with your order for them to
report for work within five (5) days from receipt thereof since the National Labor Relations Commission,
First Division, has yet to finally disposed off (sic) the case.

However, if it is now a case that your client, Mr. Michael Tong, is yielding to the Decision dated March 26,
1996 of the NLRC, we are then willing to sit down with you relative to the satisfaction of the same to avoid
said decision from being enforced by the sheriff.

Trusting your cooperation on this matter.

Thank you.

Very truly yours,

(Sgd) ROBERTO LL. PERALTA

Counsel For The Complainants"

Consequently, Cottonway sent the petitioners individual notices of termination. The standard letter of
termination which was likewise signed by counsel and individually addressed to petitioners stated:

"August 1, 1996

BELMA ALIVID
c/o Sonia Flores
#1256-A St. Nino Street
Tondo(,) Manila

Dear Ms. Alivid,27

For your failure to report for work as per letter dated June 5, 1996 within the period of five days from
receipt of the same, you are considered to have lost your employment status effective this date with the
company on the ground of failure to report for work.

Please be guided accordingly.

Very truly yours,

(Sgd) Ambrosio B. De Luna

Legal Counsel of
Network Fashion(,) Inc."

We note that Cottonway, before finally deciding to dispense with their services, did not give the petitioners
the opportunity to explain why they were not able to report to work. The records also do not bear any proof
that all the petitioners received a copy of the letters. Cottonway merely claimed that some of them have left
the country and some have found other employment. This, however, does not necessarily mean that
petitioners were no longer interested in resuming their employment at Cottonway as it has not been shown
that their employment in the other companies was permanent. It should be expected that petitioners would
seek other means of income to tide them over during the time that the legality of their termination is under
litigation. Furthermore, petitioners never abandoned their suit against Cottonway. While the case was
pending appeal before the NLRC, the Court of Appeals and this Court, petitioners continued to file
pleadings to ensure that the company would comply with the directive of the NLRC to reinstate them and
to pay them full backwages in case said decision is upheld. Moreover, in his reply to the 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

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

x x x x x x x x x."

The foregoing provision is intended for the benefit of the employee and cannot be used to defeat their own
interest. The law mandates the employer to either admit the dismissed employee back to work under the
same terms and conditions prevailing prior to his dismissal or to reinstate him in the payroll to abate further
loss of income on the part of the employee during the pendency of the appeal. But we cannot stretch the
language of the law as to give the employer the right to remove an employee who fails to immediately
comply with the reinstatement order, especially when there is reasonable explanation for the failure. If
Cottonway were really sincere in its offer to immediately reinstate petitioners to their former positions, it
should have given them reasonable time to wind up their current preoccupation or at least to explain why
they could not return to work at Cottonway at once. Cottonway did not do either. Instead, it gave them only
five days to report to their posts and when the petitioners failed to do so, it lost no time in serving them
their individual notices of termination. We are, therefore, not impressed with the claim of respondent
company that petitioners have been validly dismissed on August 1, 1996 and hence their backwages should
only be computed up to that time. We hold that petitioners are entitled to receive full backwages computed
from the time their compensation was actually withheld until their actual reinstatement, or if reinstatement
is no longer possible, until the finality of the decision, in accordance with the Decision of the NLRC dated
March 26, 1996 which has attained finality.28

IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Court of Appeals dated March 13,
2000 and Resolution dated February 13, 2001 in CA-G.R. SP No. 53204 are REVERSED and SET ASIDE.
Let the records of this case be remanded to the Labor Arbiter for execution in accordance with the Decision
of the NLRC dated March 26, 1996.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 177467 March 9, 2011

PFIZER, INC. AND/OR REY GERARDO BACARRO, AND/OR FERDINAND CORTES, AND/OR
ALFRED MAGALLON, AND/OR ARISTOTLE ARCE, Petitioners,
vs.
GERALDINE VELASCO, Respondent.

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.

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 P23,980.00 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.

On 12 July 2003, Velasco received a "Second Show-cause Notice" informing her of additional
developments in their investigation. According to the notice, a certain Carlito Jomen executed an affidavit
pointing to Velasco as the one who transacted with a printing shop to print PFIZER discount coupons.
Jomen also presented text messages originating from Velasco’s company issued cellphone referring to the
printing of the said coupons. Again, Velasco was given 48 hours to submit her written explanation on the
matter. On 16 July 2003, Velasco sent a letter to PFIZER via Aboitiz courier service asking for additional
time to answer the second Show-cause Notice.

That same day, Velasco filed a complaint for illegal suspension with money claims before the Regional
Arbitration Branch. The following day, 17 July 2003, PFIZER sent her a letter inviting her to a disciplinary
hearing to be held on 22 July 2003. Velasco received it under protest and informed PFIZER via the
receiving copy of the said letter that she had lodged a complaint against the latter and that the issues that
may be raised in the July 22 hearing "can be tackled during the hearing of her case" or at the preliminary
conference set for 5 and 8 of August 2003. She likewise opted to withhold answering the Second Show-
cause Notice. On 25 July 2003, Velasco received a "Third Show-cause Notice," together with copies of the
affidavits of two Branch Managers of Mercury Drug, asking her for her comment within 48 hours. Finally,
on 29 July 2003, PFIZER informed Velasco of its "Management Decision" terminating her employment.

On 5 December 2003, the Labor Arbiter rendered its decision declaring the dismissal of Velasco illegal,
ordering her reinstatement with backwages and further awarding moral and exemplary damages with
attorney’s fees. On appeal, the NLRC affirmed the same but deleted the award of moral and exemplary
damages.5

The dispositive portion of the Labor Arbiter’s Decision dated December 5, 2003 is as follows:

WHEREFORE, judgment is hereby rendered declaring that complainant was illegally dismissed.
Respondents are ordered to reinstate the complainant to her former position without loss of seniority rights
and with full backwages and to pay the complainant the following:

1. Full backwages (basic salary, company benefits, all allowances

as of December 5, 2003 in the amount of P572,780.00);

2. 13th Month Pay, Midyear, Christmas and performance bonuses

in the amount of P105,300.00;

3. Moral damages of P50,000.00;

4. Exemplary damages in the amount of P30,000.00;

5. Attorney’s Fees of 10% of the award excluding damages in the

amount of P67,808.00.

The total award is in the amount of P758,080.00.6

PFIZER appealed to the National Labor Relations Commission (NLRC) but its appeal was denied via the
NLRC Decision7 dated October 20, 2004, which affirmed the Labor Arbiter’s ruling but deleted the award
for damages, the dispositive portion of which is as follows:

WHEREFORE, premises considered, the instant appeal and the motion praying for the deposit in escrow of
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 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 P1,963,855.00
(representing her wages from December 5, 2003, or the date of the Labor Arbiter decision, until May 5,
2005) that was successfully garnished under the Labor 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
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 Letter20 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 22322 of
the Labor Code. In that case, we discussed in length the rationale for that doctrine, to wit:

The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be
immediately executory even pending appeal and the posting of a bond by the employer shall not stay the
execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement
immediately enforceable, even pending appeal. To require the application for and issuance of a writ of
execution as prerequisites for the execution of a reinstatement award would certainly betray and run
counter to the very object and intent of Article 223, i.e., the immediate execution of a reinstatement order.
The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous
reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the
part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught
the strict mandate and noble purpose envisioned by Article 223. In other words, if the requirements of
Article 224 [including the issuance of a writ of execution] were to govern, as we so declared in Maranaw,
then the executory nature of 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 P1,963,855.00 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
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.

In view of PFIZER’s failure to effect respondent's actual or payroll reinstatement, it is indubitable that the
Roquero ruling is applicable to the case at bar. The circumstance that respondent opted for separation pay
in lieu of reinstatement as manifested in her 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:

Anent the directive of the NLRC in its September 3, 1994 Decision ordering Citibank "to pay the salaries
due to the complainant from the date it reinstated complainant in the payroll (computed at P60,000.00 a
month, as found by the Labor Arbiter) up to and until the date of this decision," the Court hereby cancels
said award in view of its finding that the dismissal of Genuino is for a legal and valid ground.

Ordinarily, the employer is required to reinstate the employee during the pendency of the appeal pursuant
to Art. 223, paragraph 3 of the Labor Code, which states:

xxxx

If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal
is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to
refund the salaries s/he received while the case was pending appeal, or it can be deducted from the accrued
benefits that the dismissed employee was entitled to receive from his/her employer under existing laws,
collective bargaining agreement provisions, and company practices. However, if the employee was
reinstated to work during the pendency of the appeal, then the employee is entitled to the compensation
received for actual services rendered without need of refund.

Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal
is based on a just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the
September 3, 1994 NLRC Decision.34 (Emphases supplied.)

Thus, PFIZER implores the Court to annul the award of backwages and separation pay as well as to require
respondent to refund the amount that she was able to collect by way of garnishment from PFIZER as her
accrued salaries.

The contention cannot be given merit since this question has been settled by the Court en banc.

In the recent milestone case of Garcia v. Philippine Airlines, Inc.,35 the Court wrote finis to the stray
posture 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:

If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal
is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to
refund the salaries [he] received while the case was pending appeal, or it can be deducted from the
accrued benefits that the dismissed employee was entitled to receive from [his] employer under existing
laws, collective bargaining agreement provisions, and company practices. However, if the employee was
reinstated to work during the pendency of the appeal, then the employee is entitled to the compensation
received for actual services rendered without need of refund.

Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal
is based on a just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the
September 3, 1994 NLRC Decision. (Emphasis, italics and underscoring supplied)

It has thus been advanced that there is no point in releasing the wages to petitioners since their dismissal
was found to be valid, and to do so would constitute unjust enrichment.

Prior to Genuino, there had been no known similar case containing a dispositive portion where the
employee was required to refund the salaries received on payroll reinstatement. In fact, in a catena of cases,
the Court did not order the refund of salaries garnished or received by payroll-reinstated employees despite
a subsequent reversal of the reinstatement order.

The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise render inutile
the rationale of reinstatement pending appeal.

xxxx

x x x Then, by and pursuant to the same power (police power), the State may authorize an immediate
implementation, pending appeal, of a decision reinstating a dismissed or separated employee since that
saving act is designed to stop, although temporarily since the appeal may be decided in favor of the
appellant, a continuing threat or danger to the survival or even the life of the dismissed or separated
employee and his family.36
Furthermore, in Garcia, the Court went on to discuss the illogical and unjust effects of the "refund
doctrine" erroneously espoused in Genuino:

Even outside the theoretical trappings of the discussion and into the mundane realities of human
experience, the "refund doctrine" easily demonstrates how a favorable decision by the Labor Arbiter could
harm, more than help, a dismissed employee. The employee, to make both ends meet, would necessarily
have to use up the salaries received during the pendency of the appeal, only to end up having to refund the
sum in case of a final unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff
of insolvency.1avvphi1

Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse
payroll reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option
of payroll reinstatement belongs to the employer, even if the employee is able and raring to return to work.
Prior to Genuino, it is unthinkable for one to refuse payroll reinstatement. In the face of the grim
possibilities, the rise of concerned employees declining payroll reinstatement is on the horizon.

Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also
institutes a scheme unduly favorable to management. Under such scheme, the salaries dispensed pendente
lite merely serve as a bond posted in installment by the employer. For in the event of a reversal of the
Labor Arbiter's decision ordering reinstatement, the employer gets back the same amount without having to
spend ordinarily for bond premiums. This circumvents, if not directly contradicts, the proscription that the
"posting of a bond [even a cash bond] by the employer shall not stay the execution for reinstatement."

In playing down the stray posture in Genuino requiring the dismissed employee on payroll reinstatement to
refund the salaries in case a final decision upholds the validity of the dismissal, the Court realigns the
proper course of the prevailing doctrine on reinstatement pending appeal vis-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.
 Republic of the Philippines
SUPREME COURT
Baguio City

SECOND DIVISION

G.R. No. 207983 April 7, 2014

WENPHIL CORPORATION, Petitioner,

vs.
ALMER R. ABING and ANABELLE M. TUAZON, Respondents.

DECISION

BRION, J.:

We resolve this petition for review on certiorari1 under Rule 45 of the Rules of Court, challenging the
August 31, 2012 decision2 and the June 20, 2013 resolution3 (assailed CA rulings) of the Court of Appeals
(CA) in CA-G.R. SP No. 117366.

These assailed CA rulings annulled and set aside the March 26, 2010 Decision4 and September 15, 20105
resolution (NLRC rulings) of the National Labor Relations Commission (NLRC) in NLRC CA No. 02-
8233-01 (Rl-08).

The NLRC rulings, in turn, fully affirmed the November 16, 2007 Order6 of the Labor Arbiter (LA) in
NLRC-NCR Case Nos. 30-03-00993-00 and 30-03-01020-00. The LA’s order found that an illegal
dismissal took place. Thus, the LA directed petitioner Wenphil Corporation (Wenphil) to pay respondents
Almer Abing and Anabelle Tuazon (respondents) their backwages for the period from February 15, 2002 to
November 8, 2002, pursuant to the rule that an order of reinstatement is immediately executory even
pending appeal.7

Factual Antecedents

This case stemmed from a complaint for illegal dismissal filed by the respondents against Wenphil,
docketed as NLRC NCR Case No. 30-03-00993-00.

On December 8, 2000, LA Geobel A. Bartolabac ruled8 that the respondents had been illegally dismissed
by Wenphil. According to the LA, the allegation of serious misconduct against the respondents had no
factual and legal basis.9 Consequently, LA Bartolabac ordered Wenphil to immediately reinstate the
respondents to their respective positions or to equivalent ones, whether actuall or in the payroll. Also, the
LA ordered Wenphil to pay the respondents their backwages from February 3, 2000 until the date of their
actual reinstatement.10

Because of the unfavorable LA decision, Wenphil appealed to the NLRC on April 16, 200111. In the
meantime, the respondents moved for the immediate execution of the LA’s December 8, 2000 decision.12

On October 29, 2001, Wenphil and the respondents entered into a compromise agreement13 before LA
Bartolabac. They agreed to the respondents’ payroll reinstatement while Wenphil’s appeal with the NLRC
was ongoing. Wenphil also agreed to pay the accumulated salaries of the respondents for the payroll period
from April 5, 2001 until October 15, 2001.14 As for the remaining payroll period starting October 16,
2001, Wenphil committed itself to credit the respective salaries of the respondents to their ATM payroll
accounts until such time that the questioned decision of LA Bartolabac is either modified, amended or
reversed by the Honorable National Labor Relations Commission.15
On January 30, 2002, the NLRC issued a resolution16 affirming LA Bartolabac’s decision with
modifications. Instead of ordering the respondents’ reinstatement, the NLRC directed Wenphil to pay the
respondents their respective separation pay at the rate of one (1) month salary for every year of service.
Also, the NLRC found that while the respondents had been illegally dismissed, they had not been illegally
suspended. Thus, the period from February 3 to February 28, 2000 during which the respondents were on
preventive suspension – was excluded by the NLRC in the computation of the respondents’ backwages.17

Subsequently, Wenphil moved for the reconsideration18 of the NLRC’s January 30, 2002 resolution, but
the NLRC denied the motion in another resolution dated September 24, 2002.19

Wenphil thereafter went up to the CA via a petition for certiorari to question the NLRC’s January 30, 2002
and September 24, 2002 resolutions.20 On August 27, 2003, the CA rendered its decision21 reversing the
NLRC’s finding that the respondents had been illegally dismissed. According to the CA, there was enough
evidence to show that the respondents had been guilty of serious misconduct; thus, their dismissal was for a
valid cause.22 The respondents moved for the reconsideration of the CA’s decision.23 In a resolution24
dated February 23, 2004, the CA denied the respondents’ motion.

On appeal to the Supreme Court (SC) via Rule 45 (docketed as G.R. No. 16244725 and dated December
27, 2006), the SC denied the respondents petition for review on certiorari26 and affirmed the CA’s August
27, 2003 decision and February 23, 2004 resolution. The respondents did not file any motion for
reconsideration to question the SC’s decision; thus, the decision became final and executory on February
15, 2007.27

The Labor Arbitration Rulings

Sometime after the SC’s decision in G.R. No. 162447 became final and executory, the respondents filed
with LA Bartolabac a motion for computation and issuance of writ of execution.28 The respondents
asserted in this motion that although the CA’s ruling on the absence of illegal dismissal (as affirmed by the
SC) was adverse to them, under the law and settled jurisprudence, they were still entitled to backwages
from the time of their dismissal until the NLRC’s decision finding them to be illegally dismissed was
reversed with finality.29

LA Bartolabac granted the respondents’ motion and, in an order dated November 16, 2007,30 directed
Wenphil to pay each complainant their salaries on reinstatement covering the period from February 15,
2002 (the date Wenphil last paid the respondents’ respective salaries) to November 8, 2002 (since the
NLRC’s decision finding the respondents illegally dismissed became final and executory on February 28,
2002).

Both parties appealed to the NLRC to question LA Bartolabac’s November 16, 2007 order.31 Wenphil
argued that the respondents were no longer entitled to payment of backwages in view of the compromise
agreement they executed on October 29, 2001. According to Wenphil, the compromise agreement provided
that Wenphil’s obligation to pay the respondents’ backwages should cease as soon as LA Bartolabac’s
decision was "modified, amended or reversed" by the NLRC. Since the NLRC modified the LA’s ruling by
ordering the payment of separation pay in lieu of reinstatement, then the respondents, under the terms of the
compromise agreement, were entitled to backwages only up to the finality of the NLRC decision.32

The respondents questioned in their appeal the determined period for the computation of their backwages;
they posited that the period for payment should end, not on November 8, 2002, but on February 14, 2007,
since the SC’s decision which upheld the CA’s ruling became final and executory on February 15, 2007.33

The NLRC denied the parties’ respective appeals in its decision dated March 26, 201034 and affirmed in
toto the LA’s order. Both parties moved for the reconsideration of the NLRC’s decision but the NLRC
denied their respective motions in the resolution of September 15, 2010.35
 The CA’s Ruling

In its decision dated August 31, 2012,36 the CA reversed the NLRC rulings and prescribed a different
computation period.

The CA ruled that the NLRC committed grave abuse of discretion when it affirmed the LA’s computed
period which was from February 15, 2002 to November 8, 2002. In arriving at this conclusion, the CA cited
the case of Pfizer v. Velasco37 where this Court ruled that even if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the dismissed
employee’s wages during the period of appeal until reversal by the higher court.38 The CA construed this
"higher court" to be the CA, not the SC.

The CA reasoned out that it was a "higher court" than the NLRC when it reversed the NLRC’s rulings;
thus, the period for computation should end when it promulgated its decision reversing that of the NLRC,
and not on the date when the SC affirmed its decision.

The CA likewise held that the compromise agreement did not contain any waiver of rights for any award
the respondents might have received when the NLRC changed or modified the LA’s award.39

The Petition

In its petition for review with this Court, Wenphil maintained that the respondents were no longer entitled
to payment of backwages in view of the modification of the LA’s ruling by the NLRC pursuant with their
October 29, 2001 compromise agreement.

Wenphil argued that the CA utterly disregarded the terms of the parties’ compromise agreement whose
terms were very clear; the agreement reads:

3. That for the payroll period from October 16-31 and thereafter, their [respondents] salaries (net of
withholding tax, SSS, Philhealth and Pag-ibig) shall be credited every 10th and 25th of the succeeding
months through their respective ATM employee’s account until such time that the questioned decision of
the Honorable Labor Arbiter Geobel Bartolabac is modified, amended or reversed by the Honorable Labor
Relations Commission.40 [emphasis ours]

It was Wenphil’s assertion that since the NLRC’s decision partly changed the decision of LA Bartolabac by
ordering payment of separation pay in lieu of reinstatement, the NLRC decision was a "modification" that
should operate to remove Wenphil’s obligation to pay the respondents’ backwages for the period of the
CA’s reversal of the NLRC’s illegal dismissal ruling.41 According to Wenphil, the words of the
compromise agreement left no room for interpretation as to the parties’ intentions;42 as a valid agreement
between the parties, it must be given effect and respected by the court.

Wenphil also contended that the CA’s cited Pfizer case cannot apply to the present case since there was no
compromise agreement in Pfizer where the dismissed employee waived her entitlement to backwages.43

Finally, Wenphil claimed that the reliefs of reinstatement and backwages are only available to illegally
dismissed employees. A ruling that the respondents were still entitled to reinstatement pay notwithstanding
the validity of their dismissal, would amount to the court’s tolerance of an unjust and equitable situation.44

The Court’s Ruling

We resolve to DENY the petition. An order of reinstatement is immediately executory even pending
appeal. The employer has the obligation to reinstate and pay the wages of the dismissed employee during
the period of appeal until reversal by the higher court.
Under Article 223 of the Labor Code, "the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even
pending appeal. The employee shall either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation, or at the option of the employer, merely reinstated in the
payroll. The posting of a bond by the employer shall not stay the execution for reinstatement."

The Court discussed reason behind this legal policy in Aris v. NLRC,45 where it explained:

In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter
reinstating a dismissed or separated employee, the law itself has laid down a compassionate policy which,
once more, vivifies and enhances the provisions of the 1987 Constitution on labor and the working-man.
These provisions are the quintessence of the aspirations of the workingman for recognition of his role in the
social and economic life of the nation, for the protection of his rights, and the promotion of his welfare…
These duties and responsibilities of the State are imposed not so much to express sympathy for the
workingman as to forcefully and meaningfully underscore labor as a primary social and economic force,
which the Constitution also expressly affirms with equal intensity. Labor is an indispensable partner for the
nation's progress and stability. [emphasis ours]

Since the decision is immediately executory, it is the duty of the employer to comply with the order of
reinstatement, which can be done either actually or through payroll reinstatement. As provided under
Article 223 of the Labor Code, this immediately executory nature of an order of reinstatement is not
affected by the existence of an ongoing appeal. The employer has the duty to reinstate the employee in the
interim period until a reversal is decreed by a higher court or tribunal.

In the case of payroll reinstatement, even if the employer’s appeal turns the tide in its favor, the reinstated
employee has no duty to return or reimburse the salary he received during the period that the lower court or
tribunal’s governing decision was for the employee’s illegal dismissal.

Otherwise, the situation would run counter to the immediately executory nature of an order of
reinstatement. The case of Garcia v. Philippine Airlines46 is enlightening on this point:

Even outside the theoretical trappings of the discussion and into the mundane realities of human
experience, the "refund doctrine" easily demonstrates how a favorable decision by the Labor Arbiter could
harm, more than help, a dismissed employee. The employee, to make both ends meet, would necessarily
have to use up the salaries received during the pendency of the appeal, only to end up having to refund the
sum in case of a final unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff
of insolvency.

Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse
payroll reinstatement and simply find work elsewhere in the interim, if any is available.1âwphi1 Notably,
the option of payroll reinstatement belongs to the employer, even if the employee is able and raring to
return to work.

We see the situation discussed above to be present in the case before us as Wenphil observed the mandate
of Article 223 to immediately comply with the order of reinstatement by the LA. On October 29, 2001,
while Wenphil’s appeal with the NLRC was pending, it entered into a compromise agreement with the
respondents. In this agreement, Wenphil committed to reinstate the respondents in its payroll. However, the
commitment came with a condition: Wenphil stipulated that its obligation to pay the wages due to the
respondents would cease if the decision of the LA would be "modified, amended or reversed" by the
NLRC.47

Thus, when the NLRC rendered its decision on the appeal affirming the LA’s finding that the respondents
were illegally dismissed, but modifying the award of reinstatement to payment of separation pay, Wenphil
stopped paying the respondents’ wages.
The reinstatement salaries due to the respondents were, by their nature, payment of unworked backwages.
These were salaries due to the respondents because they had been prevented from working despite the LA
and the NLRC findings that they had been illegally dismissed.

We point out that reinstatement and backwages are two separate reliefs available to an illegally dismissed
employee. The normal consequences of a finding that an employee has been illegally dismissed are: first,
that the employee becomes entitled to reinstatement to his former position without loss of seniority rights;
and second, the payment of backwages covers the period running from his illegal dismissal up to his actual
reinstatement.48 These two reliefs are not inconsistent with one another and the labor arbiter can award
both simultaneously.

Moreover, the relief of separation pay may be granted in lieu of reinstatement but it cannot be a substitute
for the payment of backwages. In instances where reinstatement is no longer feasible because of strained
relations between the employee and the employer, separation pay should be granted. In effect, an illegally
dismissed employee should be entitled to either reinstatement – if viable, or separation pay if reinstatement
is no longer be viable, plus backwages in either instance.49 The rationale for such policy of distinction was
vividly explained in Santos v. NLRC under these terms:50

Though the grant of reinstatement commonly carries with it an award of backwages, the inappropriateness
or non-availability of one does not carry with it the inappropriateness or non-availability of the other.
Separation pay was awarded in favor of petitioner Lydia Santos because the NLRC found that her
reinstatement was no longer feasible or appropriate. As the term suggests, separation pay is the amount that
an employee receives at the time of his severance from the service and, as correctly noted by the Solicitor
General in his Comment, is designed to provide the employee with "the wherewithal during the period that
he is looking for another employment." In the instant case, the grant of separation pay was a substitute for
immediate and continued re-employment with the private respondent Bank. The grant of separation pay did
not redress the injury that is intended to be relieved by the second remedy of backwages, that is, the loss of
earnings that would have accrued to the dismissed employee during the period between dismissal and
reinstatement. Put a little differently, payment of backwages is a form of relief that restores the income that
was lost by reason of unlawful dismissal; separation pay, in contrast, is oriented towards the immediate
future, the transitional period the dismissed employee must undergo before locating a replacement job. It
was grievous error amounting to grave abuse of discretion on the part of the NLRC to have considered an
award of separation pay as equivalent to the aggregate relief constituted by reinstatement plus payment of
backwages under Article 280 of the Labor Code. The grant of separation pay was a proper substitute only
for reinstatement; it could not be an adequate substitute both for reinstatement and for backwages. In effect,
the NLRC in its assailed decision failed to give to petitioner the full relief to which she was entitled under
the statute. [emphasis ours]

Apparently, when the NLRC changed the LA’s decision (specifically, the order to award separation pay in
lieu of reinstatement), Wenphil read this to mean to be the "modification" envisioned in the compromise
agreement, Wenphil likewise effectively concluded that separation pay and backwages are the same or are
interchangeable reliefs. This conclusion can be deduced from Wenphil’s insistence not to pay the
respondent’s remaining backwages under its erroneous reasoning that this was the effect of the NLRC’s
order to Wenphil to pay separation pay in lieu of reinstatement.

We emphasize that the basis for the payment of backwages is different from that of the award of separation
pay. Separation pay is granted where reinstatement is no longer advisable because of strained relations
between the employee and the employer. Backwages represent compensation that should have been earned
but were not collected because of the unjust dismissal. The basis for computing separation pay is usually
the length of the employee’s past service, while that for backwages is the actual period when the employee
was unlawfully prevented from working.51

Had Wenphil really wanted to put a stop to the running of the period for the payment of the respondents’
backwages, then it should have immediately complied with the NLRC’s order to award the employees their
separation pay in lieu of reinstatement. This action would have immediately severed the employer-
employee relationship. However, the records are bereft of any evidence that Wenphil actually paid the
respondents’ separation pay. Thus, the employer-employee relationship between Wenphil and the
respondents never ceased and the employment status remained pending and uncertain until the CA actually
rendered its decision that the respondents had not been illegally dismissed. In the context of the parties’
agreement, it was only at this point that the payment of backwages should have stopped.

A compromise agreement should not be contrary to law, morals, good customs and public policy.

While it is true that a compromise agreement is binding between the parties and becomes the law between
them,52 it is also a rule that to be valid, a compromise agreement must not be contrary to law, morals, good
customs and public policy.53

In the present case, the parties’ compromise agreement simply provided that Wenphil’s obligation to pay
the respondents’ backwages shall end the moment the NLRC modifies, amends or reverses the illegal
dismissal decision of LA Bartolabac. On its face, there is nothing invalid with such stipulation. Indeed, had
the NLRC reversed the LA, the obligation to pay backwages would have stopped. The NLRC, however, did
not decree a reversal of the finding of illegal dismissal. In fact, it affirmed the illegal dismissal conclusion,
confining itself merely to a modification of the consequences of the illegal dismissal – from reinstatement
to the payment of separation pay.

This "modification" of course we cannot accept; the option under the legal policy is solely limited to a
ruling that the respondents had not been illegally dismissed. Otherwise, we would be violating the Labor
Code’s policy entitling illegally dismissed employees to their right to backwages even during the period of
appeal. As we held in the case of Garcia v. Philippine Airlines:54

The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the
dismissed employee during the period of appeal until reversal by the higher court. It settles the view that
the Labor Arbiter's order of reinstatement is immediately executory and the employer has to either re-admit
them to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate them in
the payroll, and that failing to exercise the options in the alternative, employer must pay the employee’s
salaries. [emphasis ours]

This ruling embodies a principle and policy of the law that cannot be watered down by any lesser
agreement except perhaps when backwages are already earned entitlements that the employee chooses to
surrender for a valuable consideration (and even then, the consideration must at least be equitable). This
legal policy emphasizes, too, the rule that separation pay cannot be a substitute for backwages but only for
reinstatement. The award of separation pay is not inconsistent with the payment of backwages. Thus, until a
higher court’s or tribunal’s reversal of the finding that an employee had been illegally dismissed, the
employee would be entitled to receive his reinstatement salary or backwages during the period of appeal
until such reversal. This is in line with the Labor Code’s policy that an order of reinstatement, which can
either be actual or through the payroll, is immediately executory and is not affected by the period of appeal.

Period for Computation of Backwages

The records show that the inconsistency between the labor arbitration rulings and the CA’s ruling was on
the period for the computation of such backwages and not on whether the respondents were still entitled to
such backwages during the period of appeal until the reversal of the finding of illegal dismissal.

According to the LA, whose ruling the NLRC affirmed, the period for computation should be from
February 15, 2002 until November 8, 2002 since the NLRC’s decision which affirmed the LA’s finding of
illegal dismissal became final and executory on November 8, 2002. The LA started the counting of the
period on February 15, 2002 since that was the day when Wenphil last paid the respondents’ backwages.
On the other hand, the CA, in setting aside the NLRC’s rulings, relied on the case of Pfizer v. Velasco
where we ruled that the backwages of the dismissed employee should be granted during the period of
appeal until reversal by a higher court. Since the first CA decision which found that the respondents had not
been illegally dismissed was promulgated on August 27, 2003, then the reversal by the higher court was
effectively made on August 27, 2003.

As against this view, the respondents argued that the period for payment of their backwages should end on
February 14, 2007 since the SC decision in G.R. No. 162447 which affirmed the CA’s findings that the
respondents had not been legally dismissed became final and executory on February 15, 2007.

Among these views, the commanding one is the rule in Pfizer, which merely echoes the rulings we made in
the cases of Roquero v. Philippine Airlines55 and Garcia v. Philippine Airlines56 that the period for
computing the backwages due to the respondents during the period of appeal should end on the date that a
higher court reversed the labor arbitration ruling of illegal dismissal. In this case, the higher court which
first reversed the NLRC’s ruling was not the SC but rather the CA. In this light, the CA was correct when it
found that that the period of computation should end on August 27, 2003. The date when the SC’s decision
became final and executory need not matter as the rule in Roquero, Garcia and Pfizer merely referred to the
date of reversal, not the date of the ultimate finality of such reversal.

As a last minor detail, we do not agree with the CA that the date of computation should start on February
15, 2002. Rather, it should be on February 16, 2002. The respondents themselves admitted in their motion
for computation and issuance of writ of execution that the last date when they were paid their backwages
was on February 15, 2002. To start the computation on the same date would result to a duplication of wages
for this day; thus, computation should start on the following date - February 16, 2002.

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

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Baguio City

SECOND DIVISION

G.R. No. 204646 April 15, 2015

SMART COMMUNICATIONS, INC., NAPOLEON L. NAZARENO, and RICARDO P. ISLA,*

Petitioners,
vs.
JOSE LENI Z. SOLIDUM, Respondent.

DECISION

CARPIO, J.:

The Case
This is a petition1 for review on certiorari under Rule 45 of the Rules of Court. Petitioners Smart
Communications, Inc. (Smart), Napoleon L. Nazareno and Ricardo P. Isla (Isla) challenge the Court of
Appeals' 3 July 2012 Amended Decision2 and 23 November 2012 Resolution3 in CA-G.R. SP No. 115794,
affirming the National Labor Relations Commission's (NLRC) 30 July 2010 Resolution.4

The Facts

On 26 April 2004, Smart hired respondent Jose Leni Z. Solidum (Solidum) as Department Head for Smart
Buddy Activation. Smart Buddy Activation is under the Product Marketing Group which is headed by Isla.
On 21 September 2005, Islagave Solidum a memorandum5 informing him of alleged acts of dishonesty,
directing him to explain why his employment should not be terminated, and placing him under preventive
suspension without pay for 30 days. On 28 September 2005, Solidum submitted his written explanation6 in
response to the 21 September 2005 notice.

On 22 October 2005, Isla gave Solidum a memorandum7 dated 21 October 2005 informing him of a
modified set of alleged acts of dishonesty, directing him to explain why his employment should not be
terminated, extending his preventive suspension by 10 days, and inviting him to the administrative
investigation scheduled on 26 October 2005.

On 11 November 2005, Isla gave Solidum a memorandum8 dated 9 November 2005 terminating his
employment "for fraud or willful breach of trust, falsification, misrepresentation, conflict of interest,
serious misconduct and dishonesty-related offenses."9

Solidum filed against Smart a complaint10 for illegal dismissal, illegal suspension, non-payment of
salaries, actual, moral and exemplary damages, and attorney’s fees.

In his 3 July 2006 Decision,11 the Labor Arbiter found that Solidum’s preventive suspension and dismissal
were illegal and that he was entitled to full back wages, moral and exemplary damages, and attorney’s fees.
The dispositive portion of the Decision stated:

WHEREFORE, premises all considered, judgment is hereby rendered in favor of complainant and against
respondents, as follows:

1. Declaring the 20-day extended preventive suspension of complainant from October 22, 2005 to
November 10, 2005 illegal and tantamount to constructive dismissal, and ordering respondents to
jointly and severally pay complainant his corresponding salaries, benefits, privileges, allowances
and other incentives/bonuses during the period from October 22 to November 10, 2005, in the
amount of P236,061.94;

2. Ordering respondents to jointly and severally pay the complainant’s unpaid salaries, benefits,
privileges, allowances, and other benefits/bonuses during the 30-day preventive suspension, in the
amount of P365,896.00;

3. Declaring the dismissal of complainant effective November 11, 2005 as illegal, and ordering
respondents to reinstate the complainant to his former position, immediately upon receipt of this
decision, either physically or in the payroll, at the option of the former, and failure to exercise their
option within ten (10) days hereof, shall place the complainant on payroll reinstatement, with
payment of accrued salaries, allowances, benefits/incentives and bonuses;

4. Ordering respondents to jointly and severally pay complainant his full backwages, inclusive of
all benefits bonuses, privileges, incentives, allowances or their money equivalents, from date of
dismissal on November 11, 2005 until actual reinstatement, partially computed as follows:
 a. Backwages and benefits - P2,903,561.79

b. Quarterly performance bonus - P935,640.00

c. Monthly Gas allowance - P90,693.00

d. Monthly Rice allowance - P9,000.00

e. Monthly driver’s allowance - P68,175.00

f. 13th month pay (pro-rata) - P265,569.68

g. Unpaid accumulated leaves 2004 & 2005 - P472,123.87

h. Smart incentive entitlement - P7,370,250.00[;]

5. Ordering respondents to jointly and severally pay complainant for the foregone opportunity of
pursuing studies in the United Kingdom under the British Chevening Scholarship Award, in the
sum of 20,189.00 British pounds or Peso 1,982,727.37[; and]

6. Ordering respondents to jointly and severally pay complainant moral damages in the amount of
P2 million, exemplary damages in the amount of P2 million, and attorney’s fees equivalent to 10%
of the judgment award.

SO ORDERED.12

On 25 July 2006, Smart appealed to the NLRC. On 13 November 2006, the Labor Arbiter issued a writ of
execution ordering the sheriff to collect from petitioners P1,440,667.93, representing Solidum’s accrued
salaries, allowances, benefits, incentives and bonuses from 21 July to 20 October 2006. On 15 August and
25 October 2007, 11 February, 28 April, 23 July and 11 November2008, and 22 January 2009, the Labor
Arbiter issued seven other alias writs of execution ordering the sheriff to collect from petitioners Solidum’s
accrued salaries, allowances, benefits, incentives and bonuses.

In its 26 January 2009 Resolution,13 the NLRC reversed the Labor Arbiter’s 3 July 2006 Decision and
dismissed for lack of merit Solidum’s complaint. Solidum filed a motion14 for reconsideration dated 9
February 2009.

On 4 May 2009, Solidum filed with the Labor Arbiter an ex-parte Motion15 praying that an alias writ of
execution be issued directing the sheriff to collect from petitioners P1,440,667.93, representing Solidum’s
accrued salaries, allowances, benefits, incentives and bonuses from 21 January to 20 April 2009.

In its 29 May 2009 Decision,16 the NLRC denied for lack of merit Solidum’s 9 February 2009 motion for
reconsideration.

The Labor Arbiter’s Ruling

In his 29 July 2009 Order,17 the Labor Arbiter denied for lack of merit Solidum’s ex-parte motion praying
that an alias writ of execution be issued directing the sheriff to collect from petitioners P1,440,667.93,
representing Solidum’s accrued salaries, allowances, benefits, incentives and bonuses from 21 January to
20April 2009. The Labor Arbiter held that:
In the instant case, the NLRC promulgated its Decision dated January 26, 2009 reversing this Office’s
Decision dated July 03, 2006. Also, the NLRC in its Decision dated May 29, 2009 denied the
complainant’s motion for reconsideration of its Decision dated January 26, 2009. This Office is mindful of
the fact that the NLRC is tasked with the review of decisions promulgated by this Office, as such, it is a
higher tribunal as contemplated by law.

Verily, the recent decision of the NLRC reversing the Decision of this Office prevents any future issuance
of any writ of execution on the reinstatement aspect in line with Gracia, et al. vs. Philippine Airlines, Inc.
and International Container Terminal Services vs. NLRC.18

Solidum appealed to the NLRC.

The NLRC’s Ruling

In its 31 May 2010 Decision,19 the NLRC reversed the Labor Arbiter’s 29 July 2009 Order. The NLRC
held that:

In the case at bar, records show that respondents appealed from the Labor Arbiter’s Decision to the
Commission on July 25, 2006. The Commission resolved respondents’ appeal on January 26, 2009,
reversing the Decision of the Labor Arbiter dated July 3, 2006. Notably, there is no showing in the records
that respondents reinstated complainant to his former position. Hence, pursuant to Article 223 of the Labor
Code, as amended, relative to the reinstatement aspect of the Labor Arbiter’s Decision, respondents are
obligated to pay complainant’s salaries and benefits, computed from July 13, 2006, when respondents
received a copy of the Labor Arbiter’s Decision which, among others, ordered the reinstatement of
complainant, up to the date of finality of the Commission’s resolution reversing the Labor Arbiter’s
Decision, which, for this purpose, is reckoned on May 29, 2009, when the Commission denied
complainant’s Motion for Reconsideration.

Indeed, common sense dictates that complainant’s entitlement to reinstatement salaries/wages and benefits,
emanating from the Labor Arbiter’s order of reinstatement, presupposes that said order of reinstatement is
still enforceable. Here, the Labor Arbiter’s order of reinstatement dated July 3, 2006 was no longer
enforceable as of May 29, 2009 when the Commission’s resolution reversing the Labor Arbiter’s order of
reinstatement is deemed to have become final as hereinabove discussed. Patently then, complainant is no
longer entitled to reinstatement salaries/wages and benefits after May 29, 2009.

Significantly, the Order of the Labor Arbiter being appealed from by complainant, denied the latter’s
motion for issuance of alias writ of execution for the collection of his reinstatement salaries and benefits for
the period covering January 21, 2009 to April 20, 2009. The Labor Arbiter thus committed serious error in
denying complainant’s motion with respect to his reinstatement salaries and benefits as he is entitled to the
same for the period starting July 13, 2006 to May 29, 2009.20

Solidum filed a motion21 for partial reconsideration. Petitioners filed a motion22 for reconsideration. In its
30July 2010 Resolution, the NLRC granted Solidum’s motion for partial reconsideration and denied for
lack of merit petitioners’ motion for reconsideration. The NLRC held that:

Our Entry of Judgment dated June 01, 2010 clearly states that the Decision promulgated by this
Commission on May 29, 2009 had become final and executory on August 10, 2009. Thus, We so hold that
the date of finality of Our Decision reversing the Labor Arbiter’s Decision dated July 3, 2006 is August 10,
2009, and the computation of complainant’s reinstatement or accrued salaries/wages and other benefits
should be up to August 10, 2009.

Anent respondents’ Motion for Reconsideration, We find the same unmeritorious.23

Petitoners appealed to the Court of Appeals.

In his alias writ24 of execution dated 22 October 2010, the Labor Arbiter ordered the sheriff to collect from
petitioners P1,440,667.93, representing Solidum’s accrued salaries, allowances, benefits, incentives and
bonuses from 21 January to 20 April 2009.

The Court of Appeals’ Ruling

In its 25 January 2011 Decision,25 the Court of Appeals granted petitioners’ petition for certiorari,
prohibition and mandamus with prayer for the issuance of a writ of preliminary injunction and/or temporary
restraining order and set aside the NLRC’s 31 May 2010 Decision and 30 July 2010 Resolution. The Court
of Appeals held that:

The order of the Labor Arbiter denying Private Respondent’s ex-parte motion for issuance of Alias Writ of
Execution is not a final order as there was something else to be done, namely, the resolution of his
Complaint for Illegal Dismissal against Petitioners on the merits. The subject Order of the Labor Arbiter
did not put an end to the issues of illegal suspension and illegal dismissal, and, thus, partakes the nature of
an interlocutory order. It is jurisprudential that an interlocutory order is not appealable until after the
rendition of the judgment on the merits for a contrary rule would delay the administration of justice and
unduly burden the courts. Being interlocutory in nature, the subject Order could not have been validly
appealed.

Moreover, as correctly argued by the Petitioners, an appeal from an interlocutory order is a prohibited
pleading under Section 4 of the 2005 Revised Rules of Procedure of the NLRC. Consequently, the Labor
Arbiter’s order being interlocutory and unappealable, Public Respondent NLRC has no jurisdiction to rule
on the appeal except to dismiss the same. The assailed Decision and the Resolution, rendered in excess of
the Public Respondent NLRC’s jurisdiction, are therefore null.

Besides and more importantly, records show that the Decision, dated May 29, 2009, of the NLRC in the
Illegal Dismissal Case which effectively denied Private Respondent’s Complaint for Illegal Dismissal
against Petitioners already attained finality on June 1, 2010. Indeed, an Entry of Judgment was accordingly
made. Clearly, Private Respondent can neither pray nor cause this Court to grant his Ex-parte Motion for
Issuance of Writ of Execution to reinstate him since his dismissal by Petitioners was finally ruled to be
legal; hence, the denial of his complaint for lack of merit. Ruling on Private Respondent’s Ex-parte motion
shall also have an effect of reviewing a final judgment which the law and the court abhor. It bears to stress
that when a final judgment becomes executory, it thereby becomes immutable and unalterable.26

Solidum filed a motion27 for reconsideration.

In his alias writ28 of execution dated 18 May 2011, the Labor Arbiter ordered the sheriff to collect from
petitioners P1,440,667.93, representing Solidum’s accrued salaries, allowances, benefits, incentives and
bonuses from 21 April to 20 July 2009. Petitioners filed with the Court of Appeals a motion29 to order
Solidum to return P2,881,335.86, representing the total amount under the 22 October 2010 and 18 May
2011 alias writs of execution.

In its 3 July 2012 Amended Decision, the Court of Appeals partly granted Solidum’s motion for
reconsideration and denied petitioners’ motion to order the return of P2,881,335.86. The Court of Appeals
held that:

[T]here was a wrong appreciation of fact relative to the date of finality of judgment. The true date when the
May 29, 2009 NLRC decision became final and executory was on August10, 2009 and not on June 1, 2010.
(Rollo, page 1895) Conformably with the foregoing, the involved portion of our ruling which is the subject
of the discussion at hand is hereby modified by changing the stated date therein from June 1, 2010 to
August 10, 2009.

xxxx

On the last issue for consideration — refund of monetary award, We find necessary to quote the following
pronouncement of the High Court:

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. (Juanito A. Garcia vs.
Philippine Airlines, Inc., G.R. No. 164856, January 20, 2009)

In view thereof, no refund will thus be permitted by this Court.30

Petitioners filed a motion31 for partial reconsideration with motion to order the return of P2,881,335.86. In
its 23 November 2012 Resolution, the Court of Appeals held that:

The move to reconsider the January 26, 2009 decision of the NLRC was denied on May 29, 2009.
Thereafter, an Entry of Judgment was issued which provides in particular the following: "this is to certify
that on May 29, 2009, a DECISION was rendered x x x and that the same has, pursuant to Rules of the
Commission, became [sic] final and executory on Aug. 10, 2009". (Rollo, p. 1895) It appears therefore that
the situation contemplated in the last paragraph of the Section 14 had been the case here. In view of this,
We find no cogent reason to reverse our earlier ruling that August 10, 2009 is the true date of finality of
subject decision.

xxxx

In the light, however, of our earlier discussion on the true date of finality of judgment, we cannot order the
return of the amounts released by way of the 8th and 9th Alias Writ of Execution. The wages, allowances,
incentives/benefits and bonuses received through the said writs covered the period from January21, 2009 to
July 20, 2009, thus, the latter is not required to reimburse the same due to the fact that one is entitled to
such amounts until the day that the reinstatement order was reversed with finality (which in this case falls
on August 10, 2009). (See Juanito A. Garcia vs. Philippine Airlines, Inc. G.R. No. 164856, January 20,
2009)32

Hence, the present petition.

The Issues

Petitioners raised as issues that the Court of Appeals erred in ruling that (1) the NLRC’s 29 May 2009
Decision became final and executory on 10 August 2009, and (2) Solidum was entitled to P2,881,335.86,
representing the total amount under the 22 October 2010 and 18 May 2011 alias writs of execution.

The Court’s Ruling

The petition is unmeritorious.

The NLRC’s 29 May 2009 Decision became final and executory on 10 August 2009 as shown on the entry
of judgment.33 The entry of judgment states:
This is to certify that on May 29, 2009, a DECISION was rendered in the above-entitled case, the
dispositive portion of which reads as follows:

"WHERFORE, premises considered, complainant’s motion for reconsideration, as well as respondents’

motion for injunction are hereby both DENIED for lack of merit. Accordingly, Our January 26,2009
Resolution is hereby REITERATED.

SO ORDERED."

and that the same has pursuant to the Rules of the Commission, become final and executory on Aug. 10,
2009and is hereby recorded in the Book of Entries of Judgments.

Quezon City, Philippines, June 01, 2010.34 (Boldfacing supplied)

Moreover, the certification35 issued by the NLRC states that the NLRC’s 29 May 2009 Decision
becamefinal and executory on 10 August 2009:

This is to certify that the Decision in NLRC Case No. 00-11-09564-05/NLRC CA No. 049875-06, entitled:
Jose Leni Z. Solidum vs. Smart Communications, Inc., Napoleon L.Nazareno, and/or Ricky P. Isla, was
promulgated on 29 May 2009; the same was mailed on 11 June 2009 and in the absence of return cards, the
decision had become final and executory on 10 August 2009, (after sixty (60) calendar days from the date
of mailing), and had been recorded in the Book of Entries of Judgment, pursuant to Rule VII Section 14 of
the 2005 Revised Rules of Procedure of the NLRC which provides: "The Executive Clerk or Deputy
Executive Clerk shall consider the decision, resolution or order as final and executory after sixty (60)
calendar days from date of mailing in the absence of return cards, certifications from the post office, or
other proof of service to parties.36 (Boldfacing supplied)

Since the NLRC’s 29 May 2009 Decision became final and executory on 10 August 2009, Solidum is
entitled to P2,881,335.86, representing his accrued salaries, allowances, benefits, incentives and bonuses
for the period 21 January to 20 July 2009.

In Bago v. NLRC,37 the Court held that employees are entitled to their accrued salaries, allowances,
benefits, incentives and bonuses until the NLRC’s reversal of the labor arbiter’s order of reinstatement
becomes final and executory, as shown on the entry of judgment. The Court held that:

Finally, on Arlyn’s claim that respondents "unilaterally withheld her payroll reinstatement" after the NLRC
reversed on September 27, 2004 the Labor Arbiter’s decision, Article 223, paragraph 6 of the Labor Code
provides that the decision of the NLRC on appeals from decisions of the Labor Arbiter "shall become final
and executory after ten (10) calendar days from receipt thereof by the parties." The 2002 New Rules of
Procedure of the NLRC provided:

RULE VII

xxxx

SECTION 14. FINALITY OF DECISION OF THE COMMISSION AND ENTRY OF JUDGMENT. —

(a) Finality of the Decisions, Resolutions or Orders of the Commission. Except as provided in Rule XI,
Section 9, the decisions, resolutions or orders of the Commission/Division shall become executory after ten
(10) calendar days from receipt of the same.

(b) Entry of Judgment. — Upon the expiration of the ten (10) calendar day period provided in
paragraph (a) of this section, the decision/resolution/order shall, as far as practicable, be entered in
a book of entries of judgment.
 (c) Allowance for Delay of Mail in the Issuance of Entries of Judgment. — In issuing entries of
judgment, the Executive Clerk of Court or the Deputy Executive Clerk, in the absence of a return
card or certification from the post office concerned, shall determine the finality of the decision by
making allowance for delay of mail, computed sixty (60) calendar days from the date of mailing of
the decision, resolution or order.

That the Court of Appeals may take cognizance of and resolve a petition for certiorari for the nullification
of the decisions of the NLRC on jurisdictional and due process considerations does not affect the statutory
finality of the NLRC Decision. The 2002 New Rules of Procedure of the NLRC so provided:

RULE VIII

xxxx

SECTION 6. EFFECT OF FILING OF PETITION FOR CERTIORARI ON EXECUTION. - A petition for

certiorari with the Court of Appeals or the Supreme Court shall not stay the execution of the assailed
decision unless a temporary restraining order is issued by the Court of Appeals or the Supreme Court.

In the case at bar, Arlyn received the September 27, 2004 NLRC decision on October 25, 2004, and the
January 31, 2005 NLRC Resolution denying her Motion for Reconsideration on February 23, 2005. There
is no showing that the Court of Appeals issued a temporary restraining order to enjoin the execution of the
NLRC decision, as affirmed by its Resolution of January 31, 2005. If above-quoted paragraph (a) of
Section 14 of Rule VII of the 2002 NLRC New Rules of Procedure were followed, the decision of the
NLRC would have become final and executory on March 7, 2005, ten (10) calendar days from February 25,
2005. The NLRC, however, issued on June 16, 2005 a Notice of Entry of Judgment stating that the NLRC
Resolution of January 31, 2005 became final and executory on April 16, 2005, apparently following the
above-quoted last paragraph of Section 14 of Rule VII. No objection having been raised by any of the
parties to the declaration in the Notice of Entry of Judgment of the date of finality of the NLRC January 31,
2005 Resolution, Arlyn's payroll reinstatement ended on April 16, 2005. x x x

WHEREFORE, the petition is, in light of the foregoing discussions, DENIED and the questioned decision
of the court a quo is AFFIRMED with MODIFICATION in that respondent Standard Insurance, Co., Inc. is
ordered to pay the salaries due petitioner, Arlyn Bago, from the time her payroll reinstatement was
withheld after the promulgation on September 27, 2004 of the decision of the National Labor Relations
Commission until April 16, 2005 when it became final and executory.38 (Boldfacing supplied)

WHEREFORE, the petition is DENIED. The Court of Appeals' 3 July 2012 Amended Decision and 23
November 2012 Resolution in CAG.R. SP No. 115794 are AFFIRMED.

SO ORDERED.