LABOR II CASES PP.

421-45 but may disregard such testimony and base its conclusion on its own
professional knowledge. A written contract for services shall control the
amount to be paid therefor unless found by the court to be unconscionable
G.R. No. 118746 September 7, 1995
or unreasonable.

ATTY. WILFREDO TAGANAS, petitioner,

When it comes, therefore, to the validity of contingent fees, in large measure it
vs.
depends on the reasonableness of the stipulated fees under the circumstances of
NATIONAL LABOR RELATIONS COMMISSION, MELCHOR ESCULTURA, ET
each case. The reduction of unreasonable attorney's fees is within the regulatory
AL., respondents.
powers of the courts.10

Petitioner Atty. Wilfredo E. Taganas represented herein private respondents in a labor suit for
illegal dismissal, underpayment and non-payment of wages, thirteenth-month pay, attorney's
fees and damages conditioned upon a contingent fee arrangement granting the equivalent of
fifty percent of the judgment award plus three hundred pesos appearance fee per hearing. 1 The
Labor Arbiter ruled in favor of private respondents and ordered Ultra Clean Services (Ultra) and
the Philippine Tuberculosis Society, Inc., (PTSI) respondents therein, jointly and severally to
reinstate herein private respondents with full backwages, to pay wage differentials, emergency
cost of living allowance, thirteenth-month pay and attorney's fee, but disallowed the claim for
damages for lack of basis.2 This decision was appealed by Ultra and PTSI to the National Labor
Relations Commission (NLRC), and subsequently by PTSI to the Court but to no avail. During
the execution stage of the decision, petitioner moved to enforce his attorney's charging
lien.3 Private respondents, aggrieved for receiving a reduced award due to the attorney's
charging lien, contested the validity of the contingent fee arrangement they have with petitioner,
albeit four of the fourteen private respondents have expressed their conformity thereto. 4
Finding the arrangement excessive, the Labor Arbiter ordered the reduction of petitioner's
contingent fee from fifty percent of the judgment award to ten percent, except for the four private
respondents who earlier expressed their conformity.5 Petitioner appealed to NLRC which
affirmed with modification the Labor Arbiter's order by ruling that the ten percent contingent fee
should apply also to the four respondents even if they earlier agreed to pay a higher
percentage.6 Petitioner's motion for reconsideration was denied, hence this petition for certiorari.
The sole issue in this petition is whether or not the reduction of petitioner's contingent fee is
warranted. Petitioner argues that respondent NLRC failed to apply the pertinent laws and
jurisprudence on the factors to be considered in determining whether or not the stipulated
amount of petitioner's contingent fee is fair and reasonable. Moreover, he contends that the
invalidation of the contingent fee agreement between petitioner and his clients was without any
legal justification especially with respect to the four clients who manifested their conformity
thereto. We are not persuaded.
A contingent fee arrangement is an agreement laid down in an express contract between a
lawyer and a client in which the lawyer's professional fee, usually a fixed percentage of what
may be recovered in the action is made to depend upon the success of the litigation.7 This
arrangement is valid in this jurisdiction.8 It is, however, under the supervision and scrutiny of the
court to protect clients from unjust charges.9 Section 13 of the Canons of Professional Ethics
states that "[a] contract for a contingent fee, where sanctioned by law, should be reasonable
under all the circumstances of the case including the risk and uncertainty of the compensation,
but should always be subject to the supervision of a court, as to its reasonableness". Likewise,
Rule 138, Section 24 of the Rules of Court provides:
Sec. 24. Compensation of attorneys; agreement as to fees. — An attorney
shall be entitled to have and recover from his client no more than a
reasonable compensation for his services, with a view to the importance of
the subject-matter of the controversy, the extent of the services rendered,
and the professional standing of the attorney. No court shall be bound by
the opinion of attorneys as expert witnesses as to the proper compensation
We agree with the NLRC's assessment that fifty percent of the judgment award as attorney's
fees is excessive and unreasonable. The financial capacity and economic status of the client
have to be taken into account in fixing the reasonableness of the fee.11 Noting that petitioner's
clients were lowly janitors who receive miniscule salaries and that they were precisely
represented by petitioner in the labor dispute for reinstatement and claim for backwages, wage
differentials, emergency cost of living allowance, thirteenth-month pay and attorney's fees to
acquire what they have not been receiving under the law and to alleviate their living condition,
the reduction of petitioner's contingent fee is proper. Labor cases, it should be stressed, call for
compassionate justice.
Furthermore, petitioner's contingent fee falls within the purview of Article 111 of the Labor Code.
This article fixes the limit on the amount of attorney's fees which a lawyer, like petitioner, may
recover in any judicial or administrative proceedings since the labor suit where he represented
private respondents asked for the claim and recovery of wages. In fact, We are not even
precluded from fixing a lower amount than the ten percent ceiling prescribed by the article when
circumstances warrant it.12 Nonetheless, considering the circumstances and the able handling of
the case, petitioner's fee need not be further reduced.
The manifestation of petitioner's four clients indicating their conformity with the contingent fee
contract did not make the agreement valid. The contingent fee contract being unreasonable and
unconscionable the same was correctly disallowed by public respondent NLRC even with
respect to the four private respondents who agreed to pay higher percentage. Petitioner is
reminded that as a lawyer he is primarily an officer of the court charged with the duty of assisting
the court in administering impartial justice between the parties. When he takes his oath, he
submits himself to the authority of the court and subjects his professional fees to judicial
control.13
WHEREFORE, finding no grave abuse of discretion the assailed NLRC decision is hereby
affirmed in toto.
G.R. No. 142049. January 30, 2001
GERMAN MARINE AGENCIES, INC. and LUBECA MARINE MANAGEMENT HK
LTD., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and FROILAN S. DE
LARA, Respondents.
On 17 October 1994, private respondent was hired by petitioners to work as a radio officer on
board its vessel, the M/V T.A. VOYAGER. Sometime in June, 1995, while the vessel was
docked at the port of New Zealand, private respondent was taken ill. His worsening health
condition was brought by his crewmates to the attention of the master of the vessel. However,
instead of disembarking private respondent so that he may receive immediate medical attention
at a hospital in New Zealand, the master of the vessel proceeded to Manila, a voyage of ten
days, during which time the health of private respondent rapidly deteriorated. Upon arrival in
Manila, private respondent was not immediately disembarked but was made to wait for several
hours until a vacant slot in the Manila pier was available for the vessel to dock. Private
respondent was confined in the Manila Doctors Hospital, wherein he was treated by a team of
medical specialists from 24 June 1995 to 26 July 1995.
After private respondent was discharged from the hospital, he demanded from petitioners the
payment of his disability benefits and the unpaid balance of his sickness wages, pursuant to the
Standard Employment Contract of the parties. Having been assured by petitioners that all his
benefits would be paid in time, private respondent waited for almost a year, to no avail.
Eventually, petitioners told private respondent that, aside from the sickness wages that he had
already received, no other compensation or benefit was forthcoming. 1 Private respondent filed a
complaint with the National Labor Relations Commission (NLRC) for payment of disability
benefits and the balance of his sickness wages. On 31 July 1997, the labor arbiter rendered a
decision, 2 the pertinent parts of which are quoted hereunder
In the case at bar, there is no issue on the propriety or illegality of complainants discharge or
release from employment as Radio Operator. What complainant is pursuing is limited to
compensation benefits due a seaman pursuant to POEA Standard Employment Contract, Part II,
Section C, paragraph 4(c) and paragraph 5, which reads:
SECTION C. COMPENSATION BENEFIT
xxx
4. The liabilities of the employer when the seaman suffers injury or illness during the term of his
contract are as follows:
xxx
c. The employer shall pay the seaman his basic wages from the time he leaves the vessel for
medical treatment. After discharge from the vessel, the seaman is entitled to one hundred
percent (100%) of his basic wages until he is declared fit to work or the degree of permanent
disability has been assessed by the company-designated physician, but is [sic] no case shall this
period exceed one hundred twenty (120) days. For this purpose, the seaman shall submit
himself to a post-employment medical examination by the company-designated physician within
three working days upon his return, except when he is physically incapacitated to do so, in which
case the written notice to the agency within the same period is deemed as compliance x x x.
5. In case of permanent total or partial disability of the seamen [sic] [during] the term of
employment caused by either injury or illness, the seamen [sic] shall be compensated in
accordance with the schedule of benefits enumerated in Appendix 1 of this Contract.
Computation of his benefits arising from an illness or disease shall be governed by the rates and
the rules of compensation applicable at the time of [sic] the illness or disease was contracted.
The aforecited provisions of the POEA Standards [sic] Employment Contract is clear and
unmistakable that its literal meaning should be preserved.
Thus, the only question at which the liability of respondents is anchored is whether complainant
was really fit to work in his position as radio operator. If this is so, it could mean that he is not
entitled to disability compensation which respondents vigorously disputed, citing in support the
certification made by Dra. Victoria Forendo [sic] Cayabyab, allegedly the officially accredited and
designated physician of respondents, which is likewise, accredited with the Philippine Overseas
Employment Administration where it is stated that Nothing [sic] his job description as a radio
operator, Mr. de Lara may be allowed to go back to work. (Annex D & E). Complainant on the
other hand disputes respondents above posture contending that the more persuasive and
authentic evidence for purposes of deciding his fitness or lack of fitness to work is the certificate
issued by Ms. Naneth [sic] Domingo-Reyes, MD, FPMA where it appears that after submitting
himself to another medical examination by his attending physicians at the Manila Doctors
Hospital on December 4, 1996, to verify possible mistake in his post treatment examination on
March 25, 1996, firmly was classified under partial permanent disability and is not fit to go back
to his previous work due to mental state. (Annex C, complainants reply to respondents position
paper).
We have gone into a judicious study and analysis of the arguments and exhibits particularly the
ones relied upon by the parties and find that of the complainant worthy of consideration. Looking
closely at Annexes D and E of respondents position paper, there is hardly any clear affirmation
that complainant was fully fit to resume his work as radio operator. Although the document
alluded to, declares that complainant may be allowed to go back to work, the tenor of the same
seems uncertain that complainant is fit to resume his work, and that assuming that such was the
message, the words may be can not be taken as overriding that coming from the Manila Doctor
Hospital which in the beginning handled the medical case of complainant and to which
respondents unconditionally referred him and by reason of which six or seven medical
especialists [sic] of the hospital took turn[s] studying and reviewing his uncertain ailment after
release by respondents. Otherwise stated, unlike the message of annexes D to E of
respondents, annex C of complainant is clear and unmistakable and confirm complainants
partial permanent disability and his definite unfitness to go back to his previous work due to his
mental health. Some pronouncements in this exhibit mentions also that when complainant was
admitted an emerging basis for drowsiness, behavioral change and off and on fever and different
procedures were resorted along his case, like emergency CT scan on the brain and his
admission in June 24, 1995 was catastropic, whereas, more could be said in three document[s]
issued by Dra. Victoria Florendo Cayabyab.
Finally, respondents contend that the annexes issued by Dr. Domingo-Reyes of the Manila
Doctors Hospital should not be given weight because it is not issued by the hospital or doctor
duly accredited by the POEA. Neither would a close look on the applicable provision for seamen
show that a duly accredited hospital or doctor is needed for purposes of the grant of
compensation benefits to a such [sic] or ailing seamen. We are more persuaded based on the
arguments of the complainant among others, that it is absurd to require an ailing seaman in high
seas or in a foreign land to still wait until the ship where he is working land in the country to
secure treatment in a duly accredited hospital or doctor.
On the basis of the above therefore, and convinced that complainants partial permanent
disability which was contracted in the course or on account of his employment as radio operator
in foreign principals vessel, he is entitled to disability benefit in accordance with the schedule of
benefits enumerated in Appendix 1 of the Contract, the maximum of which is US $50,000. But
since the amount prayed for is US$25,000.00 which we presume has a more realistic basis, the
same is hereby granted.
Concerning the sickness wage, respondents averred that the same had already been paid.
However, there is no evidence that the same has been paid except the payment to the
complainant of P49,546.00. Since complainants salary as US$870 and a seamans sick wage
entitlement is fixed to a maximum of 120 days, his sickness wages would rest to a total sum of
US$3,480 or its peso equivalent. On this, complainant has been paid only [P]49,546.00
(US$1,943), thereby leaving for complainant a balance of US$1,537. Finally, it is also argued
that as regards the balance, the same has been paid citing as proof the Sickness Release and
Quitclaim signed by complainant (Annexes C & C-1). Complainant, on the other hand denied
this, and contended that the quitclaim and release is invalid. Considering that there is no proof
on record that this balance of US$1,537 was paid, unlike the P49,546.00, the same is granted.
WHEREFORE, premises above-considered, a decision is hereby issued ordering respondent
German Marine Agencies Inc. to pay complainant the following sums:
(a) Disability benefit - - - - - - - - - - - - - - US$25,000.00 (b) Sickness wage balance - - - - - - - - - -
US$1,137.00
all in the aggregate of Twenty Six Thousand One Hundred Thirty Seven Dollars (US$26,137.00)
or its peso equivalent, the claim for damages being hereby dismissed for lack of merit, plus ten
(10%) percent attorneys fees.
SO ORDERED.
On 29 July 1998, the NLRC 3 affirmed the labor arbiters decision in toto and declared that the
latters findings and conclusions were supported by substantial evidence. 4 After its motion for
reconsideration was denied by the NLRC on 20 May 1999, petitioners repaired to the Court of
Appeals. 5 The appellate courts assailed decision was promulgated on 1 December 1999,
upholding the decision of the NLRC, with the modification that petitioners were ordered to pay
private respondent exemplary damages in the amount of P50,000.00. The appellate court
reasoned out its decision, 6 thus -
The basic issue here is: Whether or not petitioner is liable to pay private respondents claim as
awarded by the NLRC, and whether or not there was abuse of discretion on the part of the
NLRC in affirming such decision on appeal? To resolve this issue, this Court took time in looking
closely at the pertinent provision of the Standard Employment Contract Governing the
Employment of Filipino Seafarers on Board Ocean-Going Vessels, particularly PART II,
SECTION C, par. no. 4 (c), and par. no. 5, which states as follows:
SECTION C. COMPENSATION AND BENEFITS
4. The liabilities of the employer when the seaman suffers injury or illness during the term of his
contract are as follows: x x x x
c. The employer shall pay the seaman his basic wages from the time he leaves the vessel for
medical treatment. After discharge from the vessel the seaman is entitled to hundred percent
(100%) of his basic wages until he is declared fit to work or his degree of permanent disability
has been assessed by the company-designated physician, but in no case shall this period
exceed one hundred twenty (120) days. x x x x
5. In case of permanent total or partial disability of the seaman during the term of his
employment caused by either injury or illness the seaman shall be compensated in accordance
with the schedule of benefits enumerated in Appendix 1 of his Contract. Computation of his
benefits arising from an illness or disease shall be governed by the rates and the rules of
compensation applicable at the time the illness or disease was contracted.x x x . . .
A cursory reading of these applicable contractual provisions and a thorough evaluation of the
supporting evidence presented by both parties, lends strong credence to the contentions and
arguments presented by private respondent.
The award of disability compensation has a clear and valid basis in the Standard Employment
Contract and the facts as supported by the medical certificate issued by Dr. Nannette Domingo-
Reyes of the Manila Doctors Hospital. Petitioners contention, that Dr. Domingo-Reyes is not
company designated is far from the truth. The designation of the Manila Doctors Hospital by
petitioners as the company doctor for private respondent cannot be denied. Their very act of
committing private respondent for treatment at the Manila Doctors Hospital under the care of its
physician is tantamount to company designation. The very act of paying the hospital bills by the
petitioners constitutes their confirmation of such designation. Hence, petitioners cannot resort to
the convenience of denying this fact just to evade their obligation to pay private respondent of
his claims for disability benefit.
This Court also finds no basis on (sic) the petitioners contention that the company-designated
[physician] must also be accredited with the POEA before he can engage in the medical
treatment of a sick seaman. There is nothing in the Standard Employment Contract that provides
this accreditation requirement, and even if there is, this would be absurd and contrary to public
policy as its effect will deny and deprive the ailing seaman of his basic right to seek immediate
medical attention from any competent physician. The lack of POEA accreditation of a physician
who actually treated the ailing seaman does not render the findings of such physician (declaring
the seaman permanently disabled) less authoritative or credible. To our mind, it is the
competence of the attending physician, not the POEA accreditation, that determines the true
health status of the patient-seaman, which in this instant case, is [sic] the attending physicians
from the Manila Doctors Hospital.
As to the award of the balance of wages, this Court is inclined not to disturb the factual findings
of the NLRC. The failure of the petitioners to present a strong and credible evidence supporting
the fact of alleged payment of the balance of sickness justifies the award of such claim. The long
standing doctrine in labor cases that in case of doubt, the doubt is resolved in favor of labor
applies. For there are indications that the evidence presented by petitioners appears to be of
dubious origin as private respondent challenged the petitioners to present the original copy of
the quitclaim and the vouchers in a motion demanding from petitioners to produce the original
copy of those documents purporting to show that he had received the alleged sum
of P39,803.30, which allegedly shows the payment of the balance of his sickness wages. This
motion was vehemently opposed by petitioners. To our mind, such opposition only created more
doubts and eroded the veracity and credence of petitioners documentary evidence.
As to the award of attorneys fees, the same is justified by the fact that private respondent
actually hired the services of a lawyer to vindicate his right to claim for his disability benefit which
is being arbitrarily denied to him by petitioners. Had it not been for the arbitrary denial of
petitioners, private respondent could not have been compelled to hire the services of a lawyer to
pursue his claims in court, for which he is presumed to have incurred costs.
With respect to private respondents claim for damages, this Court finds that the NLRC
overlooked the attendance of negligence on the part of petitioners in their failure to provide
immediate medical attention to private respondent. It further appears that negligence not only
exists but was deliberately perpetrated by petitioners by its arbitrary refusal to commit the ailing
private respondent to a hospital in New Zealand or at any nearest port deprived of his right to
immediate medical attention by petitioners, which resulted to the serious deterioration of his
health that caused his permanent partial disability. Such deprivation of immediate medical
attention appears deliberate by the clear manifestation from petitioners own words which states
that, the proposition of the complainant that respondents should have taken the complainant to
the nearest port of New Zealand is easier said than done. It is worthy to note that deviation from
the route of the vessel will definitely result to loss of a fortune in dollars not only to the
respondents but likewise to the owners of the cargoes being shipped by the said vessel.
By petitioners own statement, they reveal their utter lack of concern for their Filipino crew. This
kind of attitude cannot be taken to pass by this Court without appropriate sanction by way of
payment of exemplary damages, if only to show that the life of a Filipino crew must be accorded
due attention and respect by the petitioners. For after all, had it not been for the toils of this crew,
among others, petitioners would not be doing as good in their business and making fortunes in
dollars.
In affirming the decision of the Labor Arbiter, this Court finds that the NLRC never abused its
discretion nor exceeded its jurisdiction.
Hence, this Court finds no valid basis to disturb the findings of the NLRC.
WHEREFORE, the decision of the NLRC dated 29 July 1998, and the Order dated 20 May 1999,
are hereby AFFIRMED, and in addition thereto, petitioners are ordered to pay exemplary
damages to private respondent in the sum of Fifty Thousand Pesos (P50,000.00).
SO ORDERED.
Petitioners motion for reconsideration was denied by the Court of Appeals in its Resolution of 11
February 2000. Hence, the present appeal.
Disability Benefits
Petitioners contend that the existence and degree of a seamans disability must be declared by a
company-designated physician who must be accredited with the POEA. Following this line of
reasoning, petitioners claim that private respondent is not entitled to disability benefits because
he was found fit to return to work by Dr. Victoria Florendo Cayabyab, the designated physician of
petitioners, who is also accredited with the POEA. 7cräläwvirtualibräry
Disagreeing with petitioners stand, the labor arbiter ruled that, for purposes of determining
compensation benefits under the Standard Employment Contract, an ailing seaman need not
have his condition assessed by a doctor or hospital accredited with the POEA. Consequently,
the labor arbiter gave more weight to the opinion of the specialists from the Manila Doctors
Hospital who treated private respondent and declared him as having sustained a partial
permanent disability and unfit to go back to his previous work. 8 Meanwhile, the Court of Appeals
held that petitioners act of committing private respondent for treatment at the Manila Doctors
Hospital and of paying his hospital bills therein is tantamount to company-designation, and
therefore, the certificate issued by Dr. Nanette Domingo-Reyes of the Manila Doctors Hospital
describing private respondent as suffering from a partial permanent disability should be
construed as decisive in the matter of private respondents entitlement to disability benefits. The
appellate court also declared that nothing in the Standard Employment Contract requires the
company-designated physician or hospital to also be accredited with the
POEA. 9cräläwvirtualibräry
In the case at bar, the parties are at odds as to the proper interpretation of the POEA Standard
Employment Contract Governing the Employment of All Filipino Seamen On Board Ocean-Going
Vessels (Standard Employment Contract), particularly Part II, Section C thereof, which provides
that xxx xxx xxx
4. The liabilities of the employer when the seaman suffers injury or illness during the term of his
contract are as follows:
a. The employer shall continue to pay the seaman his basic wages during the time he is on
board the vessel;
b. If the injury or illness requires medical and/or dental treatment in a foreign port, the employer
shall be liable for the full cost of such medical, dental, surgical and hospital treatment as well as
board and lodging until the seaman is declared fit to work or to be repatriated.
However, if after repatriation the seaman still requires medical attention arising from said injury
or illness, he shall be so provided at cost to the employer until such time he is declared fit or the
degree of his disability has been established by the company-designated physician.
c. The employer shall pay the seaman his basic wages from the time he leaves the vessel for
medical treatment. After discharge from the vessel the seaman is entitled to one hundred
percent (100%) of his basic wages until he is declared fit to work or the degree of permanent
disability has been assessed by the company-designated physician, but in no case shall this
period exceed one hundred twenty (120) days. For this purpose, the seaman shall submit
himself to a post-employment medical examination by the company-designated physician within
three working days upon his return except when he is physically incapacitated to do so, in which
case a written notice to the agency within the same period is deemed as compliance. Failure of
the seaman to comply with the mandatory reporting requirement shall result in his forfeiture of
the right to claim the above benefits. xxx xxx xxx
5. In case of permanent total or partial disability of the seaman during the term of employment
caused by either injury or illness the seaman shall be compensated in accordance with the
schedule of benefits enumerated in Appendix 1 of his Contract. Computation of his benefits
arising from an illness or disease shall be governed by the rates and the rules of compensation
applicable at the time the illness or disease was contracted.xxx
Petitioners contention that the existence and grade of a seamans disability must be pronounced
by a physician accredited by the POEA does not find any support in the abovecited provision,
nor in any other portion of the Standard Employment Contract. In order to claim disability
benefits under the Standard Employment Contract, it is the company-designated physician who
must proclaim that the seaman suffered a permanent disability, whether total or partial, due to
either injury or illness, during the term of the latters employment. There is no provision requiring
accreditation by the POEA of such physician. In fact, aside from their own gratuitous allegations,
petitioners are unable to cite a single provision in the said contract in support of their assertions
or to offer any credible evidence to substantiate their claim. If accreditation of the company-
designated physician was contemplated by the POEA, it would have expressly provided for such
a qualification, by specifically using the term accreditation in the Standard Employment Contract,
to denote its intention. For instance, under the Labor Code it is expressly provided that
physicians and hospitals providing medical care to an injured or sick employee covered by the
Social Security System or Government Service Insurance System must be accredited by the
Employees Compensation Commission. 10It is a cardinal rule in the interpretation of contracts
that if the terms of a contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulation shall control. 11 There is no ambiguity in the wording
of the Standard Employment Contract the only qualification prescribed for the physician
entrusted with the task of assessing the seamans disability is that he be company-designated.
When the language of the contract is explicit, as in the case at bar, leaving no doubt as to the
intention of the drafters thereof, the courts may not read into it any other intention that would
contradict its plain import. 12cräläwvirtualibräry
The word designate means to specify, to mark out and make known, to identify by name, to
indicate, to show, to distinguish by mark or description, or to set apart for a purpose or
duty. 13 The Court agrees with the appellate courts ruling that petitioners act of committing
private respondent for treatment at the Manila Doctors Hospital and paying the hospital bills
therein is tantamount to company-designation. By such unequivocal acts, petitioners clearly set
apart and distinguished the Manila Doctors Hospital, together with its team of specialists, as the
ones qualified to assess the existence and degree of private respondents disability and thereby
resolve the question of the latters entitlement to disability benefits under the Standard
Employment Contract.
In addition to their having been effectively designated by petitioners, it was the physicians from
the Manila Doctors Hospital who examined and treated private respondent for a little more than
one month, subjecting the latter to a series of medical procedures, such as medical therapy,
neurological surgical drainage for brain abscess, bilateral thalamic area S/P craniotomy (Burr
Hole), and opthalmological (orbit) surgery for socket revision and reconstruction of his left eye.
The extensive medical attention given to private respondent enabled the Manila Doctors Hospital
specialists to acquire a detailed knowledge and familiarity with private respondents medical
condition. 14No doubt such specialized knowledge enabled these physicians to arrive at a much
more accurate appraisal of private respondents condition, including the degree of any disability
which he might have sustained, as compared to another physician not privy to private
respondents case from the very beginning. Thus, the appellate court was not mistaken in giving
more weight to the certificate issued by Dr. Nanette Domingo-Reyes of the Manila Doctors
Hospital dated December 4, 1996, than to the one issued by Dr. Victoria Florendo Cayabyab.
On the strength of Dr. Domingo-Reyess medical certificate which stated that private respondent
can be classified under partial permanent disability and is not fit to go back to his previous work
due to his mental state, the labor arbiter awarded $25,000.00 as disability benefits, which award
was upheld by the NLRC and the appellate court. Petitioners insist that there is no factual basis
for the award of $25,000.00 since there is no finding as to the grade of permanent partial
disability sustained by private respondent, in accordance with Appendix 1 of the Standard
Employment Contract (Schedule of Disability or Impediment For Injuries Suffered and Diseases
or Illness Contracted), and therefore, no means of determining the exact amount of
compensation to which private respondent may be entitled. 15cräläwvirtualibräry
The Court does not agree with petitioners position. Under the Standard Employment Contract
the grade of disability suffered by the seaman must be ascertained in accordance with Appendix
1 of such contract, which is partially reproduced herein -
To be paid in Philippine Currency equivalent at the exchange rate prevailing during the time of
payment.
Private respondent asked petitioner for disability benefits in the amount of $25,000.00, or fifty
percent (50%) of the maximum rate of $50,000.00, which, under Appendix 1-A, is awarded when
the seaman sustains a grade 6 disability. One of the grade 6 head injuries listed in Appendix 1,
specifically number seven (7), is described as a moderate mental disorder or moderate brain
functional disturbance which limits worker to the activities of daily living with some directed care
or attendance. This coincides with Dr. Domingo-Reyes diagnosis of private respondents
condition, as follows -
xxx xxx xxx
Work-ups and Management:
Patient was admitted on an emergency bases for drowsiness, behavioral change and on and off
fever. This started with headaches since the first week of June 1995 while on duty (on voyage).
Patient progressively deteriorated and arrived here already dehydrated with high grade fever.
(emphasis supplied)
Emergency CT Scan of the brain revealed rounded masses in both thalamus on the brain; the
larger mass was situated at the right.
Burr hole at the right parietal and drainage of the right thalamic abscess was done on June 26,
1995. Repair of shallow fornix of left eye and biopsy was done for culture studies thereafter.
Mr. De Lara stayed in the hospital for 33 days and was still in bedridden state when discharge.
He became ambulant on mid-August 1996 but his cerebral functions (cognitive and behavioral)
remain impaired.
This is his 18th month of illness. His admission last June 24, 1995 is considered catastrophic. He
now can be classified under partial permanent disability and is not fit to go back to his previous
work due to his mental state.16(emphasis supplied) xxx xxx xxx
Thus, the medical certificate of Dr. Domingo-Reyes is more than sufficient basis for the award of
disability benefits in the amount of $25,000.00 in favor of private respondent.
Sickness wages
Petitioners assert that the award of $1,137.00, representing the balance of the sickness wages
owed to private respondent, is erroneous and in absolute disregard of their documentary
evidence - particularly the three check vouchers in the total amount of P89,354.80, all issued in
1995 in favor of either private respondent or his wife, and the Sickwages Release & Quitclaim -
which, according to petitioners, taken together would prove that they had paid private
respondent the total amount of P89,354.80, or $3,480.00, corresponding to the 120 days
sickness wages as required under the Standard Employment Contract.
Contrary to petitioners assertions, the labor arbiter held that only P49,546.00 ($1,943.00) was
paid by petitioners and that private respondent is still entitled to the balance of the sickness
wages in the amount of $1,537.00. According to the labor arbiter, petitioners failed to prove that
they had paid this amount to private respondent, notwithstanding the document entitled Sickness
Release & Quitclaim introduced by petitioners in evidence, which was not given credence. 17 The
NLRC and the Court of Appeals concurred with the labor arbiter on this issue. The appellate
court held that the documentary evidence of petitioners was insufficient to support their
contentions.18cräläwvirtualibräry
The Supreme Court has always accorded respect and finality to the findings of fact of the NLRC,
particularly if they coincide with those of the Labor Arbiter, when supported by substantial
evidence. The reason for this is that a quasi-judicial agency like the NLRC has acquired a
unique expertise because its jurisdiction is confined to specific matters. 19Whether or not
petitioners actually paid the balance of the sickness wages to private respondent is a factual
question. In the absence of proof that the labor arbiter or the NLRC had gravely abused their
discretion, the Court shall deem conclusive and cannot be compelled to overturn this particular
factual finding. 20
Damages
We affirm the appellate courts finding that petitioners are guilty of negligence in failing to provide
immediate medical attention to private respondent. It has been sufficiently established that, while
the M/V T.A. VOYAGER was docked at the port of New Zealand, private respondent was taken
ill, causing him to lose his memory and rendering him incapable of performing his work as radio
officer of the vessel. The crew immediately notified the master of the vessel of private
respondents worsening condition. However, instead of disembarking private respondent so that
he may receive immediate medical attention at a hospital in New Zealand or at a nearby port,
the master of the vessel proceeded with the voyage, in total disregard of the urgency of private
respondents condition. Private respondent was kept on board without any medical attention
whatsoever for the entire duration of the trip from New Zealand to the Philippines, a voyage of
ten days. To make matters worse, when the vessel finally arrived in Manila, petitioners failed to
directly disembark private respondent for immediate hospitalization. Private respondent was
made to suffer a wait of several more hours until a vacant slot was available at the pier for the
vessel to dock. It was only upon the insistence of private respondents relatives that petitioners
were compelled to disembark private respondent and finally commit him to a hospital. 21 There is
no doubt that the failure of petitioners to provide private respondent with the necessary medical
care caused the rapid deterioration and inevitable worsening of the latters condition, which
eventually resulted in his sustaining a permanent disability.
In light of the foregoing, petitioners are liable for moral damages for the physical suffering and
mental anguish caused to private respondent. 22 There is no hard and fast rule in the
determination of what would be a fair amount of moral damages, since each case must be
governed by its own peculiar circumstances. 23 In the present case, the Court considers the
amount of P50,000.00 in moral damages as proper.24cräläwvirtualibräry
Meanwhile, exemplary damages are imposed by way of example or correction for the public
good, pursuant to Article 2229 of the Civil Code. They are imposed not to enrich one party or
impoverish another but to serve as a deterrent against or as a negative incentive to curb socially
deleterious actions. While exemplary damages cannot be recovered as a matter of right, they
need not be proved, although plaintiff must show that he is entitled to moral, temperate, or
compensatory damages before the court may consider the question of whether or not exemplary
damages should be awarded. 25 In quasi-delicts, exemplary damages may be granted if the
defendant acted with gross negligence. 26 Coming now to the case at bar, the appellate court
found that
negligence not only exists but was deliberately perpetrated by petitioners by its arbitrary
refusal to commit the ailing private respondent to a hospital in New Zealand or at any
nearest port which resulted to the serious deterioration of his health that caused his
permanent partial disability. Such deprivation of immediate medical attention appears
deliberate by the clear manifestation from petitioners own words which states that, the
proposition of the complainant that respondents should have taken the complainant to the
nearest port of New Zealand is easier said than done. It is worthy to note that deviation
from the route of the vessel will definitely result to loss of a fortune in dollars not only to
the respondents [petitioners herein] but likewise to the owners of the cargoes being
shipped by the said vessel.
Petitioners never denied making this statement. Given the prevailing circumstances, the
appellate courts award of P50,000.00 as exemplary damages is adequate, fair, and
reasonable. 27cräläwvirtualibräry
Although the labor arbiter awarded attorneys fees, which award was subsequently affirmed by
the NLRC and the Court of Appeals, the basis for the same was not discussed in his decision
nor borne out by the records of this case, and should therefore be deleted. There must always
be a factual basis for the award of attorneys fees. 28 This is consistent with the policy that no
premium should be placed on the right to litigate. 29cräläwvirtualibräry
WHEREFORE, the 1 December 1999 Decision and 11 February 2000 Resolution of the Court of
Appeals are AFFIRMED, with the modification that petitioners must also pay private respondent
P50,000.00 as moral damages and the award of attorneys fees is deleted.
SO ORDERED.
465 Phil. 290
LYDIA BUENAOBRA v. Lim Kim Guan
CORONA, J.:
This is a petition for review seeking for the reversal of the decision[1] of the Court of Appeals
dated May 29, 2001, dismissing the petition for certiorari of Lydia Buenaobra, et. al. and
affirming the orders of the National Labor Relations Commission (NLRC), Third Division, dated
November 27, 1998 and February 15, 1999, which respectively directed private respondents to
post a cash or surety bond and dismissed petitioners' motion for reconsideration.
The facts follow.
Petitioners were employees of private respondent Unix International Export Corporation (UNIX),
a corporation engaged in the business of manufacturing bags, wallets and the like.
Sometime in 1991 and 1992, petitioners filed several cases against UNIX and its incorporators
and officers for unfair labor practice, illegal lockout/dismissal, underpayment of wages, holiday
pay, proportionate 13th month pay, unpaid wages, interest, moral and exemplary damages and
attorney's fees.
The cases were consolidated and tried jointly. On February 23, 1993, labor arbiter Jose S. de
Vera rendered a decision:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered
ordering respondent Unix Export Corporation to pay complainants, as follows:
1. P5,821,838.40 as backwages;
2. P1,484,912.00 as separation pay;
3. P527,748.00 as wage differentials;
4. P33,830.00 as regular holiday pay differentials; and
5. P365,551.95 as proportionate 13th month pay for 1990.
All other claims of the complainants are hereby dismissed for lack of merit. Likewise, the
complaint of Angelina Dimasin is dismissed with prejudice.
There being no appeal by respondents or petitioners, the decision of labor arbiter de Vera
eventually became final and executory. However, petitioners complained that the decision could
not be executed because UNIX allegedly diverted, invested and transferred all its money, assets
and properties to respondent Fuji Zipper Manufacturing Corporation (FUJI) whose stockholders
and officers were also those of UNIX.
Thus, on March 25, 1997, petitioners filed another complaint against respondents UNIX, its
corporate officers and stockholders of record, and FUJI. Petitioners mainly prayed that
respondents UNIX and FUJI be held jointly and severally held liable for the payment of the
monetary awards ordered by labor arbiter de Vera.
On May 31, 1998, labor arbiter Felipe Pati rendered a decision on the second complaint:
WHEREFORE, judgment is hereby rendered piercing the veil of corporate fiction of the two
respondent sister corporations which by virtue of this Decision are now considered as mere
associations of persons jointly and severally pay the subject amount of P8,233,880.30 out of the
properties and unpaid subscription on subscribed Capital Stock of the Board of Directors,
Corporate Officers, Incorporators and Stockholders of said respondent corporations, plus the
amount of P3,000,000.00 and P1,000,000.00 in the form of moral and exemplary damages,
respectively, as well as 10% attorney's fees from any recoverable amounts.
Other claims are hereby dismissed for lack of merit.
On July 30, 1998, private respondents FUJI, its officers and stockholders filed a memorandum
on appeal and a motion to dispense with the posting of a cash or surety appeal bond on the
ground that they were not the employers of petitioners. They alleged that they could not be held
responsible for petitioners' claims and to require them to post the bond would be unjust and
unfair, and not sanctioned by law.
On November 27, 1998, the NLRC, Third Division rendered the first assailed order[2]:
PREMISES CONSIDERED, instant motion to exempt from filing appeal bond is hereby DENIED
for lack of merit. Respondents are hereby directed to post cash or surety bond in the amount of
P8,233,880.30 within an unextendible period of ten (10) days upon receipt. Otherwise the
appeal shall be dismissed.
Petitioners moved for reconsideration of the said order, arguing that the timely posting of an
appeal bond is mandatory for the perfection of an appeal and should be complied with.
On February 15, 1999, the NLRC, Third Division rendered the second assailed order:
WHEREFORE, premises considered, complainants' Motion for Reconsideration is hereby
DISMISSED for lack of merit. Respondents' Supplemental Memorandum of Appeal is admitted.
Respondents and counsel are likewise hereby directed to submit a joint declaration under oath
within five (5) days upon receipt. Otherwise the appeal shall be dismissed.
Petitioners filed a petition in the Court of Appeals imputing grave abuse of discretion to the
NLRC, Third Division when it allowed private respondents to post the mandated cash or surety
bond four months after the filing of their memorandum on appeal.
On May 29, 2001, the Court of Appeals dismissed the petition for lack of merit. Hence, this
petition under Rule 45 of the Rules of Court, seeking to set aside the decision of the Court of
Appeals and praying that the orders dated February 15, 1999 and November 27, 1998 of the
NLRC, Third Division be set aside for having been issued without or in excess of its jurisdiction
and with grave abuse of discretion.
The petition has no merit.
The provision of Article 223 of the Labor Code requiring the posting of bond on appeals involving
monetary awards must be given liberal interpretation in line with the desired objective of
resolving controversies on the merits.[3] If only to achieve substantial justice, strict observance of
the reglementary periods may be relaxed if warranted. The NLRC, Third Division could not be
said to have abused its discretion in requiring the posting of bond after it denied private
respondents' motion to be exempted therefrom.
It is true that the perfection of an appeal in the manner and within the period prescribed by law is
not only mandatory but jurisdictional, and failure to perfect an appeal has the effect of making
the judgment final and executory. However, technicality should not be allowed to stand in the
way of equitably and completely resolving the rights and obligations of the parties.[4] We have
allowed appeals from the decisions of the labor arbiter to the NLRC, even if filed beyond the
reglementary period, in the interest of justice. The facts and circumstances of the instant case
warrant liberality considering the amount involved and the fact that petitioners already obtained a
favorable judgment on February 23, 1993 against their employer UNIX.
In the same decision which has already become final and executory, labor arbiter de Vera held:
This Branch upholds and maintains in the absence of substantial evidence to the contrary that
both respondent corporations have legitimate distinct and separate juridical personalities. Thus,
respondent Fuji Zipper Manufacturing, Inc. has been erroneously impleaded in this case.[5]
It is only fair and just that respondent FUJI be afforded the opportunity to be heard on appeal
before the NLRC, specially in the light of labor arbiter Pati's later decision holding FUJI jointly
and severally liable with UNIX in the payment of the monetary awards adjudged by labor arbiter
de Vera against UNIX.
In the absence of any showing that the NLRC committed grave abuse of discretion, or otherwise
acted without or in excess of jurisdiction, this Court is bound by its findings. Furthermore, the
Court of Appeals upheld the assailed orders of the said Commission.
WHEREFORE, the petition is hereby DENIED.
SO ORDERED.
[G.R. NO. 152843 : July 20, 2006]
INTERCONTINENTAL BROADCASTING CORPORATION, Petitioner, v.REYNALDO
BENEDICTO, deceased, substituted by his surviving spouse LOURDES V. BENEDICTO,
and children, namely: REYNALDO V. BENEDICTO, SHIRLEY V. BENEDICTO-TAN, EDGAR
V. BENEDICTO and LILIBETH V. BENEDICTO-DE LA VICTORIA,*, Respondents.
DECISION
CORONA, J.:
This is a Petition for Review on Certiorari1 of the October 18, 2001 decision2 and March 18, 2002
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 53413 which in turn affirmed the
March 5, 1999 decision4 and June 10, 1999 resolution5of the National Labor Relations
Commission (NLRC) in NLRC NCR CA Case No. 017886-99.
Petitioner alleged that Intercontinental Broadcasting Corporation is a government-owned and
controlled corporation.6 It is engaged in the business of mass media communications including,
among others, the operation of television Channel 13 (IBC 13).7
In 1993, Reynaldo Benedicto was appointed by Ceferino Basilio, the general manager8 then of
petitioner, as marketing manager with a monthly compensation of P20,000 plus 1% commission
from collections of all advertising contracts consummated. 9
In a letter dated October 11, 1994 signed by Tomas Gomez III, at that time the president of
petitioner, Benedicto was terminated from his position. 10
On December 3, 1996, Benedicto filed a complaint with the NLRC for illegal dismissal and
damages. He alleged that after his appointment, he was able to increase the televiewing,
listening and audience ratings of petitioner which resulted in its improved competitive financial
strength.11 Specifically, in 1994, he claimed that he successfully initiated, pursued and
consummated an advertising contract with VTV Corporation for a period of five years involving
the amount of P600 million.12 However, on October 11, 1994, he was terminated from his
position without just or authorized cause.
Labor arbiter Jovencio LL. Mayor, Jr.,13 in a decision dated August 17, 1998, ruled in favor of
Benedicto finding that he was indeed illegally dismissed. Consequently, Mayor: (1) ordered his
reinstatement with full backwages from the time of his dismissal up to his actual reinstatement
(amounting to P920,000 at the time of the promulgation of the decision); (2) directed petitioner to
pay his 1% commission on the contract with VTV Corporation (P645,000), attorney's fees in the
amount of 10% of the total award (P156,500) and (3) dismissed the claim for moral and
exemplary damages.14
Finding the award excessive, petitioner, on October 15, 1998, filed with the NLRC its
memorandum on appeal with motion to re-compute the award on which the appeal bond was to
be based.15 This motion was not acted upon,16 hence, on December 10, 1998, petitioner
proceeded to file the appeal bond based on the amounts17 awarded in the judgment appealed
from.18
In a decision promulgated on March 5, 1999, the NLRC dismissed the appeal and ruled that
petitioner failed to perfect its appeal since it did not file the appeal bond within the reglementary
period. The CA affirmed the NLRC's decision.
Thus this petition with application for preliminary injunction and/or temporary restraining order
alleging the following assignment of errors:
I. WITH DUE RESPECT, THE [CA] ERRED IN AFFIRMING THE ASSAILED
DECISION/RESOLUTION OF THE [NLRC] ON MERE TECHNICALITY, FAILING TO
RECOGNIZE THAT PETITIONER HAS IN FACT PERFECTED ITS APPEAL UNDER EXISTING
LAW AND JURISPRUDENCE[;]
II. WITH DUE RESPECT, THE [CA] ERRED IN AFFIRMING IN TOTO THE ASSAILED
RESOLUTION/DECISION DEPRIVING PETITIONER OF ITS RIGHT TO APPEAL, BY
IGNORING THE MERITS OF THE MOTION TO RECOMPUTE AWARD TO REDUCE BOND
AND ITS SIGNIFICANCE IN RELATION TO THE PERFECTION OF THE APPEAL[;]
III. WITH DUE RESPECT, THE [CA] ERRED IN NOT PASSING UPON THE SUBSTANTIVE
MERITS OF THE CASE, SPECIALLY ON THE VALIDITY OF THE REINSTATEMENT OF
[BENEDICTO] AT AGE SEVENTY TWO (72), CONTRARY TO LAW AND JURISPRUDENCE,
AND THE GRANT OF BACKWAGES BEYOND [THE] AGE FOR COMPULSORY
RETIREMENT AT 65[;]
IV. WITH DUE RESPECT, THE [CA] ERRED IN AFFIRMING IN TOTO THE ASSAILED
RESOLUTION/DECISION THAT GRANTS 5-YEAR AUTOMATIC INCREASE OF AWARD
[SUCH] AS FROM P1.565M TO 2.711M WITHOUT SETTING [BENEDICTO]'S MOTION TO
RECOMPUTE AWARD FOR HEARING AND WITHOUT DUE NOTICE THEREOF DEPRIVING
THE PETITIONER OF ITS PROPERTY WITHOUT DUE PROCESS[;]
V. THE [CA] ERRED IN IGNORING THE ISSUE OF JURISDICTION RAISED BY
PETITIONER.19
On June 26, 2002, this Court issued a temporary restraining order enjoining Benedicto and the
NLRC from implementing the decision of labor arbiter Mayor.20
During the pendency of the case, on November 6, 2002, Benedicto passed away. 21 He was
substituted by his surviving spouse Lourdes V. Benedicto and their four children.22
After this petition was given due course, Atty. Rodolfo B. Barriga, who claimed to have been
hired by Benedicto as collaborating counsel, filed a motion dated December 17, 2002 praying to
be reinstated as counsel of record of respondents.23 The Court, in a resolution dated March 26,
2003, denied the motion since any attorney-client relationship between him and Benedicto, if it
indeed existed, was terminated by the latter's death. Thereafter, Atty. Barriga filed a motion to
determine attorney's fees and notice and statement of charging lien for attorney's fees dated
May 5, 2003 praying, among others, that we determine and approve his attorney's fees and
approve the notice of his charging lien.24
Now the resolution of the issues.
Petitioner raises the issue of jurisdiction without, however, explaining properly the basis of its
objections.25 Such half-hearted and belated attempt to argue the NLRC's alleged lack of
jurisdiction cannot possibly be taken seriously at this late stage of the proceedings.
The NLRC and the CA dismissed petitioner's appeal. Both held that petitioner failed to perfect its
appeal. Petitioner had ten calendar days from its receipt of the labor arbiter's decision on
October 5, 1998 to appeal. While it filed its memorandum on appeal with motion to re-compute
award on October 15, 1998, the appeal bond was posted after the appeal period.
Under the second paragraph of Article 223 of the Labor Code, when a judgment involving
monetary award is appealed by the employer, the appeal is perfected only upon the posting of a
cash or surety bond issued by a reputable bonding company duly accredited by the NLRC in an
amount equivalent to the monetary award in the judgment. This assures the workers that if they
finally prevail in the case, the monetary award will be given to them on dismissal of the
employer's appeal.26 It is also meant to discourage employers from using the appeal to delay or
evade payment of their obligations to the employees.27
Nevertheless, such amount of the bond may be reduced by the NLRC in meritorious cases, on
motion of the appellant.28 Indeed, an unreasonable and excessive amount of bond is oppressive
and unjust, and has the effect of depriving a party of his right to appeal.29
The provision of Article 223 of the Labor Code requiring the posting of a bond for the perfection
of an appeal of a monetary award must be given liberal interpretation in line with the desired
objective of resolving controversies on the merits.30 If only to achieve substantial justice, strict
observance of the reglementary periods may be relaxed if warranted. 31 However, this liberal
interpretation must be justified by substantial compliance with the rule. As we declared
in Buenaobra v. Lim King Guan:32
It is true that the perfection of an appeal in the manner and within the period prescribed by law is
not only mandatory but jurisdictional, and failure to perfect an appeal has the effect of making
the judgment final and executory. However, technicality should not be allowed to stand in the
way of equitably and completely resolving the rights and obligations of the parties. We have
allowed appeals from the decisions of the labor arbiter to the NLRC, even if filed beyond the
reglementary period, in the interest of justice.33
In this case, petitioner posted the bond when the NLRC did not act on its motion for re-
computation of the award. There was thus substantial compliance that justified a liberal
application of the requirement on the timely filing of the appeal bond. Moreover, petitioner
presented a meritorious ground in questioning the computation of the backwages, as we shall
discuss below.
We now proceed to the merits of the case.
The labor arbiter found that Benedicto was an employee (the marketing manager) of
petitioner.34 He also determined that there was no just or authorized cause for Benedicto's
termination. Neither did petitioner comply with the two-notice requirement for valid termination
under the law. He therefore concluded that Benedicto was illegally dismissed. 35
These factual findings of the NLRC, confirmed by the CA, are binding on us since they are
supported by substantial evidence. Petitioner, aside from merely stating that Benedicto's
appointment was unauthorized,36 did not extensively deal with the issue of whether Benedicto
was in fact its employee. Besides, it is estopped from denying such fact considering its
admission that its former President, Tomas Gomez III, wrote him a letter of termination on
October 11, 1994.37 Petitioner, furthermore, never contested the finding of illegal dismissal.
Accordingly, there are no strong reasons for us to again delve into the facts.
Instead, the bulk of petitioner's arguments focused on the labor arbiter's order of reinstatement
and award of backwages. The issue of reinstatement was mooted by Benedicto's death in 2002.
As for the award of backwages, petitioner insists that the award should be limited to what
Benedicto was entitled to as of the compulsory retirement age of 65 years. When the labor
arbiter promulgated his decision (wherein he awarded the amount of P920,000 as backwages),
Benedicto was already 68 years old. In an order dated August 10, 1999, he further increased the
backwages by P180,000.38
We agree with petitioner that Benedicto was entitled to backwages only up to the time he
reached 65 years old, the compulsory retirement age under the law.39 When Benedicto was
illegally dismissed on October 11, 1994, he was already 64 years old. He turned 65 years old on
December 1, 199440 at which age he was deemed to have retired. Since backwages are granted
on grounds of equity for earnings lost by an employee due to his illegal dismissal,41 Benedicto
was entitled to backwages only for the period he could have worked had he not been illegally
dismissed, i.e. from October 11, 1994 to December 1, 1994.42
Petitioner also questions the award by the labor arbiter of Benedicto's 1% commission on the
blocktime sale agreement with VTV Corporation in the amount of P645,000.43 The arbiter found
that the agreement was initiated by and consummated through Benedicto's efforts and that he
was entitled to the commission.44 This is another factual matter that is binding on us. However, it
is unclear how the labor arbiter arrived at the amount adjudged. We therefore rule that in
computing the amount of the commission Benedicto was entitled to, the following should be
considered:
First, because Benedicto was entitled to backwages only from October 11 to December 1, 1994
when he turned 65 years old, petitioner should pay his commission only for this period.
Second, by nature, commissions are given to employees only if the employer receives
income.45 Employees, as a reward, receive a percentage of the earnings of the employer, which
they, through their efforts, helped produce.46 Commissions are also given in the form
of incentives or encouragement so that employees will be inspired to put a little more industry
into their tasks. Commissions can also be considered as direct remunerations for services
rendered.47 All these different concepts of commissions are incongruent with the claim that an
employee can continue to receive them indefinitely after reaching his mandatory retirement age.
Benedicto's right to the commissions was coterminous with his employment with petitioner 48 and
this ended when he reached the compulsory retirement age.
Lastly, the stipulation49providing for commissions (which did not specify the period of
entitlement) would be too burdensome if interpreted to mean that Benedicto had a right to it even
after his employment with petitioner. Doubts in contracts should be settled in favor of the
greatest reciprocity of interests.50 A lopsided and open-minded construction could not have been
the parties' contemplation. Had that been their intent, then they should have spelled it out in no
uncertain terms.
The labor arbiter should therefore re-compute the commission Benedicto was entitled to in
accordance with these guidelines.
Petitioner is also liable for 10% of the total amount for attorney's fees since Benedicto and the
present respondents were compelled to litigate and incur expenses to enforce and protect his
rights.51
With respect to Atty. Barriga's motion, we note that this entails a factual determination and
examination of the evidence. Since Atty. Barriga still has to prove his entitlement to the
attorney's fees he is claiming and the amount thereof (if he is so entitled), this may be taken up
in the NLRC which will execute the judgment.52
In summary, this case shall be remanded to the labor arbiter for re-computation of backwages
and commissions to be paid by petitioner to respondent(s) for the period October 11, 1994 to
December 1, 1994 and 10% of the total amount as attorney's fees. The labor arbiter shall also
set for further hearing Atty. Barriga's motion to determine his attorney's fees and thereafter to fix
the amount thereof if he is so entitled.
WHEREFORE, the assailed decision dated October 18, 2001 and resolution dated March 18,
2002 of the Court of Appeals in CA-G.R. SP No. 53413 are hereby REVERSED and SET
ASIDE.
Petitioner is ORDERED to pay the deceased respondent's backwages and commissions to his
heirs from the time he was illegally dismissed on October 11, 1994 up to the time he reached
compulsory retirement age on December 1, 1994. Likewise, petitioner is ORDEREDto pay
attorney's fees equivalent to 10% of the total monetary award (backwages plus commissions).
For this purpose, the case is hereby ordered REMANDED to the labor arbiter for the re-
computation of the amounts due.
The labor arbiter is also DIRECTED to set for further hearing Atty. Rodolfo B. Barriga's motion to
determine his attorney's fees and thereafter to fix the amount thereof if due to him.
Our temporary restraining order issued on June 26, 2002 is hereby LIFTED.
Costs against petitioner.
SO ORDERED.
G.R. No. 82211-12 March 21, 1989
TERESITA MONTOYA, petitioner,
vs.
TERESITA ESCAYO, JOY ESCAYO, AIDA GANANCIAL, MARY ANN CAPE, CECILIA
CORREJADO, ERLINDA PAYPON and ROSALIE VERDE, AND NATIONAL LABOR
RELATIONS COMMISSION, respondents.
Rolando N. Medalla and Segundo Y Chua for petitioner.
The Solicitor General for public respondent.
Archie S. Baribar for private respondents.
SARMIENTO, J.: SEC. 6. Conciliation pre-condition to filing of complaint. No complaint,
petition, action or proceeding involving any matter within the authority of the
Lupon as provided in Section 2 hereof shall be filed or instituted in court or
This petition for certiorari seeks the annullment and setting aside of the resolution 1 9dated
any other government office for adjudication unless there has been a
August 20, 1987 of the National Labor Relations Commission (NLRC), Third Division, which
confrontation of the parties before the Lupon Chairman or the Pangkat and
reversed and set aside the order dated September 27, 1985 of Labor Arbiter Ethelwoldo R.
no conciliation or settlement has been reached as certified by the Lupon
Ovejera of the NLRC's Regional Arbitration Branch No. VI, Bacolod City, dismissing the
Secretary or the Pangkat Secretary, attested by the Lupon or Pangkat
complaint filed by the private respondents against the petitioner. This petition raises a singular
Chairman, or unless the settlement has been repudiated. However, the
issue, i.e., the applicability of Presidential Decree (P.D.) No. 1508, more commonly known as
parties may go directly to court in the following cases:
the Katarungang Pambarangay Law, to labor disputes.

(1) Where the accused is under detention;

The chronology of events leading to the present controversy is as follows:

(2) Where a person has otherwise been deprived of per sonal liberty calling
The private respondents were all formerly employed as salesgirls in the petitioner's store, the
for habeas corpus proceedings;
"Terry's Dry Goods Store," in Bacolod City. On different dates, they separately filed complaints
for the collection of sums of money against the petitioner for alleged unpaid overtime pay,
holiday pay, 13th month pay, ECOLA, and service leave pay: for violation of the minimum wage (3) Actions coupled with provisional remedies such as preliminary injunction,
law, illegal dismissal, and attorney's fees. The complaints, which were originally treated as attachment, delivery of personal property and support pendente lite; and
separate cases, were subsequently consolidated on account of the similarity in their nature. On
August 1, 1984, the petitioner-employer moved (Annex "C" of Petition) for the dismissal of the
(4) Where the action may otherwise be barred by the Statute of Limitations.
complaints, claiming that among others, the private respondents failed to refer the dispute to the
Lupong Tagapayapa for possible settlement and to secure the certification required from the
Lupon Chairman prior to the filing of the cases with the Labor Arbiter. These actions were As correctly pointed out by the Solicitor General in his comment to the petition, even from the
allegedly violative of the provisions of P.D. No. 1508, which apply to the parties who are all three "WHEREAS" clauses of P.D. No. 1508 can be gleaned clearly the decree's intended
residents of Bacolod City. applicability only to courts of justice, and not to labor relations commissions or labor arbitrators'
offices. The express reference to "judicial resources", to "courts of justice", "court dockets", or
simply to "courts" are significant. On the other band, there is no mention at all of labor relations
Acting favorably on the petitioner's motion, Labor Arbiter Ethelwoldo R. Ovejera, on September
or controversies and labor arbiters or commissions in the clauses involved.
27, 1985, ordered the dismissal of the complaints. The private respondents sought the reversal
of the Labor Arbiter's order before the respondent NLRC. On August 20, 1987, the public
respondent rendered the assailed resolution reversing the order of Ovejera, and remanded the These "WHEREAS" clauses state:
case to the Labor Arbiter for further proceedings. A motion for reconsideration was filed by the
petitioner but this was denied for lack of merit on October 28, 1987. Hence, this petition.
WHEREAS, the perpetuation and official recognition of the time-honored
tradition of amicably settling disputes among family and barangay members
It is the petitioner's contention that the provisions of the Katarungang Pambarangay Law (P.D. at the barangay level without judicial resources would promote the speedy
No. 1508) relative to the prior amicable settlement proceedings before the Lupong Tagapayapa administration of justice and implement the constitutional mandate to
as a jurisdictional requirement at the trial level apply to labor cases. More particularly, the preserve and develop Filipino culture and to strengthen the family as a basic
petitioner insists that the failure of the private respondents to first submit their complaints for social institution;
possible conciliation and amicable settlement in the proper barangay court in Bacolod City and
to secure a certification from the Lupon Chairman prior to their filing with the Labor Arbiter,
divests the Labor Arbiter, as well as the respondent Commission itself, of jurisdiction over these WHEREAS, the indiscriminate filing of cases in the courts of
justice contributes heavily and unjustifiably to the congestion of court
labor controversies and renders their judgments thereon null and void.
dockets, thus causing a deterioration in the quality of justice;

On the other hand, the Solicitor General, as counsel for the public respondent NLRC, in his
comment, strongly argues and convincingly against the applicability of P.D. No. 1508 to labor
cases.
We dismiss the petition for lack of merit, there being no satisfactory showing of any grave abuse
of discretion committed by the public respondent.
The provisions of P.D. No. 1508 requiring the submission of disputes before the barangay
Lupong Tagapayapa prior to their filing with the court or other government offices are not
applicable to labor cases.
For a better understanding of the issue in this case, the provisions of P.D. No. 1508 invoked by
the petitioner are quoted:
WHEREAS, in order to help relieve the courts of such docket congestion
and thereby enhance the quality of Justice dispensed by the courts, it is
deemed desirable to formally organize and institutionalize a system of
amicably settling disputes at the barangay level; (Emphasis supplied.)
In addition, Letter of Instructions No. 956 and Letter of Implementation No. 105, both issued on
November 12, 1979 by the former President in connection with the implementation of the
Katarungang Pambarangay Law, affirm this conclusion. These Letters were addressed only to
the following officials: all judges of the Courts of first Instance, Circuit Criminal Courts, Juvenile
and Domestic Relations Courts, Courts of Agrarian Relations, City Courts and Municipal Courts,
and all Fiscals and other Prosecuting Officers. These presidential issuances make clear that the
only official directed to oversee the implementation of the provisions of the Katarungang
Pambarangay Law (P.D. No. 1508) are the then Minister of Justice, the then Minister of Local
Governments and Community Development, and the Chief Justice of the Supreme Court. If the
contention of the petitioner were correct, the then Minister (now Secretary) of Labor and
Employment would have been included in the list, and the two presidential issuances alsowould
have been addressed to the labor relations officers, labor arbiters, and the members of the
National Labor Relations Commission. Expressio unius est exclusio alterius.
Nor can we accept the petitioner's contention that the "other government office" referred to in
Section 6 of P.D. No. 1508 includes the Office of the Labor Arbiter and the Med-Arbiter. The
declared concern of the Katarungan Pambarangay Law is "to help relieve the courts of such
docket congestion and thereby enhance the quality of justice dispensed by the courts." Thus,
the" other government office" mentioned in Section 6 of P.D. No. 1508 refers only to such offices
as the Fiscal's Office or, in localities where there is no fiscal, the Municipal Trial Courts, where
complaints for crimes (such as those punishable by imprisonment of not more than 30 days or a,
fine of not more than P 200.00) falling under the jurisdiction of the barangay court but which are
not amicably settled, are subsequently filed for proper disposition.
But, the opinion of the Honorable Minister of Justice (Opinion No. 59, s. 1983) to the contrary
notwithstanding, all doubts on this score are dispelled by The Labor Code Of The Philippines
(Presidential Decree No. 442, as amended) itself. Article 226 thereof grants original and
exclusive jurisdiction over the conciliation and mediation of disputes, grievances, or problems in
the regional offices of the Department of Labor and Employ- ment. It is the said Bureau and its
divisions, and not the barangay Lupong Tagapayapa, which are vested by law
with original and exclusive authority to conduct conciliation and mediation proceedings on labor
controversies before their endorsement to the appropriate Labor Arbiter for adjudication. Article
226, previously adverted to is clear on this regard. It provides:
ART. 226. Bureau of Labor Relations.- The Bureau of Labor Relations and
the Labor relations divisions in the regional officer of the Department of
Labor shall have original and exclusive authority to act, at their own initiative
or upon request of either or both parties, on all inter-union and intra-union
conflicts, and all disputes, grievances or problems arising from or affecting
labor-management relations in all workplaces whether agricultural or non-
agricultural, except those arising from the implementation or interpretation of
collective bargaining agreements which shall be the subject of grievance
procedure and/or voluntary arbitration.
The Bureau shall have fifteen (15) working days to act on all labor cases,
subject to extension by agreement of the parties, after which the Bureau
shall certify the cases to the appropriate Labor Arbiters. The 15-working day
deadline, however, shall not apply to cases involving deadlocks in collective
bargaining which the Bureau shall certify to the appropriate Labor Arbiters
only after all possibilities of voluntary settlement shall have been tried.
Requiring conciliation of labor disputes before the barangay courts would defeat the very
salutary purposes of the law. Instead of simplifying labor proceedings designed at expeditious
settlement or referral to the proper court or office to decide it finally, the position taken by the
petitioner would only duplicate the conciliation proceedings and unduly delay the disposition of
the labor case. The fallacy of the petitioner's submission can readily be seen by following it to its
logical conclusion. For then, if the procedure suggested is complied with, the private respondent
would have to lodge first their complaint with the barangay court, and then if not settled there,
they would have to go to the labor relations division at the Regional Office of Region VI of the
Department of Labor and Employment, in Bacolod City, for another round of conciliation
proceedings. Failing there, their long travail would continue to the Office of the Labor Arbiter,
then to the NLRC, and finally to us. This suggested procedure would destroy the salutary
purposes of P.D. 1508 and of The Labor Code Of The Philippines. And labor would then be
given another unnecessary obstacle to hurdle. We reject the petitioner's submission. It does
violence to the constitutionally mandated policy of the State to afford full protection to labor. 2
Finally, it is already well-settled that the ordinary rules on procedure are merely suppletory in
character vis-a-vis labor disputes which are primarily governed by labor laws. 3 And "(A)ll doubts
in the implementation and interpretation of this Code (Labor), including its implementing rules
and regulations, shall be resolved in favor of labor. 4
WHEREFORE, the petition is DISMISSED. Costs against the petitioner.
SO ORDERED.
[G.R. NO. 164772 : June 8, 2006]
EQUITABLE BANKING CORPORATION (now known as EQUITABLE-PCI
BANK), Petitioner, v. RICARDO SADAC, Respondent.
Before Us is a Petition for Review on Certiorari with Motion to Refer the Petition to the Court En
Banc filed by Equitable Banking Corporation (now known as Equitable-PCI Bank), seeking to
reverse the Decision1 and Resolution2 of the Court of Appeals, dated 6 April 2004 and 28 July
2004, respectively, as amended by the Supplemental Decision3dated 26 October 2004 in CA-
G.R. SP No. 75013, which reversed and set aside the Resolutions of the National Labor
Relations Commission (NLRC), dated 28 March 2001 and 24 September 2002 in NLRC-NCR
Case No. 00-11-05252-89.
The Antecedents
As culled from the records, respondent Sadac was appointed Vice President of the Legal
Department of petitioner Bank effective 1 August 1981, and subsequently General Counsel
thereof on 8 December 1981. On 26 June 1989, nine lawyers of petitioner Bank's Legal
Department, in a letter-petition to the Chairman of the Board of Directors, accused respondent
Sadac of abusive conduct, inter alia, and ultimately, petitioned for a change in leadership of the
department. On the ground of lack of confidence in respondent Sadac, under the rules of client
and lawyer relationship, petitioner Bank instructed respondent Sadac to deliver all materials in
his custody in all cases in which the latter was appearing as its counsel of record. In reaction
thereto, respondent Sadac requested for a full hearing and formal investigation but the same
remained unheeded. On 9 November 1989, respondent Sadac filed a complaint for illegal
dismissal with damages against petitioner Bank and individual members of the Board of
Directors thereof. After learning of the filing of the complaint, petitioner Bank terminated the
services of respondent Sadac. Finally, on 10 August 1989, respondent Sadac was removed from
his office and ordered disentitled to any compensation and other benefits. 4
In a Decision5 dated 2 October 1990, Labor Arbiter Jovencio Ll. Mayor, Jr., dismissed the
complaint for lack of merit. On appeal, the NLRC in its Resolution6 of 24 September 1991
reversed the Labor Arbiter and declared respondent Sadac's dismissal as illegal. The decretal
portion thereof reads, thus:
WHEREFORE, in view of all the foregoing considerations, let the Decision of October 2, 1990
be, as it is hereby, SET ASIDE, and a new one ENTERED declaring the dismissal of the
complainant as illegal, and consequently ordering the respondents jointly and severally to
reinstate him to his former position as bank Vice-President and General Counsel without loss of
seniority rights and other privileges, and to pay him full backwages and other benefits from the
time his compensation was withheld to his actual reinstatement, as well as moral damages of
P100,000.00, exemplary damages of P50,000.00, and attorney's fees equivalent to Ten Percent
(10%) of the monetary award. Should reinstatement be no longer possible due to strained
relations, the respondents are ordered likewise jointly and severally to grant separation pay at
one (1) month per year of service in the total sum of P293,650.00 with backwages and other
benefits from November 16, 1989 to September 15, 1991 (cut off date, subject to adjustment)
computed at P1,055,740.48, plus damages of P100,000.00 (moral damages), P50,000.00
(exemplary damages) and attorney's fees equal to Ten Percent (10%) of all the monetary award,
or a grand total of P1,649,329.53.7
Petitioner Bank came to us for the first time via a Special Civil Action for Certiorari assailing the
NLRC Resolution of 24 September 1991 in Equitable Banking Corporation v. National Labor
Relations Commission, docketed as G.R. No. 102467.8
In our Decision9 of 13 June 1997, we held respondent Sadac's dismissal illegal. We said that the
existence of the employer-employee relationship between petitioner Bank and respondent
Sadac had been duly established bringing the case within the coverage of the Labor Code,
hence, we did not permit petitioner Bank to rely on Sec. 26, Rule 13810 of the Rules of Court,
claiming that the association between the parties was one of a client-lawyer relationship, and,
thus, it could terminate at any time the services of respondent Sadac. Moreover, we did not find
that respondent Sadac's dismissal was grounded on any of the causes stated in Article 282 of
the Labor Code. We similarly found that petitioner Bank disregarded the procedural
requirements in terminating respondent Sadac's employment as so required by Section 2 and
Section 5, Rule XIV, Book V of the Implementing Rules of the Labor Code. We decreed:
WHEREFORE, the herein questioned Resolution of the NLRC is AFFIRMED with the following
MODIFICATIONS: That private respondent shall be entitled to backwages from termination of
employment until turning sixty (60) years of age (in 1995) and, thereupon, to retirement benefits
in accordance with law; that private respondent shall be paid an additional amount of P5,000.00;
that the award of moral and exemplary damages are deleted; and that the liability herein
pronounced shall be due from petitioner bank alone, the other petitioners being absolved from
solidary liability. No costs.11
On 28 July 1997, our Decision in G.R. No. 102467 dated 13 June 1997 became final and
executory.12
Pursuant thereto, respondent Sadac filed with the Labor Arbiter a Motion for Execution13 thereof.
Likewise, petitioner Bank filed a Manifestation and Motion14 praying that the award in favor of
respondent Sadac be computed and that after payment is made, petitioner Bank be ordered
forever released from liability under said judgment.
employee the whole amount of the salaries or wages, plus all other benefits and bonuses and
general increases to which he would have been normally entitled had he not been dismissed;
and therefore, salary increases should be deemed a component in the computation of
backwages. Moreover, respondent Sadac contended that his check-up benefit, clothing
allowance, and cash conversion of vacation leaves must be included in the computation of his
backwages.
Petitioner Bank disputed respondent Sadac's computation. Per its computation, the amount of
monetary award due respondent Sadac is P2,981,442.98 only, to the exclusion of the latter's
general salary increases and other claimed benefits which, it maintained, were unsubstantiated.
The jurisprudential precedent relied upon by petitioner Bank in assailing respondent Sadac's
computation is Evangelista v. National Labor Relations Commission,18 citing Paramount Vinyl
Products Corp. v. National Labor Relations Commission,19 holding that an unqualified award of
backwages means that the employee is paid at the wage rate at the time of his dismissal.
Furthermore, petitioner Bank argued before the Labor Arbiter that the award of salary
differentials is not allowed, the established rule being that upon reinstatement, illegally dismissed
employees are to be paid their backwages without deduction and qualification as to any wage
increases or other benefits that may have been received by their co-workers who were not
dismissed or did not go on strike.
On 2 August 1999, Labor Arbiter Jovencio Ll. Mayor, Jr. rendered an Order20 adopting
respondent Sadac's computation. In the main, the Labor Arbiter relying on Millares v. National
Labor Relations Commission21concluded that respondent Sadac is entitled to the general
increases as a component in the computation of his backwages. Accordingly, he awarded
respondent Sadac the amount of P6,030,456.59 representing his backwages inclusive of
allowances and other claimed benefits, namely check-up benefit, clothing allowance, and cash
conversion of vacation leave plus 12 percent (12%) interest per annum equivalent to
P1,367,590.89 as of 30 June 1999, or a total of P7,398,047.48. However, considering that
respondent Sadac had already received the amount of P1,055,740.48 by virtue of a Writ of
Execution22 earlier issued on 18 January 1999, the Labor Arbiter directed petitioner Bank to pay
respondent Sadac the amount of P6,342,307.00. The Labor Arbiter also granted an award of
attorney's fees equivalent to ten percent (10%) of all monetary awards, and imposed a 12
percent (12%) interest per annum reckoned from the finality of the judgment until the satisfaction
thereof.
The Labor Arbiter decreed, thus:
WHEREFORE, in view of al (sic) the foregoing, let an "ALIAS" Writ of Execution be issued
commanding the Sheriff, this Branch, to collect from respondent Bank the amount of
Ph6,342,307.00 representing the backwages with 12% interest per annum due complainant.23

Per respondent Sadac's computation, the total amount of the monetary award is P6,030,456.59,
Petitioner Bank interposed an appeal with the NLRC, which reversed the Labor Arbiter in a
representing his backwages and other benefits, including the general increases which he should
Resolution,24 promulgated on 28 March 2001. It ratiocinated that the doctrine on general
have earned during the period of his illegal termination. Respondent Sadac theorized that he
increases as component in computing backwages in Sigma Personnel Services and St. Louis
started with a monthly compensation of P12,500.00 in August 1981, when he was appointed as
was merely obiter dictum. The NLRC found East Asiatic Co., Ltd. inapplicable on the ground that
Vice President of petitioner Bank's Legal Department and later as its General Counsel in
the original circumstances therein are not only peculiar to the said case but also completely
December 1981. As of November 1989, when he was dismissed illegally, his monthly
strange to the case of respondent Sadac. Further, the NLRC disallowed respondent Sadac's
compensation amounted to P29,365.00 or more than twice his original compensation. The
claim to check-up benefit ratiocinating that there was no clear and substantial proof that the
difference, he posited, can be attributed to the annual salary increases which he received
same was being granted and enjoyed by other employees of petitioner Bank. The award of
equivalent to 15 percent (15%) of his monthly salary.
attorney's fees was similarly deleted.

Respondent Sadac anchored his claim on Article 279 of the Labor Code of the Philippines, and
The dispositive portion of the Resolution states:
cited as authority the cases of East Asiatic Company, Ltd. v. Court of Industrial Relations, 15 St.
Louis College of Tuguegarao v. National Labor Relations Commission, 16 and Sigma Personnel
Services v. National Labor Relations Commission.17According to respondent Sadac, the catena WHEREFORE, the instant appeal is considered meritorious and accordingly, the computation
of cases uniformly holds that it is the obligation of the employer to pay an illegally dismissed prepared by respondent Equitable Banking Corporation on the award of backwages in favor of
complainant Ricardo Sadac under the decision promulgated by the Supreme Court on June 13,
1997 in G.R. No. 102476 in the aggregate amount of P2,981,442.98 is hereby ordered. 25
Respondent Sadac's Motion for Reconsideration thereon was denied by the NLRC in its
Resolution,26 promulgated on 24 September 2002.
Similarly, petitioner Bank filed a Motion for Partial Reconsideration thereon. Following an
exchange of pleadings between the parties, the Court of Appeals rendered a Resolution, 30 dated
28 July 2004, denying petitioner Bank's Motion for Partial Reconsideration for lack of merit.
Assignment of Errors

Aggrieved, respondent Sadac filed before the Court of Appeals a Petition for Certiorari seeking
nullification of the twin resolutions of the NLRC, dated 28 March 2001 and 24 September 2002,
as well as praying for the reinstatement of the 2 August 1999 Order of the Labor Arbiter.
For the resolution of the Court of Appeals were the following issues, viz.:
Hence, the instant Petition for Review by petitioner Bank on the following assignment of errors,
to wit:
(a) The Hon. Court of Appeals erred in ruling that general salary increases should be included in
the computation of full backwages.

(1) Whether periodic general increases in basic salary, check-up benefit, clothing allowance, and
cash conversion of vacation leave are included in the computation of full backwages for illegally
dismissed employees;
(2) Whether respondent is entitled to attorney's fees; andcralawlibrary
(b) The Hon. Court of Appeals erred in ruling that the applicable authorities in this case are: (i)
East Asiatic, Ltd. v. CIR, 40 SCRA 521 (1971); (ii) St. Louis College of Tuguegarao v. NLRC,
177 SCRA 151 (1989); (iii) Sigma Personnel Services v. NLRC, 224 SCRA 181 (1993); and (iv)
Millares v. NLRC, 305 SCRA 500 (1999) and not (i) Art. 279 of the Labor Code; (ii) Paramount
Vinyl Corp. v. NLRC, 190 SCRA 525 (1990); (iii) Evangelista v. NLRC, 249 SCRA 194 (1995);
and (iv) Espejo v. NLRC, 255 SCRA 430 (1996).

(3) Whether respondent is entitled to twelve percent (12%) per annum as interest on all accounts
(c) The Hon. Court of Appeals erred in ruling that respondent is entitled to check-up benefit,
outstanding until full payment thereof.
clothing allowance and cash conversion of vacation leaves notwithstanding that respondent did
not present any evidence to prove entitlement to these claims.
Finding for respondent Sadac (therein petitioner), the Court of Appeals rendered a Decision on 6
April 2004, the dispositive portion of which is quoted hereunder:
(d) The Hon. Court of Appeals erred in ruling that respondent is entitled to be paid legal interest
even if the principal amount due him has not yet been correctly and finally determined. 31
WHEREFORE, premises considered, the March 28, 2001 and the September 24, 2002
Resolutions of the National Labor Relations Commissions (sic) are REVERSED and SET ASIDE
Meanwhile, on 26 October 2004, the Court of Appeals rendered a Supplemental Decision
and the August 2, 1999 Order of the Labor Arbiter is REVIVED to the effect that private
granting respondent Sadac's Partial Motion for Reconsideration and amending the dispositive
respondent is DIRECTED TO PAY petitioner the sum of PhP6,342,307.00, representing full back
portion of the 6 April 2004 Decision in this wise, viz.:
wages (sic) which sum includes annual general increases in basic salary, check-up benefit,
clothing allowance, cash conversion of vacation leave and other sundry benefits plus 12% per
annum interest on outstanding balance from July 28, 1997 until full payment. WHEREFORE, premises considered, the March 24 (sic), 2001 and the September 24, 2002
Resolutions of the National Labor Relations Commission are hereby REVERSED and SET
ASIDE and the August 2, 1999 Order of the Labor Arbiter is hereby REVIVED to the effect that
Costs against private respondent.27
private respondent is hereby DIRECTED TO PAY petitioner the sum of P6,342,307.00,
representing full backwages which sum includes annual general increases in basic salary,
The Court of Appeals, citing East Asiatic held that respondent Sadac's general increases should check-up benefit, clothing allowance, cash conversion of vacation leave and other sundry
be added as part of his backwages. According to the appellate court, respondent Sadac's benefits "and attorney's fees equal to TEN PERCENT (10%) of all the monetary award" plus
entitlement to the annual general increases has been duly proven by substantial evidence that 12% per annum interest on all outstanding balance from July 28, 1997 until full payment.
the latter, in fact, enjoyed an annual increase of more or less 15 percent (15%). Respondent
Sadac's check-up benefit, clothing allowance, and cash conversion of vacation leave were
Costs against private respondent.32
similarly ordered added in the computation of respondent Sadac's basic wage.

On 22 November 2004, petitioner Bank filed a Supplement to Petition for Review33 contending in
Anent the matter of attorney's fees, the Court of Appeals sustained the NLRC. It ruled that our
the main that the Court of Appeals erred in issuing the Supplemental Decision by directing
Decision28 of 13 June 1997 did not award attorney's fees in respondent Sadac's favor as there
petitioner Bank to pay an additional amount to respondent Sadac representing attorney's fees
was nothing in the aforesaid Decision, either in the dispositive portion or the body thereof that
equal to ten percent (10%) of all the monetary award.
supported the grant of attorney's fees. Resolving the final issue, the Court of Appeals imposed a
12 percent (12%) interest per annum on the total monetary award to be computed from 28 July
1997 or the date our judgment in G.R. No. 102467 became final and executory until fully paid at The Court's Ruling
which time the quantification of the amount may be deemed to have been reasonably
ascertained.
I.

On 7 May 2004, respondent Sadac filed a Partial Motion for Reconsideration29 of the 6 April
2004 Court of Appeals Decision insofar as the appellate court did not award him attorney's fees.
We are called to write finis to a controversy that comes to us for the second time. At the core of
the instant case are the divergent contentions of the parties on the manner of computation of
backwages.
Petitioner Bank asseverates that Article 279 of the Labor Code of the Philippines does not
contemplate the inclusion of salary increases in the definition of "full backwages." It controverts
the reliance by the appellate court on the cases of (i) East Asiatic; (ii) St. Louis; (iii) Sigma
Personnel; and (iv) Millares. While it is in accord with the pronouncement of the Court of Appeals
that Republic Act No. 6715, in amending Article 279, intends to give more benefits to workers,
petitioner Bank submits that the Court of Appeals was in error in relying on East Asiatic to
support its finding that salary increases should be included in the computation of backwages as
nowhere in Article 279, as amended, are salary increases spoken of. The prevailing rule in the
milieu of the East Asiatic doctrine was to deduct earnings earned elsewhere from the amount of
backwages payable to an illegally dismissed employee.
Petitioner Bank posits that even granting that East Asiatic allowed general salary increases in
the computation of backwages, it was because the inclusion was purposely to cushion the blow
of the deduction of earnings derived elsewhere; with the amendment of Article 279 and the
consequent elimination of the rule on the deduction of earnings derived elsewhere, the rationale
for including salary increases in the computation of backwages no longer exists. On the
references of salary increases in the aforementioned cases of (i) St. Louis; (ii) Sigma Personnel;
and (iii) Millares, petitioner Bank contends that the same were merely obiter dicta. In fine,
petitioner Bank anchors its claim on the cases of (i) Paramount Vinyl Products Corp. v. National
Labor Relations Commission;34(ii) Evangelista v. National Labor Relations Commission;35and (iii)
Espejo v. National Labor Relations Commission,36which ruled that an unqualified award of
backwages is exclusive of general salary increases and the employee is paid at the wage rate at
the time of the dismissal.
For his part, respondent Sadac submits that the Court of Appeals was correct when it ruled that
his backwages should include the general increases on the basis of the following cases, to wit:
(i) East Asiatic; (ii) St. Louis; (iii) Sigma Personnel; and (iv) Millares.
Resolving the protracted litigation between the parties necessitates us to revisit our
pronouncements on the interpretation of the term backwages. We said that backwages in
general are granted on grounds of equity for earnings which a worker or employee has lost due
to his illegal dismissal.37 It is not private compensation or damages but is awarded in furtherance
and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right
but rather in the nature of a command to the employer to make public reparation for dismissing
an employee either due to the former's unlawful act or bad faith. 38 The Court, in the landmark
case of Bustamante v. National Labor Relations Commission, 39 had the occasion to explicate on
the meaning of full backwages as contemplated by Article 27940 of the Labor Code of the
Philippines, as amended by Section 34 of Rep. Act No. 6715. The Court in Bustamante said,
thus:
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. 41
Verily, jurisprudence has shown that the definition of full backwages has forcefully evolved. In
Mercury Drug Co., Inc. v. Court of Industrial Relations,42 the rule was that backwages were
granted for a period of three years without qualification and without deduction, meaning, the
award of backwages was not reduced by earnings actually earned by the dismissed employee
during the interim period of the separation. This came to be known as the Mercury Drug
rule.43 Prior to the Mercury Drug ruling in 1974, the total amount of backwages was reduced by
earnings obtained by the employee elsewhere from the time of the dismissal to his
reinstatement. The Mercury Drug rule was subsequently modified in Ferrer v. National Labor
Relations Commission44 and Pines City Educational Center v. National Labor Relations
Commission,45 where we allowed the recovery of backwages for the duration of the illegal
dismissal minus the total amount of earnings which the employee derived elsewhere from the
date of dismissal up to the date of reinstatement, if any. In Ferrer and in Pines, the three-year
period was deleted, and instead, the dismissed employee was paid backwages for the entire
period that he was without work subject to the deductions, as mentioned. Finally came our ruling
in Bustamante which superseded Pines City Educational Center and allowed full recovery of
backwages without deduction and without qualification pursuant to the express provisions of
Article 279 of the Labor Code, as amended by Rep. Act No. 6715, i.e., without any deduction of
income the employee may have derived from employment elsewhere from the date of his
dismissal up to his reinstatement, that is, covering the entirety of the period of the dismissal.
The first issue for our resolution involves another aspect in the computation of full backwages,
mainly, the basis of the computation thereof. Otherwise stated, whether general salary increases
should be included in the base figure to be used in the computation of backwages.
In so concluding that general salary increases should be made a component in the computation
of backwages, the Court of Appeals ratiocinated, thus:
The Supreme Court held in East Asiatic, Ltd. v. Court of Industrial Relations, 40 SCRA 521
(1971) that "general increases" should be added as a part of full backwages, to wit:
In other words, the just and equitable rule regarding the point under discussion is this: It is the
obligation of the employer to pay an illegally dismissed employee or worker the whole amount of
the salaries or wages, plus all other benefits and bonuses and general increases, to which he
would have been normally entitled had he not been dismissed and had not stopped working, but
it is the right, on the other hand of the employer to deduct from the total of these, the amount
equivalent to the salaries or wages the employee or worker would have earned in his old
employment on the corresponding days he was actually gainfully employed elsewhere with an
equal or higher salary or wage, such that if his salary or wage in his other employment was less,
the employer may deduct only what has been actually earned.
The doctrine in East Asiatic was subsequently reiterated, in the cases of St. Louis College of
Tugueg[a]rao v. NLRC, 177 SCRA 151 (1989); Sigma Personnel Services v. NLRC, 224 SCRA
181 (1993) and Millares v. National Labor Relations Commission, 305 SCRA 500 (1999).
Private respondent, in opposing the petitioner's contention, alleged in his Memorandum that only
the wage rate at the time of the employee's illegal dismissal should be considered - private
respondent citing the following decisions of the Supreme Court: Paramount Vinyl Corp. v. NLRC
190 SCRA 525 (1990); Evangelista v. NLRC, 249 SCRA 194 (1995); Espejo v. NLRC, 255
SCRA 430 (1996) which rendered obsolete the ruling in East Asiatic, Ltd. v. Court of Industrial
Relations, 40 SCRA 521 (1971).
We are not convinced.
The Supreme Court had consistently held that payment of full backwages is the price or penalty
that the employer must pay for having illegally dismissed an employee.
In Ala Mode Garments, Inc. v. NLRC 268 SCRA 497 (1997) and Bustamante v. NLRC and
Evergreen Farms, Inc. 265 SCRA 61 (1996) the Supreme Court held that the clear legislative
intent in the amendment in Republic Act 6715 was to give more benefits to workers than was
previously given them under the Mercury Drug rule or the "deductions of earnings elsewhere"
rule.
The Paramount Vinyl, Evangelista, and Espejo cases cited by private respondent are
inapplicable to the case at bar. The doctrines therein came about as a result of the old Mercury
Drug rule, which was repealed with the passage of Republic Act 6715 into law. It was in Alex
Ferrer v. NLRC 255 SCRA 430 (1993) when the Supreme Court returned to the doctrine in East
Asiatic, which was soon supplanted by the case of Bustamante v. NLRC and Evergreen Farms,
Inc., which held that the backwages to be awarded to an illegally dismissed employee, should
not, as a general rule, be diminished or reduced by the earnings derived from him during the
period of his illegal dismissal. Furthermore, the Mercury Drug rule was never meant to prejudice
the workers, but merely to speed the recovery of their backwages.
Ever since Mercury Drug Co. Inc. v. CIR 56 SCRA 694 (1974), it had been the intent of the
Supreme Court to increase the backwages due an illegally dismissed employee. In the Mercury
Drug case, full backwages was to be recovered even though a three-year limitation on recovery
of full backwages was imposed in the name of equity. Then in Bustamante, full backwages was
interpreted to mean absolutely no deductions regardless of the duration of the illegal dismissal.
In Bustamante, the Supreme Court no longer regarded equity as a basis when dealing with
illegal dismissal cases because it is not equity at play in illegal dismissals but rather, it is
employer's obligation to pay full back wages (sic). It is an obligation of the employer because it is
"the price or penalty the employer has to pay for illegally dismissing his employee."
The applicable modern definition of full backwages is now found in Millares v. National Labor
Relations Commission 305 SCRA 500 (1999), where although the issue in Millares concerned
separation pay - separation pay and backwages both have employee's wage rate at their
foundation.
x x x The rationale is not difficult to discern. It is the obligation of the employer to pay an illegally
dismissed employee the whole amount of his salaries plus all other benefits, bonuses and
general increases to which he would have been normally entitled had he not been dismissed
and had not stopped working. The same holds true in case of retrenched employees. x x x
46
x x x Annual general increases are akin to "allowances" or "other benefits." (Italics ours.)
We do not agree.
Attention must be called to Article 279 of the Labor Code of the Philippines, as amended by
Section 34 of Rep. Act No. 6715. The law provides as follows:
ART. 279. Security of Tenure. - 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 supplied.)
Article 279 mandates that an employee's full backwages shall be inclusive of allowances and
other benefits or their monetary equivalent. Contrary to the ruling of the Court of Appeals, we do
not see that a salary increase can be interpreted as either an allowance or a benefit. Salary
increases are not akin to allowances or benefits, and cannot be confused with either. The term
"allowances" is sometimes used synonymously with "emoluments," as indirect or contingent
remuneration, which may or may not be earned, but which is sometimes in the nature of
compensation, and sometimes in the nature of reimbursement. 47 Allowances and benefits are
granted to the employee apart or separate from, and in addition to the wage or salary. In
contrast, salary increases are amounts which are added to the employee's salary as an
increment thereto for varied reasons deemed appropriate by the employer. Salary increases are
not separate grants by themselves but once granted, they are deemed part of the employee's
salary. To extend the coverage of an allowance or a benefit to include salary increases would be
to strain both the imagination of the Court and the language of law. As aptly observed by the
NLRC, "to otherwise give the meaning other than what the law speaks for by itself, will open the
floodgates to various interpretations."48 Indeed, if the intent were to include salary increases as
basis in the computation of backwages, the same should have been explicitly stated in the same
manner that the law used clear and unambiguous terms in expressly providing for the inclusion
of allowances and other benefits.
Moreover, we find East Asiatic inapplicable to the case at bar. In East Asiatic, therein petitioner
East Asiatic Company, Ltd. was found guilty of unfair labor practices against therein respondent,
Soledad A. Dizon, and the Court ordered her reinstatement with back pay. On the question of
the amount of backwages, the Court granted the dismissed employee the whole amount of the
salaries plus all general increases and bonuses she would have received during the period of
her lay-off with the corresponding right of the employer to deduct from the total amounts, all the
earnings earned by the employee during her lay-off. The emphasis in East Asiatic is the duty of
both the employer and the employee to disclose the material facts and competent evidence
within their peculiar knowledge relative to the proper determination of backwages, especially as
the earnings derived by the employee elsewhere are deductions to which the employer are
entitled. However, East Asiatic does not find relevance in the resolution of the issue before us.
First, the material date to consider is 21 March 1989, when the law amending Article 279 of the
Labor Code, Rep. Act No. 6715, otherwise known as the Herrera-Veloso Law, took effect. It is
obvious that the backdrop of East Asiatic, decided by this Court on 31 August 1971 was prior to
the current state of the law on the definition of full backwages. Second, it bears stressing that
East Asiatic was decided at a time when even as an illegally dismissed employee is entitled to
the whole amount of the salaries or wages, it was the recognized right of the employer to deduct
from the total of these, the amount equivalent to the salaries or wages the employee or worker
would have earned in his old employment on the corresponding days that he was actually
gainfully employed elsewhere with an equal or higher salary or wage, such that if his salary or
wage in his other employment was less, the employer may deduct only what has been actually
earned.49 It is for this reason the Court centered its discussion on the duty of both parties to be
candid and open about facts within their knowledge to establish the amount of the deductions,
and not leave the burden on the employee alone to establish his claim, as well as on the duty of
the court to compel the parties to cooperate in disclosing such material facts. The inapplicability
of East Asiatic to respondent Sadac was sufficiently elucidated upon by the NLRC, viz.:
A full discernment of the pertinent portion of the judgment sought to be executed in East Asiatic
Co., Ltd. would reveal as follows:
"x x x to reinstate Soledad A. Dizon immediately to her former position with backwages from
September 1, 1958 until actually reinstated with all the rights and privileges acquired and due
her, including seniority and such other terms and conditions of employment AT THE TIME OF
HER LAY-OFF"
The basis on which this doctrine was laid out was summed up by the Supreme Court which
ratiocinated in this light. To quote:
"x x x on the other hand, of the employer to deduct from the total of these, the amount equivalent
to these salaries or wages the employee or worker would have earned in his old employment on
the corresponding days that he was actually gainfully employed elsewhere with an equal or
higher salary or wage, such that if his salary or wage in his other employment was less, the
employer may deduct only what has been actually earned x x x" (Ibid, pp. 547-548).
But the Supreme Court, in the instant case, pronounced a clear but different judgment from that
of East Asiatic Co. decretal portion, in this wise:
"WHEREFORE, the herein questioned Resolution of the NLRC is AFFIRMED with the following
MODIFICATIONS: that private respondent shall be entitled to backwages from termination of
employment until turning sixty (60) years of age (in 1995) and, thereupon, to retirement benefits
in accordance with law; xxx"
Undisputably (sic), it was decreed in plain and unambiguous language that complainant Sadac
"shall be entitled to backwages." No more, no less.
Thus, this decree for Sadac cannot be considered in any way, substantially in essence, with the
award of backwages as pronounced for Ms. Dizon in the case of East Asiatic Co. Ltd. 50
In the same vein, we cannot accept the Court of Appeals' reliance on the doctrine as espoused
in Millares. It is evident that Millares concerns itself with the computation of the salary base used
in computing the separation pay of petitioners therein. The distinction between backwages and
separation pay is elementary. 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 bases for computing the two are different, the first being usually the length
of the employee's service and the second the actual period when he was unlawfully prevented
from working.51
The issue that confronted the Court in Millares was whether petitioners' housing and
transportation allowances therein which they allegedly received on a monthly basis during their
employment should have been included in the computation of their separation pay. It is plain to
see that the reference to general increases in Millares citing East Asiatic was a mere obiter. The
crux in Millares was our pronouncement that the receipt of an allowance on a monthly basis
does not ipso facto characterize it as regular and forming part of salary because the nature of
the grant is a factor worth considering. Whether salary increases are deemed part of the salary
base in the computation of backwages was not the issue in Millares.
Neither can we look at St. Louis of Tuguegarao to resolve the instant controversy. What was
mainly contentious therein was the inclusion of fringe benefits in the computation of the award of
backwages, in particular additional vacation and sick leaves granted to therein concerned
employees, it evidently appearing that the reference to East Asiatic in a footnote was a mere
obiter dictum. Salary increases are not akin to fringe benefits 52and neither is it logical to
conceive of both as belonging to the same taxonomy.
We must also resolve against the applicability of Sigma Personnel Services to the case at bar.
The basic issue before the Court therein was whether the employee, Susan Sumatre, a
domestic helper in Abu Dhabi, United Arab Emirates, had been illegally dismissed, in light of the
contention of Sigma Personnel Services, a duly licensed recruitment agency, that the former
was a mere probationary employee who was, on top of this status, mentally unsound. 53 Even a
cursory reading of Sigma Personnel Services citing St. Louis College of Tuguegarao would
readily show that inclusion of salary increases in the computation of backwages was not at
issue. The same was not on all fours with the instant petition.
What, then, is the basis of computation of backwages? Are annual general increases in basic
salary deemed component in the computation of full backwages? The weight of authority leans
in petitioner Bank's favor and against respondent Sadac's claim for the inclusion of general
increases in the computation of his backwages.
We stressed in Paramount that an unqualified award of backwages means that the employee is
paid at the wage rate at the time of his dismissal, thus:
The determination of the salary base for the computation of backwages requires simply an
application of judicial precedents defining the term "backwages". Unfortunately, the Labor Arbiter
erred in this regard. An unqualified award of backwages means that the employee is paid at the
wage rate at the time of his dismissal [Davao Free Worker Front v. Court of Industrial Relations,
G.R. No. L-29356, October 27, 1975, 67 SCRA 418; Capital Garments Corporation v. Ople, G.R.
No. 53627, September 30, 1982, 117 SCRA 473; Durabilt Recapping Plant & Company v.
NLRC, G.R. No. 76746, July 27, 1987, 152 SCRA 328]. And the Court has declared that the
base figure to be used in the computation of backwages due to the employee should include not
just the basic salary, but also the regular allowances that he had been receiving, such as the
emergency living allowances and the 13th month pay mandated under the law [See Pan-
Philippine Life Insurance Corporation v. NLRC, G.R. No. 53721, June 29, 1982, 144 SCRA 866;
Santos v. NLRC, G.R. No. 76721, September 21, 1987, 154 SCRA 166; Soriano v. NLRC, G.R.
No. 75510, October 27, 1987, 155 SCRA 124; Insular Life Assurance Co., Ltd. v. NLRC,
supra.]54 (Emphasis supplied.)
There is no ambivalence in Paramount, that the base figure to be used in the computation of
backwages is pegged at the wage rate at the time of the employee's dismissal, inclusive of
regular allowances that the employee had been receiving such as the emergency living
allowances and the 13th month pay mandated under the law.
In Evangelista v. National Labor Relations Commission,55we addressed the sole issue of
whether the computation of the award of backwages should be based on current wage level or
the wage levels at the time of the dismissal. We resolved that an unqualified award of
backwages means that the employee is paid at the wage rate at the time of his dismissal, thus:
As explicitly declared in Paramount Vinyl Products Corp. v. NLRC, the determination of the
salary base for the computation of backwages requires simply an application of judicial
precedents defining the term "backwages." An unqualified award of backwages means that the
employee is paid at the wage rate at the time of his dismissal. Furthermore, the award of salary
differentials is not allowed, the established rule being that upon reinstatement, illegally dismissed
employees are to be paid their backwages without deduction and qualification as to any wage
increases or other benefits that may have been received by their co-workers who were not
dismissed or did not go on strike.56
The case of Paramount was relied upon by the Court in the latter case of Espejo v. National
Labor Relations Commission,57 where we reiterated that the computation of backwages should
be based on the basic salary at the time of the employee's dismissal plus the regular allowances
that he had been receiving. Further, the clarification made by the Court in General Baptist Bible
College v. National Labor Relations Commission,58 settles the issue, thus:
We also want to clarify that when there is an award of backwages this actually refers to
backwages without qualifications and deductions. Thus, We held that:
"The term 'backwages without qualification and deduction' means that the workers are to be paid
their backwages fixed as of the time of the dismissal or strike without deduction for their earnings
elsewhere during their layoff and without qualification of their wages as thus fixed; i.e.,
unqualified by any wage increases or other benefits that may have been received by their co-
workers who are not dismissed or did not go on strike. Awards including salary differentials are
not allowed. The salary base properly used should, however, include not only the basic salary
but also the emergency cost of living allowances and also transportation allowances if the
workers are entitled thereto."59 (Italics supplied.)
Indeed, even a cursory reading of the dispositive portion of the Court's Decision of 13 June 1997
in G.R. No. 102467, awarding backwages to respondent Sadac, readily shows that the award of
backwages therein is unqualified, ergo, without qualification of the wage as thus fixed at the time
of the dismissal and without deduction.
A demarcation line between salary increases and backwages was drawn by the Court in Paguio
v. Philippine Long Distance Telephone Co., Inc.,60 where therein petitioner Paguio, on account of
his illegal transfer sought backwages, including an amount equal to 16 percent (16%) of his
monthly salary representing his salary increases during the period of his demotion, contending
that he had been consistently granted salary increases because of his above average or
outstanding performance. We said:
In several cases, the Court had the opportunity to elucidate on the reason for the grant of
backwages. Backwages are granted on grounds of equity to workers for earnings lost due to
their illegal dismissal from work. They are a reparation for the illegal dismissal of an employee
based on earnings which the employee would have obtained, either by virtue of a lawful decree
or order, as in the case of a wage increase under a wage order, or by rightful expectation, as in
the case of one's salary or wage. The outstanding feature of backwages is thus the degree of
assuredness to an employee that he would have had them as earnings had he not been illegally
terminated from his employment.
Petitioner's claim, however, is based simply on expectancy or his assumption that, because in
the past he had been consistently rated for his outstanding performance and his salary
correspondingly increased, it is probable that he would similarly have been given high ratings
and salary increases but for his transfer to another position in the company.
In contrast to a grant of backwages or an award of lucrum cessans in the civil law, this
contention is based merely on speculation. Furthermore, it assumes that in the other position to
which he had been transferred petitioner had not been given any performance evaluation. As
held by the Court of Appeals, however, the mere fact that petitioner had been previously granted
salary increases by reason of his excellent performance does not necessarily guarantee that he
would have performed in the same manner and, therefore, qualify for the said increase later.
What is more, his claim is tantamount to saying that he had a vested right to remain as Head of
the Garnet Exchange and given salary increases simply because he had performed well in such
position, and thus he should not be moved to any other position where management would
require his services.61
Applying Paguio to the case at bar, we are not prepared to accept that this degree of
assuredness applies to respondent Sadac's salary increases. There was no lawful decree or
order supporting his claim, such that his salary increases can be made a component in the
computation of backwages. What is evident is that salary increases are a mere expectancy.
They are, by its nature volatile and are dependent on numerous variables, including the
company's fiscal situation and even the employee's future performance on the job, or the
employee's continued stay in a position subject to management prerogative to transfer him to
another position where his services are needed. In short, there is no vested right to salary
increases. That respondent Sadac may have received salary increases in the past only proves
fact of receipt but does not establish a degree of assuredness that is inherent in backwages.
From the foregoing, the plain conclusion is that respondent Sadac's computation of his full
backwages which includes his prospective salary increases cannot be permitted.
Respondent Sadac cannot take exception by arguing that jurisprudence speaks only of wage
and not salary, and therefore, the rule is inapplicable to him. It is respondent Sadac's stance that
he was not paid at the wage rate nor was he engaged in some form of manual or physical labor
as he was hired as Vice President of petitioner Bank. He cites Gaa v. Court of Appeals 62 where
the Court distinguished between wage and salary.
The reliance is misplaced. The distinction between salary and wage in Gaa was for the purpose
of Article 1708 of the Civil Code which mandates that, "[t]he laborer's wage shall not be subject
to execution or attachment, except for debts incurred for food, shelter, clothing and medical
attendance." In labor law, however, the distinction appears to be merely semantics. Paramount
and Evangelista may have involved wage earners, but the petitioner in Espejo was a General
Manager with a monthly salary of P9,000.00 plus privileges. That wage and salary are
synonymous has been settled in Songco v. National Labor Relations Commission. 63 We said:
Broadly, the word "salary" means a recompense or consideration made to a person for his pains
or industry in another man's business. Whether it be derived from "salarium," or more fancifully
from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation
for services rendered. Indeed, there is eminent authority for holding that the words "wages" and
"salary" are in essence synonymous (Words and Phrases, Vol. 38 Permanent Edition, p. 44
citing Hopkins v. Cromwell, 85 N.Y.S.839, 841, 89 App. Div. 481; 38 Am. Jur. 496). "Salary," the
etymology of which is the Latin word "salarium," is often used interchangeably with "wage", the
etymology of which is the Middle English word "wagen". Both words generally refer to one and
the same meaning, that is, a reward or recompense for services performed. Likewise, "pay" is
the synonym of "wages" and "salary" (Black's Law Dictionary, 5th Ed). x x x64 (Italics supplied.)
II.
Petitioner Bank ascribes as its second assignment of error the Court of Appeals' ruling that
respondent Sadac is entitled to check-up benefit, clothing allowance and cash conversion of
vacation leaves notwithstanding that respondent Sadac did not present any evidence to prove
entitlement to these claims.65
The determination of respondent Sadac's entitlement to check-up benefit, clothing allowance,
and cash conversion of vacation leaves involves a question of fact. The well-entrenched rule is
that only errors of law not of facts are reviewable by this Court in a Petition for Review .66 The
jurisdiction of this Court in a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of
Civil Procedure, as amended, is limited to reviewing only errors of law, not of fact, unless the
factual findings being assailed are not supported by evidence on record or the impugned
judgment is based on a misapprehension of facts.67 This Court is also not precluded from
delving into and resolving issues of facts, particularly if the findings of the Labor Arbiter are
inconsistent with those of the NLRC and the Court of Appeals.68 Such is the case in the instant
petition. The Labor Arbiter and the Court of Appeals are in agreement anent the entitlement of
respondent Sadac to check-up benefit, clothing allowance, and cash conversion of vacation
leaves, but the findings of the NLRC were to the contrary. The Labor Arbiter sustained
respondent Sadac's entitlement to check-up benefit, clothing allowance and cash conversion of
vacation leaves. He gave weight to petitioner Bank's acknowledgment in its computation that
respondent Sadac is entitled to certain benefits, namely, rice subsidy, tuition fee allowance, and
medicine allowance, thus, there exists no reason to deprive respondent Sadac of his other
benefits. The Labor Arbiter also reasoned that the petitioner Bank did not adduce evidence to
support its claim that the benefits sought by respondent Sadac are not granted to its employees
and officers. Similarly, the Court of Appeals ratiocinated that if ordinary employees are entitled to
receive these benefits, so it is with more reason for a Vice President, like herein respondent The dispositive portion of the 24 September 1991 Decision of the NLRC awards respondent
Sadac to receive the same. Sadac attorney's fees equivalent to ten percent (10%) of the monetary award, viz:

We find in the records that, per petitioner Bank's computation, the benefits to be received by
respondent are monthly rice subsidy, tuition fee allowance per year, and medicine allowance per
year.69 Contained nowhere is an acknowledgment of herein claimed benefits, namely, check-up
benefit, clothing allowance, and cash conversion of vacation leaves. We cannot sustain the
rationalization that the acknowledgment by petitioner Bank in its computation of certain benefits
granted to respondent Sadac means that the latter is also entitled to the other benefits as
claimed by him but not acknowledged by petitioner Bank. The rule is, he who alleges, not he
who denies, must prove. Mere allegations by respondent Sadac does not suffice in the absence
of proof supporting the same.
III.
We come to the third assignment of error raised by petitioner Bank in its Supplement to Petition
for Review, assailing the 26 October 2004 Supplemental Decision of the Court of Appeals which
amended the fallo of its 6 April 2004 Decision to include "attorney's fees equal to TEN
PERCENT (10%) of all the monetary award" granted to respondent Sadac. Petitioner Bank
posits that neither the dispositive portion of our 13 June 1997 Decision in G.R. No. 102467 nor
the body thereof awards attorney's fees to respondent Sadac. It is postulated that the body of
the 13 June 1997 Decision does not contain any findings of facts or conclusions of law relating
to attorney's fees, thus, this Court did not intend to grant to respondent Sadac the same,
especially in the light of its finding that the petitioner Bank was not motivated by malice or bad
faith and that it did not act in a wanton, oppressive, or malevolent manner in terminating the
services of respondent Sadac.70
We do not agree.
WHEREFORE, in view of all the foregoing considerations, let the Decision of October 2, 1990
be, as it is hereby, SET ASIDE and a new one ENTERED declaring the dismissal of the
complainant as illegal, and consequently ordering the respondents jointly and severally to
reinstate him to his former position as bank Vice-President and General Counsel without loss of
seniority rights and other privileges, and to pay him full backwages and other benefits from the
time his compensation was withheld to his actual reinstatement, as well as moral damages of
P100,000.00, exemplary damages of P50,000.00, and attorney's fees equivalent to Ten Percent
(10%) of the monetary award. Should reinstatement be no longer possible due to strained
relations, the respondents are ordered likewise jointly and severally to grant separation pay at
one (1) month per year of service in the total sum of P293,650.00 with backwages and other
benefits from November 16, 1989 to September 15, 1991 (cut off date, subject to adjustment)
computed at P1,055,740.48, plus damages of P100,000.00 (moral damages), P50,000.00
(exemplary damages) and attorney's fees equal to Ten Percent (10%) of all the monetary award,
or a grand total of P1,649,329.53.75 (Italics Ours.)
As can be gleaned from the foregoing, the Court's Decision of 13 June 1997 AFFIRMED with
MODIFICATION the NLRC Decision of 24 September 1991, which modification did not touch
upon the award of attorney's fees as granted, hence, the award stands. Juxtaposing the decretal
portions of the NLRC Decision of 24 September 1991 with that of the Court's Decision of 13
June 1997, we find that what was deleted by the Court was "the award of moral and exemplary
damages," but not the award of "attorney's fees equivalent to Ten Percent (10%) of the
monetary award." The issue on the grant of attorney's fees to respondent Sadac has been
adequately and definitively threshed out and settled with finality when petitioner Bank came to us
for the first time on a Petition for Certiorari in Equitable Banking Corporation v. National Labor
Relations Commission, docketed as G.R. No. 102467. The Court had spoken in its Decision of
13 June 1997 in the said case which attained finality on 28 July 1997. It is now immutable.

At the outset it must be emphasized that when a final judgment becomes executory, it thereby IV.
becomes immutable and unalterable. The judgment may no longer be modified in any respect,
even if the modification is meant to correct what is perceived to be an erroneous conclusion of
We proceed with the penultimate issue on the entitlement of respondent Sadac to twelve percent
fact or law, and regardless of whether the modification is attempted to be made by the Court
(12%) interest per annum on the outstanding balance as of 28 July 1997, the date when our
rendering it or by the highest Court of the land. The only recognized exceptions are the
Decision in G.R. No. 102467 became final and executory.
correction of clerical errors or the making of so-called nunc pro tunc entries which cause no
prejudice to any party, and, of course, where the judgment is void. 71 The Court's 13 June 1997
Decision in G.R. No. 102467 became final and executory on 28 July 1997. This renders moot In Eastern Shipping Lines, Inc. v. Court of Appeals,76 the Court, speaking through the Honorable
whatever argument petitioner Bank raised against the grant of attorney's fees to respondent Justice Jose C. Vitug, laid down the following rules of thumb:
Sadac. Of even greater import is the settled rule that it is the dispositive part of the judgment that
actually settles and declares the rights and obligations of the parties, finally, definitively, and
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or
authoritatively, notwithstanding the existence of inconsistent statements in the body that may
quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under
tend to confuse.72
Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable
damages.
Proceeding therefrom, we make a determination of whether the Court in Equitable Banking
Corporation v. National Labor Relations Commission,73 G.R. No. 102467, dated 13 June 1997,
II. With regard particularly to an award of interest in the concept of actual or compensatory
awarded attorney's fees to respondent Sadac. In recapitulation, the dispositive portion of the
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
aforesaid Decision is hereunder quoted:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
WHEREFORE, the herein questioned Resolution of the NLRC is AFFIRMED with the following
loan or forbearance of money, the interest due should be that which may have been stipulated in
MODIFICATIONS: That private respondent shall be entitled to backwages from termination of
writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially
employment until turning sixty (60) years of age (in 1995) and, thereupon, to retirement benefits
demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be
in accordance with law; that private respondent shall be paid an additional amount of P5,000.00;
computed from default, i.e., from judicial or extrajudicial demand under and subject to the
that the award of moral and exemplary damages are deleted; and that the liability herein
provisions of Article 1169 of the Civil Code.
pronounced shall be due from petitioner bank alone, the other petitioners being absolved from
solidary liability. No costs.74
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest (3) INTEREST of TWELVE PERCENT (12%) per annum is hereby imposed on the total sum of
on the amount of damages awarded may be imposed at the discretion of the court at the rate of all monetary award from 28 July 1997, the date of finality of Our Decision in G.R. No. 102467
6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages until full payment of the said monetary award.
except when or until the demand can be established with reasonable certainty. Accordingly,
where the demand is established with reasonable certainty, the interest shall begin to run from
The Motion to Refer the Petition to the Court En Banc is DENIED.
the time the claim is made judicially or extrajudicially (Article 1169, Civil Code) but when such
certainty cannot be so reasonably established at the time the demand is made, the interest shall
begin to run only from the date the judgment of the court is made (at which time the No costs.SO ORDERED.
quantification of damages may be deemed to have been reasonably ascertained). The actual
base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the
rate of legal interest, whether the case falls under paragraph 1 or paragraph 2 above, shall be
12% per annum from such finality until its satisfaction, this interim period being deemed to be by
then an equivalent to a forbearance of credit.77

It is obvious that the legal interest of twelve percent (12%) per annum shall be imposed from the
time judgment becomes final and executory, until full satisfaction thereof. Therefore, petitioner
Bank is liable to pay interest from 28 July 1997, the finality of our Decision in G.R. No.
102467.78 The Court of Appeals was not in error in imposing the same notwithstanding that the
parties were at variance in the computation of respondent Sadac's backwages. What is
significant is that the Decision of 13 June 1997 which awarded backwages to respondent Sadac
became final and executory on 28 July 1997.

V.

Finally, petitioner Bank's Motion to Refer the Petition En Banc must necessarily be denied as
established in our foregoing discussion. We are not herein modifying or reversing a doctrine or
principle laid down by the Court en banc or in a division. The instant case is not one that should
be heard by the Court en banc.79 ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Fallo

WHEREFORE, the petition is PARTIALLY GRANTED in the sense that in the computation of the
backwages, respondent Sadac's claimed prospective salary increases, check-up benefit,
clothing allowance, and cash conversion of vacation leaves are excluded. The petition is
PARTIALLY DENIED insofar as we AFFIRMED the grant of attorney's fees equal to ten percent
(10%) of all the monetary award and the imposition of twelve percent (12%) interest per annum
on the outstanding balance as of 28 July 1997. Hence, the Decision and Resolution of the Court
of Appeals in CA-G.R. SP No. 75013, dated 6 April 2004 and 28 July 2004, respectively, and the
Supplemental Decision dated 26 October 2004 are MODIFIED in the following manner, to wit:

Petitioner Bank is DIRECTED TO PAY respondent Sadac the following:

(1) BACKWAGES in accordance with Our Decision dated 13 June 1997 in G.R. No. 102467 with
a clarification that the award of backwages EXCLUDES respondent Sadac's claimed prospective
salary increases, check-up benefit, clothing allowance, and cash conversion of vacation leaves;

(2) ATTORNEY'S FEES equal to TEN PERCENT (10%) of the total sum of all monetary award;
andcralawlibrary
 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,"4assailed 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
I
There is no question that petitioner Roquero is guilty of serious misconduct for possessing and
using shabu. He violated Chapter 2, Article VII, section 4 of the PAL Code of Discipline which
states:
"Any employee who, while on company premises or on duty, takes or is under the influence of
prohibited or controlled drugs, or hallucinogenic substances or narcotics shall be dismissed." 16
Serious misconduct is defined as "the transgression of some established and definite rule of
action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and
not mere error in judgment."17 For serious misconduct to warrant the dismissal of an employee, it
(1) must be serious; (2) must relate to the performance of the employee's duty; and (3) must
show that the employee has become unit to continue working for the employer. 18
It is of public knowledge that drugs can damage the mental faculties of the user. Roquero was
tasked with the repair and maintenance of PAL's airplanes. He cannot discharge that duty if he
is a drug user. His failure to do his job can mean great loss of lives and properties. Hence, even
if he was instigated to take drugs he has no right to be reinstated to his position. He took the
drugs fully knowing that he was on duty and more so that it is prohibited by company rules.
Instigation is only a defense against criminal liability. It cannot be used as a shield against
dismissal from employment especially when the position involves the safety of human lives.
Petitioner cannot complain he was denied procedural due process. PAL complied with the twin-
notice requirement before dismissing the petitioner. The twin-notice rule requires (1) the notice
which apprises the employee of the particular acts or omissions for which his dismissal is being
sought along with the opportunity for the employee to air his side, and (2) the subsequent notice
of the employer's decision to dismiss him.19 Both were given by respondent PAL.
II
Article 223 (3rd paragraph) of the Labor Code20 as amended by Section 12 of Republic Act No.
6715,21 and Section 2 of the NLRC Interim Rules on Appeals under RA No. 6715, Amending the
Labor Code,22 provide that an order of reinstatement by the Labor Arbiter is immediately
executory even pending appeal. The rationale of the law has been explained in Aris (Phil.) Inc.
vs. NLRC:23
"In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor
Arbiter reinstating a dismissed or separated employee, the law itself has laid down a
compassionate policy which, once more, vivifies and enhances the provisions of the 1987
Constitution on labor and the working man.
xxx - xxx - xxx
These duties and responsibilities of the State are imposed not so much to express sympathy for
the workingman as to forcefully and meaningfully underscore labor as a primary social and
economic force, which the Constitution also expressly affirms with equal intensity. Labor is an
indispensable partner for the nation's progress and stability.
xxx - xxx - xxx
. . . In short, with respect to decisions reinstating employees, the law itself has determined a
sufficiently overwhelming reason for its execution pending appeal.
xxx - xxx - xxx
. . . Then, by and pursuant to the same power (police power), the State may authorize an
immediate implementation, pending appeal, of a decision reinstating a dismissed or separated
employee since that saving act is designed to stop, although temporarily since the appeal may
be decided in favor of the appellant, a continuing threat or danger to the survival or even the life
of the dismissed or separated employee and his family."
The order of reinstatement is immediately executory. The unjustified refusal of the employer to
reinstate a dismissed employee entitles him to payment of his salaries effective from the time the
employer failed to reinstate him despite the issuance of a writ of execution. 24 Unless there is a
restraining order issued, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement. In the case at bar, no restraining order was granted. Thus, it was mandatory on
PAL to actually reinstate Roquero or reinstate him in the payroll. Having failed to do so, PAL
must pay Roquero the salary he is entitled to, as if he was reinstated, from the time of the
decision of the NLRC until the finality of the decision of this Court.
We reiterate the rule that technicalities have no room in labor cases where the Rules of Court
are applied only in a suppletory manner and only to effectuate the objectives of the Labor Code
and not to defeat them.25 Hence, even if the order of reinstatement of the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of
the dismissed employee during the period of appeal until reversal by the higher court. On the
other hand, if the employee has been reinstated during the appeal period and such
reinstatement order is reversed with finality, the employee is not required to reimburse whatever
salary he received for he is entitled to such, more so if he actually rendered services during the
period.
IN VIEW WHEREOF, the dismissal of petitioner Roquero is AFFIRMED, but respondent PAL is
ordered to pay the wages to which Roquero is entitled from the time the reinstatement order was
issued until the finality of this decision.
SO ORDERED.
[G.R. NO. 161305 : February 9, 2007] MILAGROS PANUNCILLO, Petitioner, v. CAP
PHILIPPINES, INC., Respondent.D E C I S I O NCARPIO MORALES, J.:
Assailed via Petition for Review1 are the Decision dated May 16, 20032 and Resolution dated
November 17, 20033of the Court of Appeals in CA-G.R. SP No. 74665 which declared valid the
dismissal of Milagros Panuncillo (petitioner) by CAP Philippines, Inc. (respondent).
Petitioner was hired on August 28, 1980 as Office Senior Clerk by respondent. At the time of her
questioned separation from respondent on April 23, 1999, she was receiving a monthly salary
of P16,180.60.
In order to secure the education of her son, petitioner procured an educational plan (the plan)
from respondent which she had fully paid but which she later sold to Josefina Pernes (Josefina)
for P37,000. Before the actual transfer of the plan could be effected, however, petitioner pledged
it for P50,000 to John Chua who, however, sold it to Benito Bonghanoy. Bonghanoy in turn sold
the plan to Gaudioso R. Uy for P60,000.
Having gotten wind of the transactions subsequent to her purchase of the plan, Josefina, by
letter of February 10, 1999,4 informed respondent that petitioner had "swindled" her but that she
was willing to settle the case amicably as long as petitioner pay the amount involved and the
interest. She expressed her appreciation "if [respondent] could help her in anyway."
Acting on Josefina's letter, the Integrated Internal Audit Operations (IIAO) of respondent required
petitioner to explain in writing why the plan had not been transferred to Josefina and was instead
sold to another. Complying, petitioner proffered the following explanation:
Because of extreme need of money, I was constrained to sell my CAP plan of my son to J.
Pernes last July, 1996, in the amount of Thirty Seven Thousand Pesos (P37,000.) The plan was
not transferred right away because of lacking requirement on the part of the buyer (birth
certificate). The birth certificate came a month later. While waiting for the birth certificate, again
because of extreme need of money, I was tempted to pawned [sic] the plan, believing I can
redeemed [sic] it later when the birth certificate will come.
Last year, I was already pressured by J. Pernes for the transfer of the plan. But before hand, she
already knew the present situation. I was trying to find means to redeemed [sic] the plan but to
no avail. I cannot borrow anymore from my creditors because of outstanding loans which
remains unpaid. As of the present, I am heavily debtladen and I don't know where to run.
I can't blame the person whom I pawned the plan if he had sold it. I can't redeemed [sic] it
anymore. Everybody needs money and besides, I have given them my papers.
I admit, I had defrauded Ms. J. Pernes, but I didn't do it intentionally. At first, I believe I can
redeem the plan hoping I can still borrow from somebody.
With my more than 18 years stay with the company, I don't have the intention of ruining my
image as well as the company's. I think I am just a victim of circumstances.5(Emphasis and
underscoring supplied)cralawlibrary
A show-cause memorandum6 dated February 23, 1999 was thereupon sent to petitioner, giving
her 48 hours from receipt thereof to explain why she should not be disciplinarily dealt with.
Petitioner did not comply, however.
The IIAO of respondent thus conducted an investigation on the matter. By Memorandum of April
5, 1999,7 the IIAO recommended that, among other things, administrative action should be taken
against petitioner for violating Section 8.4 of respondent's Code of Discipline reading:
Committing or dealing any act or conniving with co-employees or anybody to defraud the
company or customer/sales associates.
In the same memorandum, the IIAO reported other matters bearing on petitioner's duties as an
employee, to wit:
OTHERS:
We also received a copy of demand letter of a certain Evelia Casquejo addressed to Ms.
Panuncillo requiring the latter to pay the amount of P54,870.00 for the supposed transfer of the
lapsed plan of Subscriber Corazon Lintag with SFA # 25-67-40-01-00392. Ms. Panuncillo
received the payment of P25,000.00 and P29,870.00 on July 17, 1997 and July 18, 1997
respectively (Exhibits L&M).
Ms. Panuncillo verbally admitted that she was the one who sold the plan to Ms. Casquejo but
with the authorization from Ms. Lintag. However, the transfer was not effected because she
had misappropriated a portion of the moneyuntil the plan was terminated. Ms. Casquejo,
however, did not file a complaint because Ms. Panuncillo executed a Special Power of Attorney
authorizing the former to receive P68,000 of Ms. Panuncillo's retirement pay (Exhibit
N).8(Emphasis in the original; underscoring supplied))
On April 7, 1999, another show-cause memorandum was sent to petitioner by Renato M. Daquiz
(Daquiz), First Vice President of respondent, giving her another 48 hours to explain why she
should not be disciplinarily dealt with in connection with the complaints of Josefina and Evelia
Casquejo (Evelia). Complying with the directive, petitioner, by letter of April 10, 1999, on top of
reiterating her admission of having "defrauded" Josefina, admitted having received from Evelia
the payment for a lapsed plan, thus:
With regards to [Evelia's] case, yes its [sic] true I had received the payment but it was
accordingly given to the owner or Subscriber Ms. C. Lintag. The plan was not transferred
because it was already forfeited and we, Ms. Lintag, [Evelia] and I already made settlement of
the case.
I think I have violated Sec. 8.4 of the company's Code of Discipline. I admit it is my
wrongdoing. I was only forced to do this because of extreme needs to pay for my debts. I am
open for whatever disciplinary action that will be sanctioned againts [sic] me. I hope it is
not termination from my job. How can I pay for obligations if that will happen to me.
As for [Josefina], I have the greatest desire to pay for my indebtedness but my capability at the
moment is nil. (space) I have been planning to retire early just to pay my obligations. That is why
I had written to you last year inquiring tax exemption when retiring. I have been with the
company for almost 19 years already and I never intend [sic] to smear its name as well as mine.
I was only forced by circumstances. Although it hurts to leave CAP, I will be retiring on April 30,
1999.x x x x9 (Emphasis and underscoring supplied)cralawlibrary
Respondent thereupon terminated the services of petitioner by Memorandum dated April 20,
1999.10
Petitioner sought reconsideration of her dismissal, by letter of April 23, 1999 addressed to
Daquiz, imploring as follows:
. . . Please consider my retirement letter I sent to you. I would like to avail [of] the retirement
benefit of the company. The proceeds of my retirement could help me pay some of my
obligations as well as the needs of my family. My husband is jobless and I am the breadwinner
of the family. If I will be terminated, I don't know what will happen to us.
Sir, I am enclosing the affidavit of Ms. Evelia Casquejo proving that we have already settled the
case.x x x x11 (Underscoring supplied)ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
Pending resolution of petitioner's motion for reconsideration, respondent received a letter dated
April 28, 199912 from one Gwendolyn N. Dinoro (Gwendolyn) who informed that she had been
paying her "quarterly dues" through petitioner but found out that none had been remitted to
respondent, on account of which she (Gwendolyn) was being penalized with interest charges.
Acting on petitioner's motion for reconsideration, Daquiz, by letter-memorandum of May 5, 1999,
denied the same in this wise:
A review of your case was made per your request, and we note that it was not just a single
case but multiple cases, that of Ms. Casquejo, Ms. Pernes, and newly reported Ms. Dinoro.
Furthermore, the cases happened way back in July 1996 and 1997, and were just discovered
recently. In addition, the misappropriation of money/or act to defraud the company or customer
was deliberate and intentional. There were several payments received - over a period of time.
While you plead for your retirement benefit to help you pay some of your obligations, as well as
the need of your family (your husband being jobless and being the breadwinner), these thoughts
should have crossed your mind before you committed the violations rather than now. To allow
you to retire with benefits, is to tolerate and encourage others to do the same in the future, as it
will be a precedent that will surely be invoked in similar situations in the future, as it will be a
precedent that will surely be invoked in similar situations in the future. It is also unfair to others
who do their jobs faithfully and honestly. If we let you have your way, it will appear that we let
you scot-free and even reward you with retirement - someone who deliberately violated
trust and confidence of the company and customers.
Premises considered, the decision to terminate your services for cause stays and the request for
reconsideration is denied.
x x x x13 (Emphasis and underscoring supplied)cralawlibrary
Petitioner thus filed a complaint14 for illegal dismissal, 13th month pay, service incentive leave
pay, damages and attorney's fees against respondent.
The Labor Arbiter, while finding that the dismissal was for a valid cause, found the same too
harsh. He thus ordered the reinstatement of petitioner to a position one rank lowerthan her
previous position, and disposed as follows:
WHEREFORE, the foregoing considered, judgement [sic] is hereby rendered directing the
respondent to pay complainant's 13th Month pay and Service Incentive Leave Pay for 1999 in
proportionate amount computed as follows:
13th Month Pay
xxx
Plus P482.30 ten (10%) Attorney's Fees or a total aggregate amount of PESOS: FIVE
THOUSAND THREE HUNDRED FIVE & 31/100 (P5,305.31).
Respondent is likewise, directed to reinstate the complainant to a position one rank lower
without backwages.15 (Underscoring supplied)cralawlibrary
On appeal, the National Labor Relations Commission (NLRC), by Decision of October 29, 2001,
reversed that of the Labor Arbiter, it finding that petitioner's dismissal wasillegal and
accordingly ordering her reinstatement to her former position. Thus it disposed:
WHEREFORE, the Decision in the main case dated February 18, 2000 of the Labor Arbiter
declaring the dismissal of the complainant valid, and his Order dated June 26, 2000 declaring
the Motion to Declare Respondent-appellant in Contempt as prematurely filed and ordering the
issuance of an alias writ of execution are hereby SET ASIDE, and a new one is rendered
DECLARING the dismissal of the complainant illegal, and ORDERING the respondent, CAP
PHILIPPINES, INCORPORATED, the following:
1. to reinstate the complainant MILAGROS B. PANUNCILLO to her former position without loss
of seniority rights and with full backwages from the date her compensation was withheld from
her on April 20, 1999 until her actual reinstatement;
2. to pay to the same complainant P4,045.14 as 13th month pay, and P777.89 as service
incentive leave pay;
3. to pay to the same complainant moral damages of FIFTY THOUSAND PESOS (P50,000.00),
and exemplary damages of another FIFTY THOUSAND PESOS (P50,000.00);
4. to pay attorney's fees equivalent to ten percent (10%) of the total award exclusive of moral
and exemplary damages.
Further, the complainant's Motion to Declare Respondent in Contempt dated May 3, 2000 is
denied and rendered moot by virtue of this Decision.
All other claims are dismissed for lack of merit.16(Underscoring supplied)cralawlibrary
In so deciding, the NLRC held that the transaction between petitioner and Josefina was private
in character and, therefore, respondent did not suffer any damage, hence, it was error to apply
Section 8.4 of respondent's Code of Discipline.
Respondent challenged the NLRC Decision before the appellate court via Petition for
Certiorari.17 By Decision of May 16, 2003,18 the appellate court reversed the NLRC Decision and
held that the dismissal was valid and that respondent complied with the procedural requirements
of due process before petitioner's services were terminated.
Hence, the present petition, petitioner faulting the appellate court
I
x x x IN REVIEWING THE FINDINGS OF FACT OF THE LABOR ARBITER AND THE
NATIONAL LABOR RELATIONS COMMISSION THAT RESPONDENT CAP PHILIPPINES,
INC., HAS NOT BEEN DEFRAUDED NOR DAMAGED IN THE TRANSACTION/S ENTERED
INTO BY PETITIONER RELATING TO HER FULLY PAID EDUCATIONAL PLAN.
II
x x x IN HOLDING THAT RESPONDENT CAP PHILIPPINES, INC. IS THE INSURER OF
PETITIONER'S FULLY PAID EDUCATIONAL PLAN UNDER THE INSURANCE CODE.
III
x x x IN HOLDING THAT PETITIONER WAS DULY AFFORDED DUE PROCESS BEFORE
DISMISSAL[,]
and maintaining that she
IV
x x x IS ENTITLED TO HER FULL BACKWAGESFROM THE DATE HER COMPENSATION
WAS WITHHELD FROM HER ON APRIL 20, 1999 PURSUANT TO THE DECISION OF THE
NLRC REINSTATING HER TO HER PREVIOUS POSITIONWITH FULL BACKWAGES AND
SETTING ASIDE THE DECISION OF THE LABOR ARBITER REINSTATING HER TO A
POSITION NEXT LOWER IN RANK, UNTIL THE REVERSAL OF THE NLRC DECISION BY
THE HONORABLE COURT OF APPEALS.19 (Emphasis and underscoring
supplied)cralawlibrary
The petition is not meritorious.
Whether respondent did not suffer any damage resulting from the transactions entered into by
petitioner, particularly that with Josefina, is immaterial. As Lopez v. National Labor Relations
Commission instructs:
That the [employer] suffered no damage resulting from the acts of [the employee]
is inconsequential. In Glaxo Wellcome Philippines, Inc. v. Nagkakaisang Empleyado ng
Wellcome-DFA (NEW-DFA), we held that deliberate disregard or disobedience of company rules
could not be countenanced, and any justification that the disobedient employee might put forth
would be deemed inconsequential. The lack of resulting damage was unimportant, because "the
heart of the charge is the crooked and anarchic attitude of the employee towards his employer.
Damage aggravates the charge but its absence does not mitigate nor negate the employee's
liability." x x x20 (Italics in the original; underscoring supplied)
The transaction with Josefina aside, there was this case of misappropriation by petitioner of the
amounts given to her by Evelia representing payment for the lapsed plan of Corazon Lintag.
While a settlement of the case between the two may have eventually been forged, that did not
obliterate the misappropriation committed by petitioner against a client of respondent.
Additionally, there was still another complaint lodged before respondent by Gwendolyn against
petitioner for failure to remit the cash payments she had made to her, a complaint she was
apprised of but on which she was silent.
In fine, by petitioner's repeated violation of Section 8.4 of respondent's Code of Discipline, she
violated the trust and confidence of respondent and its customers. To allow her to continue with
her employment puts respondent under the risk of being embroiled in unnecessary lawsuits from
customers similarly situated as Josefina, et al. Clearly, respondent exercised its management
prerogative when it dismissed petitioner.
the essence of due process lies in an opportunity to be heard, and not always and indispensably
in an actual hearing.22
When respondent received the letter-complaint of Josefina, petitioner was directed to comment
and explain her side thereon. She did comply, by letter of February 22, 1999 wherein she
admitted that she "had defrauded Ms. J. Pernes, but [that she] didn't do it intentionally."
Respondent subsequently sent petitioner a show-cause memorandum giving her 48 hours from
receipt why she should not be disciplinarily sanctioned. Despite the 48-hour deadline, nothing
was heard from her until April 10, 1999 when she complied with the second show-cause
memorandum dated April 7, 1999.
On April 20, 1999, petitioner was informed of the termination of her services to which she filed a
motion for reconsideration.
There can thus be no doubt that petitioner was given ample opportunity to explain her side.
Parenthetically, when an employee admits the acts complained of, as in petitioner's case, no
formal hearing is even necessary.23

. . . [T]ime and again, this Court has upheld a company's management prerogatives so long as
Finally, petitioner argues that even if the order of reinstatement of the NLRC was reversed on
they are exercised in good faith for the advancement of the employer's interest and not for the
appeal, it is still obligatory on the part of an employer to reinstate and pay the wages of a
purpose of defeating or circumventing the rights of the employees under special laws or under
dismissed employee during the period of appeal, citing Roquero v. Philippine Airlines,24 the third
valid agreements.
paragraph of Article 22325 of the Labor Code, and the last paragraph of Section 16,26 Rule V of
the then 1990 New Rules of Procedure of the NLRC.
Deliberate disregard or disobedience of rules by the employees cannot be countenanced.
Whatever maybe the justification behind the violations is immaterial at this point, because the
Petitioner adds that respondent made "clever moves to frustrate [her] from enjoying the
fact still remains that an infraction of the company rules has been committed.
reinstatement aspect of the decision starting from that of the Labor Arbiter (although to a next
lower rank), [to that] of the NLRC to her previous position without loss of seniority rights until it
Under the Labor Code, the employer may terminate an employment on the ground was caught up by the decision of the Honorable Court of Appeals reversing the decision of the
of serious misconduct or willful disobedience by the employee of the lawful orders of his NLRC and declaring the dismissal of petitioner as based on valid grounds."
employer or representative in connection with his work. Infractions of company rules and
regulations have been declared to belong to this category and thus are valid causes for
Respondent, on the other hand, maintains that Roquero and the legal provisions cited by
termination of employment by the employer.
petitioner are not applicable as they speak of reinstatement on order of the Labor Arbiter and not
of the NLRC.
x x x
The Labor Arbiter ordered the reinstatement of petitioner to a lower position. The third paragraph
The employer cannot be compelled to continue the employment of a person who was found of Article 223 of the Labor Code is clear, however - the employee, who is ordered reinstated,
guilty of maliciously committing acts which are detrimental to his interests. It will be highly must be accepted back to work under the same terms and conditions prevailing prior to his
prejudicial to the interests of the employer to impose on him the charges that warranted his dismissal or separation.
dismissal from employment. Indeed, it will demoralize the rank and file if the undeserving, if not
undesirable, remain in the service. It may encourage him to do even worse and will render a
Petitioner's being demoted to a position one rank lower than her original position is certainly not
mockery of the rules of discipline that employees are required to observe. This Court was more
in accordance with the said third paragraph provision of Article 223. Besides, the provision
emphatic in holding that in protecting the rights of the laborer, it cannot authorize the oppression
contemplates a finding that the employee was illegally dismissed or there was no just cause for
or self-destruction of the employer.21 x x x (Underscoring supplied)cralawlibrary
her dismissal. As priorly stated, in petitioner's case, the Labor Arbiter found that there was just
cause for her dismissal, but that dismissal was too harsh, hence, his order for her reinstatement
Petitioner nevertheless argues that she was not afforded due process before her dismissal as to a lower position.
she was merely required to answer a show-cause memorandum dated April 7, 1999 and there
was no actual investigation conducted in which she could have been heard.
The order to reinstate is incompatible with a finding that the dismissal is for a valid cause. Thus
this Court declared in Colgate Palmolive Philippines, Inc. v. Ople:
Before terminating the services of an employee, the law requires two written notices: (1) one to
apprise him of the particular acts or omissions for which his dismissal is sought; and (2) the
The order of the respondent Minister to reinstate the employees despite a clear finding of guilt
other to inform him of his employer's decision to dismiss him. As to the requirement of a hearing,
on their part is not in conformity with law. Reinstatement is simply incompatible with a
finding of guilt. Where the totality of the evidence was sufficient to warrant the dismissal of the Resolving these issues, this Court held in Roquero:
employees the law warrants their dismissal without making any distinction between a first
offender and a habitual delinquent. Under the law, respondent Minister is duly mandated to
Article 223 (3rd paragraph) of the Labor Code as amended by Section 12 of Republic Act No.
equally protect and respect not only the labor or workers' side but also the management and/or
6715, and Section 2 of the NLRC Interim Rules on Appeals under RA No. 6715, Amending the
employers' side. The law, in protecting the rights of the laborer, authorizes neither oppression
Labor Code, provide that an order of reinstatement by the Labor Arbiter is immediately executory
nor self-destruction of the employer. x x x As stated by Us in the case of San Miguel Brewery v.
even pending appeal. The rationale of the law has been explained in Aris (Phil.) Inc. v. NLRC:
National Labor Union, "an employer cannot legally be compelled to continue with the
employment of a person who admittedly was guilty of misfeasance or malfeasance towards his
employer, and whose continuance in the service of the latter is patently inimical to his "In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor
interest."27 (Emphasis and underscoring supplied)cralawlibrary 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.x x x
The NLRC was thus correct when it ruled that it was erroneous for the Labor Arbiter to order the
reinstatement of petitioner, even to a position one rank lower than that which she formerly held.28
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
Now, on petitioner's argument that, following the third paragraph of Article 223 of the Labor
economic force, which the Constitution also expressly affirms with equal intensity. Labor is an
Code, the order of the NLRC to reinstate her and to pay her wages was immediately executory
indispensable partner for the nation's progress and stability.x x x
even while the case was on appeal before the higher courts: The third paragraph of Article 223
of the Labor Code directs that - "the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned, shall immediately be The order of reinstatement is immediately executory. The unjustified refusal of the employer to
executory, even pending appeal." 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
In Roquero, the Labor Arbiter upheld the dismissal of Roquero,along with another employee,
reinstatement. In the case at bar, no restraining order was granted. Thus, it was mandatory on
albeit he found both the two and employer Philippine Airlines (PAL) at fault. The Labor Arbiter
PAL to actually reinstate Roquero or reinstate him in the payroll. Having failed to do so, PAL
thus ordered the payment of separation pay and attorney's fees to the complainant. No order for
must pay Roquero the salary he is entitled to, as if he was reinstated, from the time of the
reinstatement was issued by the Labor Arbiter, precisely because the dismissal was upheld.
decision of the NLRC until the finality of the decision of this Court.

On appeal, the NLRC ruled in favor of Roquero and his co-complainant as it also found PAL
guilty of instigation. The NLRC thus ordered the reinstatement of Roquero and his co-
complainant to their former positions, but without backwages.
PAL appealed the NLRC decision via Petition for Review before this Court. Roquero and his co-
complainant did not. They instead filed before the Labor Arbiter a Motion for Execution of the
NLRC order for their reinstatement which the Labor Arbiter granted.
Acting on PAL's Petition for Review, this Court referred it to the Court of Appeals pursuant to St.
Martin Funeral Home v. NLRC.29
The appellate court reversed the NLRC decision and ordered the reinstatement of the decision
of the Labor Arbiter but only insofar as it upheld the dismissal of Roquero.
Back to this Court on Roquero's Petition for Review, the following material issues were raised:
x x x
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?cralaw library
We reiterate the rule that technicalities have no room in labor cases where the Rules of Court
are applied only in a suppletory manner and only to effectuate the objectives of the Labor Code
and not to defeat them. Hence, even if the order of reinstatement of the Labor Arbiter is reversed
on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the
dismissed employee during the period of appeal until reversal by the higher court. On the other
hand, if the employee has been reinstated during the appeal period and such reinstatement
order is reversed with finality, the employee is not required to reimburse whatever salary he
received for he is entitled to such, more so if he actually rendered services during the
period.31 (Italics in the original, emphasis and underscoring supplied)
In the present case, since the NLRC found petitioner's dismissal illegal and ordered her
reinstatement, following the provision of the sixth paragraph of Article 223, viz:
The [National Labor Relations] Commission shall decide all cases within twenty (20) calendar
days from receipt of the answer of the appellee. The decision of the Commission shall be final
and executory after ten (10) calendar days from receipt thereof by the parties. (Emphasis and
underscoring supplied),
the NLRC decision became "final and executory after ten calendar days from receipt of the
decision by the parties" for reinstatement.
In view, however, of Article 224 of the Labor Code which provides:

3. Would the employer who refused to reinstate an employee despite a writ duly issued be held
ART. 224. Execution of decisions, orders or awards. - (a) The Secretary of Labor and
liable to pay the salary of the subject employee from the time that he was ordered reinstated up
Employment or any Regional Director, the Commission or any Labor Arbiter, or med-arbiter or
to the time that the reversed decision was handed down?30
voluntary arbitrator may, motu proprio or on motion of any interested party, issue a writ of
execution on a judgment within five (5) years from the date it becomes final and executory,
requiring a sheriff or a duly deputized officer to execute or enforce final decisions, orders or
awards of the Secretary of Labor and Employment or regional director, the Commission, the
Labor Arbiter or med-arbiter, or voluntary arbitrators. In any case, it shall be the duty of the
responsible officer to separately furnish immediately the counsels of record and the parties with
copies of said decisions, orders or awards. Failure to comply with the duty prescribed herein
shall subject such responsible officer to appropriate administrative sanctions.
x x x x (Emphasis and underscoring supplied),
there was still a need for the issuance of a writ of execution of the NLRC decision.
Unlike then the order for reinstatement of a Labor Arbiter which is self-executory, that of the
NLRC is not. There is still a need for the issuance of a writ of execution. Thus this Court held
in Pioneer Texturizing Corp. v. NLRC:32
x x x The provision of Article 223 is clear that an award [by the Labor Arbiter] for
reinstatement shall be immediately executory even pending appeal and the posting of a bond by
the employer shall not stay the execution for reinstatement. The legislative intent is quite
obvious, i.e., to make an award of reinstatement immediately enforceable, even pending appeal.
To require the application for and issuance of a writ of execution as prerequisites for the
execution of a reinstatement award would certainly betray and run counter to the very object and
intent of Article 223, i.e., the immediate execution of a reinstatement order. The reason is
simple. An application for a writ of execution and its issuance could be delayed for numerous
reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an
inaction on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ
thereby setting at naught the strict mandate and noble purpose envisioned by Article 223. In
other words, if the requirements of Article 224 [including the issuance of a writ of execution] were
to govern, as we so declared in Maranaw, then the executory nature of a reinstatement order or
award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual. In
enacting the law, the legislature is presumed to have ordained a valid and sensible law, one
which operates no further than may be necessary to achieve its specific purpose. Statutes, as a
rule, are to be construed in the light of the purpose to be achieved and the evil sought to be
remedied. x x x In introducing a new rule on the reinstatement aspect of a labor decision under
Republic Act No. 6715, Congress should not be considered to be indulging in mere semantic
exercise. On appeal, however, the appellate tribunal concerned may enjoin or suspend the
reinstatement order in the exercise of its sound discretion.33 (Italics in the original, emphasis and
underscoring supplied)
If a Labor Arbiter does not issue a writ of execution of the NLRC order for the reinstatement of
an employee even if there is no restraining order, he could probably be merely observing judicial
courtesy, which is advisable "if there is a strong probability that the issues before the higher
court would be rendered moot and moribund as a result of the continuation of the proceedings in
the lower court."34 In such a case, it is as if a temporary restraining order was issued, the effect
of which Zamboanga City Water District v. Buhat explains:
The issuance of the temporary restraining order - did not nullify the rights of private respondents
to their reinstatement and to collect their wages during the period of the effectivity of the order
but merely suspended the implementation thereof pending the determination of the validity of the
NLRC resolutions subject of the petition. Naturally, a finding of this Court that private
respondents were not entitled to reinstatement would mean that they had no right to collect any
back wages. On the other hand, where the Court affirmed the decision of the NLRC and
recognized the right of private respondents to reinstatement,' private respondents are entitled to
the wages accruing during the effectivity of the temporary restraining order.35 (Emphasis
and underscoring supplied)cralawlibrary
While Zamboanga was decided prior to St. Martin Funeraland, therefore, the NLRC decisions
were at the time passed upon by this Court to the exclusion of the appellate court, it is still
applicable.
Since this Court is now affirming the challenged decision of the Court of Appeals finding that
petitioner was validly dismissed and accordingly reversing the NLRC Decision that petitioner
was illegally dismissed and should be reinstated, petitioner is not entitled to collect any
backwages from the time the NLRC decision became final and executory up to the time the
Court of Appeals reversed said decision.
It does not appear that a writ of execution was issued for the implementation of the NLRC order
for reinstatement. Had one been issued, respondent would have been obliged to reinstate
petitioner and pay her salary until the said order of the NLRC for her reinstatement was reversed
by the Court of Appeals, and following Roquero, petitioner would not have been obliged to
reimburse respondent for whatever salary she received in the interim.
In sum, while under the sixth paragraph of Article 223 of the Labor Code, the decision of the
NLRC becomes final and executory after the lapse of ten calendar days from receipt thereof by
the parties, the adverse party is not precluded from assailing it via Petition for Certiorari under
Rule 65 before the Court of Appeals and then to this Court via a Petition for Review under Rule
45. If during the pendency of the review no order is issued by the courts enjoining the execution
of a decision of the Labor Arbiter or NLRC which is favorable to an employee, the Labor Arbiter
or the NLRC must exercise extreme prudence and observe judicial courtesy when the
circumstances so warrant if we are to heed the injunction of the Court in Philippine Geothermal,
Inc v. NLRC:
While it is true that compassion and human consideration should guide the disposition of cases
involving termination of employment since it affects one's source or means of livelihood, it
should not be overlooked that the benefits accorded to labor do not include compelling an
employer to retain the services of an employee who has been shown to be a gross liability to the
employer. The law in protecting the rights of the employees authorizes neither oppression nor
self-destruction of the employer. It should be made clear that when the law tilts the scale of
justice in favor of labor, it is but a recognition of the inherent economic inequality between labor
and management. The intent is to balance the scale of justice; to put the two parties on relatively
equal positions. There may be cases where the circumstances warrant favoring labor over the
interests of management but never should the scale be so tilted if the result is an injustice to the
employer. Justitia nemini neganda est (Justice is to be denied to none).36 (Italics in the original;
emphasis and underscoring supplied)
WHEREFORE, the petition is DENIED. The assailed Court of Appeals Decision dated May 16,
2003 and Resolution dated November 17, 2003 are AFFIRMED.
SO ORDERED.
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.
D E C I S I O NVELASCO, 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:xxx
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 Complaint 14 against Citibank
docketed as NLRC Case No. 00-10-06450-93 for illegal suspension and illegal dismissal with
damages and prayer for temporary restraining order and/or writ of preliminary injunction. The
Labor Arbiter rendered a Decision15 on May 2, 1994, the dispositive portion of which reads:
WHEREFORE, finding the dismissal of the complainant Marilou S. Genuino to be
without just cause and in violation of her right to due process, respondent CITIBANK,
N.A., and any and all persons acting on its behalf or by or under their authority are
hereby ordered to reinstate complainant immediately to her former position as
Treasury Sales Division Head or its equivalent without loss of seniority rights and
other benefits, with backwages from August 23, 1993 up to April 30, 1994 in the
amount of P493,800.00 (P60,000 x 8.23 mos.) subject to adjustment until reinstated
actually or in the payroll.
Respondents are likewise ordered to pay complainant the amount of 1.5 Million Pesos
and P500,000.00 by way of moral and exemplary damages plus 10% of the total
monetary award as attorney's fees.16
Both parties appealed to the NLRC. The NLRC, in its September 3, 1994 Decision in NLRC-
NCR Case No. 00-10-06450-93 (CA No. 006947-94), reversed the Labor Arbiter's decision with
the following modification:
WHEREFORE, Judgment is hereby rendered (1) SETTING ASIDE the appealed
decision of the Labor Arbiter; (2) DECLARING the dismissal of the complainant valid
and legal on the ground of serious misconduct and breach of trust and confidence and
consequently DISMISSING the complaint a quo; but (3) ORDERING the respondent
bank to pay the salaries due to the complainant from the date it reinstated complainant
in the payroll (computed at P60,000.00 a month, as found by the Labor Arbiter) up to
and until the date of this decision.
SO ORDERED.17
The parties' motions for reconsideration were denied by the NLRC in a resolution dated October
28, 1994.18
The Ruling of the Court of Appeals
On December 6, 1994, Genuino filed a petition for certiorari docketed as G.R. No. 118023 with
this Court. Citibank's petition for certiorari, on the other hand, was docketed as G.R. No. 118667.
In the January 27, 1999 Resolution, we referred these petitions to the CA pursuant to our ruling
in St. Martin Funeral Home v. NLRC.19
Genuino's petition before the CA was docketed as CA-G.R. SP No. 51532 while Citibank's
petition was docketed as CA-G.R. SP No. 51533. Genuino prayed for the reversal of the NLRC's
decision insofar as it declared her dismissal valid and legal. Meanwhile, Citibank questioned the
NLRC's order to pay Genuino's salaries from the date of reinstatement until the date of the
NLRC's decision.
The CA promulgated its decision on September 30, 1999, denying due course to and dismissing
both petitions.20Both parties filed motions for reconsideration and on March 31, 2000, the
appellate court modified its decision and held:
WHEREFORE, save for the MODIFICATION ordering Citibank, N.A. to pay Ms.
Marilou S. Genuino five thousand pesos (P5,000.00) as indemnity for non-observance
of due process in CA-G.R. SP No. 51532, this Court's 30 September 1999 decision
is REITERATED and AFFIRMED in all other respects.
SO ORDERED.21
Hence, we have this petition.
The Issue
WHETHER OR NOT THE DISMISSAL OF GENUINO IS FOR A JUST CAUSE AND IN
ACCORDANCE WITH DUE PROCESS
In G.R. Nos. 142732-33, Genuino contends that Citibank failed to observe procedural due
process in terminating her employment. This failure is allegedly an indication that there were no
valid grounds in dismissing her. In G.R. Nos. 142753-54, Citibank questions the ruling that
Genuino has a right to reinstatement under Article 223 of the Labor Code. Citibank contends that
the Labor Arbiter's finding is not supported by evidence; thus, the decision is void. Since a void
decision cannot give rise to any rights, Citibank opines that there can be no right to payroll
reinstatement.
The dismissal was for just cause but lacked due process
We affirm that Genuino was dismissed for just cause but without the observance of due process.
In a string of cases, 22 we have repeatedly said that the requirement of twin notices must be met.
In the recent case of King of Kings Transport, Inc. v. Mamac, we explained:
To clarify, the following should be considered in terminating the services of
employees:
(1) The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees
are given the opportunity to submit their written explanation within a reasonable
period. "Reasonable opportunity" under the Omnibus Rules means every kind of
assistance that management must accord to the employees to enable them to prepare
adequately for their defense. This should be construed as a period of at least five (5)
calendar days from receipt of the notice to give the employees an opportunity to study
the accusation against them, consult a union official or lawyer, gather data and
evidence, and decide on the defenses they will raise against the complaint. Moreover,
in order to enable the employees to intelligently prepare their explanation and
defenses, the notice should contain a detailed narration of the facts and
circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention
which company rules, if any, are violated and/or which among the grounds under Art.
282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct
a hearing or conferencewherein the employees will be given the opportunity to: (1)
explain and clarify their defenses to the charge against them; (2) present evidence in
support of their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the chance
to defend themselves personally, with the assistance of a representative or counsel of
 their choice. Moreover, this conference or hearing could be used by the parties as an
opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall
serve the employees a written notice of termination indicating that: (1) all
circumstances involving the charge against the employees have been considered; and
(2) grounds have been established to justify the severance of their employment. 23
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

The Labor Arbiter found that Citibank failed to adequately notify Genuino of the charges against
We note also that during the proceedings before the Labor Arbiter, Citibank presented the
her. On the contrary, the NLRC held that "the function of a 'notice to explain' is only to state the
following affidavits, with supporting documentary evidence against Genuino:
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
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
We agree with the CA that the dismissal was valid and legal, and with its modification of the
the transfer of monies as supported by the following documents:
NLRC ruling that PhP 5,000 is due Genuino for failure of Citibank to observe due process.

1) [S]ome of the Term Investment Applications (TIA), Applications for Money Transfer,
The Implementing Rules and Regulations of the Labor Code provide that any employer seeking
all filled up in the handwriting of Ms. Marilou Genuino. These documents cover/show
to dismiss a worker shall furnish the latter a written notice stating the particular acts or omissions
the transfer of the monies of the Citibank clients from their money
constituting the grounds for dismissal.25 The purpose of this notice is to sufficiently apprise the
placements/deposits with Citibank, N.A. to Global and/or Torrance.
employee of the acts complained of and enable him/her to prepare his/her defense.

2) [S]ome of the checks that were drawn by Global and Torrance against their Citibank
In this case, the letters dated August 23, September 13 and 20, 1993 sent by Citibank did not
accounts in favor of the other companies by which Global and Torrance transferred
identify the particular acts or omissions allegedly committed by Genuino. The August 23, 1993
the monies of the bank clients to the other companies.
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 3) [S]ome of the checks drawn by the other companies in favor of Global or Torrance
Global Pacific and/or Citibank and 12 bank clients. Lastly, the September 20, 1993 letter stated by which the other companies remitted back to Global and/or Torrance the monies of
that Genuino and "Mr. Dante Santos, using the facilities of their family corporations (Torrance the bank clients concerned.
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
4) [S]ome of the checks drawn by Global and Torrance against their Citibank accounts
violation of the conflict of law rule [sic]." The extent of Genuino's alleged knowledge and
in favor of Mr. Dante Santos and Ms. Marilou Genuino, covering the shares of the
participation in the diversion of bank's clients' funds, manner of diversion, and amounts involved;
latter in the spreads or margins Global and Torrance had derived from the investments
the acts attributed to Genuino that conflicted with the bank's interests; and the circumstances
of the monies of the Citibank clients in the other companies.
surrounding the alleged irregular transactions, were not specified in the notices/letters.

5) [S]ome of the checks drawn by Torrance and Global in favor of Citibank clients by
While the bank gave Genuino an opportunity to deny the truth of the allegations in writing and
which Global and Torrance remitted back to said bank clients their principal
participate in the administrative investigation, the fact remains that the charges were too general
investments (or portions thereof) and the rates of interests realized from their
to enable Genuino to intelligently and adequately prepare her defense.
investment placed with the other companies less the spreads made by Global and/or
Torrance, Mr. Dante L. Santos and Ms. Marilou Genuino.29
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
In Lim's Reply-Affidavit with attached supporting documents, he stated that out of the competing
set out clearly what the employee is being held liable for. The employee should be afforded
money placement activities, Genuino and Santos derived financial gains amounting to PhP
ample opportunity to be heard and not mere opportunity. As explained in King of Kings
2,027,098.08 and PhP 2,134,863.80, respectively.30
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 2) Marilyn Bautista, a Treasury Sales Specialist in the Treasury Department of the Global
Genuino is inadequate, the dismissal could not be in accordance with due process. Consumer Bank of Citibank and whose superiors were Genuino and Santos, stated that:

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
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.
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 Court16 made this
brief comment:
The decision of the Labor Arbiter in this case was rendered on December 18, 1988, or
three (3) months before Article 223 of the Labor Code was amended by Republic Act
6715 (which became law on March 21, 1989), providing that a decision of the Labor
Arbiter ordering the reinstatement of a dismissed or separated employee shall be
immediately executory insofar as the reinstatement aspect is concerned, and the
posting of an appeal bond by the employer shall not stay such execution. Since this
new law contains no provision giving it retroactive effect (Art. 4, Civil Code), the
amendment may not be applied to this case.
which the Court adopted and applied in Callanta v. NLRC.17 In Zamboanga City Water District
v. Buat,18 the Court construed Article 223 to mean exactly what it says. We said:
 Under the said provision of law, the decision of the Labor Arbiter reinstating a
dismissed or separated employee insofar as the reinstatement aspect is concerned,
shall be immediately executory, even pending appeal. The employer shall reinstate
the employee concerned either by: (a) actually admitting him back to work under the
same terms and conditions prevailing prior to his dismissal or separation; or (b) at the
option of the employer, merely reinstating him in the payroll. Immediate reinstatement
is mandated and is not stayed by the fact that the employer has appealed, or has
posted a cash or surety bond pending appeal.19
We expressed a similar view a year earlier in Medina v. Consolidated Broadcasting System
(CBS) — DZWX20 and laid down the rule that an employer who fails to comply with an order of
reinstatement makes him liable for the employee's salaries. Thus:
Petitioners construe the above paragraph to mean that the refusal of the employer to
reinstate an employee as directed in an executory order of reinstatement would make
it liable to pay the latter's salaries. This interpretation is correct. Under Article 223 of
the Labor Code, as amended, an employer has two options in order for him to comply
with an order of reinstatement, which is immediately executory, even pending appeal.
Firstly, he can admit the dismissed employee back to work under the same terms and
conditions prevailing prior to his dismissal or separation or to a substantially equivalent
position if the former position is already filled up as we have ruled in Union of
Supervisors (RB) NATU vs. Sec. of Labor, 128 SCRA 442 [1984]; and Pedroso
vs. Castro, 141 SCRA 252 [1986]. Secondly, he can reinstate the employee merely in
the payroll. Failing to exercise any of the above options, the employer can be
compelled under pain of contempt, to pay instead the salary of the employee. This
interpretation is more in consonance with the constitutional protection to labor (Section
3, Art. XIII, 1987 Constitution). The right of a person to his labor is deemed to be
property within the meaning of the constitutional guaranty that no one shall be
deprived of life, liberty, and property without due process of law. Therefore, he should
be protected against any arbitrary and unjust deprivation of his job (Bondoc vs.
People's Bank and Trust Co., Inc., 103 SCRA 599 [1981]). The employee should not
be left without any remedy in case the employer unreasonably delays reinstatement.
Therefore, we hold that the unjustified refusal of the employer to reinstate an illegally
dismissed employee entitles the employee to payment of his salaries . . . . 21
The Court, however, deviated from this construction in the case of Maranaw. Reinterpreting the
import of Article 223 in Maranaw, the Court22 declared that the reinstatement aspect of the Labor
Arbiter's decision needs a writ of execution as it is not self-executory, a declaration the Court
recently reiterated and adopted in Archilles Manufacturing Corp. v. NLRC.23
We note that prior to the enactment of R.A. No. 6715, Article 22324 of the Labor Code contains
no provision dealing with the reinstatement of an illegally dismissed employee. The amendment
introduced by R.A. No. 6715 is an innovation and a far departure from the old law indicating
thereby the legislature's unequivocal intent to insert a new rule that will govern the reinstatement
aspect of a decision or resolution in any given labor dispute. In fact, the law as now worded
employs the phrase "shall immediately be executory" without qualification emphasizing the need
for prompt compliance. As a rule, "shall" in a statute commonly denotes an imperative obligation
and is inconsistent with the idea of discretion25 and that the presumption is that the word "shall",
when used in a statute, is mandatory.26An 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 legisderived 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 proprioor 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.
A.M. No. RTJ-97-1382 July 17, 1997
(Formerly OCA I.P.I. No. 95-22-RTJ)
ATTY. REXEL M. PACURIBOT, complainant,
vs.
JUDGE RODRIGO F. LIM, JR., respondent.R E S O L U T I O N
FRANCISCO, J.:
This is an administrative complaint against Judge Rodrigo F. Lim, Jr., of Branch 21, Regional
Trial Court of Misamis Oriental, Cagayan de Oro City, for gross ignorance of the law, misconduct
and oppression filed by Atty. Rexel M. Pacuribot, counsel for the District Office of the Public
Attorney's Office in Cagayan de Oro City and officially assigned to Branches 17 and 21 of the
RTC of Misamis Oriental, Cagayan de Oro City.
The complaint stemmed from the Orders issued by respondent judge, dated November 23,
1994, citing complainant in contempt of court and ordering him to pay a fine of P200.00 for
failure to appear as counsel de oficio for the accused in Criminal Case No. 94-822 at the
scheduled arraignment on said date, and subsequently on December 1, 1994, reiterating that
complainant pay the fine imposed on him in the previous order within one day from receipt
thereof or face graver sanctions. Complainant refused to comply with the aforesaid orders and
instead filed a Manifestation alleging that he is not privy to the aforesaid criminal case as he is
not the counsel of any of the accused and assailed the order for being illegal, arbitrary, despotic
and not in accordance with Rule 71 of the Rules of Court. Thereafter, complainant proceeded to
file the instant administrative complaint arguing that respondent judge acted arbitrarily in citing
him for contempt for the following reasons: 1) the order was issued without affording him due
process because he was not given an opportunity to show cause why he should not be cited for
contempt; 2) he was not privy to the case as he was not the counsel of any of the accused, and
3) none of the grounds provided in Rule 71 for direct and indirect contempt are present.
In answer to the complaint, respondent judge filed his Comment and countered that complainant
misled the trial court into believing that he was the counsel for the accused. According to
respondent, complainant himself admitted that he is officially assigned to Branch 21 of the RTC
of Cagayan de Oro City, respondent judge's sala. The accused in Criminal Case No. 94-822
being detention prisoners, the Notice of Hearing was, as a matter of procedure, sent to the
public prosecutor assigned to Branch 21, one of them being herein complainant. Upon receipt of
the Notice of Hearing on November 10, 1994, complainant even wrote a request on the return of
the notice that the case be called at 10 A.M. because he has other cases already scheduled. 1 At
the scheduled hearing however, complainant failed to appear at all despite accommodating his
request. Respondent judge therefore considered this as an affront to the court's dignity as it
made a mockery of the proceedings and thus led him to issue the order of November 23, 1994,
citing complainant in contempt of court outright and ordering him to pay a fine of P200.00 for
failing to appear at the scheduled hearing. Nevertheless, respondent judge contends that even
assuming that he committed an error in issuing the aforesaid order, the same was not enforced
despite the absence of any motion for reconsideration on complainant's part because the
court, motu propio, desisted from imposing the sanctions contained therein. Moreover,
respondent judge maintains that he could not be entirely faulted for issuing the assailed order of
November 23, 1994 because he was misled into believing that complainant was indeed the
counsel for the accused in Criminal Case No. 94-822 as borne by the notations of complainant
on the return of the notice of hearing, coupled with the latter's failure to inform the court that he
is not privy to the case despite receiving the notice of hearing as early as November 10, 1994.
Thus, according to respondent judge, this suit may actually be categorized as "damnum absque
injuria". Finally, respondent judge alleged that the filing of this complaint was intended purely
and plainly for purposes of harassment and resentment on the part of complainant owing to the
fact that on previous occasions the latter has been rebuffed by the court in several cases
pending before it where he appeared as counsel. Hence, respondent judge prays for the
dismissal of this complaint.
It is well-settled that the power to punish for contempt is inherent in all courts so as to preserve
order in judicial proceedings and to uphold the due administration of justice. 2 Judges, however,
should exercise their contempt powers judiciously and sparingly, with utmost restraint, and with
the end in view of utilizing their contempt powers for correction and preservation, not for
retaliation or vindication.3
Failure to attend a scheduled hearing without a valid cause can be a ground for indirect
contempt under Section 3 of Rule 71. However, the following requisites must be present: 1) a
complaint in writing which may either be a motion for contempt filed by a party or an order issued
by the court requiring a person to appear and explain his conduct, and 2) an opportunity for the
person charged to appear and explain his conduct.4
In the instant suit, the assailed order of respondent judge dated November 23, 1994 citing
complainant in contempt of court was issued outright without affording the complainant any
opportunity to appear and explain his conduct. This was clearly an error on respondent's part.
Respondent's claim that the court, motu propio, desisted from enforcing the sanctions contained
in the order dated November 23, 1994 despite the absence of a motion for reconsideration is
unavailing considering that another order was in fact immediately issued by the respondent
judge on December 1, 1994, reiterating compliance with the previous order within one day from
receipt or face stiffer sanctions.5
Nonetheless, the Court agrees with respondent that complainant is not entirely blameless
because he misled respondent judge into believing that he was the counsel de oficio for the
accused in Criminal Case No. 94-822. Complainant's denial of being privy to the case is belied
by the return of the notice of hearing which contained his signature and written notations
requesting that the case be called at 10 A.M. because he had other cases already scheduled for
that day. Complainant failed to deny or refute this in his Reply to respondent's Comment,
perforce, he must be bound by the same.
From the foregoing, it is evident that both the complainant and respondent were guilty of
negligence in the performance of their duties as officers of the court and their actuations must
therefore be censured.
ACCORDINGLY, both parties are hereby REPRIMANDED and ordered to pay a fine of One
thousand Pesos (P1,000.00) each, with a stern warning that a repetition of the same acts will be
severely dealt with in the future.
SO ORDERED.
G.R. No. 123375 February 28, 2005
GENARO BAUTISTA, petitioner,
vs.
HON. COURT OF APPEALS and THE OFFICIALS AND BOARD OF DIRECTORS OF
KAISAHAN AT KAPATIRAN NG MGA MANGGAGAWA AT KAWANI SA METROPOLITAN
WATERWORKS AND SEWERAGE SYSTEM UNION, REPRESENTED BY ITS PRESIDENT,
PRUDENCIO CRUZ, respondents.
DECISION
CHICO-NAZARIO, J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, assailing the Decision1 and Resolution2 of the Court of Appeals, dated 09 October
1995 and 08 January 1996, respectively. The court a quo, in said Decision, held that the
jurisdiction to determine the proper representative of employees in the Metropolitan Waterworks
and Sewerage System pertains to the Department of Labor and Employment, more particularly
to the Bureau of Labor Relations.
The Facts
On 07 May 1993, after a petition for election of officers of Kaisahan at Kapatiran ng mga
Manggagawa at Kawani sa Metropolitan Waterworks and Sewerage System (KKMK-MWSS)
was filed by Bonifacio De Guzman, former auditor of KKMK-MWSS, a Resolution was issued by
Perlita Bathan-Velasco, in her capacity as Director of the Bureau of Labor Relations (BLR), the
decretal portion of which states:
Wherefore, the instant petition is hereby granted and the Kaisahan at Kapatiran ng mga
Manggagawa at Kawani sa Metropolitan Waterworks and Sewerage System (KKMK-MWSS) is
hereby directed to immediately conduct an election of the following union officers: 1. President,
2. 1st Vice President, 3. 2nd Vice President, 4. Executive Secretary, 5. Assistant Executive
Secretary, 6. Treasurer, 7. Assistant Treasurer, 8. Auditor, 9. Assistant Auditor, 10. Public
Relations Officer, 11. Twenty Three (23) Directors, 12. Four Sergeants at Arms, and 13.
Business Manager, after the usual pre-election conferences.
The Labor Organizations Division, this Bureau, shall supervise the conduct of said election. 3
A Motion for Reconsideration was filed by the incumbent officers of KKMK-MWSS, led by its
President, Genaro Bautista, with the BLR, but was denied by Perlita Bathan-Velasco on 08 July
1993.1awphi1.nét
An appeal was filed with the Office of the Secretary of Labor and Employment where the order of
the BLR was assailed as having been issued with grave abuse of discretion and without
jurisdiction.4
On 24 August 1993, an Order was issued by the Office of the Secretary of Labor and
Employment, through Undersecretary Bienvenido Laguesma, part of which reads:
Records clearly show that the subject of the present controversy is an intra union conflict
involving an employee’s organization in the public sector created and registered pursuant to
Executive Order No. 180. Consequently, this office (referring to the Secretary of Labor and
Employment) has no other recourse but to dismiss the appeal for lack of jurisdiction.
...
Wherefore, the instant appeal is hereby dismissed for lack of jurisdiction. Accordingly, let the
entire records of this case be returned to the Bureau of Labor Relations, for appropriate action. 5
The then incumbent officers of KKMK-MWSS, represented by its President, Genaro C. Bautista,
filed a special civil action for certiorari which was, however, dismissed.l^vvphi1.net The Court, on
20 September 1993, issued the following Resolution:
G.R. No. 111635 (Incumbent Officers of KKMK-MWSS represented by its President Genaro C.
Bautista v. Hon. Bienvenido E. Laguesma, in his capacity as Undersecretary of Labor and
Employment, Hon. Perlita Bathan-Velasco, in her capacity as Officer-In-Charge of the Bureau of
Labor Relations, Bonifacio De Guzman and 544 other members of KKMK-MWSS). – Acting on
the special civil action for certiorari, with prayer for the issuance of a temporary restraining order,
the Court Resolved to DISMISS the petition for being insufficient in form and substance, and for
want of a genuine justiciable issue.
Petitioners claim to be incumbent officers of the Kaisahan at Kapatiran ng mga Manggagawa sa
Metropolitan Waterworks and Sewerage System (KKMK-MWSS). However, they are not
individually named in the petition.
In the main, the petition argues that public respondents have no jurisdiction over an intra-union
dispute among government employees, hence, cannot order a new election of officers. A cursory
reading of the Order of 24 August 1993 issued by respondent Undersecretary reveals that he
agrees with this view. Thus –
Records clearly show that the subject of the present controversy is an intra-union conflict
involving an employees organization in the public sector created and registered pursuant to
Executive Order No. 180. Consequently, this Office (referring to the Secretary of Labor and
Employment) has no other recourse but to dismiss the appeal for lack of jurisdiction.
There is no valid issue therefore to be resolved in the instant petition.6
This Resolution of the Court became final and executory on 27 October 1994 and was recorded
in the Book of Entries of Judgments.7
Earlier, or on 25 November 1993, a Petition for Prohibition with Prayer for a Temporary
Restraining Order/Injunction8was filed by Genaro Bautista, et al., against Perlita Bathan-
Velasco, Director, Eugenia Fernandez, Med-Arbiter, and Johnny P. Garcia, Chief, Labor
Organizations Division, all of the BLR, before the Regional Trial Court (RTC), Quezon City,
Branch 87. The petition sought to enjoin the herein respondents from proceeding with the
election of officers of KKMK-MWSS scheduled on 02 December 1993, and to permanently
prohibit them from exercising jurisdiction over the conduct of election of the officers of the
KKMK-MWSS.1a\^/phi1.net
On 26 November 1993, the RTC, Quezon City, Branch 87, through Judge Elsie Ligot Telan,
issued a temporary restraining order, quoted as follows:
A verified petition for prohibition with prayer for a temporary restraining order/injunction has been
filed by the plaintiffs. The petition being sufficient in form and substance, and so as not to render
the issues raised moot and academic, the defendants are hereby ordered to temporarily refrain
from proceeding with the election of officers of the KKMK-MWSS scheduled on December 2,
1993, until further orders from the Court.
Let the prayer for issuance of injunction be set for hearing on December 7, 1993 at 8:30 a.m., at
which date and time, defendants may show cause why the same should not be granted.
Let summons together with copies of the complaint be served upon the defendants. 9
Copies of this Order were served upon the defendants therein on 29 November 1993.10
On 02 December 1993, the election of the officers of KKMK-MWSS pushed through despite the
issuance of the temporary restraining order. Another Order was issued by Branch 87 on the
same date, hereunder quoted:
Counsel for petitioners appeared today with an urgent ex-parte manifestation stating that despite
the order of this Court, dated November 26, 1993, restraining the defendants temporarily from
proceeding with the election of officers of the KKMK-MWSS – scheduled for today, until further
orders, and that the officials of the MWSS had been served copy of this order, the election is
now being held in utter defiance and disobedience of the said order of this Court.
To substantiate the above manifestation report are affidavits attached thereto executed by
Angelito Ignacio, alleged incumbent Asst. Treasurer of the KKMK-MWSS and Mario Perez,
incumbent assistant auditor, respectively, swearing to the truth that the prohibited elections are
now being held at the compounds of the MWSS, Balara, Quezon City, and at Arroceros, Manila.
The defendants in this case together with Teofilo Asuncion and Gregorio Garcia, who were
furnished copy of the order and such other persons who are involved in conducting [of] the
election and/or sanctioning the same are hereby given up to 4:30 o’clock this afternoon to
explain why they should not be punished for contempt in defying the order of this Court dated
November 26, 1993.1awphi1.nét
The Court hereby reiterates its order restraining the defendants, their agents, assigns and
representatives, and any or all persons having to do with such elections, specifically the
management of the MWSS and all others acting in cooperation with them or acting on their
behalf or direction, from conducting or continuing or tolerating the elections scheduled today. 11
On 07 December 1993, another Order was issued by the RTC, Quezon City, Branch 87, part of
which reads:
. . . [T]he defendants, as well as all their agents, assigns, representatives and any or all persons
having to do with the elections, scheduled on December 2, 1993, including the BLR officials and
the management of the Metropolitan Waterworks and Sewerage System, and all others This Court hereby resolves the following:
cooperating with them, or acting on their behalf and direction, are hereby restrained from
continuing or tolerating the election process in question at any stage thereof, and if already
(1) to DENY the motion for the issuance of temporary restraining order of the
accomplished in defiance of the orders of this Court, the said defendants are ordered to refrain
petitioners, considering that the instant case has already been decided on October 9,
from giving effect to the election by ratifying and registering the same and recognizing the
1995;
persons supposedly elected. Further, the persons allegedly elected in said elections are hereby
ordered to refrain from assuming office and acting as officers of the KKMK-MWSS.12
(2) to DENY the motion for reconsideration of the respondents, it appearing that there
are no new issues raised which would warrant the reversal or modification of Our
On 28 December 1993, an order for the issuance of a writ of preliminary injunction was issued
decision.25
by Branch 87.13 A day later, or on 29 December 1993, a Writ of Preliminary Injunction was
issued by the RTC, the pertinent portion of which reads:
On 13 February 1996, a petition for review on certiorari was filed before this Court by Genaro
Bautista26 seeking the reversal and setting aside of the Decision and Resolution of the Court of
NOW THEREFORE, you the respondents, your agents and representatives, particularly the
Appeals cited earlier.
officers concerned ordering them until further orders of this Court to refrain from giving any effect
to the elections above adverted to by ratifying and registering the same, and recognizing as
officers the persons supposedly elected; and for the latter to refrain from assuming office and Meanwhile, on 28 May 1996, a petition for mandamus was filed by Genaro Bautista, as
acting as officers of the KKMK-MWSS.14 President, and by the other officers27 and members of the board28 of KKMK-MWSS against Angel
L. Lazaro III, Administrator, MWSS, and the Board of Trustees of MWSS, before the RTC,
Quezon City, raffled again to Branch 220, docketed as Sp. Proc. No. Q-96-27586.29 In this
After the case was re-raffled to Branch 220, RTC, Quezon City,15 presided by Judge Prudencio
petition, it was prayed, among other things, that Angel Lazaro III and the Board of Trustees of
Altre Castillo, Jr., the respondents, on 20 June 1994, filed a Reiteration of Motion to Dismiss and
MWSS give due recognition to Genaro Bautista, et al., as officers of KKMK-MWSS, and that the
Motion to Lift Writ of Preliminary Injunction,16 on the ground of lack of jurisdiction and that the
union dues be released to the latter.
injunction does not anymore serve its purpose.17Branch 220 issued an Order dated 01 July
1994, dismissing the case, the decretal portion of which states:
On 27 June 1996, an Urgent Motion for Issuance of Temporary Restraining Order30 was filed
before this Court by the private respondents praying that Regional Trial Court Judge Prudencio
WHEREFORE, the instant case is dismissed. The Writ is ordered quashed and Petitioners are
Altre Castillo be enjoined from hearing the mandamus case.
hereby ordered to show cause why their injunction bond should not be confiscated in favor of the
respondents.18
Then Associate Justice Teodoro R. Padilla, as Chairman of the First Division, issued a
Temporary Restraining Order on 08 July 1996, a portion of which reads:
A motion for reconsideration was filed by Bautista, et al., dated 16 July 1994, alleging among
other things, that the RTC has jurisdiction considering that the case before it was an action for
prohibition, which was cognizable by it.19As a result of which Branch 220 issued another NOW, THEREFORE, you (respondents), your officers, agents, representatives, and/or persons
Order20 dated 27 December 1994 reinstating the Writ of Preliminary Injunction and injunction acting upon your orders or, in your place or stead, are hereby ENJOINED to desist from hearing
bond.1a\^/phi1.net the case in SP Case No. Q-96-27586 entitled "Genaro Bautista, et al. vs. Angel L. Lazaro,
Administrator, Metropolitan Waterworks and Sewerage System (MWSS), Board of Trustees
(MWSS)."
A motion for reconsideration was filed by the private respondents but was denied by Branch 220
in its order dated 27 April 1995.21
A Motion to Lift Temporary Restraining Order31 and a Supplemental Motion32 thereto were later
filed by Genaro Bautista, et al.
On 18 May 1995, a petition for certiorari, prohibition and mandamus with prayer for Preliminary
Injunction and/or Restraining Order was filed before the Court of Appeals by private respondents
herein.22 In it, the orders of Branch 220 dated 27 December 1994 and 27 April 1995 were Thereafter, petitioner Genaro Bautista filed an urgent motion to declare the administrator, Angel
assailed for having been issued with grave abuse of discretion. L. Lazaro III, and manager, Erlich V. Barraquias, of the Legal Department of the MWSS in
indirect contempt of court.33 The petitioner, in this motion, alleged that Lazaro and Barraquias
both failed to follow the opinions rendered by the Office of the Government Corporate Counsel
On 09 October 1995, a Decision was rendered by the Court of Appeals finding for the private
(OGCC) to the effect that the petitioner and his set of officers are still the rightful parties with
respondents, upholding that the BLR had jurisdiction over an intra-union dispute, the dispositive
whom MWSS management has to deal with in all union matters as they continue to be the
portion of which reads:
incumbent officers.34 The Court issued a Resolution35 dated 18 June 1997 requiring the said
administrator and manager to comment on the motion. A joint comment was thereafter filed by
IN VIEW OF THE FOREGOING PREMISES, the instant petition for certiorari, prohibition Lazaro and Barraquias dated 28 July 1997. In it, they contended that the first two opinions
and mandamus is hereby GRANTED. The assailed orders of December 27, 1994 and April 27, rendered by the OGCC were overtaken by the Decision and Resolution of the Court of Appeals,
1995 are hereby SET ASIDE and NULLIFIED for reasons above-stated. No costs.23 now the subjects of this petition for review on certiorari, wherein it declared that the regular
courts have no jurisdiction to prohibit the holding of the election of the officers and members of
the board of KKMK-MWSS, as it is lodged with the BLR. When they again sought the guidance
Petitioner then filed a motion for reconsideration dated 27 October 1995, 24 but was denied by the
of the OGCC as to the effect of the aforementioned Decision of the Court of Appeals, another
court a quo in its Resolution dated 08 January 1996, which is quoted hereunder:
opinion was issued by the OGCC which, they said, did not resolve that question but instead
merely reiterated its previous opinions deviant to the conclusions of the Court of Appeals. 36
THE ISSUE AND PENDING INCIDENTS
The bombardment of cases filed before several fora notwithstanding, the solitary question raised
by the petitioner is simply whether or not the RTC has jurisdiction over a case involving an intra-
union dispute (election of officers) of an employee’s organization in the public sector (MWSS). 37
Stated in another way, does the BLR have jurisdiction to call for and conduct the election of
officers of an employee’s association in the public sector?
Pending resolution in the instant case are the motions to lift the temporary restraining order in
the mandamus case before the lower court and to declare the administrator and the manager of
the Legal Department of the MWSS in indirect contempt of court.
THE COURT’S RULINGS
The decision of the Court of Appeals relied on our earlier ruling in the case of Association of
Court of Appeals Employees (ACAE) v. Ferrer-Calleja.38 In this case, we held that the BLR has
the jurisdiction to call for and supervise the conduct of certification elections in the public
sector, viz:
. . . In the same way that CSC validly conducts competitive examinations to grant requisite
eligibilities to court employees, we see no constitutional objection to DOLE handling the
certification process in the Court of Appeals, considering its expertise, machinery, and
experience in this particular activity. Executive Order No. 180 requires organizations of
government employees to register with both CSC and DOLE.l^vvphi1.net This ambivalence
notwithstanding, the CSC has no facilities, personnel, or experience in the conduct of
certification elections. The BLR has to do the job.
Executive Order No. 180 states that certificates of registration of the legitimate employee
representatives must be jointly approved by the CSC Chairman and the DOLE Secretary.
Executive Order No. 180 is not too helpful in determining whose opinion shall prevail if the CSC
Chairman and the DOLE Secretary arrive at different conclusions. At any rate, we shall deal with
that problem when it occurs. Insofar as power to call for and supervise the conduct of
certification elections is concerned, we rule against the petitioner.39
The petitioner contends that the aforecited case finds no application in the case at bar for the
following reasons.
First, the ACAE case involved a conflict between two government unions in the Court of
Appeals, a situation not obtaining in the instant case because what is involved here is only one
and the same employee’s organization, the KKMK-MWSS.40
Second, the ACAE case concerned a certification election, i.e., which between the two
government unions should be considered as the bargaining unit before the Court of Appeals,
while the present case embraces the issue of who among the members of the organization shall
be elected as officers and members of the board.41
The petitioner likewise advances the theory that the power of the BLR, as found in Executive
Order No. 180, is limited only to the registration of a union in a government corporation, and to
call for a certification election.42
Moreover, the petitioner assails the ruling of the court a quo to the effect that his group
participated in the questioned elections and submitted themselves to the jurisdiction of the BLR.
According to him, the records will readily show that they did not in any way join in it. 43
We disagree in petitioner’s assertions, hence, the petition must fail.
It may be true that the ACAE case involved a certification election between two unions in a
government entity. However, this does not mean that our previous ruling cannot apply in the
instant case.
The authority of the BLR in assuming jurisdiction over a certification election, or any inter-union
or intra-union conflicts, is found in Article 226 of the Labor Code of the Philippines, which reads:
Art. 226. BUREAU OF LABOR RELATIONS. – The Bureau of Labor Relations and the Labor
Relations Division in the regional offices of the Department of Labor shall have original and
exclusive authority to act, at their own initiative or upon request of either or both parties, on all
inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or
affecting labor-management relations in all workplaces whether agricultural or nonagricultural,
except those arising from the implementation or interpretation of collective bargaining
agreements which shall be the subject of grievance procedure and/or voluntary arbitration.
The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to
extension by agreement of the parties.
It is quite clear from this provision that BLR has the original and exclusive jurisdiction on all inter-
union and intra-union conflicts. An intra-union conflict would refer to a conflict within or inside a
labor union, and an inter-union controversy or dispute, one occurring or carried on between or
among unions.44 The subject of the case at bar, which is the election of the officers and
members of the board of KMKK-MWSS, is, clearly, an intra-union conflict, being within or inside
a labor union. It is well within the powers of the BLR to act upon. The petitioner is asking us to
make an illogical edict by declaring that our ruling in the ACAE case, considering that it involved
an inter-union conflict, should not apply to the instant case for the reason that the latter involves
an intra-union conflict. This, we cannot do because the law is very clear on this matter.
Executive Order No. 180 (1987),45 particularly Section 16 thereof, is completely lucid as to the
settlement of disputes involving government employees, viz:
SEC. 16. The Civil Service and labor laws and procedures, whenever applicable, shall be
followed in the resolution of complaints, grievances and cases involving government
employees.46
Since Article 226 of the Labor Code has declared that the BLR shall have original and exclusive
authority to act on all inter-union and intra-union conflicts, then there should be no more doubt
as to its jurisdiction.
We likewise find bereft of merit petitioner’s claim that his group did not in any way participate in
the subject elections, and therefore, the principle of estoppel cannot apply.
In the Order of the RTC dated 01 July 1994, it appears that the petitioner, indeed, participated in
the election. A portion of the Order states:
Candidate Votes
 Genaro C. Bautista 288 Petitioners vehemently denied the allegations and challenged PAL to show proof that they were
indeed "caught in the act of sniffing shabu." Dumago claimed that he was in the Toolroom
Prudencio Cruz 1080 Section to request for an allen wrench to fix the needles of the sewing and zigzagger machines.
Garcia averred he was in the Toolroom Section to inquire where he could take the Trackster’s
47
Bonifacio De Guzman 1081 tire for vulcanizing.

On October 9, 1995, petitioners were dismissed for violation of Chapter II, Section 6, Article 46
The petitioner was, undoubtedly, a candidate in the election. The 288 votes for him were
(Violation of Law/Government Regulations) and Chapter II, Section 6, Article 48 (Prohibited
counted in his favor.
Drugs) of the PAL Code of Discipline.5 Both simultaneously filed a case for illegal dismissal and
damages.
Further, the petitioner and his group submitted a list of candidates before the BLR dated 04
October 199348 , which included the name of petitioner himself.
In the meantime, the Securities and Exchange Commission (SEC) placed PAL under an Interim
Rehabilitation Receiver due to severe financial losses.
WHEREFORE, in view of all the foregoing, the assailed Decision and Resolution of the Court of
Appeals being in accord with law, are hereby AFFIRMED. Accordingly, the Urgent Motion to
Declare the Administrator and Manager, Legal Department, MWSS, in indirect contempt of court On January 11, 1999, the Labor Arbiter rendered a decision6 in petitioners’ favor:
is DENIED, and the temporary restraining order earlier issued is hereby made permanent. Costs
against the petitioner. WHEREFORE, conformably with the foregoing, judgment is hereby rendered finding the
respondents guilty of illegal suspension and illegal dismissal and ordering them to reinstate
complainants to their former position without loss of seniority rights and other privileges.
SO ORDERED.
Respondents are hereby further ordered to pay jointly and severally unto the complainants the
following:
G.R. No. 164856 August 29, 2007
Alberto J. Dumago - P409,500.00 backwages as of 1/10/99
JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners,
vs.
PHILIPPINE AIRLINES, INC., Respondent.D E C I S I O NQUISUMBING, J.: 34,125.00 for 13th month pay

Juanito A. Garcia - P1,290,744.00 backwages as of 1/10/99

This petition for review assails both the Decision1 dated December 5, 2003 and the
Resolution2 dated April 16, 2004 of the Court of Appeals in CA-G.R. SP No. 69540, which had
annulled the Resolutions3 dated November 26, 2001 and January 28, 2002 of the National Labor 107,562.00 for 13th month pay
Relations Commission (NLRC) in NLRC Injunction Case No. 0001038-01, and also denied the
motion for reconsideration, respectively.
The amounts of P100,000.00 and P50,000.00 to each complainant as and by way of moral and
exemplary damages; and
The antecedent facts of the case are as follows:
The sum equivalent to ten percent (10%) of the total award as and for attorneys fees.
Petitioners Alberto J. Dumago and Juanito A. Garcia were employed by respondent Philippine
Airlines, Inc. (PAL) as Aircraft Furnishers Master "C" and Aircraft Inspector, respectively. They
were assigned in the PAL Technical Center. Respondents are directed to immediately comply with the reinstatement aspect of this Decision.
However, in the event that reinstatement is no longer feasible, respondent[s] are hereby
ordered, in lieu thereof, to pay unto the complainants their separation pay computed at one
On July 24, 1995, a combined team of the PAL Security and National Bureau of Investigation month for [e]very year of service.
(NBI) Narcotics Operatives raided the Toolroom Section – Plant Equipment Maintenance
Division (PEMD) of the PAL Technical Center. They found petitioners, with four others, near the
said section at that time. When the PAL Security searched the section, they found shabu SO ORDERED.7
paraphernalia inside the company-issued locker of Ronaldo Broas who was also within the
vicinity. The six employees were later brought to the NBI for booking and proper investigation. Meanwhile, the SEC replaced the Interim Rehabilitation Receiver with a Permanent
Rehabilitation Receiver.
On July 26, 1995, a Notice of Administrative Charge4 was served on petitioners. They were
allegedly "caught in the act of sniffing shabu inside the Toolroom Section," then placed under On appeal, the NLRC reversed the Labor Arbiter’s decision and dismissed the case for lack of
preventive suspension and required to submit their written explanation within ten days from merit.8Reconsideration having been denied, an Entry of Judgment9 was issued on July 13, 2000.
receipt of the notice.
On October 5, 2000, the Labor Arbiter issued a Writ of Execution10 commanding the sheriff to
proceed:
 xxxx SO ORDERED.14

1. To the Office of respondent PAL Building I, Legaspi St., Legaspi Village, Makati City Hence, the instant petition raising a single issue as follows:
or to any of its Offices in the Philippines and cause reinstatement of complainants to
their former position and to cause the collection of the amount of [₱]549,309.60 from
WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
respondent PAL representing the backwages of said complainants on the
PETITIONERS ARE ENTITLED TO THEIR ACCRUED WAGES DURING THE PENDENCY OF
reinstatement aspect;
PAL’S APPEAL.15

2. In case you cannot collect from respondent PAL for any reason, you shall levy on
Simply put, however, there are really two issues for our consideration: (1) Are petitioners entitled
the office equipment and other movables and garnish its deposits with any bank in the
to their wages during the pendency of PAL’s appeal to the NLRC? and (2) In the light of new
Philippines, subject to the limitation that equivalent amount of such levied movables
developments concerning PAL’s rehabilitation, are petitioners entitled to execution of the Labor
and/or the amount garnished in your own judgment, shall be equivalent to
Arbiter’s order of reinstatement even if PAL is under receivership?
[₱]549,309.60. If still insufficient, levy against immovable properties of PAL not
otherwise exempt from execution.
We shall first resolve the issue of whether the execution of the Labor Arbiter’s order is legally
possible even if PAL is under receivership.
x x x x11

We note that during the pendency of this case, PAL was placed by the SEC first, under an
Although PAL filed an Urgent Motion to Quash Writ of Execution, the Labor Arbiter issued a
Interim Rehabilitation Receiver and finally, under a Permanent Rehabilitation Receiver. The
Notice of Garnishment12 addressed to the President/Manager of the Allied Bank Head Office in
pertinent law on this matter, Section 5(d) of Presidential Decree (P.D.) No. 902-A, as amended,
Makati City for the amount of ₱549,309.60.
provides that:

PAL moved to lift the Notice of Garnishment while petitioners moved for the release of the
SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and
garnished amount. PAL opposed petitioners’ motion. It also filed an Urgent Petition for Injunction
Exchange Commission over corporations, partnerships and other forms of associations
which the NLRC resolved as follows:
registered with it as expressly granted under existing laws and decrees, it shall have original and
exclusive jurisdiction to hear and decide cases involving:
WHEREFORE, premises considered, the Petition is partially GRANTED. Accordingly, the Writ of
Execution dated October 5, 2000 and related [N]otice of Garnishment [dated October 25, 2000]
xxxx
are DECLARED valid. However, the instant action is SUSPENDED and REFERRED to the
Receiver of Petitioner PAL for appropriate action.
d) Petitions of corporations, partnerships or associations to be declared in the state of
13 suspension of payments in cases where the corporation, partnership or association possesses
SO ORDERED.
property to cover all of its debts but foresees the impossibility of meeting them when they
respectively fall due or in cases where the corporation, partnership or association has no
PAL appealed to the Court of Appeals on the grounds that: (1) by declaring the writ of execution sufficient assets to cover its liabilities, but is under the [management of a rehabilitation receiver
and the notice of garnishment valid, the NLRC gave petitioners undue advantage and or] Management Committee created pursuant to this Decree.
preference over PAL’s other creditors and hampered the task of the Permanent Rehabilitation
Receiver; and (2) there was no longer any legal or factual basis to reinstate petitioners as a
The same P.D., in Section 6(c) provides that:
result of the reversal by the NLRC of the Labor Arbiter’s decision.

The appellate court ruled that the Labor Arbiter issued the writ of execution and the notice of
garnishment without jurisdiction. Hence, the NLRC erred in upholding its validity. Since PAL was
under receivership, it could not have possibly reinstated petitioners due to retrenchment and
cash-flow constraints. The appellate court declared that a stay of execution may be warranted by
the fact that PAL was under rehabilitation receivership. The dispositive portion of the decision
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 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.
SECTION 6. In order to effectively exercise such jurisdiction, the Commission shall possess the
following powers:
xxxx
c) To appoint one or more receivers of the property, real or personal, which is the subject of the
action pending before the Commission in accordance with the pertinent provisions of the Rules
of Court in such other cases whenever necessary in order to preserve the rights of the parties-
litigants and/or protect the interest of the investing public and creditors:…Provided, finally, That
upon appointment of a management committee, rehabilitation receiver, board or body, pursuant
to this Decree, all actions for claims against corporations, partnerships or associations under
management or receivership pending before any court, tribunal, board or body shall be
suspended accordingly.
x x x x Worth stressing, upon appointment by the SEC of a rehabilitation receiver, all actions for
claims against the corporation pending before any court, tribunal or board shall ipso jure be
suspended. The purpose of the automatic stay of all pending actions for claims is to enable the
rehabilitation receiver to effectively exercise its/his powers free from any judicial or extra-judicial
interference that might unduly hinder or prevent the rescue of the corporation. 16

More importantly, the suspension of all actions for claims against the corporation embraces all
phases of the suit, be it before the trial court or any tribunal or before this Court. 17 No other
action may be taken, including the rendition of judgment during the state of suspension. It must
be stressed that what are automatically stayed or suspended are the proceedings of a suit and
not just the payment of claims during the execution stage after the case had become final and
executory.18

Furthermore, the actions that are suspended cover all claims against the corporation whether for
damages founded on a breach of contract of carriage, labor cases, collection suits or any other
claims of a pecuniary nature.19 No exception in favor of labor claims is mentioned in the
law.201avvphi1

This Court’s adherence to the above-stated rule has been resolute and steadfast as evidenced
by its oft-repeated application in a plethora of cases involving PAL, the most recent of which is
Philippine Airlines, Inc. v. Zamora.21

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.22

However, to still require petitioners at this time to re-file their labor claim against PAL under the
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.