8. Case Title: Bergonio vs.

SEAIR (South East Asian Airlines)

GR No: 195227 Date: April 21, 2014

Ponente: Brion, J.

DOCTRINE: Payment of accrued wages  despite reversal of decision: An employer, who,

despite the Labor Arbiter’s order of reinstatement, did not reinstate the employee during the
pendency of the appeal up to the reversal by a higher tribunal may still be held liable for the
accrued wages of the employee, i.e., the unpaid salary accruing up to the time the higher tribunal
reverses the decision. The rule, therefore, is that an employee may still recover the accrued
wages up to and despite the reversal by the higher tribunal. This entitlement of the employee to
the accrued wages proceeds from the immediate and self-executory nature of the reinstatement
aspect of the LA’s decision.
Exception.  By way of exception to the above rule, an employee may be barred from collecting
the accrued wages if shown that the delay in enforcing the reinstatement pending appeal was
without fault on the part of the employer. To determine whether an employee is thus barred, two
tests must be satisfied: (1) actual delay or the fact that the order of reinstatement pending appeal
was not executed prior to its reversal; and (2) the delay must not be due to the employer’s
unjustified act or omission. Note that under the second test, the delay must be without the
employer’s fault. If the delay is due to the employer’s unjustified refusal, the employer may still
be required to pay the salaries notwithstanding the reversal of the LA’s decision.
FACTS: On April 30, 2004, a complaint before the Labor Arbiter (LA) for illegal dismissal and
illegal suspension was filed by the petitioners against respondents South East Asian Airlines (SEAIR) and Irene
Dornier as SEAIR’s President. On May 31, 2005, the LA found the petitioners illegally
dismissed and ordered the respondents to reinstate the petitioners with full back wages. There
was failure on the part of the Respondent to reinstate the said employees, prompting the
application for the Writ of Execution, the latter was subsequently granted by the court in favor of
the petitioners.

On February 21, 2006, respondents issued a Memorandum directing the petitioners to report on
work before February 24, 2006. However, petitioners failed to report to work alleging that only
one of them received the Memorandum on February 23, 2005. The Memorandum also instructed
them to report to Clark, Pampanga instead of NAIA-Domestic Airport in Pasay which according
to the petitioners was a violation of Art. 223 (par.3) of the Labor Code as it changes the terms
and conditions of the petitioners’ employment prior to the dismissal.

On May 31, 2005, respondents appealed to the NLRC which was subsequently dismissed for failure to perfect
an appeal. Respondents then filed a petition for certiorari which was granted by the Court of
Appeals (CA), the latter ruling in favor of the respondents and declaring the dismissal
valid. The CA also ruled that the delay of the execution of the reinstatement order was not due to 
the respondent’s unjustified act but to petitioners’ refusal to comply with the February 21, 2006
Memorandum of return-to-work. This led the petitioners to file a petition for review in the Supreme Court.
LA/RTC/NLRC RULING: LA granted the petitioners' motion; it directed Metrobank-San
Lorenzo to release the P1,900,000.00 garnished amount.  The LA found valid and meritorious
the respondents' claim for accrued wages in view of the respondents' refusal to reinstate the
petitioners despite the final and executory nature of the reinstatement aspect of its (LA's) May
31, 2005 decision.  The LA noted that as of the December 18, 2007 CA decision (that reversed
the illegal dismissal findings of the LA), the petitioners' accrued wages amounted to
P3,078,366.33.

In its July 16, 2008 resolution, the NLRC affirmed in toto the LA's March 13, 2008 order.  The
NLRC afterwards denied the respondents' motion for reconsideration for lack of merit.

CA RULING: The CA agreed that the reinstatement aspect of the LA's decision is immediately
executory even pending appeal, such that the employer is obliged to reinstate and pay the wages
of the dismissed employee during the period of appeal until the decision (finding the employee
illegally dismissed including the reinstatement order) is reversed by a higher court.

Petitioner’s Contention: petitioners argue that the computation of their accrued wages stopped
when they failed to report for work on February 24, 2006. 

Petitioners point out that the February 21, 2006 Memorandum directed them to report for work at
Clark Field, Angeles, Pampanga instead of at the NAIA-Domestic Airport in Pasay City where
they had been assigned.

Petitioners claim that the delay in their reinstatement was in fact due to the respondents'
unjustified acts and that the respondents never really complied with the LA's reinstatement order

Petitioner’s Contention: Respondents maintain that the petitioners were validly dismissed and
that they complied with the LA's reinstatement order when it directed the petitioners to report
back to work, which directive the petitioners did not heed.

Respondents point out that their relationship had been so strained that reinstatement was no
longer possible.  Despite this strained relationship, the respondents point out that they still
required the petitioners to report back to work if only to comply with the LA's reinstatement
order.  Instead of reporting for work as directed, the petitioners, however, insisted for a payroll
reinstatement, which option the law grants to them (the respondents) as employer.  Also,
contrary to the petitioners' claim, the Memorandum directed them to report at Clark Field,
Pampanga only for a re-orientation of their respective duties and responsibilities.

Respondents claim that the delay in the petitioners' reinstatement was in fact due to the latter's
refusal to report for work after the issuance of the February 21, 2006 Memorandum in addition to
their strained relationship.
ISSUE: WON the respondent SEAIR complied with the LA decision on the reinstatement of
employees which will negate petitioners’ claim for accrued back wages?

HELD: No. As provided for in Art. 223(3) of the Labor Code, the reinstatement of anemployee
found illegally dismissed is immediately executory even during the pendency of the employer’s
appeal from the decision. Under this provision, the employer must reinstate the employee – either by
physically admitting him under the conditions prevailing prior to his dismissal, and paying his
wages, or within the option of the employer to reinstate him in the
payroll. A dismissed employee whose case was favored by the LA is entitled to receive wages
pending appeal upon reinstatement, which reinstatement is immediately executory. Unless the
appellate tribunal issues a restraining order, the LA is duty bound to implement the order of
reinstatement and the employer has no option but to comply with it.

Moreover, and equally worth emphasizing, is that an order of reinstatement issued by the LA
is self-executory, i.e., the dismissed employee need not even apply for and the LA need not even
issue a writ of execution to trigger the employer's duty to reinstate the dismissed employee. 

The employer is duty-bound to reinstate the employee, failing which, the employer is liable
instead to pay the dismissed employee's salary.  The Court's consistent and prevailing treatment
and interpretation of the reinstatement order as immediately enforceable, in fact, merely
underscores the right to security of tenure of employees that the Constitution[30] protects.

The employer is obliged to pay the

dismissed employee's salary if he
refuses to reinstate until actual
reinstatement or reversal by a higher
tribunal; circumstances that may bar an
employee from receiving the accrued wages

As we amply discussed above, an employer is obliged to immediately reinstate the employee

upon the LA's finding of illegal dismissal; if the employer fails, it is liable to pay the salary of
the dismissed employee.  Of course, it is not always the case that the LA's finding of illegal
dismissal is, on appeal by the employer, upheld by the appellate court.  After the LA's decision is
reversed by a higher tribunal, the employer's duty to reinstate the dismissed employee is
effectively terminated.  This means that an employer is no longer obliged to keep the employee
in the actual service or in the payroll.  The employee, in turn, is not required to return the wages
that he had received prior to the reversal of the LA's decision.