LABREL (2ND SET)

1. Covered Employees - This program is open only to all regular employees

of the hotel.
- Pioneer employees will be given a special consideration.

G.R. No. 162233

March 10, 2006

RONALDO B. CASIMIRO, ELISA M. LAT, JOSE L. LALAP, CELESTIN S, LACHICA,

REYNALDO S. MALLILLIN, LEONILA G. ROJO, JULIE H. SEBASTIAN, EDITHA M.
SOLOMON, EMILIANO T. TAMBAOAN III, FERNANDO G. TROZADO, Petitioners,
vs.
STERN REAL ESTATE INC. REMBRANDT HOTEL and/or GRACE KRISTIN
MEEHAN
(General Manager), and ERIC SINGSON (Owner), Respondents.

2. Separation Pay - The hotel will pay affected employees in accordance

with the following benefit schedule per year of service (computed as 12
months) on a pro-rata basis tax exempt.
a. Basic: One-half (1/2) month basic salary for [every] year of
service or one (1) month salary, whichever is higher.
b. Additional: (1) One year of service or less .. P1,000.00
(2) Two years of service ... P3,000.00

DECISION
CALLEJO, SR., J.:

(3) Three years of service . P6,000.00

(4) Four years of service P10,000.00

This is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court, assailing the Decision1 of the Court of Appeals (CA) in CA-G.R. SP. No. 64536,
as well as the Resolution2 dated February 16, 2004 denying the motion for
reconsideration thereof.
Respondent Stern Real Estate & Development Corporation is a corporation duly
organized and existing under Philippine laws, engaged in the business of purchasing,
selling and operating buildings and other real properties for profit. One such
property it owns is the Hotel Rembrandt located at No. 26 Tomas Morato Avenue,
corner Scout Bayoran Street, Quezon City, with Grace Kristine Meehan as General
Manager, and Eric Singson as its Director. 3 The hotel has been fully operational since
1996.
On May 6, 1999, Meehan issued the following Memorandum4 announcing a Special
Separation Program (SSP) for all interested employees:
1. Due to the hotels dire financial status, the hotel has decided to
implement/offer a one-time non-recurring special separation program (SSP)
that all employees can avail of for the limited period of 10th May to 24th
May 1999 only. Management, however, shall have the sole option to
approve/disapprove the application of any employee.
2. If the number of employees who apply for the Special Separation
Program do not meet the minimum number required by the company,
management will be constrained to involuntary terminate the services of
employees due to financial losses. Those employees who would be
terminated after this program would only receive the legal benefits
mandated by law.
A. Guidelines

3. Other Entitlements
a. Vacation Leaves. Employees with earned vacation leaves whose
applications for separation are accepted under this program, shall
be allowed to go on terminal leave to use up their leave credits.
While they are on leave, they shall be entitled to correspondingly
share in the Service Charges. For employees whose applications
for separation are accepted but whose services are needed up to
their last day of employment, their earned leaves shall be
commuted/paid in cash.
b. Thirteenth (13th) Month Pay. All employees approved to avail of
the SSP will be entitled to a pro-rata payment of the 13th month
pay (i.e., from 1st January 31st May 1999)
4. The basis of computation of the separation pay is the monthly basic
salary as of Wednesday, 26th May.
5. The release of the special separation package will be around 2 weeks
from the submission of the necessary clearances.
6. All applications accepted under this Program shall be effective 31st May
1999.
7. An employee who avails of the Special Separation Program is not entitled
to any other benefits by reason of his separation. The employee waives the
right to any other benefits normally associated with his/her employment at
Hotel Rembrandt.

8. Employees with physical limitations due to recurring illness or advanced

age and who can no longer perform their jobs effectively shall be given
priority [u]pon the certification of a physician designated by the hotel, if the
concerned employees physical infirmities/limitations that [sic] may
adversely affect the employees job performance.

charge that the "last in, first out rule" was not observed in dismissing the
employees. The Labor Arbiter also declared that while the complainants executed
quitclaims and accepted their separation pay, they were not estopped from
challenging the validity of their dismissal. The dispositive portion of the decision
reads:

9. The hotel reserves the sole right and discretion to decide on the case of
an employee.

WHEREFORE, premises above considered, a decision is hereby issued declaring the

retrenchment of the complainants devoid of factual and legal basis, hence
respondent firm[,] Grace Kristen [sic] Meehan and Eric Singson is [sic] hereby
ordered to reinstate complainants to their former or equivalent position with full
backwages minus what have been received by them as separation benefits,
reckoned from the date of their actual dismissal [or] retrenchment until reinstated
actually or in payroll, plus attorneys fees equivalent to ten (10%) percent of the
award. For this purpose, the Examination and Computation Unit of this Arbitration
branch is hereby directed to make the necessary computation of the complainants
backwages which computation is hereby adopted and to form an integral part of this
decision as Annex "A."

10. The number of employees to be separated will depend on:

a. The ability of the company to fund this one time, non-recurring
special separation program.
b. The companys explicit approval of each application on a caseto-case basis.
11. This special separation program is a one-time, non-recurring program. It
should not set any precedent nor be invoked in the future. 5
On May 24, 1999, the hotel management accepted 49 applications for its SSP.
On May 28, 1999, management filed an Establishment Termination Report 6 before
the Department of Labor and Employment. Said report covered 29 employees whose
termination was to take effect on June 28, 1999. "Financial losses" was the main
reason cited, and the other being "company reorganization/downsizing." From June
15 to 21, 1999, letters were sent to the employees concerned informing them that
they were considered dismissed from employment one month after receipt of such
notice.7
Petitioners were among the retrenched employees. 8 They later filed a complaint for
"illegal dismissal in the guise of retrenchment and underpayment/non-payment of
overtime pay, premium compensation for holiday and rest day" with prayer for
moral and exemplary damages and attorneys fees before the National Labor
Relations Commission (NLRC). The complaint was docketed as NLRC NCR Case No.
00-08-08351-99.
According to the complainants, while the hotel management claimed that they were
retrenched due to "serious financial losses," it failed to satisfy the requirements of
the Labor Code in terminating their employment: no notice was given to the
Department of Labor of such intended retrenchment and no evidence was submitted
to prove that the hotel had been suffering financial losses. Moreover, respondents
had not only advertised their need for personnel vacated by complainants; 9 they had
already started hiring replacements. The complainants were convinced that their
retrenchment was only a ploy to ease them out of their respective jobs. 10
On March 6, 2000, Labor Arbiter Donato G. Quinto, Jr. ruled in favor of the retrenched
employees. According to the Labor Arbiter, a thorough examination of the financial
statements submitted by respondents would readily show that the expenses in 1998
were bloated as compared to the previous year, clearly made to justify the
retrenchment of the complainants.11 Moreover, the hotel had advertised job
vacancies for extra banquet waiters and waitresses, and likewise failed to rebut the

The other claims including damages are hereby dismissed for lack of merit. 12
In compliance with the Labor Arbiters directive, the Examination and Computation
Unit of the NLRC issued a computation of complainants entitlement, awarding in
their favor a total of P1,988,908.91.13
Respondents appealed the decision to the NLRC, arguing that the Labor Arbiter
committed grave abuse of discretion in disregarding the audited financial
statements, and choosing to believe the erroneous computation of the complainants
without even checking the veracity of their allegations.[14] Aside from the audited
financial statements for 1997[15] and 1998,[16] and the Audit Report[17] of
Banaria, Banaria and Company, dated April 14, 1999, respondents also attached
receipts and vouchers to show that the hotel had really incurred losses.
Complainants, for their part, filed their Comments with Motion to Dismiss Appeal,
[18] alleging that respondents did not furnish them with a copy of the Memorandum
of Appeal and the Motion to Reduce Supersedeas Bond, which violated their right to
due process. They also pointed out that the cash deposit of P50,000.00 made by
respondents was a "measly amount," and as such, it was as if no appeal bond was
paid and no appeal had been perfected.
In its Decision19 dated January 15, 2001, the NLRC reversed the ruling of the Labor
Arbiter and dismissed the complaints for lack of merit. It held that through the dulyaudited financial statements submitted to it, the respondent hotel was able to show
that it suffered losses in 1996, 1997 and 1998 amounting
to P19,272,539.37, P18,512,683.00 and P13,669,695.00, respectively. The NLRC
further ruled that the Labor Arbiter erred in disregarding these statements and
giving full credence to complainants contention that the hotels expenses were
bloated. It pointed out that respondents presented receipts on appeal to show that
the repair and maintenance, light and water expenses, and telephone and
communication expenses were not fabricated. Citing The New Valley Times Press v.
National Labor Relations Commission,20 it averred that evidence presented on appeal
may be considered by it, and pointed out that the complainants did not rebut the
evidence despite due notice.

The NLRC further ruled that, contrary to the allegation of the complainants, the firstin-last-out policy was observed by respondents, since evidence of the complainants
efficiency and performance for the past years were presented to show that this
criteria was considered. The labor tribunal pointed out that this evidence was not
rebutted by the complainants. It further ruled that complainants failed to show that
they were forced to sign quitclaims when they received their respective separation
pay. Citing Veloso v. Department of Labor and Employment, 21 it declared that "dire
necessity" is not an acceptable reason to set aside quitclaims otherwise valid.
Aggrieved, the retrenched employees filed before the CA a Petition for Certiorari
under Rule 65 of the Revised Rules of Court. On July 20, 2001, the CA issued a
Resolution22 directing petitioners to amend their petition by dropping seven 23 of
them who failed to sign the verification and certification of non-forum shopping. On
October 19, 2001, petitioners Reantaso, Elisa Lat, Lalap, Lachica, Mallillin, Rojo,
Sebastian, Solomon, Tambaoan III, Trozado, and Edwin Lat filed their Amended
Petition.24 Petitioner Cabardo filed her Amended Petition on November 7, 2001. 25
On July 31, 2003, the CA affirmed the ruling of the NLRC and dismissed the petition
for lack of merit.26 On the issue of the filing of the cash bond, it ruled that
respondents action constituted substantial compliance with the rules. It stated that
the Labor Arbiters decision did not specify the exact amount of the monetary award
due the petitioners, prompting respondents to file a P50,000.00 cash bond and
motion for the reduction of the supersedeas bond. Once the computation of the
monetary
award was received on July 14, 2000, they immediately sought the
cancellation of the cash bond, and moved that it be substituted with a surety bond
equivalent to the monetary award. The CA further ruled that petitioners failed to
show that respondents were in bad faith or that they intended to delay payment. It
observed that when the Labor Arbiter issued the writ of execution, respondents
instructed petitioners to immediately report to the hotel on July 26, 2000. The
appellate court also disagreed with petitioners contention that they were deprived
of due process when additional documents were submitted before the NLRC. Under
the New Rules of Procedure of the NLRC, the submission of new evidence is not
prohibited, not being prejudicial to the other party who could still submit counterevidence.
Citing NDC-Guthrie Plantations, Inc. v. National Labor Relations Commission, 27 the CA
declared that respondents were able to comply with all the requirements for a valid
retrenchment under Article 283 of the
Labor Code.
Aggrieved, petitioners now come to this Court, assailing the ruling of the CA on the
following grounds:
5.1. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT RULED
THAT THE APPEAL OF THE RESPONDENTS WITH THE NATIONAL LABOR RELATIONS
COMMISSION WAS PERFECTED DESPITE THE FACT THAT THE APPEAL OR SURETY
BOND OF P1,988,908.91 WAS POSTED SEVENTY (70) DAYS LATE FROM RECEIPT OF
THE DECISION OF THE LABOR ARBITER.
5.2. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT RULED
THAT THE PETITIONERS WERE NOT PREJUDICED WHEN THE NLRC ADMITTED THE

APPEAL MEMORANDUM AS WELL AS THE ADDITIONAL EVIDENCE OF THE

RESPONDENTS EVEN WITHOUT FURNISHING FIRST THE PETITIONERS COPIES
THEREOF MORE SPECIFICALLY THE APPEAL MEMORANDUM.
5.3. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT RULED
THAT THERE WAS A VALID RETRENCHMENT TO WARRANT THE DISMISSAL OF THE
PETITIONERS.
5.4. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT RULED
THAT THE PETITIONERS EXECUTED A VALID QUITCLAIM.
5.5. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT
ADMITTED AND ENTERTAINED THE COMMENT OF THE RESPONDENTS DESPITE ITS
ORDER THAT CONSIDERED SAID RESPONDENTS TO HAVE WAIVED THE RIGHT TO
FILE THEIR COMMENT AND SAID ORDER WAS NOT RECONSIDERED AND SET ASIDE
THUS LEGALLY STILL IN FULL FORCE AND EFFECT.28
Petitioners insist that a decision in labor cases involving a monetary award may be
perfected only upon the posting of a cash or surety bond, as mandated by Republic
Act No. 6715, as well as Section 6, Rule VI of the New Rules of Procedure of the
NLRC. They aver that the reason behind the rule is to give the workers an assurance
that they will be paid in the event that they win the case. They claim that there was
no reason why respondents could not afford to deposit the sum of P1,988.908.01.
While the late filing of the supersedeas bond has been relaxed in a number of cases,
there is no cogent reason to apply a liberal interpretation in the instant case. The
word "only" in the provision, according to petitioners, makes it perfectly clear that
the lawmakers intended the posting of a cash or surety bond as the exclusive means
by which an employers appeal may be perfected. They insist that the appeal bond
of P50,000.00 is shockingly low and grossly inadequate, as it constitutes only 2.5%
of the monetary award.
Petitioners also aver that, contrary to respondents claim in the appellate court, they
(respondents) were furnished a copy of the Labor Arbiters decision, as well as the
computation of the monetary award. In fact, it was respondents who did not provide
them a copy of their Memorandum of Appeal, contrary to Rule IV, Section 3 of the
New Rules of Procedure of the NLRC. On this score alone, the appeal before the NLRC
should have been dismissed. Petitioners aver that they were prevented from filing
the appropriate pleadings on account of such intentional act. They insist that
additional evidence on appeal cannot be filed on personal whims and caprices, and
that "there are rules to be observed in order that the rights of the other party will
not be prejudiced and trampled upon." They conclude that petitioners intentional
failure to furnish them a copy of such appeal memorandum deprived them of their
right to be heard - ultimately, their right to due process.
On the merits of the case, petitioners stress that respondents were not motivated by
honest intentions in effecting their dismissal. They remind the Court that while the
law recognizes the employers right to protect its interest, such right should be
exercised in a manner which does not infringe on the employees constitutional right
to security of tenure. They insist that respondents presented "sanitized financial
statements" to justify the legality of their retrenchment. They reiterate that they
were not furnished copies of said statements, hence, their failure to submit evidence

to controvert the same. Under the circumstances, respondents should have

presented respondent hotels income tax returns for the preceding years since
audited financial statements are not entirely reliable and can be easily fabricated.
On the appellate courts finding that the quitclaims they executed were valid,
petitioners insist that they were forced to do so since their employer was
determined to carry out their dismissal. Since most of them were their respective
families sole breadwinners, there was no other recourse but for them to sign such
waivers out of dire necessity.
Respondents, for their part, allege that no new matter or issue was raised in the
instant petition, a mere rehash of petitioners arguments before the appellate court,
and that such arguments had already been passed upon by the appellate court.
The issues involved in this case are procedural and substantial in nature. On the
procedural aspect, petitioners question the filing of the cash bond, which, according
to them, was a measly amount as compared to the award of the Labor Arbiter. They
likewise question the fact that the CA considered the evidence submitted by
respondents on appeal before the NLRC, and they contend that this is a violation of
their right to due process. On the other hand, the main and substantial issue to be
resolved by the Court is whether petitioners were validly retrenched, and, corollarily,
whether respondents presented adequate proof of financial losses, and whether the
quitclaims executed by petitioners are valid and binding.
At the outset, the Court stresses that the substantial issues for resolution are factual
in nature, and generally, factual findings of the NLRC are accorded respect.
However, there is compelling reason to deviate from this salutary principle where, as
in this case, such findings of facts of the NLRC are in conflict with that of the Labor
Arbiter. Accordingly, this Court must of necessity review the records to determine
which findings should be preferred as more conformable to the evidentiary facts. 29
A careful perusal of the records show that respondents filed their Memorandum of
Appeal on May 17, 2000 before the NLRC, together with the P50,000.00 cash bond.
They also filed a Motion for Reduction of Supersedeas Bond. Thereafter,
respondents new counsel filed a Manifestation with Motion to Substitute (Cash Bond
with Supersedeas Bond), alleging that a copy of the monetary award had not been
attached to the copy of the Labor Arbiters decision which was furnished them. The
NLRC approved the substitution in a Resolution30 dated December 28, 2000. In light
of the fact that in his decision, the Labor Arbiter directed the Examination and
Computation Unit of the NLRC to compute the backwages of the retrenched
employees, it would not have been possible for respondents to obtain a copy of such
computation. As such, the initial filing of the P50,000.00 cash bond was justified
under the circumstances.
The second paragraph of Article 223 of the Labor Code states that when a judgment
involving monetary award is appealed by the employer, the appeal may be
perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in the amount equivalent to
the monetary award in the judgment. This is to assure the workers that if they finally
prevail in the case, the monetary award will be given to them upon dismissal of the
employers appeal, and is meant to discourage employers from using the appeal to
delay or evade payment of their obligations to the employees. 31 However, as
provided for in Section 6, Rule VI of the New Rules of Procedure of the NLRC, such
amount of the bond may be reduced in meritorious cases, upon motion of the

appellant. The exercise of this authority is not a matter of right on the part of the
movant but lies within the sound discretion of the NLRC upon showing of meritorious
grounds.32 Indeed, an unreasonable and excessive amount of bond would be
oppressive and unjust, and would have the effect of depriving a party of his right to
appeal.33
The Court likewise holds that the NLRC did not err in admitting the receipts and
other evidence attached to the Memorandum of Appeal of respondents. In Tanjuan v.
Philippine Postal Savings Bank, Inc.,34 where this Court was confronted with the
similar question, i.e., whether proof of business losses may be admitted on appeal
before the NLRC, we declared that the NLRC is not precluded from receiving
evidence on appeal because technical rules of procedure are not binding in labor
cases, which rule applies to both employer and employee. 35 Moreover, the fact that
evidence was not presented before the Labor Arbiter will not justify its outright
rejection, particularly since such evidence is absolutely necessary to resolve the
issue of whether retrenched employees were validly terminated. 36 No less than the
Labor Code directs labor officials to use all reasonable means to ascertain the facts
speedily and objectively, with little regard to technicalities or formalities, 37 while
Section 10, Rule VII of the New Rules of Procedure of the NLRC provides that
technical rules are not binding.38 Indeed, the application of technical rules of
procedure may be relaxed in labor cases to serve the demand of substantial
justice.39
Contrary to petitioners claim, they were not denied due process. The essence of due
process in administrative proceedings is simply an opportunity to explain ones side
or an opportunity to present evidence in support of ones defense. 40 In this case,
petitioners submitted their respective pleadings to controvert the allegations of
respondents.
Article 28341 of the Labor Code of the Philippines authorizes retrenchment as one of
the valid causes to dismiss employees as a measure to avoid or minimize business
losses.42 Retrenchment is the "termination of employment initiated by the employer
through no fault of the employees and without prejudice to the latter, resorted to by
management during periods of business recession, industrial depression, or seasonal
fluctuations, or during lulls occasioned by lack of orders, shortage of materials,
conversion of the plant for a new production program or the introduction of new
methods or more efficient machinery, or of automation." 43 Simply put, it is a
reduction in manpower, a measure utilized by an employer to minimize losses
incurred in the operation of its business. It is a management prerogative consistently
recognized and affirmed by this Court.44 In Danzas Intercontinental, Inc. v.
Daguman, 45 we enumerated the requirements for a valid retrenchment which the
employer must prove by clear and convincing evidence:
x x x (1) that retrenchment is reasonably necessary and likely to prevent business
losses which, if already incurred, are not merely de minimis, but substantial, serious,
actual and real, or if only expected, are reasonably imminent as perceived
objectively and in good faith by the employer; (2) that the employer served written
notice both to the employees and to the Department of Labor and Employment at
least one month prior to the intended date of retrenchment; (3) that the employer
pays the retrenched employees separation pay equivalent to one (1) month pay or
at least one-half (1/2) month pay for every year of service, whichever is higher; (4)
that the employer exercises its prerogative to retrench employees in good faith for
the advancement of its interest and not to defeat or circumvent the employees
right to security of tenure; and (5) that the employer used fair and reasonable
criteria in ascertaining who would be dismissed and who would be retained among

the employees, such as status, efficiency, seniority, physical fitness, age, and
financial hardship for certain workers.46

of the independent auditors who prepared the financial statements which

respondents submitted.

In this case, respondents presented audited financial statements and receipts to

prove that the hotel had been incurring business losses. As found by the appellate
court:

The Court also finds that the quitclaims executed by the individual petitioners in this
case are valid and binding. Indeed, quitclaims executed by employees are commonly
frowned upon as being contrary to public policy, and where there is clear proof that
the waiver was wangled from an unsuspecting or gullible person, or where the terms
of settlement are unconscionable on their faces, the law will step in to annul the
questionable transactions.49 However, when such quitclaim was made voluntarily
and there is no evidence that the employer was guilty of fraud or intimidation in
obtaining such waiver, as in this case, the validity of the quitclaim must be upheld.
As the Court held in Magsalin v. National Organization of Working Men: 50

In the case at bar, the respondent hotel undertook a Special Separation Program
(SSP) which all employees can avail of for the limited period of May 10 to 24, 1999,
due to the dire financial status it was experiencing. Forty-nine (49) employees were
accepted for this separation program. The private respondents then decided that a
retrenchment program was further needed in order to stem the losses. The private
respondents then informed the DOLE through an Establishment Termination Report
filed on May 28, 1999, that they were retrenching twenty-nine (29) employees
effective June 28, 1999, among whom included the herein petitioners. The private
respondents likewise informed these twenty-nine (29) employees that their services
would be terminated thirty (30) days after the receipt of the written notification.
After one month from receipt of the letters of termination, the twenty-nine (29)
employees were given their separation pay and the corresponding quitclaims were
signed.
xxxx
The private respondents in the instant case presented balance sheets for the years
1997, 1998 and 1999 as audited by independent auditors, which showed that
respondent Stern experienced net losses for several years, as follows:
1996 = P19,272,539.77

x x x While quitclaims executed by employees are commonly frowned upon as being

contrary to public policy and are ineffective to bar claims for the full measure of
their legal rights, there are, however, legitimate waivers that represent a voluntary
and reasonable settlement of laborers claims which should be so respected by the
Court as the law between the parties. Where the person making the waiver has done
so voluntarily, with a full understanding thereof, and the consideration for the
quitclaim is credible and reasonable, the transaction must be recognized as being a
valid and binding undertaking. "Dire necessity" is not an acceptable ground for
annulling the release, when it is not shown that the employee has been forced to
execute it (emphasis supplied).51
Verily, it is neither the function of the law nor its intent to supplant the prerogative
of management in running its business, such as, to compel the latter to operate at a
continuing loss simply because it has to maintain its workers in employment. Such
an act would be tantamount to the taking of property without due process of law. 52

1997 = P18,512,683.11

CONSIDERING THE FOREGOING, the instant petition is DENIED for lack of merit. The
Decision of the Court of Appeals in CA- CA-G.R. SP. No. 64536 is AFFIRMED.

1998 = P13,669, 095.80

SO ORDERED.

1999 = P14,626,684.36
Hence, for a period of four (4) years, respondent Stern accumulated losses
amounting to around P66,000,000.00, with no sign of abating in the future. The
petitioners failed to back up their allegation that the expenses presented in the
financial statements were bloated. Nor did the petitioners explain why independent
public accountants Clemente Uson & Co. and Banaria, Banaria and Company would
knowingly allow false figures to be included in the balance sheets. Consequently, we
are more inclined to affirm the finding of the public respondent that the expenses
presented by the private respondents were not fabricated. 47

LINTON COMMERCIAL CO., INC.

and DESIREE ONG,
Petitioners,

Contrary to the allegation of petitioners, income tax returns are self-serving

documents because they are generally filled up by the taxpayer himself, and are still
to be examined by the Bureau of Internal Revenue for their correctness. 48
The Court notes that petitioners failed to dispute the validity of the financial
statements and receipts submitted by respondents, or that any false entries were
made therein. They also failed to prove, much less impute, any ill motive on the part

-versus-

G.R. No. 163147

Present:
QUISUMBING, J.,
Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

ALEX A. HELLERA, FRANCISCO

RACASA, DANTE ESCARLAN,
DONATO SASA, RODOLFO OLINAR,
Promulgated:
DANIEL CUSTODIO, ARTURO POLLO,
ROBERT OPELIA, B. PILAPIL,
WINIFREG BLANDO, JUANITO
October 10, 2007
GUILLERMO, DONATO BONETE,
ISAGANI YAP, CESAR RAGONON, BENEDICTO
ILAGAN, REXTE SOLANOY, RODOLFO
LIM, ERNESTO ALCANTARA, DANTE
DUMAPE, FELIPE CAGOCO, JR., JOSE
NARCE, NELIO CANTIGA, QUIRINO C.
ADA, MANUEL BANZON, JOEL F. ADA,
SATPARAM ELMER, ROMEO BALAIS,
CLAUDIO S. MORALES, DANILO NORLE,
LEONCIO RACASA, NOEL LEONCIO
RACASA, NOEL ACEDILLA, ELPIDIO E.
VERGABINIA, JR., CONRADO CAGOCO,
ROY BORAGOY, EDUARDO GULTIA,
REYNALDO SANTOS, LINO VALENCIA,
ROY DURANO, LEO VALENCIA, ROBERTO
BLANDO, JAYOMA A., NOMER ALTAREJOS,
RAMON OLINAR III, SATURNINO C. EBAYA,
FERNANDO R. REBUCAS, NICANOR L. DE
CASTRO, EDUARDO GONZALES, ISAGANI
GONZALES, THOMAS ANDRAB, JR., MINIETO
DURANO, ERNESTO VALLENTE, NONITO I.
DULA, NESTOR M. BONETE, JOSE SALONOY,
ALBERTO LAGMAN, ROLANDO TORRES,
ROLANDO TOLDO, ROLINDO CUALQUIERA,
ARMANDO LIMA, FELIX D. DUMARE, ALFREDO
SELAPIO, MARTIN V. VILLACAMPA, JR., CARLITO
PABLE, DANTE ESCARLAN, M. DURANO, RAMON
ROSO, LORETA RAFAEL, and ELEZAR MELLEJOR,
Respondents.

Linton Commercial Company, Inc. (Linton) had committed illegal reduction of work
when it imposed a reduction of work hours thereby affecting its employees.
Linton is a domestic corporation engaged in the business of importation,
wholesale, retail and fabrication of steel and its by-products. [3] Petitioner Desiree
Ong

is

Lintons

memorandum

[5]

vice

president. [4] On 17

December

1997,

Linton

issued

addressed to its employees informing them of the companys

decision to suspend its operations from18 December 1997 to 5 January 1998 due to
the currency crisis that affected its business operations. Linton submitted an
establishment termination report[6] to the Department of Labor and Employment
(DOLE) regarding the temporary closure of the establishment covering the said
period. The companys operation was to resume on 6 January 1998.
On 7 January 1997,[7] Linton issued another memorandum [8] informing them
that effective 12 January 1998, it would implement a new compressed workweek of
three (3) days on a rotation basis. In other words, each worker would be working on
a rotation basis for three working days only instead for six days a week. On the
same day, Linton submitted an establishment termination report [9] concerning the
rotation of its workers. Linton proceeded with the implementation of the new policy
without waiting for its approval by DOLE.

x-------------------------------------------------------------------------------------x
Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal

DECISION
TINGA, J.:

reduction of workdays with the Arbitration Branch of the NLRC on 17 July 1998.

On the other hand, the workers pointed out that Linton implemented the

This is a petition for review under Rule 45 of the Rules of Civil Procedure
seeking the reversal of the Decision [1] of the Court of Appeals promulgated on 12
December 2003 as well as its Resolution [2] promulgated on 2 April 2004 denying
petitioners motion for reconsideration.

reduction of work hours without observing Article 283 of the Labor Code, which
required

submission

of

notice

thereof

to

DOLE

one

month

prior

to

the

implementation of reduction of personnel, since Linton filed only the establishment

termination report enacting the compressed workweek on the very date of its

This case originated from a labor complaint filed before the National Labor
Relations Commission (NLRC) in which herein respondents contended that petitioner

implementation.[10]

Petitioners, on the other hand, contended that the devaluation of the peso

because no closure was undertaken and no reduction of employees was

created a negative impact in international trade and affected their business because

implemented by Linton. Lastly, the NLRC took note that there were twenty-one (21)

a majority of their raw materials were imported. They claimed that their business

complainants-workers[15] who had already resigned and executed individual waivers

suffered a net loss of P3,569,706.57 primarily due to currency devaluation and the

and quitclaims. Consequently, the NRLC considered them as dropped from the list of

slump in the market. Consequently, Linton decided to reduce the working days of its

complainants.

employees to three (3) days on a rotation basis as a cost-cutting measure. Further,

Resolution

[16]

The

workers

motion

for

reconsideration

was

denied

in

dated 24 September 2001.

petitioners alleged that the compressed workweek was actually implemented on 12

The workers then filed before the Court of Appeals [17] a petition for certiorari

January 1998 and not on 7 January 1998, and that Article 283 was not applicable to
the instant case.[11]

under Rule 65 of the Rules of Civil Procedure assailing the decision [18] of the NLRC
and its resolution[19] that denied their Motion for Reconsideration. In the petition, the

Pending decision of the Labor Arbiter, twenty-one (21) of the workers

workers claimed that the NLRC erred in finding that the one (1) month notice

signed individual release and quitclaim documents stating that they had voluntarily

requirement under Article 283 of the Labor Code did not apply to the instant case;

tendered their resignation as employees of Linton and that they had been fully paid

that Linton did not exceed the limits of its business prerogatives; and that Linton

of all monetary compensation due them.

[12]

was able to establish a factual basis on record to justify the reduction of work days.

On 28 January 2000, the Labor Arbiter rendered a Decision [13] finding

In its Comment,[20] Linton highlighted the fact that the caption, the body as

petitioners guilty of illegal reduction of work hours and directing them to pay each of

well as the verification of the petition submitted by complainants-workers indicated

the workers their three (3) days/weeks worth of work compensation from 12 January

solely Alex Hellera, et al. as petitioners. Linton argued that the petition was

1998 to 13 July 1998.

defective and did not necessarily include the other workers in the proceedings
before the NLRC. Linton also mentioned that 21 out of the 68 complainants-workers

Petitioners appealed to the National Labor Relations Commission (NLRC). In

a Resolution

[14]

promulgated on 29 June 2001, the NLRC reversed the decision of the

executed individual resignation letters and individual waivers and quitclaims.

[21]

With these waivers and quitclaims, Linton raised in issue whether the petition

Labor Arbiter. The NLRC held that an employer has the prerogative to control all

still included the signatories of said documents. Moreover, Linton pointed out that

aspects of employment in its business organization, including the supervision of

the caption of the petition did not include the NLRC as party respondent, which

workers, work regulation, lay-off of workers, dismissal and recall of workers. The

made for another jurisdictional defect. The rest of its arguments were merely a

NLRC took judicial notice of the Asian currency crisis in 1997 and 1998 thus finding

reiteration of its arguments before the NLRC.

Lintons decision to implement a compressed workweek as a valid exercise of

management prerogative. Moreover, the NLRC ruled that Article 283 of the Labor

In reversing the NLRC, the Court of Appeals, in its Decision [22] dated 12

Code, which requires an employer to submit a written notice to DOLE one (1) month

December 2003 ruled that the failure to indicate all the names of petitioners in the

prior to the closure or reduction of personnel, is not applicable to the instant case

caption of the petition was not violative of the Rules of Court because the records of

the case showed that there were sixty-eight (68) original complainants who filed the

Lastly, the appellate court found Linton to have failed to adopt a more

complaint before the Arbitration Branch of the NLRC. The appellate court likewise

sensible means of cutting the costs of its operations in less drastic measures not

considered the quitclaims and release documents as ready documents which did

grossly unfavorable to labor. Hence, Linton failed to establish enough factual basis to

not change the fact that the 21 workers were impelled to sign the same. The

justify the necessity of a reduced workweek. [25]

appellate court gave no credence to the said quitclaims, considering the economic
disadvantage that would be suffered by the employees. The appellate court also
noted that the records did not show that the 21 workers desisted from pursuing the

Petitioners filed a motion for reconsideration [26] which the appellate court
denied through a Resolution[27] dated 2 April 2004.

petition and that the waivers and quitclaims would not bar the 21 complainants from
continuing the action.[23]

In filing the instant petition for review, petitioners allege that the Court of
Appeals erred when it considered the petition as having been filed by all sixty (68)

On the failure to include the NLRC as party respondent, the appellate court

workers, in disregard of the fact that only Alex Hellera, et al. was indicated as

treated the NLRC as a nominal party which ought to be joined as party to the

petitioner in the caption, body and verification of the petition and twenty-one (21) of

petition simply because the technical rules require its presence on record. The

the workers executed waivers and quitclaims. Petitioners further argue that the

inclusion of the NLRC in the body of the petition was deemed by the appellate court

Court of Appeals erred in annulling the release and quitclaim documents signed by

as substantial compliance with the rules.

21 employees because no such relief was prayed for in the petition. The validity of
the release and quitclaim was also not raised as an issue before the labor arbiter nor

On the main issues, the Court of Appeals ruled that the employees were

the NLRC. Neither was it raised in the very petition filed before the Court of

constructively dismissed because the short period of time between the submission

Appeals. Petitioners conclude that the Court of Appeals, therefore, had invalidated

of the establishment termination report informing DOLE of its intention to observe a

the waivers and quitclaims motu proprio.

compressed workweek and the actual implementation thereat was a manifestation

of Lintons intention to eventually retrench the employees. It found that Linton had

Petitioners also allege that the Court of Appeals erred when it held that the

failed to observe the substantive and procedural requirements of a valid dismissal or

reduction of workdays is equivalent to constructive dismissal. They posit that there

retrenchment to avoid or minimize business losses since it had failed to present

was no reduction of salary but instead only a reduction of working days from six to

adequate, credible and persuasive evidence that it was indeed suffering, or would

three days per week. Petitioners add that the reduction of workdays, while not

imminently suffer, from drastic business losses. Lintons financial statements for

expressly covered by any of the provisions of the Labor Code, is analogous to the

1997-1998 showed no indication of financial losses, and the alleged loss

situation contemplated in Article 286[28] of the Labor Code because the company

of P3,645,422.00 in 1997 was considered insubstantial considering its total asset

implemented the reduction of workdays to address its financial losses. Lastly, they

of P1,065,948,601.00.Hence, the appellate court considered Lintons losses as de

note that since there was no retrenchment, the one-month notice requirement under

minimis.[24]

Article 283 of the Labor Code is not applicable.

First, we resolve the procedural issues of the case. Rule 7, Section 1 of the

With respect to the absence of the workers signatures in the verification,

Rules of Court states that the names of the parties shall be indicated in the title of

the verification requirement is deemed substantially complied with when some of

the original complaint or petition. However, the rules itself endorses its liberal

the parties who undoubtedly have sufficient knowledge and belief to swear to the

construction if it promotes the objective of securing a just, speedy and inexpensive

truth of the allegations in the petition had signed the same. Such verification is

disposition of the action or proceeding.[29] Pleadings shall be construed liberally so

deemed a sufficient assurance that the matters alleged in the petition have been

as to render substantial justice to the parties and to determine speedily and

made in good faith or are true and correct, and not merely speculative. [35] The

inexpensively the actual merits of the controversy with the least regard to

verification in the instant petition states that Hellera, the affiant, is the president of

technicalities.

[30]

the union of which complainants are all members and officers. [36] As the matter at
hand is a labor dispute between Linton and its employees, the union president

In Vlason

Enterprises

Corporation

v.

Court

of

Appeals

[31]

the

Court

undoubtedly has sufficient knowledge to swear to the truth of the allegations in the

pronounced that, while the general rule requires the inclusion of the names of all the

petition. Helleras verification sufficiently meets the purpose of the requirements set

parties in the title of a complaint, the non-inclusion of one or some of them is not

by the rules.

fatal to the cause of action of a plaintiff, provided there is a statement in the body of
the petition indicating that a defendant was made a party to such action. If

Moreover, the Court has ruled that the absence of a verification is not

in Vlason the Court found that the absence of defendants name in the caption

jurisdictional, but only a formal defect. [37] Indeed, the Court has ruled in the past that

would not cause the dismissal of the action, more so in this case where only the

a pleading required by the Rules of Court to be verified may be given due course

names of some of petitioners were not reflected. This is consistent with the general

even without a verification if the circumstances warrant the suspension of the rules

rule that mere failure to include the name of a party in the title of a complaint is not

in the interest of justice.[38]

fatal by itself.[32]
We turn to the propriety of the Court of Appeals ruling on the invalidity of
Petitioners likewise challenge the absence of the names of the other

the waivers and quitclaims executed by the 21 workers. It must be remembered that

workers in the body and verification of the petition. The workers petition shows that

the petition filed before the Court of Appeals was a petition for certiorari under Rule

the petition stipulated as parties-petitioners Alex A. Hellera, et al. as employees of

65 in which, as a rule, only jurisdictional questions may be raised, including matters

Linton, meaning that there were more than one petitioner who were all workers of

of grave abuse of discretion which are equivalent to lack of jurisdiction. [39] The issue

Linton. The petition also attached the resolution [33] of the NLRC where the names of

on the validity or invalidity of the waivers and quitclaims was not raised as an issue

the workers clearly appear. As documents attached to a complaint form part thereof,

in the petition. Neither was it raised in the NLRC. There is no point of reference from

[34]

which one can determine whether or not the NLRC committed grave abuse of

the petition, therefore has sufficiently indicated that the rest of the workers were

parties to the petition.

discretion in its finding on the validity and binding effect of the waivers and
quitclaims since this matter was never raised in issue in the first place.

In addition, petitioners never had the opportunity to support or reinforce

the validity of the waivers and quitclaims because the authenticity and binding

ruling inPhilippine Graphic Arts Inc., in determining the validity of reduction of

working hoursthat the company was suffering from losses.

effect thereof were never challenged. In the interest of fair play, justice and due
process, the documents should not have been unilaterally evaluated by the Court of
Appeals. Thus, the corresponding modification of its Decision should be ordained.

Petitioners attempt to justify their action by alleging that the company was
suffering from financial losses owing to the Asian currency crisis. Was petitioners
claim of financial losses supported by evidence?

After resolving the technical aspects of this case, we now proceed to the
merits thereof. The main issue in this labor dispute is whether or not there was an

The lower courts did not give credence to the income statement submitted

illegal reduction of work when Linton implemented a compressed workweek by

by Linton because the same was not audited by an independent auditor. [42] The

reducing from six to three the number of working days with the employees working

NLRC, on the other hand, took judicial notice of the Asian currency crisis which

on a rotation basis.

resulted in the devaluation of the peso and a slump in market demand. [43] The Court
of Appeals for its part held that Linton failed to present adequate, credible and

In Philippine Graphic Arts, Inc. v. NLRC,[40] the Court upheld for the validity

persuasive evidence to show that it was in dire straits and indeed suffering, or would

of the reduction of working hours, taking into consideration the following: the

imminently suffer, from drastic business losses. It did not find the reduction of work

arrangement was temporary, it was a more humane solution instead of a

hours justifiable, considering that the alleged loss of P3,645,422.00 in 1997 is

retrenchment of personnel, there was notice and consultations with the workers and

insubstantial compared to Lintons total asset ofP1,065,948,601.76.[44]

supervisors, a consensus were reached on how to deal with deteriorating economic

conditions and it was sufficiently proven that the company was suffering from losses.
A close examination of petitioners financial reports for 1997-1998 shows
The Bureau of Working Conditions of the DOLE, moreover, released a

that, while the company suffered a loss of P3,645,422.00 in 1997, it retained a

bulletin[41] providing for in determining when an employer can validly reduce the

considerable amount of earnings [45] and operating income.[46] Clearly then, while

regular number of working days. The said bulletin states that a reduction of the

Linton suffered from losses for that year, there remained enough earnings to

number of regular working days is valid where the arrangement is resorted to by the

sufficiently sustain its operations. In business, sustained operations in the black is

employer to prevent serious losses due to causes beyond his control, such as when

the ideal but being in the red is a cruel reality. However, a year of financial losses

there is a substantial slump in the demand for his goods or services or when there is

would not warrant the immolation of the welfare of the employees, which in this

lack of raw materials.

case was done through a reduced workweek that resulted in an unsettling

diminution of the periodic pay for a protracted period. Permitting reduction of work

Although the bulletin stands more as a set of directory guidelines than a

binding set of implementing rules, it has one main consideration, consistent with the

and pay at the slightest indication of losses would be contrary to the States policy
to afford protection to labor and provide full employment. [47]

Certainly, management has the prerogative to come up with measures to

ensure profitability or loss minimization. However, such privilege is not absolute.

(1) The compressed workweek arrangement was lifted after six (6) months, or on 13

Management prerogative must be exercised in good faith and with due regard to the

July 1998.[51] Thus, Linton resumed its regular operations and discontinued the

rights of labor.[48]

emergency measure;

(2) The claims of the workers, as reflected in their pleadings, were narrowed to
As previously stated, financial losses must be shown before a company can

petitioners illegal reduction of their work hours and the non-payment of their

validly opt to reduce the work hours of its employees. However, to date, no definite

compensation for three (3) days a week from 12 January 1998 to 13 July 1998. They

guidelines have yet been set to determine whether the alleged losses are sufficient

did not assert any other claims;

to justify the reduction of work hours. If the standards set in determining the
justifiability of financial losses under Article 283 (i.e., retrenchment) or Article 286

(3) As found by the NLRC, 21 of the workers are no longer entitled to any monetary

(i.e., suspension of work) of the Labor Code were to be considered, petitioners would

award since they had already executed their respective waivers and quitclaims. We

end up failing to meet the standards. On the one hand, Article 286 applies only

give weight to the finding and exclude the 21 workers as recipients of the award to

when there is a bona fide suspension of the employers operation of a business or

be granted in this case. Consequently, only the following workers are entitled to the

undertaking for a period not exceeding six (6) months. [49] Records show that Linton

award, with the amounts respectively due them stated opposite their names:

continued its business operations during the effectivity of the compressed

workweek, which spanned more than the maximum period. On the other hand, for
retrenchment to be justified, any claim of actual or potential business losses must
satisfy the following standards: (1) the losses incurred are substantial and notde
minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is
reasonably necessary and is likely to be effective in preventing the expected losses;
and (4) the alleged losses, if already incurred, or the expected imminent losses
sought to be forestalled, are proven by sufficient and convincing evidence. [50] Linton
failed to comply with these standards.

All taken into account, the compressed workweek arrangement was

unjustified and illegal. Thus, petitioners committed illegal reduction of work hours.

In assessing the monetary award in favor of respondents, the Court has

taken the following factors into account:

1. Alex A. Hellera
2. Francisco Racasa
3. Dante Escarlan
4. Donato Sasa
5. Rodolfo Olinar
6. Daniel Custodio
7. Arturo Pollo
8. B. Pilapil
9. Donato Bonete
10. Isagani Yap
11. Cesar Ragonon
12. Benedicto Bagan
13. Rexte Solanoy
14. Felipe Cagoco, Jr.
15. Jose Narce
16. Quirino C. Ada
17. Salfaram Elmer
18. Romeo Balais
19. Claudio S. Morales 20. Elpidio E. Vergabinia
21. Conrado Cagoco
22. Roy Boragoy
23. Reynaldo Santos
24. Lino Valencia
25. Roy Durano
26. Leo Valencia

P16,368.30
16,458.00
15,912.00
15,580.50
15,912.00
15,912.00
16,660.80
16,075.80
15,600.00
15,678.00
16,068.00
15,775.50
15,678.00
15,990.00
16,348.80
15,990.00
16,302.00
16,302.00
15,947.10
15,561.00
15,990.00
15,892.50
16,200.60
15,678.00
15,678.00
15,678.00

27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.

Jayoma A.
Ramon Olinar III
Saturnino C. Ebaya Nicanor L. de Castro
Eduardo Gonzales
Isagani Gonzales
Thomas Andrab, Jr.
Minieto Durano
Ernesto Vallente
Nestor M. Bonete
Jose Salonoy
Alberto Lagman
Rolando Torres
Rolindo Cualquiera Armando Lima
Alfredo Selapio
Martin V. Villacampa
Carlito Pable
Dante Escarlan
M. Durano
Ramon Roso

15,561.00
15,678.00
15,919.80
16,614.00
15,678.00
16,469.70
15,912.00
16,660.80
15,997.80
15,705.30
16,458.00
16,660.80
15,678.00
16,068.00
16,426.80
16,060.20
15,939.30
16,263.00
15,912.00
16,614.00
16,302.00[52]

SO ORDERED.

G.R. No. 91298 June 22, 1990

CORAZON PERIQUET, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and THE PHIL. NATIONAL
CONSTRUCTION CORPORATION (Formerly Construction Development Corp.
of the Phils.), respondents.
Tabaquero, Albano & Associates for petitioner.
The Government Corporate Counsel for private respondent.

(4) The Labor Arbiters decision in favor of respondents was reversed by the NLRC.
Considering that there is no provision for appeal from the decision of the NLRC,
[53]

petitioners should not be deemed at fault in not paying the award as ordered by

the Labor Arbiter. Petitioners liability only gained a measure of certainty only when
the Court of Appeals reversed the NLRC decision. In the interest of justice, the 6%
legal interest on the award should commence only from the date of promulgation of
the Court of Appeals Decision on 12 December 2003.

WHEREFORE, the Petition is GRANTED IN PART. The decision of the Court of

Appeals

reinstating

the

decision

of

the

Labor

Arbiter

is

AFFIRMED

with

MODIFICATION to the effect that the 21 workers who executed waivers and

CRUZ, J.:
It is said that a woman has the privilege of changing her mind but this is usually
allowed only in affairs of the heart where the rules are permissibly inconstant. In the
case before us, Corazon Periquet, the herein petitioner, exercised this privilege in
connection with her work, where the rules are not as fickle.
The petitioner was dismissed as toll collector by the Construction Development
Corporation of the Philippines, private respondent herein, for willful breach of trust
and unauthorized possession of accountable toll tickets allegedly found in her purse
during a surprise inspection. Claiming she had been "framed," she filed a complaint
for illegal dismissal and was sustained by the labor arbiter, who ordered her
reinstatement within ten days "without loss of seniority rights and other privileges
and with fun back wages to be computed from the date of her actual dismissal up to
date of her actual reinstatement." 1 On appeal, this order was affirmed in toto by
public respondent NLRC on August 29, 1980. 2

quitclaims are no longer entitled to back payments. Petitioners are ORDERED TO PAY
respondents, except the aforementioned 21 workers, the monetary award as
computed,[54] pursuant to the decision of the Labor Arbiter [55] with interest at the rate
of 6% per annum from 12 December 2003, the date of promulgation of the Court of
Appeals decision, until the finality of this decision, and thereafter at the rate of 12%
per annum until full payment.

On March 11, 1989, almost nine years later, the petitioner filed a motion for the
issuance of a writ of execution of the decision. The motion was granted by the
executive labor arbiter in an order dated June 26, 1989, which required payment to
the petitioner of the sum of P205,207.42 "by way of implementing the balance of
the judgment amount" due from the private respondent. 3 Pursuant thereto, the said
amount was garnished by the NLRC sheriff on July 12, 1989. 4 On September 11,
1989, however, the NLRC sustained the appeal of the CDCP and set aside the order
dated June 20, 1989, the corresponding writ of execution of June 26, 1989, and the
notice of garnishment. 5

In its decision, the public respondent held that the motion for execution was timebarred, having been filed beyond the five-year period prescribed by both the Rules
of Court and the Labor Code. It also rejected the petitioner's claim that she had not
been reinstated on time and ruled as valid the two quitclaims she had signed
waiving her right to reinstatement and acknowledging settlement in full of her back
wages and other benefits. The petitioner contends that this decision is tainted with
grave abuse of discretion and asks for its reversal. We shall affirm instead.
Sec. 6, Rule 39 of the Revised Rules of Court, provides:
SEC. 6. Execution by motion or by independent action. A
judgment may be executed on motion within five (5) years from
the date of its entry or from the date it becomes final and
executory. After the lapse of such time, and before it is barred by
the statute of limitations, a judgment may be enforced by action.
A similar provision is found in Art. 224 of the Labor Code, as amended by RA 6715,
viz.
ART. 224. Execution of decision, orders, awards. (a) The
Secretary of Labor and Employment or any Regional Director, the
Commission or any Labor Arbiter or Med-Arbiter, or the 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 a final decision, order
or award. ...
The petitioner argues that the above rules are not absolute and cites the exception
snowed in Lancita v. Magbanua, 6 where the Court held:
Where judgments are for money only and wholly unpaid, and
execution has been previously withheld in the interest of the
judgment debtor, which is in financial difficulties, the court has no
discretion to deny motions for leave to issue execution more than
five years after the judgments are entered. (Application of Molnar,
Belinsky, et al. v. Long Is. Amusement Corp., I N.Y.S, 2d 866)
In computing the time limited for suing out of an execution,
although there is authority to the contrary, the general rule is that
there should not be included the time when execution is stayed,
either by agreement of the parties for a definite time, by
injunction, by the taking of an appeal or writ of error so as to
operate as a supersedeas, by the death of a party, or otherwise.
Any interruption or delay occasioned by the debtor will extend the
time within which the writ may be issued without scire facias.
xxx xxx xxx
There has been no indication that respondents herein had ever
slept on their rights to have the judgment executed by mere
motions, within the reglementary period. The statute of limitation

has not been devised against those who wish to act but cannot do
so, for causes beyond their central.
Periquet insists it was the private respondent that delayed and prevented the
execution of the judgment in her favor, but that is not the way we see it. The record
shows it was she who dilly-dallied.
The original decision called for her reinstatement within ten days from receipt
thereof following its affirmance by the NLRC on August 29, 1980, but there is no
evidence that she demanded her reinstatement or that she complained when her
demand was rejected. What appears is that she entered into a compromise
agreement with CDCP where she waived her right to reinstatement and received
from the CDCP the sum of P14,000.00 representing her back wages from the date of
her dismissal to the date of the agreement. 7
Dismissing the compromise agreement, the petitioner now claims she was actually
reinstated only on March 16, 1987, and so should be granted back pay for the period
beginning November 28, 1978, date of her dismissal, until the date of her
reinstatement. She conveniently omits to mention several significant developments
that transpired during and after this period that seriously cast doubt on her candor
and bona fides.
After accepting the sum of P14,000.00 from the private respondent and waiving her
right to reinstatement in the compromise agreement, the petitioner secured
employment as kitchen dispatcher at the Tito Rey Restaurant, where she worked
from October 1982 to March 1987. According to the certification issued by that
business, 8 she received a monthly compensation of P1,904.00, which was higher
than her salary in the CDCP.
For reasons not disclosed by the record, she applied for re-employment with the
CDCP and was on March 16,1987, given the position of xerox machine operator with
a basic salary of P1,030.00 plus P461.33 in allowances, for a total of P1,491.33
monthly. 9
On June 27, 1988; she wrote the new management of the CDCP and asked that the
rights granted her by the decision dated August 29, 1980, be recognized because
the waiver she had signed was invalid. 10
On September 19, 1988, the Corporate Legal Counsel of the private respondent
(now Philippine National Construction Corporation) recommended the payment to
the petitioner of the sum of P9,544.00, representing the balance of her back pay for
three years at P654. 00 per month (minus the P14,000.00 earlier paid). 11
On November 10, 1988, the petitioner accepted this additional amount and signed
another Quitclaim and Release reading as follows:
KNOW ALL MEN BY THESE PRESENTS:
THAT, I CORAZON PERIQUET, of legal age, married and resident of No. 87 Annapolis
St., Quezon City, hereby acknowledged receipt of the sum of PESOS: NINE
THOUSAND FIVE HUNDRED FORTY FOUR PESOS ONLY (P9,544.00) Philippine
currency, representing the unpaid balance of the back wages due me under the

judgment award in NLRC Case No. AB-2-864-79 entitled "Corazon Periquet vs. PNCCTOLLWAYS" and I further manifest that this payment is in full satisfaction of all my
claims/demands in the aforesaid case. Likewise, I hereby manifest that I had
voluntarily waived reinstatement to my former position as TOLL TELLER and in lieu
thereof, I sought and am satisfied with my present position as XEROX MACHINE
OPERATOR in the Central Office.
Finally, I hereby certify that delay in my reinstatement, after finality of the Decision
dated 10 May 1979 was due to my own fault and that PNCC is not liable thereto.
I hereby RELEASE AND DISCHARGE the said corporation and its officers from money
and all claims by way of unpaid wages, separation pay, differential pay, company,
statutory and other benefits or otherwise as may be due me in connection with the
above-entitled case. I hereby state further that I have no more claims or right of
action of whatever nature, whether past, present, future or contingent against said
corporation and its officers, relative to NLRC Case No. AB-2-864-79.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of November
1988 at Mandaluyong, Metro Manila. (Emphasis supplied.) 12
The petitioner was apparently satisfied with the settlement, for in the memorandum
she sent the PNCC Corporate Legal Counsel on November 24, 1988, 13 she said in
part:
Sir, this is indeed my chance to express my gratitude to you and
all others who have helped me and my family enjoy the fruits of
my years of stay with PNCC by way of granting an additional
amount of P9,544.00 among others ...
As per your recommendation contained therein in said memo, I am
now occupying the position of xerox machine operator and is (sic)
presently receiving a monthly salary of P2,014.00.
Reacting to her inquiry about her entitlement to longevity pay, yearly company
increases and other statutory benefits, the private respondent adjusted her monthly
salary from P2,014.00 to P3,588.00 monthly.
Then the lull. Then the bombshell.
On March 11, 1989, she filed the motion for execution that is now the subject of this
petition.
It is difficult to understand the attitude of the petitioner, who has blown hot and
cold, as if she does not know her own mind. First she signed a waiver and then she
rejected it; then she signed another waiver which she also rejected, again on the
ground that she had been deceived. In her first waiver, she acknowledged full
settlement of the judgment in her favor, and then in the second waiver, after
accepting additional payment, she again acknowledged fun settlement of the same
judgment. But now she is singing a different tune.
In her petition she is now disowning both acknowledgments and claiming that the
earlier payments both of which she had accepted as sufficient, are insufficient. They

were valid before but they are not valid now. She also claimed she was harassed and
cheated by the past management of the CDCP and sought the help of the new
management of the PNCC under its "dynamic leadership." But now she is
denouncing the new management-for also tricking her into signing the second
quitclaim.
Not all waivers and quitclaims are invalid as against public policy. If the agreement
was voluntarily entered into and represents a reasonable settlement, it is binding on
the parties and may not later be disowned simply because of a change of mind. It is
only where there is clear proof that the waiver was wangled from an unsuspecting or
gullible person, or the terms of settlement are unconscionable on its face, that the
law will step in to annul the questionable transaction. But where it is shown that the
person making the waiver did so voluntarily, with full understanding of what he was
doing, and the consideration for the quitclaim is credible and reasonable, the
transaction must be recognized as a valid and binding undertaking. As in this case.
The question may be asked: Why did the petitioner sign the compromise agreement
of September 16, 1980, and waive all her rights under the judgment in consideration
of the cash settlement she received? It must be remembered that on that date the
decision could still have been elevated on certiorari before this Court and there was
still the possibility of its reversal. The petitioner obviously decided that a bird in
hand was worth two on the wing and so opted for the compromise agreement. The
amount she was then waiving, it is worth noting, had not yet come up to the
exorbitant sum of P205,207.42 that she was later to demand after the lapse of eight
years.
The back pay due the petitioner need not detain us. We have held in countless cases
that this should be limited to three years from the date of the illegal dismissal,
during which period (but not beyond) the dismissed employee is deemed
unemployed without the necessity of proof. 14 Hence, the petitioner's contention that
she should be paid from 1978 to 1987 must be rejected, and even without regard to
the fact (that would otherwise have been counted against her) that she was actually
employed during most of that period.
Finally, the petitioner's invocation of Article 223 of the Labor Code to question the
failure of the private respondent to file a supersedeas bond is not well-taken. As the
Solicitor General correctly points out, the bond is required only when there is an
appeal from the decision with a monetary award, not an order enforcing the
decision, as in the case at bar.
As officers of the court, counsel are under obligation to advise their clients against
making untenable and inconsistent claims like the ones raised in this petition that
have only needlessly taken up the valuable time of this Court, the Solicitor General,
the Government Corporate Counsel, and the respondents. Lawyers are not merely
hired employees who must unquestioningly do the bidding of the client, however
unreasonable this may be when tested by their own expert appreciation of the
pertinent facts and the applicable law and jurisprudence. Counsel must counsel.
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so
ordered.

[G.R. NO. 156761 : October 17, 2006]

LADY LYDIA CORNISTA-DOMINGO, SYLVIA SALANGA, LIWAYWAY SILAPAN,
CYNTHIA ALICANTE, ALBERTO ANCHETA, ANA MARIA SANCHEZ, ELENA
TUMBAGA, PEDRO JOSU, TERESITA VOCAL, ROSIE ANCHETA, LILIA
PINUELA-JULIAN, IMELDA ERESE, NORMA YABUT, LOURDES PINEDA,
CORAZON CARANDANG, ERLINDA GUTIERREZ, MARIO MILAN, FLAVIANO
MEJIA, JR., ESTELA AYSON, ENRIQUE GARAYGAY, ROSE DAILEG, JOSE CALDO,
RITA BATAC, MARIA CORAZON GALAN, MA. ELISA GAYO, DEBBIE
RODRIGUEZ, CAROLINA CABEBE, EDGARDO BOLIVAR, FE ILAGAN, TERESITA
MONDEJAR, ELVIRA ANGELES, PEDRO EMPIG, LUZ MARQUEZ, TERESITA
DORIA, ABELARDO BONTOC, MADELON REYES-YEE and FILOMENO CINCO,
JR., Petitioners, v.NATIONAL LABOR RELATIONS COMMISSION, LABOR
ARBITER EDUARDO J. CARPIO, PHILIPPINE VETERANS BANK and/or SUNDAY
LAVIN, PHILIPPINE VETERANS BANK EMPLOYEES UNION and/or FELIZARDO
SARAPAT, AMELITA DURIAN, RICARDO RICAFRENTE, LEON MAGALONA,
FERMIN CASTILLO, NORMINIO MOJICA and OLYMPIO DE
GUZMAN, Respondents.

terminated the employment of all the employees of the Bank effective June 15,
1985. Thereafter, the liquidator commenced payment of separation pay and other
benefits to the terminated employees.
Although a number of the Bank employees accepted their separation pay and other
benefits and executed quitclaims and releases therefor in favor of the Bank, others
chose to question their termination. Thus, on September 25, 1985, the Union filed a
supplemental petition for prohibition with preliminary injunction in G.R. No. 67125
opposing Monetary Board Resolution No. 612.
On August 24, 1990, the Court promulgated a consolidated 3 en banc Decision4 in
G.R. No. 67125 upholding the authority of the Monetary Board to place the
respondent Bank under liquidation as well as the legality of the termination of all the
Bank's employees, including the members of the Union. The Court also rejected the
dismissed employees' claim for back wages as it held that they were not illegally
dismissed but lawfully separated as a result of the Bank's liquidation upon order of
the Monetary Board.
On January 2, 1992, Congress enacted Republic Act (R.A.) No. 7169, 5 authorizing the
Central Bank to reopen the Bank.
To facilitate the implementation of R.A. No. 7169, a Rehabilitation Committee was
created by the Monetary Board. The committee thus created was given the power to
select and to organize an initial manning force headed by a management team to be
staffed by a trained workforce. Hiring preference was given the veterans and their
dependents, other qualifications being equal.6

DECISION

GARCIA, J.:
By this Petition for Review on Certiorari, 1 petitioners seek the review and reversal of
the consolidated Decision2dated December 21, 2001 of the Court of Appeals (CA) in
CA-G.R. SP No. 51218, CA-G.R. SP No. 51219 and CA-G.R. SP No. 51220 declaring as
null and void the September 14, 1993 decision and the November 22, 1993
resolution of the National Labor Relations Commission (NLRC) and reinstating the
decision dated March 31, 1993 of Labor Arbiter Eduardo J. Carpio. Likewise, assailed
is the CA Resolution of January 8, 2003, denying the petitioners' motion for
reconsideration.
The ultimate facts material to the resolution of the case are as follows:
On April 10, 1983, by virtue of Resolution No. 334 of the Central Bank's Monetary
Board, the Philippine Veterans Bank (Bank, hereafter) was placed under receivership.
In consequence, the Bank adopted a retrenchment and reorganization program
which was challenged before this Court by the Philippine Veterans Bank Employees
Union (Union, hereafter) on the ground that the program allegedly violated the
security of tenure of the Bank's employees, in G.R. No. 67125 entitled Philippine
Veterans Bank Employees Union-NUBE v. Philippine Veterans Bank.
While G.R. No. 67125 was pending, the Monetary Board issued Resolution No. 612,
dated June 7, 1985, ordering the liquidation of the Bank. The Monetary Board then
appointed a liquidator who, pursuant to the authority vested by the same Board,

At this juncture, several employees of the Bank initiated a series of cases claiming
that the enactment of R.A. No. 7169 nullified Monetary Board Resolution No. 612
placing respondent Bank under liquidation and, in effect, also nullified the
liquidator's termination of the Bank's employees.
On January 20, 1992, the Union filed a petition with the Secretary of Labor and
Employment charging the Bank with unfair labor practices and praying that the
Rehabilitation Committee be directed to cease and desist from screening and hiring
new employees and to immediately reinstate the Bank's former employees. The
petition, docketed asNLRC NCR No. 00-02426-92, also sought payment of the
accrued collective bargaining agreement benefits and back wages of the employees
from the time they were terminated from employment in 1985 up to the time of
their actual reinstatement. Several other petitions seeking essentially the same
relief were consolidated with NLRC NCR No. 00-02426-92.
In the meantime, on August 3, 1992, the respondent Bank resumed operations.
On March 31, 1993, Labor Arbiter Eduardo J. Carpio rendered a decision 7 dismissing
NLRC NCR No. 00-02426-92 and all cases consolidated therewith for lack of merit.
The dispositive portion of said decision reads:
Wherefore, premises considered, the claim of the Union for reinstatement of the
individual complainants it represents as well as the claims for payment of
backwages, other benefits and damages are hereby, as they should be, dismissed
for lack of merit.

The charge for unfair labor practice filed by the Union against the respondent Bank
is likewise dismissed for lack of factual and legal basis.

claims then pending with the NLRC and/or other tribunals arising from the
employment of the individual complainants with the Bank.

SO ORDERED.

A substantial majority of the members of the Union ratified the compromise

agreement.

In time, the Union appealed the Labor Arbiter's decision to the NLRC proper.
On September 14, 1993, the NLRC rendered a Decision 8 reversing and setting aside
that of the Labor Arbiter. Additionally, the NLRC directed the immediate
reinstatement of all Union members subject to the operational requirements of the
Bank which it likewise ordered to cease and desist from further hiring new
employees. More specifically, the fallo of the NLRC decision reads:
ACCORDINGLY, the decision of the Labor Arbiter is hereby SET ASIDE and a new one
entered, finding the claim for reinstatement of the appellant to be legal and proper.
Accordingly, Appellee bank therefore is hereby ordered to immediately reinstate all
members of the appellant union inclusive of those who have executed their
quitclaims and release and all the rest of the PVBEU members, who will signify their
intention to be reinstated from the date of this Decision. In the meanwhile, however,
that the bank has not fully reopened and activated all its operational departments,
offices and branches, the employees' reinstatement shall be conditioned to actual
personnel requirement of the department branch office to be reopened, for which
reason, preference shall be given to employees formerly occupying the position
being reinstated or reactivated or at the prerogative and discretion of management,
to any position in the office provided the latter is of equivalent rank and at least has
the same rate of pay.
For this purpose, appellee is hereby ordered to temporarily cease and desist from
further hiring new employees which might affect the full compliance to this Decision.
The claim for backwages and other CBA benefits are hereby denied for lack merit.
The claim for unfair labor practice is also hereby denied for lack of merit.
SO ORDERED.
On October 1, 1993, the Bank sought a reconsideration of the said decision. Six days
later, or on October 7, 1993, the Union also moved for its partial reconsideration.
Both motions, however, were denied by the NLRC in its resolution of November 22,
1993.
Therefrom, the Bank and the Union interposed separate petitions to this Court.
The Bank, in its petition, docketed as G.R. No. 113423,9 sought to nullify the NLRC
decision of September 14, 1993, reinstating the members of the Union, and its
Resolution of November 22, 1993, denying the Bank's motion for reconsideration.
While in its petition, docketed as G.R. No. 115421,10 the Union sought a modification
of the same decision so as to include the award of backwages.
On January 26, 1996, while G.R. NOS. 113423 and 115421 were pending before the
Court, the Union, through its duly authorized officers, and the Bank entered into
a Compromise Agreement 11 for the amicable settlement of all other cases and

On February 16, 1996, Labor Arbiter Eduardo J. Carpio approved the compromise
agreement and issued an Order12which reads:
WHEREFORE, finding the terms and conditions set forth in the Compromise
Agreement to be not contrary to law, morals and public policy, the same is hereby
approved and considered as in complete and full satisfaction of the Decision in the
above-entitled case dated September 14, 1993.
The parties are hereby enjoined to comply strictly and faithfully with the terms and
conditions of the Compromise Agreement.
SO ORDERED.
A number of the employees, in separate appeals to the NLRC, contested the
foregoing Order of the Labor Arbiter. They argued that the compromise agreement is
contrary to law and jurisprudence.
On February 29, 1996, the Bank and the Union filed before the Court their Joint
Motion to Dismiss Petition in G.R. Cases No. 113423 and 115421.
In a Resolution dated June 17, 1996, the Court denied said Joint Motion. In the same
resolution, the Court gave due course to an Urgent Motion for Leave to Intervene
and to Oppose Motion to Dismiss Petition filed by the bank employees led by a
certain Nestor Garcia and the Urgent Motion With Leave of Court for Individual Union
Members Petitioners to Intervene and to Participate in Their Individual Capacities
And To Oppose Joint Motion to Dismiss Petition filed by the herein petitioners Lady
Lydia Domingo, et al.
On October 2, 1996, the NLRC decided the aforementioned separate appeals from
the Labor Arbiter's Order of February 16, 1996 approving the compromise
agreement. The NLRC ruled that those who received and acknowledged receipt of
the first payment, as agreed upon in the questioned Compromise Agreement, and
who executed the corresponding Quitclaim, Waiver and Release were bound by the
same Compromise Agreement. The decision dispositively reads:
WHEREFORE, in the interest of substantial justice and fair play, the order appealed
from is hereby partially vacated and Set Aside in that:
a) For those union members who received and acknowledged receipt of the first
payment as agreed upon in the Compromise Agreement dated January 26, 1996 and
who executed the corresponding Quitclaim, Waiver and Release will be bound by the
said Compromise Agreement which was made the basis of the Order dated February
16, 1996 appealed from and they shall continue to receive the money due them on
the second and third payments due on December 15, 1996 and December 15, 1997,
respectively.

b) For those union members who signified their opposition and those who are
similarly situated who did not receive and acknowledge receipt of the money, let the
case be remanded to the Arbitration Branch of origin for further proceedings. The
Labor Arbiter so designated to hear is hereby ordered to proceed with dispatch so as
not to prejudice the parties as the disposition hereof has been duly delayed.
SO ORDERED.
Separate petitions were then filed with the Court by the Bank, the Union and the
petitioners. The Bank assailed the reinstatement of union members while the Union
questioned the lack of award for backwages. For their part, the petitioners
questioned the validity of the compromise agreement.
On December 7, 1998, the Court issued a Resolution referring the three aforesaid
petitions to the CA for appropriate action and disposition, pursuant to St. Martin
Funeral Homes v. NLRC.13 In the CA, the Bank's petition, PVB v. NLRC, et al., was
docketed as CA-G.R. SP No. 51218, that of the Union, PVBEU-NUBE v. NLRC, et al.,
was docketed as CA-G.R. SP No. 51219, and that of herein petitioners' Lady Lydia
Cornista Domingo, et al. v. NLRC, et al., was docketed as CA-G.R. SP No. 51220. The
three (3) petitions were thereafter consolidated.
On December 21, 2001, the CA rendered the herein challenged consolidated
decision declaring that the NLRC gravely abused its discretion in ordering the
reinstatement of the union members and accordingly declared null and void its
September 14, 1993 decision and the November 22, 1993 resolution, and instead
reiterated the March 31, 1993 decision of the Labor Arbiter, to wit:
PREMISES CONSIDERED, the assailed NLRC decision dated September 14, 1993 as
well as its Resolution dated November 22, 1993 (CA-G.R. SP No. 51218) are both
declared NULL and VOID and SET ASIDE. The Decision dated March 31, 1993 of the
Labor Arbiter Eduardo J. Carpio is hereby ordered REINSTATED.
Accordingly, the other two (2) petitions, CA-G.R. SP No. 51219 and CA-G.R. SP No.
51220 are hereby DISMISSED for lack of merit.

While the PVB employees concerned should be given priority in hiring, they cannot
demand it as a matter of right.
xxx
Evidently, Domingo, et al. ratified the Compromise Agreement and even voluntarily
received the first payment under that agreement, executing the corresponding
Quitclaim, Waiver and Release in the process. Having done that, they are deemed
bound by the Compromise Agreement under the previously discussed principle
of res judicata and/or estoppel.
xxx
Petitioners are now before the Court via the present recourse essentially arguing
that the CA committed reversible error in foreclosing their right to be reinstated to
their former employment with the Bank upon its rehabilitation and in upholding the
validity of the Compromise Agreement entered into by the Bank and the Union.
Petitioners argue that the passage of R.A. No. 7169,14 which reopened and
rehabilitated the Bank, gave them the right to be reinstated and entitled them to the
payment of back wages and other benefits. They call the Court's attention to
Congress Resolution No. 1104 expressing the sentiments of some congressmen to
give preference to veterans and their dependents in the employment with the Bank.
This resolution, according to petitioners, strengthens their claim for reinstatement.
We are not persuaded.
As we see it, upon implementation of Monetary Board Resolution No. 612 and prior
to the passage of R.A. No. 7169, the Bank ceased to exist. Its subsequent
rehabilitation was not an ordinary rehabilitation. R.A. No. 7169 had to be passed as a
legislative fiat to breathe life into the Bank. While it is true that the Bank used its old
name, a new law had to be enacted to restructure its outstanding liabilities. As it is,
the Bank's present state of finances, the enormous cost of backwages and other
benefits that have to be paid its employees seeking to be reinstated would surely
put an end to the economic viability of the Bank.

SO ORDERED.
Partly says the CA in its decision:
1. The Supreme Court said in G.R. No. 67125 (189 SCRA 14) that the PVB employees
were not "illegally dismissed but lawfully separated." This is a pronouncement, as
categorical as can be, that the employment relationship between the Bank and the
separated employees had definitely ceased to exist as of that time;
xxx xxx xxxx
4. It is a well-settled doctrine that reinstatement is proper only in cases of illegal
dismissal. The pronouncement of the Supreme Court that the PVB employees were
"not illegally dismissed" forecloses any right of reinstatement under any
circumstance.

The enactment of R.A. No. 7169 did not nullify Monetary Board Resolution No. 612
which earlier placed the Bank under liquidation and caused the termination of
employment of the petitioners. The Bank's subsequent rehabilitation did not, by any
test of reason, "revive" what was already a dead relationship between the
petitioners and the Bank. Neither did such rehabilitation affect the Court's
pronouncement in Philippine Veterans Bank Employees Union-NUBE v. Philippine
Veterans Bank15 that the actions of the Monetary Board and its duly appointed
liquidator were valid and that the former employees' claim for back wages must be
rejected as they were lawfully separated. Reinstatement is a relief accorded only to
an employee who was illegally dismissed.16
To reiterate, the forcible closure of the Bank by operation of law permanently
severed the employer-employee relationship between it and its employees when it
ceased operations from April 10, 1983 to August 3, 1992. Thus, the claim for
reinstatement and payment of back wages and other benefits, having no leg to
stand on, must necessarily fall.

Whilst House Resolution No. 1104 expressed sentiments of some congressmen that
"preferential right to employment be given to veterans and their dependents" under
Section 7(b) of R.A. No. 7169, without more, such sentiments did not operate as a
compulsion to the newly opened Bank to accept an employee earlier separated from
work as a result of its closure. If at all, such sentiments only provide that all things
being equal, preference shall be given to veterans and their dependents in the hiring
of new employees. While the employees concerned should be given priority in
hiring, they cannot demand it as a matter of right.
Verily, the clear wordings of Section 7 of R.A. No. 7169 gave the rehabilitation
committee created thereunder a free hand in the selection and appointment of the
Bank's new employees. We quote Section 7 of the law:
Sec. 7. Rehabilitation Committee. - To facilitate the implementation of the provisions
this Act, there is hereby created a rehabilitation committee which shall have a term
of three (3) months from the date of the approval of this Act composed of the
following: the Executive Secretary, as Chairman, and the Administrator of the
Philippine Veterans Affairs Office, the President of the Veterans Federation of the
Philippines, a representative from the executive board of the Veterans Federation of
the Philippines and a representative from the Board of Trustees of the Veterans of
World War II or their respective representatives, as members.
Specifically, the committee shall:
(a) Prepare, finalize and submit a viable rehabilitation plan to the Monetary Board of
the Central Bank;
(b) Select and organize an initial manning force headed by a management team to
be composed of competent, experienced and professional managers who must
possess all qualifications and none of the disqualifications provided under Central
Bank rules and regulations. The management team shall be staffed by a trained
workforce: Provided, That preference shall be given to the veterans and their
dependents, other qualifications being equal;
The mandate given the Bank's rehabilitation committee to "select and organize an
initial manning force" shows that the lawmakers recognize the fact that the new
bank is entirely without any working force. Congress, therefore, gave the Bank full
authority and discretion to recruit and form a new staff. Had Congress intended that
separated employees be rehired and given priority in the hiring of new employees, it
would have clearly stated this in R.A. No. 7169. The fact that it did not only shows its
clear legislative intent to give the new bank a free hand in the selection and hiring of
its new staff.
We have to acknowledge the sad reality that giving in to petitioners' demand of
wholesale reinstatement with back wages, bonuses, holiday pay, vacation and sick
leave benefits would be a fatal blow to the very intention of R.A. No. 7169 to
rehabilitate the Bank. The payment of such substantial amounts would definitely
further dissipate the remaining assets of the Bank and cripple its finances even as,
at this point, the Bank is barely making a profit under the weight of its present
liabilities, and ultimately make impossible its desired rehabilitation. This clearly
contravenes the intent and spirit of R.A. No. 7169.

Petitioners fault the CA in upholding the validity of the Compromise Agreement.

They claim that said agreement is not binding on employees who did not ratify it and
even to those who were allegedly tricked and/or deceived by the Union into
accepting the first payment under the same agreement.
The argument is utterly baseless. A labor union's function is to represent its
members. It can file an action or enter into compromise agreements on behalf of its
members. Here, majority of the Bank's employees authorized the Union to enter into
a compromise agreement with the Bank on their behalves. Union members were
bound by the resulting compromise agreement when they affixed their signatures
thereon, thereby giving their individual assent thereto, and when they accepted the
benefits due them under that agreement. As it is, the Compromise Agreement in
question detailed the amounts to be received by each employee. Petitioners and
other employees of the Bank knew exactly what they were ratifying when they
affixed their signatures in the said compromise agreement.
Further, respondent Union is a closed shop union. For this reason, it was the only one
with legal authority to negotiate, transact, and enter into any agreement with the
Bank. The Compromise Agreement was ratified by 282 Union members representing
a majority of its entire 529 membership. The ratification of the Compromise
Agreement by the majority of the Union members necessarily binds the minority.
The general rule that the Labor Arbiter must be present during the signing of the
compromise agreement is not immune to certain exceptions. Here, the submission
of the Compromise Agreement on joint motion of the parties for approval by the
Labor Arbiter cured whatever defect the signing of the agreement in the absence of
the Labor Arbiter would have caused. So it is that in Santiago v. De Guzman,17 the
Court ruled:
A compromise agreement entered into by the parties not in the presence of the
Labor Arbiter before whom the case is pending shall be approved by him, if after
confronting the parties, particularly the complainants, he is satisfied that they
understand the terms and conditions of "the settlement and that it was entered into
freely and voluntarily by them.
It is incumbent upon the Labor Arbiter not only to persuade the parties to settle
amicably, but equally to ensure the compromise agreement is a fair one and that
the same was forged freely, voluntarily with full understanding of the terms and
conditions embodies therein as well as the consequences thereof."
It is likewise noteworthy that as of March 31, 2004, thirty (30) of the herein thirtyseven (37) petitioners already received payment under the same Compromise
Agreement. The acceptance by said petitioners of the benefits bars them from
repudiating the agreement. They cannot be allowed to adopt an inconsistent
position at the expense of the Bank. Petitioners cannot belatedly reject or repudiate
their acts of accepting the monetary consideration under the compromise
agreement, to the prejudice of the Bank.18 We, thus, quote with approval the
following observation of the CA in its challenged Decision of December 21, 2001:
As regards the third petition for certiorari filed by Lady Lydia Cornista Domingo, et.
al. (CA-G.R. SP No. 51220), the position taken by the petitioners is that NLRC
committed grave abuse of discretion by: a) ordering petitioners who received the
first payment under the Compromise Agreement to be bound by it, and b) resolving

to remand the case to the Labor Arbiter for further proceedings insofar as those who
did not receive payment are concerned.
Petitioners Domingo et. al. allege that "(a)s found out by the respondent NLRC, the
Compromise Agreement was not entered into in the presence of the labor Arbiter
and it (NLRC) faulted the latter in not calling the parties especially the complainants,
to a conference and satisfy himself that they (complainants) understand the terms
and conditions of the settlement; and that the agreement was entered into freely
and voluntarily" (Rollo of SP No. 51218-20, p. 886) as called for under Section 2, Rule
V of the New Rules of Procedure of the NLRC.
Further, petitioners contend that "(h)ad the respondents NLRC and Labor Arbiter
Carpio followed the rules, they would have found out that those who received the
first payment were only tricked and deceived in(to) receiving the payment;" that
"had the respondents Labor Arbiter and NLRC been more circumspect in their
solemn duties, they should have required the respondent union officers to present a
special power of attorney as required under Article 1878(3) of the Civil Code." (Ibid.,
pp. 886-887).
We are not convinced.
Evidently, Domingo, et. al. ratified the Compromise Agreement and even voluntarily
received the first payment under that agreement, executing the corresponding
Quitclaim, Waiver and Release in the process. Having done that, they are deemed
bound by the Compromise Agreement under the previously discussed principle
of res judicata and/or estoppel.

Records reveal that when the Bank offered termination or separation pay to its
remaining employees by way of a compromise agreement, a great majority of them
accepted the amount as justifiable settlement of their claims.21Like these quitclaims
and releases, there are voluntary agreements which represent reasonable
settlements and are considered binding on the parties. 22 Petitioners, therefore,
cannot renege on the compromise agreement they entered into after accepting
benefits earlier simply because they may have felt that they committed a mistake in
accepting their termination/separation pay. As no proof was presented to show that
the compromise agreement in dispute was entered into through fraud,
misrepresentation or coercion, the same must be recognized as valid and binding
upon all the 529 employees of the Bank. In fine, the petitioners and the other
employees are estopped from questioning the validity of the Compromise
Agreement.
In law, a compromise agreement, once approved, has the effect of res
judicata between the parties and should not be disturbed except for vices of
consent, forgery, fraud, misrepresentation and coercion, 23 none of which exists in
this case. The Compromise Agreement between the Union and the Bank binds the
minority Union members.
All told, the Court finds and so holds that the CA committed no reversible error in
rendering its challenged decision of December 21, 2001 and Resolution of January 8,
2003.
IN VIEW WHEREOF, the instant petition is DENIED.
No pronouncement as to costs.

We find that the subsequent decision of petitioners Domingo, et. al. to repudiate the
Compromise Agreement was merely an afterthought, whatever would be the reason
for their subsequent change of mind. Since they had entered into a binding contract
on their own volition and received benefits therefrom, they are therefore estopped
from questioning the validity of said contract later on. Parenthetically, it is
interesting to note that while the petitioners try to impugn the Compromise
Agreement that they themselves entered into, they have not made any offer or
effort to return the money they received as first payment under said agreement.
The other allegation of the petitioners that "those who received the first payment
were only tricked and deceived in(to) receiving the payment" deserves scant
consideration. Said petitioners are not only ordinary laborers but mature, educated
and intelligent people with college degrees, and considering the size of their group,
it is unbelievable that they could have been easily duped into doing something
against their will and self-interest. Absent a showing that they were indeed victims
of trickery and deception, outside of their own self-serving affidavits, the petitioners'
allegation does not hold water.
Here, the petitioners and other employees legally separated were in fact given
termination or separation pay despite the staggering loss sustained by the Bank.
They were given a very good bargain in the compromise agreement. They,
therefore, have no reason to complain. Without the subject compromise agreement,
they would not have received any separation pay in light of our ruling in State
Investment House, Inc. v. CA,19 and North Davao Mining Corporation v. NLRC,20 where
we held that in cases of serious losses or financial reverses, the Labor Code does not
impose any obligation upon the employer to pay separation benefits, for obvious
reasons.

SO ORDERED.

[G.R. No. 106518. March 11, 1999]

ABS CBN SUPERVISORS EMPLOYEE UNION MEMBERS, petitioner, vs. ABS

CBN BROADCASTING CORP., HERBERT RIVERA, ALBERTO BERBON,
CINDY MUNOZ, CELSO JAMBALOS, SALVADOR DE VERA, ARNULFO
ALCAZAR, JAKE MADERAZO, GON CARPIO, OSCAR LANDRITO, FRED
GARCIA, CESAR LOPEZ and RUBEN BARRAMEDA, respondents.
DECISION
PURISIMA, J.:

At bar is a special civil action for Certiorari[1] seeking the reversal of the
Order[2] dated July 31, 1992 of public respondent Department of Labor and
Employment Undersecretary Bienvenido E. Laguesma[3] in Case No. NCR OD M
90 07 - 037.
From the records on hand, it can be gathered, that:
On December 7, 1989, the ABS-CBN Supervisors Emloyees Union (the Union),
represented by respondent Union Officers, and ABS-CBN Broadcasting Corporation
(the Company) signed and concluded a Collective Bargaining Agreement with the
following check-off provision, to wit:
Article XII The [C]ompany agrees to advance to the Union a sum equivalent to
10% of the sum total of all the salary increases and signing bonuses granted to the
Supervisors under this collective Bargaining Agreement and upon signing hereof to
cover the Unions incidental expenses, including attorneys fees and representation
expenses for its organization and (sic) preparation and conduct hereof, and such
advance shall be deducted from the benefits granted herein as they accrue.
On September 19, 1990, Petitioners [4] filed with the Bureau of Labor Relations,
DOLE-NCR, Quezon City, a Complaint against the Union Officers [5] and ABS-CBN
Broadcasting corporation, praying that (1) the special assessment of ten percent
(10%) of the sum total of all salary increases and signing bonuses granted by
respondent Company to the members of the Union be declared illegal for failure to
comply with the labor Code, as amended, particularly Article 241, paragraphs (g),
(n), and (o); and in utter violation of the Constitution and By-Laws of the ABS-CBN
Supervisors Employees Union; (2) respondent Company be ordered to suspend
further deductions from petitioners salaries for their shares thereof.
In their Answers, respondent Union Officers and Company prayed for the
dismissal of the Complaint for lack of merit. They argued that the check-off
provision
is
in
accordance
with
law
as
majority
of
the
Union
members individually executed a written authorization giving the Union officers and
the Company a blanket authority to deduct subject amount.
On January 21, 1991, Med-Arbiter Rasidali C. Abdula issued the following Order:

part of their share in the advances already made to the union and which it had kept
in trust during the pendency of this case; and
e) directing the respondents union officers and respondent Company to submit
report on the compliance thereof.
SO ORDERED.
On appeal, respondent DOLE Undersecretary Bienvenido E. Laguesma handed
down a Decision[7] on July 1, 1991, disposing as follows:
WHEREFORE, the appeals are hereby denied, the Order of the Med-Arbiter is
affirmed en toto.
On July 5, 1991, the aforesaid Decision was received by the respondent Union
Officers and respondent Company. On July 13, 1991, they filed their Motion for
Reconsideration stating, inter alia that the questioned ten percent (10%) special
assessment is valid pursuant to the ruling in Bank of the Philippine Islands Employee
Union ALU vs. NLRC.[8]
thus:

On July 31, 1992, Undersecretary B.E. Laguesma issued an Order [9]; resolving,

"WHEREFORE, the Decision dated 01 July 1991 is hereby SET ASIDE. In lieu thereof,
a new one is hereby entered DISMISSING the Complaint/Petition for lack of merit."
Hence, the present petition seeking to annul and set aside the above-cited
Order of public respondent Undersecretary B.E. Laguesma, for being allegedly
tainted with grave abuse of discretion amounting to lack of jurisdiction.
Did the public respondent act with grave abuse of discretion in issuing the
challenged Order reversing his own Decision of July 1, 1991? Such is the sole issue
posited,which we resolve in the negative. The petition is unmeritorious.

[6]

WHEREFORE, premises considered, judgment is hereby rendered:

a) declaring the special assessment of 10% of the sum total of CBA benefits as
illegal;
b) ordering respondents union officers to refund to the complainants and other
union members the amount of five Hundred Thousand Pesos (P500,000.00)
advanced by the respondent Company as part of the 10% sum total of CBA benefits
without unnecessary delay;
c) ordering the respondent company to stop and desist from further making
advances and deductions from the union members salaries their share in the
advances already made to the union;
d) ordering the respondent Company to remit directly to the complainants and other
union members the amount already deducted from the union members salaries as

Petitioners claim[10] that the Decision of the Secretary of Labor and Employment
dated July 1, 1991, affirming in toto the Order of Med-Arbiter Rasidali Abdullah dated
January 31, 1991, cannot be a subject of a motion for reconsideration because it is
final and unappealable pursuant to Section 8, Rule VIII, Book V of the Omnibus Rule
Implementing the Labor Code. It is further argued that the only remedy of the
respondent Union Officers' is to file a petition for certiorari with this Court.
Section 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor
Code, provides:
"The Secretary shall have fifteen (15) calendar days within which to decide the
appeal from receipt of the records of the case. The decision of the Secretary shall
be final and inappealable." [Underscoring supplied]. (Comment, p. 101)
The aforecited provision cannot be construed to mean that the Decision of the
public respondent cannot be reconsidered since the same is reviewable by writ of
certiorari under Rule 65 of the Rules of Court. As a rule, the law requires a motion
for reconsideration to enable the public respondent to correct his mistakes, if
any. In Pearl S. Buck Foundation, Inc., vs. NLRC,[11] this Court held:

"Hence, the only way by which a labor case may reach the Supreme Court is through
a petition for certiorari under Rule 65 of the Rules of Court alleging lack or excess of
jurisdiction or grave abuse of discretion. Such petition may be filed within a
reasonable time from receipt of the resolution denying the motion for
reconsideration of the NLRC decision." [Underscoring; supplied].
Clearly, before a petition for certiorari under Rule 65 of the Rules of Court may be
availed of, the filing of a motion for reconsideration is a condition sine qua non to
afford an opportunity for the correction of the error or mistake complained of.
So also, considering that a decision of the Secretary of Labor is subject to
judicial review only through a special civil action of certiorari and, as a rule, cannot
be resorted to without the aggrieved party having exhausted administrative
remedies through a motion for reconsideration, the aggrieved party, must be
allowed to move for a reconsideration of the same so that he can bring a special civil
action for certiorari before the Supreme Court.[12]
Furthermore, it appears that the petitioners filed with the public respondent
a Motion for Early Resolution[13] dated June 24, 1992. Averring that private
respondents' Motion for Reconsideration did not contain substantial factual or legal
grounds for the reversal of subject decision. Consequently, petitioners are
now estopped from raising the issue sought for resolution. In Alfredo Marquez vs.
Secretary of Labor,[14] the Court said:
"xxx The active participation of the party against whom the action was brought,
coupled with his failure to object to the jurisdiction of the court or quasi-judicial body
where the action is pending, is tantamount to an invocation of that jurisdiction and a
willingness to abide by the resolution of the case and will bar said party from later
on impugning the court or body's jurisdiction."
What is more, it was only when the public respondents issued the Order
adverse to them that the petitioners raised the question for the first time before this
Court. Obviously, it is a patent afterthought which must be abhorred.
Petitioners also argued that the check-off provision in question is illegal
because it was never submitted for consideration and approval to "all the members
at a general membership meeting called for the purpose"; and further alleged that
the formalities mandated by Art. 241, paragraphs (n) and (o) of the Labor Code, as
amended, were not complied with.
"A check-off is a process or device whereby the employer, on agreement with
the Union, recognized as the proper bargaining representative, or on prior
authorization from its employees, deducts union dues or agency fees from the
latter's wages and remits them directly to the union." [15] Its desirability in a labor
organization is quite evident. It is assured thereby of continuous funding. As this
Court has acknowledged, the system of check-off is primarily for the benefit of the
Union and only indirectly, for the individual employees.
The legal basis of check-off is found in statutes or in contracts. [16] The statutory
limitations on check-offs are found in Article 241, Chapter II, Title IV, Book Five of the
Labor Code, which reads:
"Rights and conditions of membership in a labor organization. - The following are the
rights and conditions of membership in a labor organization:
xxx

(g) No officer, agent, member of a labor organization shall collect any fees, dues, or
other contributions in its behalf or make any disbursement of its money or
funds unless he is duly authorized pursuant to its constitution and by-laws.
xxx
(n) No special assessment or other extraordinary fees may be levied upon the
members of a labor organization unless authorized by a written resolution of a
majority of all the members of a general membership meeting duly called for the
purpose. The secretary of the organization shall record the minutes of the meeting
including the list of all members present, the votes cast, the purpose of the special
assessment or fees and the recipient of such assessment or fees. The record shall
be attested to by the president.
(o) Other than for mandatory activities under the Code, no special assessments,
attorney's fees, negotiation fees or any other extraordinary fees may be checked off
from any amount due to an employee with an individual written authorization duly
signed by the employee. The authorization should specifically state the amount,
purpose and beneficiary of the deductions. [Underscoring; supplied]
Article 241 of the Labor Code, as amended, must be read in relation to Article
222, paragraph (b) of the same law, which states:
"No attorney's fees, negotiation fees or similar charges of any kind arising from
collective bargaining negotiations or conclusion of the collective agreement shall be
imposed on any individual member of the contracting union:Provided, however, that
attorney's fees may be charged against union funds in an amount to be agreed
upon by the parties. Any contract, agreement or arrangement of any sort to the
contrary shall be null and void." [Underscoring; supplied]
And this court elucidated the object and import of the said provision of law
in Bank of Philippine Islands Employees Union - Association Labor Union (BPIEU-ALU)
vs. National Labor Relations Commission:[17]
"The Court reads the afore-cited provision (Article 222 [b] of the Labor Code) as
prohibiting the payment of attorney's fees only when it is effected through forced
contributions from the workers from their own funds as distinguished from the union
funds. xxx"
Noticeably, Article 241 speaks of three (3) requisites that must be complied
with in order that the special assessment for Union's incidental expenses, attorney's
fees and representation expenses, as stipulated in Article XII of the CBA, be valid
and upheld namely: 1) authorization by a written resolution of the majority of all the
members at the general membership meeting duly called for the
purpose; (2) secretary's record of the minutes of the meeting; and (3) individual
written authorization for check-off duly signed by the employee concerned.
After a thorough review of the records on hand, we find that the three (3)
requisites for the validity of the ten percent (10%) special assessment for Union's
incidental expenses, attorney's fees and representation expenses were met.
It can be gleaned that on July 14, 1989, the ABS-CBN Supervisors Employee
Union held its general meeting, whereat it was agreed that a ten percent (10%)
special assessment from the total economic package due to every member would be

checked-off to cover expenses for negotiation, other miscellaneous expenses and

attorney's fees. The minutes of the said meeting were recorded by the Union's
Secretary, Ma. Carminda M. Munoz, and noted by its President, Herbert Rivera. [18]
On May 24, 1991, said Union held its General Membership Meeting, wherein
majority of the members agreed that "in as much as the Union had already paid Atty.
P. Pascual the amount of P500,000.00, the same must be shared by all the members
until this is fully liquidated."[19]
Eighty-five (85) members of the same Union executed individual written
authorizations for check-off, thus:
"Towards that end, I hereby authorize the Management and/or Cashier of ABS-CBN
BROADCASTING CORPORATION to deduct from my salary the sum of P30.00 per
month as my regular union dues and said Management and/or Cashier are further
authorize (sic) to deduct a sum equivalent to 10% of all and whatever benefits that
will become due to me under the COLLECTIVE BARGAINING AGREEMENT (CBA) that
may be agreed upon by the UNION and MANAGEMENT and to apply the said sum to
the advance that Management will make to our Union for incidental expenses such
as attorney's fees, representations and other miscellaneous expenses pursuant to
Article XII of the proposed CBA." [20]
Records do not indicate that the aforesaid check-off authorizations were
executed by the eighty-five (85) Union members under the influence of force or
compulsion. There is then, the presumption that such check-off authorizations were
executed voluntarily by the signatories thereto. Petitioners contention that the
amount to be deducted is uncertain[21] is not persuasive because the check-off
authorization clearly stated that the sum to be deducted is equivalent to ten percent
(10%) of all and whatever benefits may accrue under the CBA. In other words,
although the amount is not fixed, it is determinable.
Petitioners further contend that Article 241 (n) of the Labor Code, as amended,
on special assessments, contemplates a general meeting after the conclusion of the
collective bargaining agreement.
Subject Article does not state that the general membership meeting should be
called after the conclusion of a collective bargaining agreement. Even granting ex
gratia argumenti that the general meeting should be heldafter the conclusion of the
CBA, such requirement was complied with since the May 24, 1991 General
Membership Meeting was held after the conclusion of the Collective Bargaining
Agreement, which was signed and concluded on December 7, 1989.
Considering that the three requisites afforesaid for the validity of a special
assessment were observed or met, we uphold the validity of the ten percent (10%)
special assessment authorized in Article XII of the CBA.
We also concur in the finding by public respondent that the Bank of the
Philippine Islands Employees Union ALU vs. NLRC [22] is apposite in this case. In
BPIEU-ALU, the petitioners, impugned the Order of the NLRC, holding that the
validity of the five percent (5%) special assessment for attorneys fees is contrary to
Article 222, paragraph (b) of the Labor Code, as amended. The court ratiocinated,
thus:
The Court reads the aforecited provision as prohibiting the payment of attorneys
fees only when it is effected through forced contributions from the workers
from their own funds a distinguished from the union funds. The purpose of the
provision is to prevent imposition on the workers of the duty to individually

contribute their respective shares in the fee to be paid the attorney for his services
on behalf of the union in its negotiations with the management. xxx [Underscoring
supplied]
However, the public respondent overlooked the fact that in the said case, the
deduction of the stipulated five percent (5%) of the total economic benefits under
the new collective bargaining agreement was applied only to workers who gave
their individual signed authorizations. The Court explained:
xxx And significantly, the authorized deduction affected only the workers who
adopted and signed the resolution and who were the only ones from whose benefits
the deductions were made by BPI. No similar deductions were taken from the other
workers who did not sign the resolution and so were not bound by it. [Underscoring;
supplied]
While the court also finds merit in the finding by the public respondents
that Palacol vs. Ferrer-Calleja[23] is inapropos in the case under scrutiny, it does not
subscribe to public respondents reasoning that Palacolshould not be retroactively
applied to the present case in the interest of justice, equity and fairplay. [24] The
inapplicability of Palacol lies in the fact that it has a different factual milieu from the
present
case. In Palacol,
the
check-off
authorization
was
declared
invalid because majority of the Union members had withdrawn their individual
authorizations, to wit:
Paragraph (o) on the other hand requires an individual written authorization duly
signed by every employee in order that special assessment maybe validly checkoff. Even assuming that the special assessment was validly levied pursuant to
paragraph (n), and granting that individual written authorizations were obtained by
the Union, nevertheless there can be no valid check-off considering that the majority
of the Union members had already withdrawn their individual authorizations. A
withdrawal of individual authorization is equivalent to no authorization at all. xxx
[Underscoring; supplied]
In this case, the majority of the Union members gave their individual written checkoff authorizations for the ten percent (10%) special assessment. And they have
never withdraw their individual written authorizations for check-off.
There is thus cogent reason to uphold the assailed Order, it appearing from the
records of the case that twenty (20)[25] of the forty-two (42) petitioners executed as
Compromise Agreement[26] ratifying the controversial check-off provision in the CBA.
Premises studiedly considered, we are of the irresistable conclusion and, so
find, that the ruling in BPIEU-ALU vs. NLRC that (1) the prohibition against attorneys
fees in Article 222, paragraph (b) of the Labor Code applies only when the payment
of attorneys fees is effected through forced contributions from the workers; and (2)
that no deductions must be taken from the workers who did not sign the check-off
authorization, applies to the case under consideration.
WHEREFORE, the assailed Order, dated July 31, 1992, of DOLE
Undersecretary B.E. Laguesma is AFFIRMED except that no deductions shall be
taken from the workers who did not give their individual written check-off
authorization. No pronouncement as to costs.
SO ORDERED.

The case stemmed from the administrative charge filed by PAL against its
employees-herein petitioners [3] after they were allegedly caught in the act of sniffing
JUANITO A. GARCIA and ALBERTO J.
DUMAGO,
Petitioners,

- versus -

PHILIPPINE AIRLINES, INC.,

Respondent.

G.R. No. 164856

Present:
PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,
AZCUNA,
TINGA,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO, and
BRION, JJ.
Promulgated:

January 20, 2009

x-----------------------------------------------------------------------------------------x
DECISION

shabu when a team of company security personnel and law enforcers raided the PAL
Technical Centers Toolroom Section on July 24, 1995.

After due notice, PAL dismissed petitioners on October 9, 1995 for

transgressing the PAL Code of Discipline, [4] prompting them to file a complaint for
illegal dismissal and damages which was, by Decision of January 11, 1999,
[5]

resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter

alia, immediately comply with the reinstatement aspect of the decision.

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

CARPIO MORALES, J.:

Petitioners Juanito A. Garcia and Alberto J. Dumago assail the December 5,

From the Labor Arbiters decision, respondent appealed to the NLRC which, by

2003 Decision and April 16, 2004 Resolution of the Court of Appeals [1] in CA-G.R. SP

Resolution of January 31, 2000, reversed said decision and dismissed petitioners

No. 69540 which granted the petition for certiorari of respondent, Philippine Airlines,

complaint for lack of merit.[6]

Inc. (PAL), and denied petitioners Motion for Reconsideration, respectively. The
dispositive portion of the assailed Decision reads:
WHEREFORE, premises considered and in view of the
foregoing, the instant petition is hereby GIVEN DUE COURSE. The
assailed November 26, 2001 Resolution as well as the January 28,
2002 Resolution of public respondent National Labor Relations
Commission [NLRC] is hereby ANNULLED and SET ASIDE for having
been issued with grave abuse of discretion amounting to lack or
excess of jurisdiction. Consequently, the Writ of Execution and the
Notice of Garnishment issued by the Labor Arbiter are hereby
likewise ANNULLED and SET ASIDE.
SO ORDERED.[2]

Petitioners Motion for Reconsideration was denied by Resolution of April

28, 2000 and Entry of Judgment was issued on July 13, 2000.[7]

Subsequently or on October 5, 2000, the Labor Arbiter issued a Writ of

Execution

(Writ)

respecting

the reinstatement

aspect of

his January

11,

1999 Decision, and onOctober 25, 2000, he issued a Notice of Garnishment

(Notice). Respondent thereupon moved to quash the Writ and to lift the Notice while
petitioners moved to release the garnished amount.

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

By Manifestation and Compliance of October 30, 2007, respondent informed

the Court that the SEC, by Order of September 28, 2007, granted its request to exit
from rehabilitation proceedings.[9]

referred the action to the Rehabilitation Receiver for appropriate action.

In view of the termination of the rehabilitation proceedings, the Court now
Respondent elevated the matter to the appellate court which issued the
herein challenged Decision and Resolution nullifying the NLRC Resolutions on two
grounds, essentially espousing that: (1) a subsequent finding of a valid dismissal
removes the basis for implementing the reinstatement aspect of a labor arbiters
decision

(the

reinstatement

first
order

ground),
due

to

and (2) the

corporate

impossibility
rehabilitation

to

comply

provides

with

the

proceeds

to

resolve

the remaining

issue for

consideration, which

is whether

petitioners may collect their wages during the period between the Labor
Arbiters order of reinstatement pending appeal and the NLRC decision
overturning that of the Labor Arbiter, now that respondent has exited from
rehabilitation proceedings.

reasonable

justification for the failure to exercise the options under Article 223 of the Labor
Code (the second ground).
Amplification of the First Ground
By Decision of August 29, 2007, this Court PARTIALLY GRANTED the present

The appellate court counted on as its first ground the view that a subsequent

petition and effectively reinstated the NLRC Resolutions insofar as it suspended the

finding of a valid dismissal removes the basis for implementing the reinstatement

proceedings, viz:

aspect of a labor arbiters decision.

Since petitioners claim against PAL is a money claim for

their wages during the pendency of PALs appeal to the NLRC, the
same should have been suspended pending the rehabilitation
proceedings. The Labor Arbiter, the NLRC, as well as the Court of
Appeals should have abstained from resolving petitioners case for
illegal dismissal and should instead have directed them to lodge
their claim before PALs receiver.
However, to still require petitioners at this time to re-file
their labor claim against PAL under peculiar circumstances of the
case that their dismissal was eventually held valid with only the
matter of reinstatement pending appeal being the issue this Court
deems it legally expedient to suspend the proceedings in this case.
WHEREFORE, the instant petition is PARTIALLY GRANTED in
that the instant proceedings herein are SUSPENDED until further
notice from this Court. Accordingly, respondent Philippine Airlines,
Inc. is hereby DIRECTED to quarterly update the Court as to the
status of its ongoing rehabilitation. No costs.
SO ORDERED.[8] (Italics in the original; underscoring supplied)

On this score, the Courts attention is drawn to seemingly divergent decisions

concerning reinstatement pending appeal or, particularly, the option of payroll
reinstatement. On the one hand is the jurisprudential trend as expounded in a line
of cases including Air Philippines Corp. v. Zamora, [10] while on the other is the recent
case ofGenuino v. National Labor Relations Commission.[11] At the core of the
seeming divergence is the application of paragraph 3 of Article 223 of the Labor
Code which reads:
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement
aspect is concerned, shall immediately be executory, pending
appeal. The employee shall either be admitted back to work under
the same terms and conditions prevailing prior to his dismissal or
separation or, at the option of the employer, merely reinstated in

the payroll. The posting of a bond by the employer shall not stay
the execution for reinstatement provided herein. (Emphasis and
underscoring supplied)

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

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

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

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

The opposite view is articulated in Genuino which states:

If the decision of the labor arbiter is later reversed on appeal
upon the finding that the ground for dismissal is valid, then the
employer has the right to require the dismissed
employee on payroll reinstatement to refund the salaries
s/he received while the case was pending appeal, or it can be
deducted from the accrued benefits that the dismissed employee
was entitled to receive from his/her employer under existing laws,
collective bargaining agreement provisions, and company
practices. However, if the employee was reinstated to work during
the pendency of the appeal, then the employee is entitled to the
compensation received for actual services rendered without need
of refund.
Considering that Genuino was not reinstated to work or
placed on payroll reinstatement, and her dismissal is based on a
just cause, then she is not entitled to be paid the salaries stated in
item no. 3 of the fallo of the September 3, 1994 NLRC Decision.
[14]
(Emphasis, italics and underscoring supplied)

unjust enrichment.

Prior to Genuino, there had been no known similar case containing a

dispositive portion where the employee was required to refund the salaries received
on payroll reinstatement. In fact, in a catena of cases, [15] the Court did not order the
refund of salaries garnished or received by payroll-reinstated employees despite a
subsequent reversal of the reinstatement order.

The dearth of authority supporting Genuino is not difficult to fathom for it

would otherwise render inutile the rationale of reinstatement pending appeal.
x x x [T]he law itself has laid down a compassionate policy
which, once more, vivifies and enhances the provisions of the 1987
Constitution on labor and the working man.
xxxx
These duties and responsibilities of the State are imposed
not so much to express sympathy for the workingman as to
forcefully and meaningfully underscore labor as a primary social
and economic force, which the Constitution also expressly affirms
with equal intensity. Labor is an indispensable partner for the
nation's progress and stability.
xxxx
x x x In short, with respect to decisions reinstating
employees, the law itself has determined a sufficiently
overwhelming reason for its execution pending appeal.
xxxx
x x x Then, by and pursuant to the same power (police
power), the State may authorize an immediate implementation,
pending appeal, of a decision reinstating a dismissed or separated
employee since that saving act is designed to stop, although
temporarily since the appeal may be decided in favor of the
appellant, a continuing threat or danger to the survival or even the
life of the dismissed or separated employee and his family. [16]

The social justice principles of labor law outweigh or render

inapplicable
by

the

civil

law

doctrine

of

unjust

enrichment espoused

[even

cash

reinstatement.

bond]

by

the

employer

shall

not

stay

the

execution

for

[17]

Justice Presbitero Velasco, Jr. in his Separate Opinion. The constitutional and

statutory precepts portray the otherwise unjust situation as a condition affording

full protection to labor.

In playing down the stray posture in Genuino requiring the dismissed

employee on payroll reinstatement to refund the salaries in case a final decision
upholds the validity of the dismissal, the Court realigns the proper course of the

Even outside the theoretical trappings of the discussion and into the mundane
realities of human experience, the refund doctrine easily demonstrates how a

prevailing doctrine on reinstatement pending appeal vis--vis the effect of a reversal

on appeal.

favorable decision by the Labor Arbiter could harm, more than help, a dismissed
employee. The employee, to make both ends meet, would necessarily have to use

Respondent insists that with the reversal of the Labor Arbiters Decision,

up the salaries received during the pendency of the appeal, only to end up having

there is no more basis to enforce the reinstatement aspect of the said decision. In

to refund the sum in case of a final unfavorable decision. It is mirage of a stop-gap

his Separate Opinion, Justice Presbitero Velasco, Jr. supports this argument and finds

leading the employee to a risky cliff of insolvency.

the prevailing doctrine in Air Philippines and allied cases inapplicable because,
unlike the present case, the writ of execution therein was secured prior to the

Advisably, the sum is better left unspent. It becomes more logical and

reversal of the Labor Arbiters decision.

practical for the employee to refuse payroll reinstatement and simply find work
elsewhere in the interim, if any is available. Notably, the option of payroll
reinstatement belongs to the employer, even if the employee is able and raring to
return to work. Prior to Genuino, it is unthinkable for one to refuse payroll
reinstatement. In the face of the grim possibilities, the rise of concerned employees

The proposition is tenuous. First, the matter is treated as a mere race against
time. The discussion

stopped

there

without

considering

the cause of

delay. Second, it requires the issuance of a writ of execution despite the

immediately

executory

nature

of

the

reinstatement

aspect

of

Philippines, Inc.,[19] the Court observed:

Further, the Genuino ruling not only disregards the social justice principles
the

rule,

but

also

institutes

scheme

unduly

favorable

to

management. Under such scheme, the salaries dispensed pendente lite merely
serve as a bond posted in installment by the employer. For in the event of a reversal
of the Labor Arbiters decision ordering reinstatement, the employer gets back the
same

amount without

having

to

spend

the

decision. In Pioneer Texturing Corp. v. NLRC,[18] which was cited in Panuncillo v. CAP

declining payroll reinstatement is on the horizon.

behind

the

ordinarily

for

bond

premiums. This

circumvents, if not directly contradicts, the proscription that the posting of a bond

x x x The provision of Article 223 is clear that an award [by the

Labor Arbiter] for reinstatement shall be immediately executory
even pending appeal and the posting of a bond by the employer
shall not stay the execution for reinstatement. The legislative intent
is quite obvious, i.e., to make an award of reinstatement
immediately enforceable, even pending appeal. To require the
application for and issuance of a writ of execution as
prerequisites for the execution of a reinstatement award would
certainly betray and run counter to the very object and
intent of Article 223, i.e., the immediate execution of a
reinstatement order. The reason is simple. An application for a writ
of execution and its issuance could be delayed for numerous
reasons. A mere continuance or postponement of a scheduled
hearing, for instance, or an inaction on the part of the Labor Arbiter

or the NLRC could easily delay the issuance of the writ thereby
setting at naught the strict mandate and noble purpose envisioned
by Article 223. In other words, if the requirements of Article
224 [including the issuance of a writ of execution] were to
govern, as we so declared in Maranaw, then the executory nature
of a reinstatement order or award contemplated by Article 223 will
be unduly circumscribed and rendered ineffectual. In enacting the
law, the legislature is presumed to have ordained a valid and
sensible law, one which operates no further than may be necessary
to achieve its specific purpose. Statutes, as a rule, are to be
construed in the light of the purpose to be achieved and the evil
sought to be remedied. x x x In introducing a new rule on the
reinstatement aspect of a labor decision under Republic Act No.
6715, Congress should not be considered to be indulging in mere
semantic exercise. x x x [20] (Italics in the original; emphasis and
underscoring supplied)

The spirit of the rule on reinstatement pending appeal animates the

proceedings once the Labor Arbiter issues the decision containing an order of
reinstatement. The

immediacy

of

its

execution

needs

no

further

elaboration. Reinstatement pending appeal necessitates its immediate execution

during the pendency of the appeal, if the law is to serve its noble purpose. At the
same time, any attempt on the part of the employer to evade or delay its execution,
as observed in Panuncillo and as what actually transpired inKimberly,[23] Composite,
[24]

Air Philippines,[25] and Roquero,[26] should not be countenanced.

The Court reaffirms the prevailing principle that even if the order of

After the labor arbiters decision is reversed by a higher tribunal, the

reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part

employee may be barred from collecting the accrued wages, if it is shown

of the employer to reinstate and pay the wages of the dismissed employee during

that the delay in enforcing the reinstatement pending appeal was without

the period of appeal until reversal by the higher court.

[21]

It settles the view that the

fault on the part of the employer.

Labor Arbiter's order of reinstatement is immediately executory and the employer

has to either re-admit them to work under the same terms and conditions prevailing

The test is two-fold: (1) there must be actual delay or the fact that the order

prior to their dismissal, or to reinstate them in the payroll, and that failing to

of reinstatement pending appeal was not executed prior to its reversal; and (2) the

exercise the options in the alternative, employer must pay the employees salaries.

delay must not be due to the employers unjustified act or omission. If the delay is

[22]

due to the employers unjustified refusal, the employer may still be required to pay
the salaries notwithstanding the reversal of the Labor Arbiters decision.

Amplification of the Second Ground

In Genuino, there was no showing that the employer refused to reinstate the
employee, who was the Treasury Sales Division Head, during the short span of four

The remaining issue, nonetheless, is resolved in the negative on the strength

months or from the promulgation on May 2, 1994 of the Labor Arbiters Decision up

of the second ground relied upon by the appellate court in the assailed

to the promulgation on September 3, 1994 of the NLRC Decision. Notably, the

issuances. The Court sustains the appellate courts finding that the peculiar

former NLRC Rules of Procedure did not lay down a mechanism to promptly

predicament of a corporate rehabilitation rendered it impossible for respondent to

effectuate the self-executory order of reinstatement, making it difficult to establish

exercise its option under the circumstances.

that the employer actually refused to comply.

In a situation like that in International Container Terminal Services, Inc. v.

NLRC

[27]

where it was alleged that the employer was willing to comply with the order

and that the employee opted not to pursue the execution of the order, the Court

It is apparent that there was inaction on the part of respondent to reinstate

them, but whether such omission was justified depends on the onset of the exigency
of corporate rehabilitation.

upheld the self-executory nature of the reinstatement order and ruled that the salary
automatically accrued from notice of the Labor Arbiter's order of reinstatement until

It is settled that upon appointment by the SEC of a rehabilitation receiver, all

its ultimate reversal by the NLRC. It was later discovered that the employee indeed

actions for claims before any court, tribunal or board against the corporation

moved for the issuance of a writ but was not acted upon by the Labor Arbiter. In

shall ipso jure be suspended.[31] As stated early on, during the pendency of

that scenario where the delay was caused by the Labor Arbiter, it was ruled that the

petitioners complaint before the Labor Arbiter, the SEC placed respondent under an

inaction of the Labor Arbiter who failed to act upon the employees motion for the

Interim Rehabilitation Receiver. After the Labor Arbiter rendered his decision, the

issuance of a writ of execution may no longer adversely affect the cause of the

SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation

dismissed employee in view of the self-executory nature of the order of

Receiver.

reinstatement.

[28]

Case
The new NLRC Rules of Procedure, which took effect on January 7, 2006, now

law

recognizes

that unless

there

is

restraining

order,

the

[32]

This

implementation of the order of reinstatement is ministerial and mandatory.

require the employer to submit a report of compliance within 10 calendar days from

injunction or suspension of claims by legislative fiat [33] partakes of the nature of a

receiptof the Labor Arbiters decision,[29] disobedience to which clearly denotes a

restraining order that constitutes a legal justification for respondents non-

refusal to reinstate. The employee need not file a motion for the issuance of the writ

compliance with the reinstatement order. Respondents failure to exercise the

of

the

alternative options of actual reinstatement and payroll reinstatement was thus

writ. With the new rules in place, there is hardly any difficulty in

justified. Such being the case, respondents obligation to pay the salaries pending

determining the employers intransigence in immediately complying with

appeal, as the normal effect of the non-exercise of the options, did not attach.

execution

since

the

Labor

Arbiter shall thereafter motu

proprio issue

the order.
While reinstatement pending appeal aims to avert the continuing threat or
In the case at bar, petitioners exerted efforts [30] to execute the Labor Arbiters

danger to the survival or even the life of the dismissed employee and his family, it

order of reinstatement until they were able to secure a writ of execution, albeit

does not contemplate the period when the employer-corporation itself is similarly in

issued onOctober 5, 2000 after the reversal by the NLRC of the Labor Arbiters

a judicially monitored state of being resuscitated in order to survive.

decision. Technically, there was still actual delay which brings to the question of
whether the delay was due to respondents unjustified act or omission.

The parallelism between a judicial order of corporation rehabilitation as a

justification for the non-exercise of its options, on the one hand, and a claim of
actual and imminent substantial losses as ground for retrenchment, on the other
hand, stops at the red line on the financial statements. Beyond the analogous

condition of financial gloom, as discussed by Justice Leonardo Quisumbing in his

Separate Opinion, are more salient distinctions. Unlike the ground of substantial
losses contemplated in a retrenchment case, the state of corporate rehabilitation
was judicially pre-determined by a competent court and not formulated for the first

[G.R. No. 118651. October 16, 1997]

time in this case by respondent.

More importantly, there are legal effects arising from a judicial order placing a
corporation under rehabilitation. Respondent was, during the period material to the

PIONEER
TEXTURIZING
CORP.
and/or
JULIANO
LIM, petitioners,
vs. NATIONAL
LABOR
RELATIONS
COMMISSION,
PIONEER
TEXTURIZING
WORKERS
UNION
and
LOURDES
A.
DE
JESUS, respondents.

case, effectively deprived of the alternative choices under Article 223 of the Labor
DECISION

Code, not only by virtue of the statutory injunction but also in view of the interim
relinquishment of management control to give way to the full exercise of the powers
of the rehabilitation receiver. Had there been no need to rehabilitate, respondent
may have opted for actual physical reinstatement pending appeal to optimize the
utilization of resources. Then again, though the management may think this wise,
the rehabilitation receiver may decide otherwise, not to mention the subsistence of
the injunction on claims.

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

WHEREFORE, the petition is PARTIALLY DENIED. Insofar as the Court of

Appeals Decision of December 5, 2003 and Resolution of April 16, 2004 annulling
the NLRC Resolutions affirming the validity of the Writ of Execution and the Notice of
Garnishment are concerned, the Court finds no reversible error.

SO ORDERED.

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 Arbiters decision,
petitioners appealed to the 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 Arbiters 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 NLRCs 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.
These 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 respondent [petitioners herein] cannot be entirely
faulted for dismissing the complaint[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 NLRCs decision from
where petitioners derived and isolated the aforequoted portions of the NLRCs
observation reads in full as follows:
We cannot fully subscribe to the complainants 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
POs. The complaint 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 NLRCs 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 sure that as it may, the factual issue in this case is whether or not
complaint 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 burdent 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 complainants
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:
First, 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 misinterpreted 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 Arbiters observations or from the NLRCs
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 burdent 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 Labor 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 employers 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 employees 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 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 cae, 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 employees 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 employers goods
and funds, while that of Piedad concerns a bill collector who essentially handles the
employers 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 days 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 reexamine 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. --Decisions, awards, or orders of the Labor Arbiter are
final and executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such decisions,
awards, or orders. Such appeal maybe entertained only on any of the
following grounds:
xxx

xxx

xxx

In an 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 reistated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement provided herein.
xxx

xxx
xxx

We initially interpreted the aforequoted provision in Inciong v. NLRC.[15] The

Court[16] made this brief comment:
The decision of the Labor Arbiter in this case was rendered on December
18, 1988, or three (3) months before Article 223 of the Labor Code was
amended by Republic Act 6715 (which became law on March 21, 1989),

providing that a decision of the Labor Arbiter ordering the reinstatement of

a dismissed or separated employee shall be immediately executory insofar
as the reinstatement aspect is concerned, and the posting of an appeal
bond by the employer shall not stay such execution. Since this new law
contains no provision giving it retroactive effect (Art. 4, Civil Code), the
amendment may not be applied to this case.
which the Court adopted and applied in Callanta v. NLRC.[17] In Zamboanga City
Water District v. Buat,[18] the Court construed Article 223 to mean exactly what it
says. We said:
Under the said provision of law, the decision of the Labor Arbiter
reinstating a dismissed or separated employee insofar as the reinstatement
aspect is concerned, shall be immediately executory, even pending
appeal. The employer shall reinstate the employee concerned either
by: (a) actually admitting him back to work under the same terms and
conditions prevailing prior to his dismissal or separation; or (b) at the
option of the employer, merely reinstating him in the payroll. Immediate
reinstatement is mandated and is not stayed by the fact that the employer
has appealed, or has posted a cash or surety bond pending appeal. [19]
We expressed a similar view a year earlier in Medina v. Consolidated Broadcasting
System (CBS) DZWX[20] and laid down the rule that an employer who fails to
comply with an order of reinstatement makes him liable for the employees
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 latters 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. Peoples 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 x x x. [21]
The
Court,
however,
deviated
from
this
construction
in
the
case
of Maranaw. Reinterpreting the import of Article 223 in Maranaw, the
Court[22] declared that the reinstatement aspect of the Labor Arbiters decision needs
a writ of execution as it is not self-executory, a declaration the Court recently
reiterated and adopted in Archilles Manufacturing Corp. v. NLRC.[23]
We note that prior to the enactment of R.A. No. 6715, Article 223 [24] of the
Labor Code contains no provision dealing with the reinstatement of an illegally

dismissed employee. The amendment introduced by R.A. No. 6715 is an innovation

and a far departure from the old law indicating therby the legislatures unequivocal
intent to insert a new rule that will govern the reinstatement aspect of a decision or
resolution in any given labor dispute. In fact, the law as now worded employs the
phrase shall immediately be executory without qualification emphasizing the need
for prompt compliance. As a rule, shall in a statute commonly denotes an
imperative obligation and is inconsistent with the idea of discretion [25] and that the
presumption is that the word shall, when used in a statute, is mandatory. [26] An
appeal or posting of bond, by plain mandate of the law, could not even forestall nor
stay the executory nature of an order of reinstatement. The law, moreover, is
unambiguous and clear. Thus, it must be applied according to its plain and obvious
meaning, according to its express terms. In Globe-Mackay Cable and Radio
Corporation v. NLRC,[27] we held that:
Under the principles of statutory construction, if a statute is clear, plain and free
from ambiguity, it must be given its literal meaning and applied without attempted
interpretation. This plain-meaning rule or verba 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
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 selfexecutory. There must be a writ of execution which may be issuedmotu
proprio or on motion of an interested party. Article 224 of the Labor Code
provides:
ART. 224. Execution of decisions, orders or awards. (a) The Secretary of
Labor and Employment or any Regional Director, the Commission or any
Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu 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 (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 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 . No motion for execution shall be entertained nor a
writ be 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 them 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 petitioners 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. x x x
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending
appeal. The employee shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the payroll. The
posting of a bond by the employer shall not stay the execution
for reinstatement provided herein.
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 decicions, orders or awards of the Secretary of
Labor and Employment or regional director, the Commission, the 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 awards becomes final and
executory. It cannot 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 content 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 ordaineda 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 statues
are fairly susceptible of two or more construction, that construction should be
adopted which will most tend to give effect to the manifest intent of the law maker
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. 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.