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G.R. Nos. 191288 & 191304 March 7, 2012
MANILA ELECTRIC COMPANY, Petitioner,
vs.
JAN CARLO GALA, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari,1 seeking to
annul the decision2 dated August 25, 2009 and the resolution3
dated February 10, 2010 of the Court of Appeals (CA) rendered
in CA-G.R. SP. Nos. 105943 and 106021.
The Antecedents
The facts are summarized below.
On March 2, 2006, respondent Jan Carlo Gala commenced
employment with the petitioner Meralco Electric Company
(Meralco) as a probationary lineman. He was assigned at
Meralco’s Valenzuela Sector. He initially served as member of
the crew of Meralco’s Truck No. 1823 supervised by Foreman
Narciso Matis. After one month, he joined the crew of Truck No.
1837 under the supervision of Foreman Raymundo Zuñiga, Sr.
On July 27, 2006, barely four months on the job, Gala was
dismissed for alleged complicity in pilferages of Meralco’s
electrical supplies, particularly, for the incident which took place
on May 25, 2006. On that day, Gala and other Meralco workers
were instructed to replace a worn-out electrical pole at the
Pacheco Subdivision in Valenzuela City. Gala and the other
linemen were directed to join Truck No. 1891, under the
supervision of Foreman Nemecio Hipolito.
When they arrived at the worksite, Gala and the other workers
saw that Truck No. 1837, supervised by Zuñiga, was already
there. The linemen of Truck No. 1837 were already at work.
Gala and the other members of the crew of Truck No. 1891
were instructed to help in the digging of a hole for the pole to be
installed.
While the Meralco crew was at work, one Noberto "Bing" Llanes,
a non-Meralco employee, arrived. He appeared to be known to
the Meralco foremen as they were seen conversing with him.
Llanes boarded the trucks, without being stopped, and took out
what were later found as electrical supplies. Aside from Gala,
the foremen and the other linemen who were at the worksite
when the pilferage happened were later charged with
misconduct and dishonesty for their involvement in the incident.
Unknown to Gala and the rest of the crew, a Meralco
surveillance task force was monitoring their activities and
recording everything with a Sony video camera. The task force

was composed of Joseph Aguilar, Ariel Dola and Frederick
Riano.
Meralco called for an investigation of the incident and asked
Gala to explain. Gala denied involvement in the pilferage,
contending that even if his superiors might have committed a
wrongdoing, he had no participation in what they did. He
claimed that: (1) he was at some distance away from the trucks
when the pilferage happened; (2) he did not have an inkling that
an illegal activity was taking place since his supervisors were
conversing with Llanes, giving him the impression that they
knew him; (3) he did not call the attention of his superiors
because he was not in a position to do so as he was a mere
lineman; and (4) he was just following instructions in connection
with his work and had no control in the disposition of company
supplies and materials. He maintained that his mere presence
at the scene of the incident was not sufficient to hold him liable
as a conspirator.
Despite Gala’s explanation, Meralco proceeded with the
investigation and eventually terminated his employment on July
27, 2006.4 Gala responded by filing an illegal dismissal
complaint against Meralco.5
The Compulsory Arbitration Rulings
In a decision dated September 7, 2007,6 Labor Arbiter Teresita
D. Castillon-Lora dismissed the complaint for lack of merit. She
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held that Gala’s participation in the pilferage of Meralco’s
property rendered him unqualified to become a regular
employee.
Gala appealed to the National Labor Relations Commission
(NLRC). In its decision of May 2, 2008,7 the NLRC reversed the
labor arbiter’s ruling. It found that Gala had been illegally
dismissed, since there was "no concrete showing of complicity
with the alleged misconduct/dishonesty[.]"8 The NLRC,
however, ruled out Gala’s reinstatement, stating that his tenure
lasted only up to the end of his probationary period. It awarded
him backwages and attorney’s fees.
Both parties moved for partial reconsideration; Gala, on the
ground that he should have been reinstated with full backwages,
damages and interests; and Meralco, on the ground that the
NLRC erred in finding that Gala had been illegally dismissed.
The NLRC denied the motions. Relying on the same grounds,
Gala and Meralco elevated the case to the CA through a petition
for certiorari under Rule 65 of the Rules of Court.
The CA Decision
In its decision of August 25, 2009,9 the CA denied Meralco’s
petition for lack of merit and partially granted Gala’s petition. It
concurred with the NLRC that Gala had been illegally dismissed,
a ruling that was supported by the evidence. It opined that
nothing in the records show Gala’s knowledge of or complicity in

the pilferage. It found insufficient the joint affidavit10 of the
members of Meralco’s task force testifying that Gala and two
other linemen knew Llanes.
The CA modified the NLRC decision of May 2, 200811 and
ordered Gala’s reinstatement with full backwages and other
benefits. The CA also denied Meralco’s motion for
reconsideration. Hence, the present petition for review on
certiorari.12
The Petition
The petition is anchored on the ground that the CA seriously
erred and gravely abused its discretion in -
1. ruling that Gala was illegally dismissed; and
2. directing Gala’s reinstatement despite his probationary
status.
Meralco faults the CA for not giving credit to its witnesses
Aguilar, Dola and Riano, and instead treated their joint affidavit
(Samasamang Sinumpaang Salaysay) as inconclusive to
establish Gala’s participation in the pilferage of company
property on May 25, 2006. It submits that the affidavit of the
three Meralco employees disproves the CA’s findings,
considering that their statements were based on their first-hand
account of the incident during their day-long surveillance on
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May 25, 2006. It points out that the three Meralco employees
categorically stated that all of the company’s foremen and
linemen present at that time, including Gala, had knowledge of
the pilferage that was happening at the time. According to
Aguilar, Dola and Riano, the trucks’ crew, including Gala, was
familiar with Llanes who acted as if his presence — particularly,
that of freely collecting materials and supplies — was a regular
occurrence during their operations.
Meralco maintains that Gala himself admitted in his own
testimony13 that he had been familiar with Llanes even before
the May 25, 2006 incident where he saw Zuñiga, the foreman of
Truck No. 1837, conversing with Llanes. Meralco submits that
Gala’s admission, instead of demonstrating "his feigned
innocence,"14 even highlights his guilt, especially considering
that by design, his misfeasance assisted Llanes in pilfering
company property; Gala neither intervened to stop Llanes, nor
did he report the incident to the Meralco management.
Meralco posits that because of his undeniable knowledge of, if
not participation in, the pilferage activities done by their group,
the company was well within its right in terminating his
employment as a probationary employee for his failure to meet
the basic standards for his regularization. The standards, it
points out, were duly explained to him and outlined in his
probationary employment contract. For this reason and due to
the expiration of Gala’s probationary employment, the CA
should not have ordered his reinstatement with full backwages.

Finally, Meralco argues that even if Gala was illegally dismissed,
he was entitled to just his backwages for the unexpired portion
of his employment contract with the company.
Gala’s Case
By way of his Comment (to the Petition) dated September 2,
2010,15 Gala asks for a denial of the petition because of (1)
serious and fatal infirmities in the petition; (2) unreliable
statements of Meralco’s witnesses; and (3) clear lack of basis to
support the termination of his employment.
Gala contends, in regard to the alleged procedural defects of
the petition, that the "Verification and Certification," "Secretary’s
Certificate" and "Affidavit of Service" do not contain the details
of the Community or Residence Tax Certificates of the affiants,
in violation of Section 6 of Commonwealth Act No. 465 (an Act
to Impose a Residence Tax). Additionally, the lawyers who
signed the petition failed to indicate their updated Mandatory
Continuing Legal Education (MCLE) certificate numbers, in
violation of the rules.
With respect to the merits of the case, Gala bewails Meralco’s
reliance on the joint affidavit16 of Aguilar, Dola and Riano not
only because it was presented for the first time on appeal to the
CA, but also because it was a mere afterthought. He explains
that Aguilar and Dola were the very same persons who
executed a much earlier sworn statement or transcription dated
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July 7, 2006. This earlier statement did not even mention Gala,
but the later joint affidavit "splashes GALA’s name in a
desperate attempt to link him to an imagined wrongdoing."17
Zeroing in on what he believes as lack of credibility of Meralco’s
evidence, Gala posits that there is clear lack of basis for the
termination of his employment. Thus, he wonders why Meralco
did not present as evidence the video footage of the entire
incident which it claims exists. He suspects that the footage was
adverse to Meralco’s position in the case.
Gala adds that the allegations of a "reported pilferage" or
"rampant theft or pilferage" committed prior to May 25, 2006 by
his superiors were not established, for even the labor arbiter did
not make a finding on the foremen’s involvement in the incident.
He stresses that the same is true in his case as there is no proof
of his participation in the pilferage.
Gala further submits that even if he saw Llanes on May 25,
2006 at about the time of the occurrence of the pilferage near or
around the Meralco trucks, he was not aware that a wrongdoing
was being committed or was about to be committed. He points
out at that precise time, his superiors were much nearer to the
trucks than he as he was among the crew digging a hole. He
presumed at the time that his own superiors, being the more
senior employees, could be trusted to protect company
property.

Finally, Gala posits that his reinstatement with full backwages is
but a consequence of the illegality of his dismissal. He argues
that even if he was on probation, he is entitled to security of
tenure. Citing Philippine Manpower Services, Inc. v. NLRC,18 he
claims that in the absence of any justification for the termination
of his probationary employment, he is entitled to continued
employment even beyond the probationary period.
The Court’s Ruling
The procedural issue
Gala would want the petition to be dismissed outright on
procedural grounds, claiming that the "Verification and
Certification," "Secretary’s Certificate" and "Affidavit of Service"
accompanying the petition do not contain the details of the
Community Tax Certificates of the affiants, and that the lawyers
who signed the petition failed to indicate their updated MCLE
certificate numbers, in violation of existing rules.
We stress at this point that it is the spirit and intention of labor
legislation that the NLRC and the labor arbiters shall use every
reasonable means to ascertain the facts in each case speedily
and objectively, without regard to technicalities of law or
procedure, provided due process is duly observed.19 In keeping
with this policy and in the interest of substantial justice, we
deem it proper to give due course to the petition, especially in
view of the conflict between the findings of the labor arbiter, on
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the one hand, and the NLRC and the CA, on the other. As we
said in S.S. Ventures International, Inc. v. S.S. Ventures Labor
Union,20 "the application of technical rules of procedure in labor
cases may be relaxed to serve the demands of substantial
justice."
The substantive aspect of the case
We find merit in the petition.
Contrary to the conclusions of the CA and the NLRC, there is
substantial evidence supporting Meralco’s position that Gala
had become unfit to continue his employment with the company.
Gala was found, after an administrative investigation, to have
failed to meet the standards expected of him to become a
regular employee and this failure was mainly due to his
"undeniable knowledge, if not participation, in the pilferage
activities done by their group, all to the prejudice of the
Company’s interests."21
Gala insists that he cannot be sanctioned for the theft of
company property on May 25, 2006. He maintains that he had
no direct participation in the incident and that he was not aware
that an illegal activity was going on as he was at some distance
from the trucks when the alleged theft was being committed. He
adds that he did not call the attention of the foremen because he
was a mere lineman and he was focused on what he was doing
at the time. He argues that in any event, his mere presence in

the area was not enough to make him a conspirator in the
commission of the pilferage.
Gala misses the point. He forgets that as a probationary
employee, his overall job performance and his behavior were
being monitored and measured in accordance with the
standards (i.e., the terms and conditions) laid down in his
probationary employment agreement.22 Under paragraph 8 of
the agreement, he was subject to strict compliance with, and
non-violation of the Company Code on Employee Discipline,
Safety Code, rules and regulations and existing policies. Par. 10
required him to observe at all times the highest degree of
transparency, selflessness and integrity in the performance of
his duties and responsibilities, free from any form of conflict or
contradicting with his own personal interest.
The evidence on record established Gala’s presence in the
worksite where the pilferage of company property
happened.1âwphi1 It also established that it was not only on
May 25, 2006 that Llanes, the pilferer, had been seen during a
Meralco operation. He had been previously noticed by Meralco
employees, including Gala (based on his admission),23 in past
operations. If Gala had seen Llanes in earlier projects or
operations of the company, it is incredulous for him to say that
he did not know why Llanes was there or what Zuñiga and
Llanes were talking about. To our mind, the Meralco crew (the
foremen and the linemen) allowed or could have even asked
Llanes to be there during their operations for one and only
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purpose — to serve as their conduit for pilfered company
supplies to be sold to ready buyers outside Meralco worksites.
The familiarity of the Meralco crew with Llanes, a non-Meralco
employee who had been present in Meralco field operations,
does not contradict at all but rather support the Meralco
submission that there had been "reported pilferage" or "rampant
theft," by the crew, of company property even before May 25,
2006. Gala downplays this particular point with the argument
that the labor arbiter made no such finding as she merely
assumed it to be a fact,24 her only "basis" being the statement
that "may natanggap na balita na ang mga crew na ito ay
palagiang hindi nagsasauli ng mga electric facilities na kanilang
ginagamit o pinapalitan bagkus ito ay ibinenta palabas." 25 Gala
impugns the statement as hearsay. He also wonders why
Meralco’s supposed "video footage" of the incident on May 25,
2006 was never presented in evidence.
The established fact that Llanes, a non-Meralco employee, was
often seen during company operations, conversing with the
foremen, for reason or reasons connected with the ongoing
company operations, gives rise to the question: what was he
doing there? Apparently, he had been visiting Meralco worksites,
at least in the Valenzuela Sector, not simply to socialize, but to
do something else. As testified to by witnesses, he was picking
up unused supplies and materials that were not returned to the
company. From these factual premises, it is not hard to
conclude that this activity was for the mutual pecuniary benefit

of himself and the crew who tolerated the practice. For one
working at the scene who had seen or who had shown
familiarity with Llanes (a non-Meralco employee), not to have
known the reason for his presence is to disregard the obvious,
or at least the very suspicious.
We consider, too, and we find credible the company submission
that the Meralco crew who worked at the Pacheco Subdivision
in Valenzuela City on May 25, 2006 had not been returning
unused supplies and materials, to the prejudice of the company.
From all these, the allegedly hearsay evidence that is not
competent in judicial proceedings (as noted above), takes on
special meaning and relevance.
With respect to the video footage of the May 25, 2006 incident,
Gala himself admitted that he viewed the tape during the
administrative investigation, particularly in connection with the
accusation against him that he allowed Llanes (binatilyong may
kapansanan sa bibig) to board the Meralco trucks.26 The choice
of evidence belongs to a party and the mere fact that the video
was shown to Gala indicates that the video was not an evidence
that Meralco was trying to suppress. Gala could have, if he had
wanted to, served a subpoena for the production of the video
footage as evidence. The fact that he did not does not
strengthen his case nor weaken the case of Meralco.
On the whole, the totality of the circumstances obtaining in the
case convinces us that Gala could not but have knowledge of
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the pilferage of company electrical supplies on May 25, 2006;
he was complicit in its commission, if not by direct participation,
certainly, by his inaction while it was being perpetrated and by
not reporting the incident to company authorities. Thus, we find
substantial evidence to support the conclusion that Gala does
not deserve to remain in Meralco’s employ as a regular
employee. He violated his probationary employment agreement,
especially the requirement for him "to observe at all times the
highest degree of transparency, selflessness and integrity in the
performance of their duties and responsibilities[.]" 27 He failed to
qualify as a regular employee.28
For ignoring the evidence in this case, the NLRC committed
grave abuse of discretion and, in sustaining the NLRC, the CA
committed a reversible error.
WHEREFORE, premises considered, the petition is GRANTED.
The assailed decision and resolution of the Court of Appeals are
SET ASIDE. The complaint is DISMISSED for lack of merit.
SO ORDERED.
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vs.
THE COURT OF APPEALS, NATIONAL LABOR RELATIONS
COMMISSION and JOSEPH DIMPAZ, HIPOLITO LOPEZ,
EDWARD ODATO, FELICISIMO PABON and JOHNNY
AGBAY, Respondents.

RESOLUTION

QUISUMBING, J.:

This petition for certiorari seeks the reversal and setting aside of
the Decision1 dated January 31, 2002 and the
2
Resolution dated September 12, 2002 of the Court of Appeals
in CA-G.R. SP No. 65465. The appellate court had affirmed the
January 30, 20013 and April 20, 2001 Resolutions of the
National Labor Relations Commission (NLRC).

The factual antecedents of this case are as follows.

Labor Arbiter Manuel M. Manansala found petitioner Nationwide

Security and Allied Services, Inc., a security agency, not liable
for illegal dismissal in NLRC NCR 00-01-00833-96 and
00-02-01129-96 involving eight security guards who were
employees of the petitioner. However, the Labor Arbiter directed
G.R. No. 155844 July 14, 2008
the petitioner to pay the aforementioned security guards
₱81,750.00 in separation pay, ₱8,700.00 in unpaid salaries,
NATIONWIDE SECURITY and ALLIED SERVICES,
₱93,795.68 for underpayment and 10% attorney’s fees based
INC., Petitioner,
on the total monetary award.4

Dissatisfied with the decision, petitioner appealed to the NLRC
which dismissed its appeal for two reasons — first, for having
been filed beyond the reglementary period within which to
perfect the appeal and second, for filing an insufficient appeal
bond. It disposed as follows:
WHEREFORE, in the light of the foregoing, it is hereby ordered
that:
1. the instant appeal be considered DISMISSED; and,
2. the Decision appealed from be deemed FINAL and
EXECUTORY.
SO ORDERED.5
Its motion for reconsideration having been denied, petitioner
then appealed to the Court of Appeals to have the appeal
resolved on the merits rather than on pure technicalities in the
interest of due process.
The Court of Appeals dismissed the case, holding that in a
special action for certiorari, the burden is on petitioner to prove
not merely reversible error, but grave abuse of discretion
amounting to lack of or excess of jurisdiction on the part of
public respondent NLRC. The dispositive portion of its decision
states:
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WHEREFORE, in view of the foregoing, the petition is hereby
DISMISSED. The questioned Resolutions dated 30 January
2001 and 20 April 2001 of the National Labor Relations
Commission are accordingly AFFIRMED.
SO ORDERED.6
The Court of Appeals likewise denied the petitioner’s motion for
reconsideration.7 Hence, this petition which raises the following
issues:
I.
WHETHER OR NOT TECHNICALITIES IN LABOR CASES
MUST PREVAIL OVER THE SPIRIT AND INTENTION OF THE
LABOR CODE UNDER ARTICLE 221 THEREOF WHICH
STATES:
"In any proceeding before the Commission or any of the Labor
Arbiters, the rules of evidence prevailing in courts of Law or
equity shall not be controlling and it is the spirit and
[i]ntention of this Code that the Commission and its
members and Labor Arbiters shall use every and all
reasonable means to ascertain the facts in each case
speedily and objectively and without [regard] to
technicalities of law or procedure, all [i]n the interest of due
process." Emphasis added.

II.
WHETHER OR NOT THE DOCTRINE IN THE CASE OF STAR
ANGEL HANDICRAFT vs. NLRC, et al., 236 SCRA 580 AND
ROSEWOOD PROCESSING, INC. VS. NLRC, G.R. [No.]
116476, May 21, 1998 FINDS APPLICATION IN THE INSTANT
CASE [;]
III.
WHETHER OR NOT SEPARATION PAY IS JUSTIFIED AS
AWARD IN CASES WHERE THE EMPLOYEE IS
TERMINATED DUE TO CONTRACT EXPIRATION AS IN THE
INSTANT CASE; AND
IV.
WHETHER OR NOT THE REQUIREMENT ON
CERTIFICATION AGAINST FORUM SHOPPING WHICH WAS
RAISED BEFORE THE NLRC IS ENFORCEABLE IN THE
INSTANT CASE.8
Petitioner contends that the Court of Appeals erred when it
dismissed its case based on technicalities while the private
respondents contend that the appeal to the NLRC had not been
perfected, since the appeal was filed outside the reglementary
period, and the bond was insufficient.9
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After considering all the circumstances in this case and the
submission by the parties, we are in agreement that the petition
lacks merit.
At the outset it must be pointed out here that the petition for
certiorari filed with the Court by petitioner under Rule 65 of the
Rules of Court is inappropriate. The proper remedy is a petition
for review under Rule 45 purely on questions of law. There
being a remedy of appeal via petition for review under Rule 45
of the Rules of Court available to the petitioner, the filing of a
petition for certiorari under Rule 65 is improper.1avvphi1
But even if we bend our Rules to allow the present petition for
certiorari, still it will not prosper because we do not find any
grave abuse of discretion amounting to lack of or excess of
jurisdiction on the part of the Court of Appeals when it dismissed
the petition of the security agency. We must stress that under
Rule 65, the abuse of discretion must be so patent and gross as
to amount to an evasion of positive duty or to a virtual refusal to
perform a duty enjoined by law, or to act at all in contemplation
of law, as where the power is exercised in an arbitrary and
despotic manner by reason of passion or personal hostility.10 No
such abuse of discretion happened here. The assailed decision
by the Court of Appeals was certainly not capricious nor
arbitrary, nor was it a whimsical exercise of judgment amounting
to a lack of jurisdiction.11
The Labor Code provides as follows:

ART. 223. Appeal. – Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. Such appeal
may be entertained only on any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on the
part of the Labor Arbiter;
(b) If the decision, order or award was secured through fraud or
coercion, including graft and corruption;
(c) If made purely on questions of law, and
(d) If serious errors in the findings of facts are raised which
would cause grave or irreparable damage or injury to the
appellant.
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.
xxxx
The New Rules of Procedure of the NLRC states:
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Section 1. Periods of appeal. – Decisions, resolutions or
orders of the Labor Arbiter shall be final and executory unless
appealed to the Commission by any or both parties within ten
(10) calendar days from receipt thereof; and in case of decisions,
resolutions or orders of the Regional Director of the Department
of Labor and Employment pursuant to Article 129 of the Labor
Code, within five (5) calendar days from receipt thereof. If the
10th or 5th day, as the case may be, falls on a Saturday,
Sunday or holiday, the last day to perfect the appeal shall be the
first working day following such Saturday, Sunday or holiday.
No motion or request for extension of the period within which to
perfect an appeal shall be allowed.
In the instant case, both the NLRC and the Court of Appeals
found that petitioner received the decision of the Labor Arbiter
on July 16, 1999. This factual finding is supported by sufficient
evidence,12 and we take it as binding on us. Petitioner then
simultaneously filed its "Appeal Memorandum", "Notice of
Appeal" and "Motion to Reduce Bond", by registered mail on
July 29, 1999, under Registry Receipt No. 003098. 13 These
were received by the NLRC on July 30, 1999. 14 The appeal to
the NLRC should have been perfected, as provided by its Rules,
within a period of 10 days from receipt by petitioner of the
decision on July 16, 1999. Clearly, the filing of the appeal--three
days after July 26, 1999--was already beyond the reglementary
period and in violation of the NLRC Rules and the pertinent
Article on Appeal in the Labor Code.

Failure to perfect an appeal renders the decision final and
executory.15 The right to appeal is a statutory right and one who
seeks to avail of the right must comply with the statute or the
rules. The rules, particularly the requirements for perfecting an
appeal within the reglementary period specified in the law, must
be strictly followed as they are considered indispensable
interdictions against needless delays and for the orderly
discharge of judicial business.16It is only in highly meritorious
cases that this Court will opt not to strictly apply the rules and
thus prevent a grave injustice from being done.17 The exception
does not obtain here. Thus, we are in agreement that the
decision of the Labor Arbiter already became final and
executory because petitioner failed to file the appeal within 10
calendar days from receipt of the decision.
Clearly, the NLRC committed no grave abuse of discretion in
dismissing the appeal before it. It follows that the Court of
Appeals, too, did not err, nor gravely abuse its discretion, in
sustaining the NLRC Order, by dismissing the petition for
certiorari before it. Hence, with the primordial issue resolved, we
find no need to tarry on the other issues raised by petitioner.
WHEREFORE, the Decision dated January 31, 2002 and the
Resolution dated September 12, 2002 of the Court of Appeals in
CA- G.R. SP No. 65465 are AFFIRMED. Costs against
petitioner.
SO ORDERED.
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G.R. No. 168501 January 31, 2011
ISLRIZ TRADING/VICTOR HUGO LU, Petitioner,
vs.
EFREN CAPADA, LAURO LICUP, NORBERTO NIGOS,
RONNIE ABEL, GODOFREDO MAGNAYE, ARNEL SIBERRE,
EDMUNDO CAPADA, NOMERLITO MAGNAYE and
ALBERTO DELA VEGA, Respondents.
DECISION
DEL CASTILLO, J.:
We reiterate in this petition the settled view that employees are
entitled to their accrued salaries during the period between the
Labor Arbiter’s order of reinstatement pending appeal and the
resolution of the National Labor Relations Commission (NLRC)
overturning that of the Labor Arbiter. Otherwise stated, even if
the order of reinstatement of the Labor Arbiter is reversed on
appeal, the employer is still obliged to reinstate and pay the
wages of the employee during the period of appeal until reversal
by a higher court or tribunal. In this case, respondents are
entitled to their accrued salaries from the time petitioner
received a copy of the Decision of the Labor Arbiter declaring
respondents’ termination illegal and ordering their reinstatement
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up to the date of the NLRC resolution overturning that of the WHEREFORE, premises considered, judgment is hereby
Labor Arbiter. rendered as follows:

This Petition for Review on Certiorari assails the 1. Declaring respondent ISLRIZ TRADING guilty of illegal
Decision1 dated March 18, 2005 of the Court of Appeals (CA) in dismissal.
CA-G.R. SP No. 84744 which dismissed the petition for
certiorari before it, as well as the Resolution2 dated June 16, 2. Ordering respondent to reinstate complainants to their former
2005 which denied the motion for reconsideration thereto. positions without loss of seniority rights and the payment of full
backwages from date of dismissal to actual reinstatement which
Factual Antecedents are computed as follows: (As of date of decision);

Respondents Efren Capada, Lauro Licup, Norberto Nigos and 1. EFREN CAPADA ₱ 102,400.00 (6,400.00X16)
Godofredo Magnaye were drivers while respondents Ronnie
Abel, Arnel Siberre, Edmundo Capada, Nomerlito Magnaye and 2. LAURO LICUP 87,040.00 (5,440.00X16)
Alberto Dela Vega were helpers of Islriz Trading, a gravel and 3. NORBERTO NIGOS 87,040.00 (5,440.00X16)
sand business owned and operated by petitioner Victor Hugo Lu.
Claiming that they were illegally dismissed, respondents filed a 4. RONNIE ABEL 76,800.00 (4,800.00X16)
Complaint3 for illegal dismissal and non-payment of overtime
5. GODOFREDO MAGNAYE 102,400.00 (6,400.00X16)
pay, holiday pay, rest day pay, allowances and separation pay
against petitioner on August 9, 2000 before the Labor Arbiter. 6. ARNEL SIBERRE 51,200.00 (3,200.00X16)
On his part, petitioner imputed abandonment of work against
respondents. 7. EDMUNDO CAPADA 76,800.00 (4,800.00X16)

8. NOMERLITO MAGNAYE 76,800.00 (4,800.00X16)

Proceedings before the Labor Arbiter and the NLRC
9. ALBERTO DELA VEGA 51,200.00 (3,200.00X16)
On December 21, 2001, Labor Arbiter Waldo Emerson R. Gan
(Gan) rendered a Decision4 in this wise:

3. Ordering respondent to pay complainants 10% of the total
monetary award as attorney’s fees.
All other claims are dismissed for lack of merit.
SO ORDERED.5
Aggrieved, petitioner appealed6 to the NLRC which granted the
appeal. The NLRC set aside the Decision of Labor Arbiter Gan
in a Resolution7 dated September 5, 2002. Finding that
respondents’ failure to continue working for petitioner was
neither caused by termination nor abandonment of work, the
NLRC ordered respondents’ reinstatement but without
backwages. The dispositive portion of said Resolution reads as
follows:
WHEREFORE, premises considered, the appeal is GRANTED
and the Decision dated 21 December 2001 is hereby ordered
SET ASIDE.
A New Decision is hereby rendered finding that the failure to
work of complainants-appellees is neither occasioned by
termination (n)or abandonment of work, hence,
respondents-appellants shall reinstate complainants-appellees
to their former positions without backwages within ten (10) days
from receipt of this Resolution.
SO ORDERED.8
14
Labor Law II
Respondents filed a Motion for Reconsideration9 thereto but
same was likewise denied in a Resolution10 dated November 18,
2002. This became final and executory on December 7, 2002. 11
On December 9, 2003, however, respondents filed with the
Labor Arbiter an Ex-Parte Motion to Set Case for Conference
with Motion.12 They averred therein that since the Decision of
Labor Arbiter Gan ordered their reinstatement, a Writ of
Execution13 dated April 22, 2002 was already issued for the
enforcement of its reinstatement aspect as same is immediately
executory even pending appeal. But this notwithstanding and
despite the issuance and subsequent finality of the NLRC
Resolution which likewise ordered respondents’ reinstatement,
petitioner still refused to reinstate them. Thus, respondents
prayed that in view of the orders of reinstatement, a
computation of the award of backwages be made and that an
Alias Writ of Execution for its enforcement be issued.
The case was then set for pre-execution conference on January
29, February 24 and March 5, 2004. Both parties appeared
thereat but failed to come to terms on the issue of the monetary
award. Hence, the office of the Labor Arbiter through Fiscal
Examiner II Ma. Irene T. Trinchera (Fiscal Examiner Trinchera)
issued an undated Computation14 of respondents’ accrued
salaries from January 1, 2002 to January 30, 2004 or for a total
of 24.97 months in the amount of ₱1,110,665.60 computed as
follows:

Accrued Salary from January 1, 2002 to January 30, 2004 =
24.97 months
1. Efren Capada ₱ 6,400.00 x 24.97 months
2. Lauro Licup ₱ 5,440.00 x 24.97 months
3. Norberto Nigos ₱ 5,440.00 x 24.97
months
4. Ronnie Abel ₱ 4,800.00 x 24.97 months
5. Godofredo Magnaye ₱ 6,400.00 x 24.97
months
6. Arnel Siberre ₱ 3,200.00 x 24.97 months
7. Edmundo Capada ₱ 4,800.00 x 24.97
months
8. Nomerlito Magnaye ₱ 4,800.00 x 24.97
months
9. Alberto de la Vega ₱ 3,200.00 x 24.97
months
15
Labor Law II
Total ₱ 1,110,665.60
₱ 159,808.00 Petitioner questioned this computation in his
15
Motion/Manifestation claiming that said computation was
₱ 135,836.80 without any factual or legal basis considering that Labor Arbiter
Gan’s Decision had already been reversed and set aside by the
NLRC and that therefore there should be no monetary award.
₱ 135,836.80
Nevertheless, Labor Arbiter Danna M. Castillon (Castillon) still
issued a Writ of Execution16 dated March 9, 2004 to enforce the
₱ 119,856.00 monetary award in accordance with the abovementioned
computation. Accordingly, the Sheriff issued a Notice of
Sale/Levy on Execution of Personal Property17 by virtue of
₱ 159,808.00
which petitioner’s properties were levied and set for auction sale
on March 29, 2004. In an effort to forestall this impending
₱ 79, 904.00 execution, petitioner then filed a Motion to Quash Writ of
Execution with Prayer to Hold in Abeyance of Auction
Sale18 and a Supplemental Motion to Quash/Stop Auction
₱ 119, 856.00
Sale.19 He also served upon the Sheriff a letter of protest.20 All
of these protest actions proved futile as the Sheriff later
submitted his Report dated March 30, 2004 informing the Labor
₱ 119, 856.00 Arbiter that he had levied some of petitioner’s personal
properties and sold them in an auction sale where respondents
₱ 79, 904.00 were the only bidders. After each of the respondents entered a
bid equal to their individual shares in the judgment award, the
levied properties were awarded to them.

Later, respondents claimed that although petitioner’s levied
properties were already awarded to them, they could not take
full control, ownership and possession of said properties
because petitioner had allegedly padlocked the premises where
the properties were situated. Hence, they asked Labor Arbiter
Castillon to issue a break-open order.21 For his part and in a last
ditch effort to nullify the writ of execution, petitioner filed a
Motion to Quash Writ of Execution, Notice of Sale/Levy on
Execution of Personal Property and Auction Sale on Additional
Grounds.22 He reiterated that since the NLRC Resolution which
reversed the Decision of the Labor Arbiter ordered respondents’
reinstatement without payment of backwages or other monetary
award, only the execution of reinstatement sansany backwages
or monetary award should be enforced. It is his position that the
Writ of Execution dated March 9, 2004 ordering the Sheriff to
collect respondents’ accrued salaries of ₱1,110,665.60 plus
₱1,096.00 execution fees or the total amount of ₱1,111,761.60,
in effect illegally amended the said NLRC Resolution; hence,
said writ of execution is null and void. And, as the writ is null and
void, it follows that the Labor Arbiter cannot issue a break-open
order. In sum, petitioner prayed that the Writ of Execution be
quashed and all proceedings subsequent to it be declared null
and void and that respondents’ Urgent Motion for Issuance of
Break Open Order be denied for lack of merit.
Both motions were resolved in an Order23 dated June 3, 2004.
Labor Arbiter Castillon explained therein that the monetary
award subject of the questioned Writ of Execution refers to
16
Labor Law II
respondents’ accrued salaries by reason of the reinstatement
order of Labor Arbiter Gan which is self-executory pursuant to
Article 22324 of the Labor Code. The Order cited Roquero v.
Philippine Airlines Inc.25 where this Court ruled that employees
are still entitled to their accrued salaries even if the order of
reinstatement has been reversed on appeal. As to the
application for break open order, Labor Arbiter Castillon relied
on the Sheriff’s report that there is imminent danger that
petitioner’s properties sold at the public auction might be
transferred or removed, as in fact four of said properties were
already transferred. Thus, she deemed it necessary to grant
respondents’ request for a break open order to gain access to
petitioner’s premises. The dispositive portion of said Order
reads:
WHEREFORE, premises considered, the Motion to Quash Writ
of Execution [and] Notice of Sale/Levy on Execution Sale filed
by the respondent(s) [are] hereby DENIED. In view of the
refusal of the respondents’ entry to its premises, Deputy Sheriff
S. Diega of this Office is hereby ordered to break-open the
entrance of the premises of respondent wherein the properties
are located.
For this purpose, he may secure the assistance of the local
police officer having jurisdiction over the locality where the said
properties are located.
SO ORDERED.26

Undeterred, petitioner brought the matter to the CA through a
Petition for Certiorari.
Proceedings before the Court of Appeals
Before the CA, petitioner imputed grave abuse of discretion
amounting to lack or excess of jurisdiction upon Labor Arbiter
Castillon for issuing the questioned Writ of Execution and the
Order dated June 3, 2004. He maintained that since the
December 21, 2001 Decision of Labor Arbiter Gan has already
been reversed and set aside by the September 5, 2002
Resolution of the NLRC, the Writ of Execution issued by Labor
Arbiter Castillon should have confined itself to the said NLRC
Resolution which ordered respondents’ reinstatement without
backwages. Hence, when Labor Arbiter Castillon issued the writ
commanding the Sheriff to satisfy the monetary award in the
amount of ₱1,111,761.60, she acted with grave abuse of
discretion amounting to lack or excess of jurisdiction. For the
same reason, her issuance of the Order dated June 3, 2004
denying petitioner’s Motion to Quash Writ of Execution with
Prayer to Hold in Abeyance Auction Sale and granting
respondents’ Urgent Motion for Issuance of Break Open Order
is likewise tainted with grave abuse of discretion. Aside from
these, petitioner also questioned the conduct of the auction sale.
He likewise claimed that he was denied due process because
he was not given the opportunity to file a motion for
reconsideration of the Order denying his Motion to Quash Writ
of Execution considering that a break-open order was also
17
Labor Law II
made in the same Order. For their part, respondents posited
that since they have already disposed of petitioner’s levied
properties, the petition has already become moot.
In a Decision27 dated March 18, 2005, the CA quoted the June 3,
2004 Order of Labor Arbiter Castillon and agreed with her
ratiocination that pursuant to Article 223 of the Labor Code,
what is sought to be enforced by the subject Writ of Execution is
the accrued salaries owing to respondents by reason of the
reinstatement order of Labor Arbiter Gan. The CA also found as
unmeritorious the issues raised by petitioner with regard to the
conduct of the auction sale. Moreover, it did not give weight to
petitioner’s claim of lack of due process considering that a
motion for reconsideration of a Writ of Execution is not an
available remedy. Thus, the CA dismissed the petition.
Petitioner’s Motion for Reconsideration28 suffered the same fate
as it was also denied in a Resolution29 dated June 16, 2005.
Hence, petitioner is now before this Court through this Petition
for Review on Certiorari where he presents the following issues:
1. Whether the provision of Article 223 of the Labor Code is
applicable to this case x x x.
2. Whether x x x the Decision dated March 18, 2005 and the
Resolution dated June 16, 2005 of the Court of Appeals are
contrary to law and jurisprudence[.]

3. Whether x x x the award of accrued salaries has legal and
factual bases[.]30
The Parties’ Arguments
Petitioner contends that the assailed Decision and Resolution of
the CA are contrary to law and jurisprudence. This is because in
upholding the issuance of the questioned Writ of Execution for
the enforcement of respondents’ accrued salaries, said
Decision and Resolution, in effect, altered the NLRC Resolution
which only decreed respondents’ reinstatement without
backwages. Moreover, he
posits that Article 223 of the Labor Code only applies when an
employee has been illegally dismissed from work. And since in
this case the NLRC ruled that respondents’ failure to continue
working for petitioner was not occasioned by termination, there
is no illegal dismissal to speak of, hence, said provision of the
Labor Code does not apply. Lastly, petitioner claims that the
computation of respondents’ accrued salaries in the total
amount of ₱1,110,665.60 has no legal and factual bases since
as repeatedly pointed out by him, the NLRC Resolution
reversing the Labor Arbiter’s Decision has already ordered
respondents’ reinstatement without backwages after it found
that there was no illegal termination.
Respondents, on the other hand, maintain that the CA did not
err in applying Article 223 of the Labor Code to the instant case.
18
Labor Law II
They thus contend that the computation of their accrued
salaries covering the period during which they were supposed
to have been reinstated or from January 1, 2002 to January 30,
2004, should be upheld since same merely applied Article 223.
In sum, respondents believe that the assailed Decision and
Resolution of the CA are in accord with law and jurisprudence.
Our Ruling
The petition is not meritorious.
The core issue to be resolved in this case is similar to the one
determined in Garcia v. Philippine Airlines Inc.,31 that is,
whether respondents may collect their wages during the period
between the Labor Arbiter’s order of reinstatement pending
appeal and the NLRC Resolution overturning that of the Labor
Arbiter.
In order to provide a thorough discussion of the present case,
an overview of Garcia is proper.
In Garcia, petitioners therein were dismissed by Philippine
Airlines Inc. (PAL) after they were allegedly caught in the act of
sniffing shabu during a raid at the PAL Technical Center’s
Toolroom Section. They thus filed a complaint for illegal
dismissal. In the meantime, PAL was placed under an interim
rehabilitation receivership because it was then suffering from
severe financial losses. Thereafter, the Labor Arbiter ruled in

petitioners’ favor and ordered PAL to immediately comply with
the reinstatement aspect of the decision. PAL appealed to the
NLRC. The NLRC reversed the Labor Arbiter’s Decision and
dismissed petitioners’ complaint for lack of merit. As petitioners’
Motion for Reconsideration thereto was likewise denied, the
NLRC issued an Entry of Judgment. Notably, PAL’s Interim
Rehabilitation Receiver was replaced by a Permanent
Rehabilitation Receiver during the pendency of its appeal with
the NLRC. A writ of execution with respect to the reinstatement
aspect of the Labor Arbiter’s Decision was then issued and
pursuant thereto, a Notice of Garnishment was likewise issued.
To stop this, PAL filed an Urgent Petition for Injunction with the
NLRC. While the NLRC suspended and referred the action to
the rehabilitation receiver, it however, likewise affirmed the
validity of the writ so that PAL appealed to the CA. Fortunately
for PAL, the CA nullified the assailed NLRC Resolutions on the
grounds that (1) a subsequent finding of a valid dismissal
removes the basis for the reinstatement aspect of a labor
arbiter’s decision and, (2) the impossibility to comply with the
reinstatement order due to corporate rehabilitation justifies
PAL’s failure to exercise the options under Article 223 of the
Labor Code. When the case reached this Court, we partially
granted the petition in a Decision dated August 29, 2007 and
effectively reinstated the NLRC Resolutions insofar as it
suspended the proceedings. But as PAL later manifested that
the rehabilitation proceedings have already been terminated,
the court proceeded to determine the remaining issue, which is,
19
Labor Law II
as earlier stated, whether petitioners therein may collect their
wages during the period between the Labor Arbiter’s order of
reinstatement pending appeal and the NLRC Resolution
overturning that of the Labor Arbiter.
In resolving the case, the Court examined its conflicting rulings
with respect to the application of paragraph 3 of Article 223 of
the Labor Code, viz:
At the core of the seeming divergence is the application of
paragraph 3 of Article 223 of the Labor Code which reads:
‘In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement
aspect is concerned, shall immediately be executory,
pending appeal. The employee shall either be admitted back to
work under the same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the employer
shall not stay the execution for reinstatement provided herein.’
The view as maintained in a number of cases is that:
‘x x x [E]ven if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the part of
the employer to reinstate and pay the wages of the
dismissed employee during the period of appeal until
reversal by the higher court. On the other hand, if the

employee has been reinstated during the appeal period and
such reinstatement order is reversed with finality, the employee
is not required to reimburse whatever salary he received for he
is entitled to such, more so if he actually rendered services
during the period.
In other words, a dismissed employee whose case was
favorably decided by the Labor Arbiter is entitled to receive
wages pending appeal upon reinstatement, which is
immediately executory. Unless there is a restraining order, it is
ministerial upon the Labor Arbiter to implement the order of
reinstatement and it is mandatory on the employer to comply
therewith.
The opposite view is articulated in Genuino which states:
‘If the decision of the labor arbiter is later reversed on appeal
upon the finding that the ground for dismissal is valid, then the
employer has the right to require the dismissed
employee on payroll reinstatement to refund the salaries
s/he received while the case was pending appeal, or it can be
deducted from the accrued benefits that the dismissed
employee was entitled to receive from his/her employer under
existing laws, collective bargaining agreement provisions, and
company practices. However, if the employee was reinstated to
work during the pendency of the appeal, then the employee is
entitled to the compensation received for actual services
rendered without need of refund.
20
Labor Law II
x x x x’
It has thus been advanced that there is no point in releasing the
wages to petitioners since their dismissal was found to be valid,
and to do so would constitute unjust enrichment." (Emphasis,
italics and underscoring in the original; citations omitted.)32
The Court then stressed that as opposed to the
abovementioned Genuino v. National Labor Relations
Commission,33 the social justice principles of labor law outweigh
or render inapplicable the civil law doctrine of unjust enrichment.
It then went on to examine the precarious implication of the
"refund doctrine" as enunciated in Genuino, thus:
[T]he "refund doctrine" easily demonstrates how a favorable
decision by the Labor Arbiter could harm, more than help, a
dismissed employee. The employee, to make both ends meet,
would necessarily have to use up the salaries received during
the pendency of the appeal, only to end up having to refund the
sum in case of a final unfavorable decision. It is mirage of a
stop-gap leading the employee to a risky cliff of insolvency.
Advisably, the sum is better left unspent. It becomes more
logical and practical for the employee to refuse payroll
reinstament and simply find work elsewhere in the interim, if any
is available. Notably, the option of payroll reinstatement belongs
to the employer, even if the employee is able and raring to
return to work. Prior to Genuino, it is unthinkable for one to

refuse payroll reinstatement. In the face of the grim possibilities,
the rise of concerned employees declining payroll reinstatement
is on the horizon.
Further, the Genuino ruling not only disregards the social justice
principles behind the rule, but also institutes a scheme unduly
favorable to management. Under such scheme, the salaries
dispensed pendente lite merely serve as a bond posted in
installment by the employer. For in the event of a reversal of the
Labor Arbiter’s decision ordering reinstatement, the employer
gets back the same amount without having to spend ordinarily
for bond premiums. This circumvents, if not directly contradicts,
the proscription that the "posting of a bond [even a cash bond]
by the employer shall not stay the execution for reinstatement.
[Underscoring in the original]34
In view of this, the Court held this stance in Genuino as a stray
posture and realigned the proper course of the prevailing
doctrine on reinstatement pending appeal vis-à-vis the effect of
a reversal on appeal, that is, even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it
is obligatory on the part of the employer to reinstate and
pay the wages of the dismissed employee during the period
of appeal until reversal by the higher court or tribunal. It
likewise settled the view that the Labor Arbiter’s order of
reinstatement is immediately executory and the employer
has to either re-admit them to work under the same terms
and conditions prevailing prior to their dismissal, or to
21
Labor Law II
reinstate them in the payroll, and that failing to exercise the
options in the alternative, employer must pay the
employee’s salaries.
The discussion, however, did not stop there. The court went on
to declare that after the Labor Arbiter’s decision is reversed
by a higher tribunal, the employee may be barred from
collecting the accrued wages, if it is shown that the delay in
enforcing the reinstatement pending appeal was without
fault on the part of the employer. It then provided for the
two-fold test in determining whether an employee is barred from
recovering his accrued wages, to wit: (1) there must be actual
delay or that the order of reinstatement pending appeal was not
executed prior to its reversal; and (2) the delay must not be due
to the employer’s unjustified act or omission. If the delay is due
to the employer’s unjustified refusal, the employer may still be
required to pay the salaries notwithstanding the reversal of the
Labor Arbiter’s Decision. In Garcia, after it had been established
that there was clearly a delay in the execution of the
reinstatement order, the court proceeded to ascertain whether
same was due to PAL’s unjustified act or omission. In so doing,
it upheld the CA’s finding that the peculiar predicament of a
corporate rehabilitation rendered it impossible for PAL, under
the circumstances, to exercise its option under Article 223 of the
Labor Code. The suspension of claims dictated by rehabilitation
procedure therefore constitutes a justification for PAL’s failure to
exercise the alternative options of actual reinstatement or
payroll reinstatement. Because of this, the Court held that PAL’s

obligation to pay the salaries pending appeal, as the normal
effect of the non-exercise of the options, did not attach. Simply
put, petitioners cannot anymore collect their accrued salaries
during the period between the Labor Arbiter’s order of
reinstatement pending appeal and the NLRC Resolution
overturning that of the Labor Arbiter because PAL’s failure to
actually reinstate them or effect payroll reinstatement was
justified by the latter’s situation of being under corporate
rehabilitation.
Application of the Two-Fold Test to the present case
As previously mentioned, the vital question that needs to be
answered in the case at bar is: Can respondents collect their
accrued salaries for the period between the Labor Arbiter’s
order of reinstatement pending appeal and the NLRC
Resolution overturning that of the Labor Arbiter? If in the
affirmative, the assailed CA Decision and Resolution which
affirmed the June 3, 2004 Order of Labor Arbiter Castillon
denying the Motion to Quash Writ of Execution and ordering the
break-open of petitioner’s premises as well as the issuance of
the subject Writ of Execution itself, have to be upheld.
Otherwise, they need to be set aside as what petitioner would
want us to do.
To come up with the answer to said question, we shall apply the
two-fold test used in Garcia.
22
Labor Law II
Was there an actual delay or was the order of reinstatement
pending appeal executed prior to its reversal? As can be
recalled, Labor Arbiter Gan issued his Decision ordering
respondents’ reinstatement on December 21, 2001, copy of
which was allegedly received by petitioner on February 21,
2002.35 On March 4, 2002, petitioner appealed said decision to
the NLRC. A few days later or on March 11, 2002, respondents
filed an Ex-Parte Motion for Issuance of Writ of Execution
relative to the implementation of the reinstatement aspect of the
decision.36 On April 22, 2002, a Writ of Execution was issued by
Labor Arbiter Gan. However, until the issuance of the
September 5, 2002 NLRC Resolution overturning Labor Arbiter
Gan’s Decision, petitioner still failed to reinstate respondents or
effect payroll reinstatement in accordance with Article 223 of the
Labor Code. This was what actually prompted respondents to
file an Ex-Parte Motion to Set Case for Conference with Motion
wherein they also prayed for the issuance of a computation of
the award of backwages and Alias Writ of Execution for its
enforcement. It cannot therefore be denied that there was an
actual delay in the execution of the reinstatement aspect of the
Decision of Labor Arbiter Gan prior to the issuance of the NLRC
Resolution overturning the same.
Now, the next question is: Was the delay not due to the
employer’s unjustified act or omission? Unlike in Garciawhere
PAL, as the employer, was then under corporate rehabilitation,
Islriz Trading here did not undergo rehabilitation or was under
any analogous situation which would justify petitioner’s

non-exercise of the options provided under Article 223 of the
Labor Code. Notably, what petitioner gave as reason in not
immediately effecting reinstatement after he was served with
the Writ of Execution dated April 22, 2002 was that he would
first refer the matter to his counsel as he could not effectively act
on the order of execution without the latter’s advice. 37 He gave
his word that upon conferment with his lawyer, he will inform the
Office of the Labor Arbiter of his action on the writ. Petitioner,
however, without any satisfactory reason, failed to fulfill this
promise and respondents remained to be not reinstated until the
NLRC resolved petitioner’s appeal. Evidently, the delay in the
execution of respondents’ reinstatement was due to petitioner’s
unjustified refusal to effect the same.
Hence, the conclusion is that respondents have the right to
collect their accrued salaries during the period between the
Labor Arbiter’s Decision ordering their reinstatement pending
appeal and the NLRC Resolution overturning the same because
petitioner’s failure to reinstate them either actually or through
payroll was due to petitioner’s unjustified refusal to effect
reinstatement. In order to enforce this, Labor Arbiter Castillon
thus correctly issued the Writ of Execution dated March 9, 2004
as well as the Order dated June 3, 2004 denying petitioner’s
Motion to Quash Writ of Execution and granting respondents’
Urgent Motion for Issuance of Break-Open Order. Consequently,
we find no error on the part of the CA in upholding these
issuances and in dismissing the petition for certiorari before it.
23
Labor Law II
Having settled this, we find it unnecessary to discuss further the
issues raised by petitioner except the one with respect to the
computation of respondents’ accrued salaries.
Correctness of the Computation of Respondents’ Accrued
Salaries
Petitioner contends that respondents’ accrued salaries in the
total amount of ₱1,110,665.60 have no factual and legal bases.
This is because of his obstinate belief that the NLRC’s reversal
of Labor Arbiter Gan’s Decision has effectively removed the
basis for such award.
Although we do not agree with petitioner’s line of reasoning, we,
however, find incorrect the computation made by Fiscal
Examiner Trinchera.
In Kimberly Clark (Phils.), Inc., v. Facundo,38 we held that:
[T]he Labor Arbiter’s order of reinstatement was immediately
executory. After receipt of the Labor Arbiter’s decision ordering
private respondents’ reinstatement, petitioner has to either
re-admit them to work under the same terms and conditions
prevailing prior to their dismissal, or to reinstate them in the
payroll. Failing to exercise the options in the alternative,
petitioner must pay private respondents’ salaries which
automatically accrued from notice of the Labor Arbiter’s

order of reinstatement until its ultimate reversal of the
NLRC.
xxxx
x x x [S]ince private respondent’s reinstatement pending
appeal was effective only until its reversal by the NLRC on
April 28, 1999, they are no longer entitled to salaries from May 1,
1999 to March 15, 2001, as ordered by the Labor Arbiter.
(Emphasis supplied)
To clarify, respondents are entitled to their accrued salaries only
from the time petitioner received a copy of Labor Arbiter Gan’s
Decision declaring respondents’ termination illegal and ordering
their reinstatement up to the date of the NLRC Resolution
overturning that of the Labor Arbiter. This is because it is only
during said period that respondents are deemed to have been
illegally dismissed and are entitled to reinstatement pursuant to
Labor Arbiter Gan’s Decision which was the one in effect at that
time. Beyond that period, the NLRC Resolution declaring that
there was no illegal dismissal is already the one prevailing.
From such point, respondents’ salaries did not accrue not only
because there is no more illegal dismissal to speak of but also
because respondents have not yet been actually reinstated and
have not rendered services to petitioner.
Fiscal Examiner Trinchera’s computation of respondents’
accrued salaries covered the period January 1, 2002 to January
24
Labor Law II
30, 2004. As there was no showing when petitioner actually
received a copy of Labor Arbiter Gan’s decision except for
petitioner’s self-serving claim that he received the same on
February 21, 2002,39 we are at a loss as to how Fiscal Examiner
Trinchera came up with January 1, 2002 as the reckoning point
for computing respondents’ accrued wages. We likewise
wonder why it covered the period up to January 30, 2004 when
on September 5, 2002, the NLRC already promulgated its
Resolution reversing that of the Labor Arbiter. Hence, we deem
it proper to remand the records of this case to the Labor Arbiter
for the correct computation of respondents’ accrued wages
which shall commence from petitioner’s date of receipt of the
Labor Arbiter’s Decision ordering reinstatement up to the date of
the NLRC Resolution reversing the same. Considering,
however, that petitioner’s levied properties have already been
awarded to respondents and as alleged by the latter, have also
already been sold to third persons, respondents are ordered to
make the proper restitution to petitioner for whatever excess
amount received by them based on the correct computation.
As a final note, since it appears that petitioner still failed to
reinstate respondents pursuant to the final and executory
Resolution of the NLRC, respondents’ proper recourse now is to
move for the execution of the same. It is worthy to note that
Labor Arbiter Castillon stated in her questioned Order of June 3,
2004 that the Writ of Execution she issued is for the sole
purpose of enforcing the wages accruing to respondents by
reason of Labor Arbiter Gan’s order of reinstatement. Indeed,

the last paragraph of said writ provides only for the enforcement
of said monetary award and nothing on reinstatement, viz:
NOW THEREFORE, you are commanded to proceed to the
premises of respondents Islriz Trading/Victor Hugo C. Lu
located at Brgy. Luciano Trece Martires[,] Cavite City or
wherever it may be found to collect the amount of One Million
One Hundred Eleven Thousand Seven Hundred Sixty One
pesos & 60/100 (₱1,111,761.60) inclusive [of] ₱1,096.00 as
execution fees and turn over the said amount to the NLRC
Cashier for further disposition. In case you fail to collect the said
amount in cash, you are directed to cause the satisfaction of the
same out of respondents’ chattels, movable/immovable
properties not exempt from execution. You are directed to return
these Writ One Hundred Eighty (180) days from receipt hereof,
together with the report of compliance.
SO ORDERED.40
WHEREFORE, the Petition for Review on Certiorari is DENIED.
The assailed March 18, 2005 Decision and June 16, 2005
Resolution of the Court of Appeals in CA-G.R. SP No. 84744
are AFFIRMED. The records of this case are ordered
REMANDED to the Office of the Labor Arbiter for the correct
computation of respondents’ accrued salaries covering the date
of petitioner’s receipt of the December 21, 2001 Decision of the
Labor Arbiter up to the issuance of the NLRC Resolution on
September 5, 2002. Respondents are ordered to make the
25
Labor Law II
proper restitution to petitioner for whatever excess amount
which may be
determined to have been received by them based on the correct
computation.
SO ORDERED.
G.R. No. 196830 February 29, 2012
CESAR V. GARCIA, CARLOS RAZON, ALBERTO DE
GUZMAN, TOMAS RAZON, OMER E. PALO, RIZALDE
VALENCIA, ALLAN BASA, JESSIE GARCIA,JUANITO
PARAS, ALEJANDRO ORAG, ROMMEL PANGAN, RUEL
SOLIMAN, and CENEN CANLAPAN, represented by
SERENO, and CESAR V. GARCIA, Petitioners,
vs.
KJ COMMERCIAL and REYNALDO QUE, Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition1 for review on certiorari under Rule 45 of the
Rules of Court. The petition challenges the 29 April 2011
Decision2 of the Court of Appeals in CA-G.R. SP No. 115851,

affirming the 8 February3 and 25 June4 2010 Resolutions of the
National Labor Relations Commission (NLRC) in NLRC-LAC-No.
12-004061-08. The NLRC set aside the 30 October 2008
Decision5 of the Labor Arbiter in NLRC Case No.
RAB-III-02-9779-06.
The Facts
Respondent KJ Commercial is a sole proprietorship. It owns
trucks and engages in the business of distributing cement
products. On different dates, KJ Commercial employed as truck
drivers and truck helpers petitioners Cesar V. Garcia, Carlos
Razon, Alberto De Guzman, Tomas Razon, Omer E. Palo,
Rizalde Valencia, Allan Basa, Jessie Garcia, Juanito Paras,
Alejandro Orag, Rommel Pangan, Ruel Soliman, and Cenen
Canlapan (petitioners).
On 2 January 2006, petitioners demanded for a ₱40 daily salary
increase. To pressure KJ Commercial to grant their demand,
they stopped working and abandoned their trucks at the
Northern Cement Plant Station in Sison, Pangasinan. They also
blocked other workers from reporting to work.
On 3 February 2006, petitioners filed with the Labor Arbiter a
complaint6 for illegal dismissal, underpayment of salary and
non-payment of service incentive leave and thirteenth month
pay.
26
Labor Law II
The Labor Arbiter’s Ruling
In his 30 October 2008 Decision, the Labor Arbiter held that KJ
Commercial illegally dismissed petitioners. The Labor Arbiter
held:
After a careful examination and evaluation of the facts and
evidences adduced by both parties, we find valid and cogent
reasons to declare that these complainants were illegally
dismissed from their work to be entitled to their separation in
lieu of reinstatement equivalent to their salary for one (1) month
for every year of service and backwages from the time that they
were terminated on January 2, 2006 up to the date of this
Decision.
We carefully examined the defense set up by the respondents
that these complainants were not terminated from their
employment but were the one [sic] who abandoned their work
by staging strike and refused to perform their work as drivers of
the trucks owned by the respondents on January 2, 2006,
vis-á-vis, he [sic] allegations and claims of the complainants that
when they asked for an increase of their salary for ₱40.00, they
were illegally dismissed from their employment without due
process, and we gave more credence and value to the
allegations of the complainants that they were illegally
dismissed from their employment without due process and did
not abandoned [sic] their work as the respondents wanted to
project. We examined the narration of facts of the respondents

in their Position Paper and Supplemental Position Paper and we
concluded that these complainants were actually terminated on
January 2, 2006 and did not abandoned [sic] their jobs as
claimed by the respondents when the respondents, in their
Position Paper, admitted that their cement plant was shutdown
on January 3, 2006 and when it resumed its operation on
January 7, 2006, they ordered the other drivers to get the trucks
in order that the hauling of the cements will not incur further
delay and that their business will not be prejudiced.
Granting for the sake of discussion that indeed these
complainants abandoned their work on January 2, 2006, why
then that [sic] the cement plant was shutdown on January 3,
2006 and resumed operation on January 7, 2006, when there
are fifty (50) drivers of the respondents and only thirteen (13) of
them were allegedly stopped from working. Further, if these
complainants actually abandoned their work, as claimed by the
respondents, they miserably failed to show by substantial
evidence that these complainants deliberately and unjustifiably
refused to resume their employment.
xxxx
The acts of these complainants in filing this instant case a
month after they were terminated from their work is more than
sufficient evidence to prove and show that they do not have the
intention of abandoning their work. While we acknowledged the
offer of the respondents for these complainants to return back to
27
Labor Law II
work during the mandatory conference, the fact that these
complainants were illegally terminated and prevented from
performing their work as truck drivers of the respondents and
that there was no compliance with the substantive and
procedural due process of terminating an employee, their
subsequent offer to return to work will not cure the defect that
there was already illegal dismissal committed against these
complainants.7
KJ Commercial appealed to the NLRC. It filed before the NLRC
a motion to reduce bond and posted a ₱50,000 cash bond.
The NLRC’s Ruling
In its 9 March 2009 Decision,8 the NLRC dismissed the appeal.
The NLRC held:
Filed with respondents-appellants’ Appeal Memorandum is a
Motion to Reduce Appeal Bond and a cash bond of ₱50,000.00
only. x x x
We find no merit on [sic] the respondents-appellants’ Motion. It
must be stressed that under Section 6, Rule VI of the 2005
Revised Rules of this Commission, a motion to reduce bond
shall only be entertained when the following requisites concur:
1. The motion is founded on meritorious ground; and

2. A bond of reasonable amount in relation to the monetary
award is posted.
We note that while respondents-appellants claim that they could
not possibly produce enough cash for the required appeal bond,
they are unwilling to at least put up a property to secure a surety
bond. Understandably, no surety agency would normally accept
a surety obligation involving a substantial amount without a
guarantee that it would be indemnified in case the surety bond
posted is forfeited in favor of a judgment creditor.
Respondents-appellants’ insinuation that no surety company
can finish the processing of a surety bond in ten days time is not
worthy of belief as it is contrary to ordinary business experience.
What is obvious is that respondents-appellants are not willing to
accept the usual conditions of a surety agreement that is why no
surety bond could be processed. The reduction of the required
bond is not a matter of right o[n] the part of the movant but lies
within the sound discretion of the NLRC upon showing of
meritorious grounds x x x. In this case, we find that the instant
motion is not founded on a meritorious ground. x x x Moreover,
we note that the ₱50,000.00 cash bond posted by
respondents-appellants which represents less than two (2)
percent of the monetary award is dismally disproportionate to
the monetary award of ₱2,612,930.00 and that the amount of
bond posted by respondents-appellants is not reasonable in
relation to the monetary award. x x x A motion to reduce bond
that does not satisfy the conditions required under NLRC Rules
28
Labor Law II
shall not stop the running of the period to perfect an appeal x x
x.
Conversely, respondents-appellants failed to perfect an appeal
for failure to post the required bond.9
KJ Commercial filed a motion10 for reconsideration and posted
a ₱2,562,930 surety bond. In its 8 February 2010 Resolution,
the NLRC granted the motion and set aside the Labor Arbiter’s
30 October 2008 Decision. The NLRC held:
x x x [T]his Commission opts to resolve and grant the Motion for
Reconsideration filed by respondent-appellant seeking for
reconsideration of Our Decision promulgated on March 9, 2009
dismissing the Appeal for non-perfection, there being an honest
effort by the appellants to comply with putting up the full amount
of the required appeal bond. Moreover, considering the merit of
the appeal, by granting the motion for reconsideration, the
paramount interest of justice is better served in the resolution of
this case.
xxxx
Going over the record of the case, this Commission noted that
in respondents’ Supplemental Position Paper, in denying
complainants’ imputation of illegal dismissal, respondents
categorically alleged "..[.] that complainants were not illegally
dismissed but on January 2, 2006, they abandoned their work

by means of [‘]work stoppage[’] or they engaged in an [‘]illegal
strike[’] when they demanded for a higher rate..[.] that while their
respective assigned trucks were all in the cement plant ready to
be loaded, complainants paralyzed respondents’ hauling or
trucking operation by staging a work stoppage at the premises
of KJ Commercial compound by further blocking their co-drivers
not to report for work." We have observed that despite these
damaging allegations, complainants never bothered to dispute
nor contradicted these material allegations. Complainants’
silence on these material allegations consequently lends
support to respondents-appellants[’] contention that
complainants were never dismissed at all but had stopped
driving the hauler truck assigned to each of them when their
demand for salary increase in the amount they wish was not
granted by respondents-appellants.
Moreover, contrary to the findings of the Labor Arbiter, the
purported shutdown of the cement plant being cited by the
Labor Arbiter a quo as the principal cause of complainants’
purported dismissal cannot be attributed to respondents
because it was never established by evidence that respondents
were the owner [sic] of the cement plant where complainants as
truck drivers were hauling cargoes of cement with trucks owned
by respondents whose business is confined to that of a cement
distributor and cargo truck hauler. Based on the undisputed
account of respondents-appellants, it appears that the cement
plant was compelled to shut down because the hauling or
trucking operation was paralyzed due to complainants’ resort to
29
Labor Law II
work stoppage by refusing to drive their hauler trucks despite
the order of the management for them to get the trucks which
blockaded the cement plant.
Furthermore, a perusal of the complainants’ position paper and
amended position paper failed to allege the overt acts showing
how they were in fact dismissed on 02 January 2006. The
complainants had not even alleged that they were specifically
told that they were dismissed after they demanded for a salary
increase or any statement to that effect. Neither had they
alleged that they were prevented from reporting for work. This
only shows there was never a dismissal to begin with.
xxxx
We cannot affirm the Labor Arbiter’s conclusions absent
showing a fact of termination or circumstances under which the
dismissal was effected. Though only substantial evidence is
required in proceedings before the Labor Arbiter to support a
litigant’s claim, the same still requires evidence separate and
different, and something which supports the allegations
affirmatively made. The complainants’ claim that they were
dismissed on 02 January 2006, absent proof thereof or any
supporting evidence thereto is at best self serving.11
Petitioners filed a motion for reconsideration. In its 25 June
2010 Resolution, the NLRC denied the motion for lack of merit.
The NLRC held:

We stress that it is within the power and discretion of this
Commission to grant or deny a motion to reduce appeal bond.
Having earlier denied the motion to reduce bond of the
respondents-appellants, this Commission is not precluded from
reconsidering its earlier Decision on second look when it finds
meritorious ground to serve the ends of justice. Settled is the
norm in the matter of appeal bonds that letter-perfect rules must
yield to the broader interest of substantial justice x x x. In this
case, the Decision of the Labor Arbiter had not really become
final and executory as respondents timely filed a Memorandum
of Appeal with a Motion to Reduce Appeal Bond and a partial
appeal bond. Although the respondents[’] appeal was dismissed,
in the earlier decision, the same Decision was later
reconsidered on considerations that the Labor Arbiter
committed palpable errors in his findings and the monetary
awards to the appellees are secured by a partial bond and then
later, by an appeal bond for the full amount of the monetary
awards.12
Petitioners filed with the Court of Appeals a petition 13 for
certiorari under Rule 65 of the Rules of Court.
The Court of Appeals’ Ruling
In its 29 April 2011 Decision, the Court of Appeals dismissed the
petition and affirmed the NLRC’s 8 February and 25 June 2010
Resolutions. The Court of Appeals held:
30
Labor Law II
After scrupulously examining the contrasting positions of the
parties, and the conflicting decisions of the labor tribunals, We
find the records of the case bereft of evidence to substantiate
the conclusions reached by the Labor Arbiter that petitioners
were illegally dismissed from employment.
While petitioners vehemently argue that they were unlawfully
separated from work, records are devoid of evidence to show
the fact of dismissal. Neither was there any evidence offered by
petitioners to prove that they were no longer allowed to perform
their duties as truck drivers or they were prevented from
entering KJ Commercial’s premises, except for their empty and
general allegations that they were illegally dismissed from
employment. Such bare and sweeping statement contains
nothing but empty imputation of a fact that could hardly be given
any evidentiary weight by this Court. At the very least,
petitioners should have detailed or elaborated the
circumstances surrounding their dismissal or substantiate their
claims by submitting evidence to butress such contention.
Without a doubt, petitioners’ allegation of illegal dismissal has
no leg to stand on. Accordingly, they should not expect this
Court to swallow their asseveration hook, line and sinker in the
absence of supporting proof. Allegation that one was illegally
dismissed from work is not a magic word that once invoked will
automatically sway this Court to rule in favor of the party
invoking it. There must first be substantial evidence to prove
that indeed there was illegal dismissal before the employer
bears the burden to prove the contrary.14

Hence, the present petition.
The Issue
Petitioners raise as issue that the Labor Arbiter’s 30 October
2008 Decision became final and executory; thus, the NLRC’s 8
February and 25 June 2010 Resolutions and the Court of
Appeals’ 29 April 2011 Decision are void for lack of jurisdiction.
Petitioners claim that KJ Commercial failed to perfect an appeal
since the motion to reduce bond did not stop the running of the
period to appeal.
The Court’s Ruling
The petition is unmeritorious.
When petitioners filed with the Court of Appeals a petition for
certiorari, they did not raise as issue that the Labor Arbiter’s 30
October 2008 Decision had become final and executory. They
enumerated the issues in their petition:
GROUNDS FOR THE PETITION
I.
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION
WHEN IT REVERSED THE DECISION OF THE LABOR
31
Labor Law II
ARBITER A QUO AND PRONOUNCED THAT THE
PETITIONERS WERE NOT ILLEGALLY DISMISSED DESPITE
CLEAR AND SUBSTANTIAL EVIDENCE ON THE RECORDS
SHOWING THAT COMPLAINANTS WERE REGULAR
EMPLOYEES TO BE ENTITLED TO SECURITY OF TENURE
AND WERE ILLEGALLY DISMISSED FROM THEIR
EMPLOYMENT.
II.
THE NLRC HAS COMMITTED GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OR EXCESS OF
JURISDICTION WHEN IT GIVE [sic] MUCH WEIGHT TO
PRIVATE RESPONDENTS[’] BASELESS ALLEGATIONS IN
ITS [sic] MOTION FOR RECONSIDERATION WHEN IT [sic]
ALLEGED THAT COMPLAINANTS HAD ABANDONED THEIR
WORK BY MEANS OF "WORK STOPPAGE" OR THEY
ENGAGED IN AN "ILLEGAL STRIKE" WHEN THEY
DEMANDED FOR A HIGHER RATE.
III.
THE NLRC GRAVELY ERRED TANTAMOUNT TO LACK OR
EXCESS OF JURISDICTION WHEN IT CONCLUDED THAT
"COMPLAINANTS PARALYZED HAULING OR TRUCKING
OPERATION BY STAGING A WORK STOPPAGE AT THE
PREMISES OF KJ COMMERCIAL COMPOUND BY FURTHER
BLOCKING THEIR CO-DRIVERS NOT TO REPORT FOR

WORK" WITHOUT A SINGLE EVIDENCE TO SUPPORT
SUCH ALLEGATIONS OF PRIVATE RESPONDENTS.
IV.
THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT
THE PRINCIPAL CAUSE OF COMPLAINANTS’ DISMISSAL
WAS DUE TO THE PURPORTED SHUTDOWN OF THE
CEMENT PLANT CITED BY THE LABOR ARBITER IN HIS
DECISION.15
Accordingly, the Court of Appeals limited itself to the resolution
of the enumerated issues. In its 29 April 2011 Decision, the
Court of Appeals held:
Hence, petitioners seek recourse before this Court via this
Petition for Certiorari challenging the NLRC Resolutions and
raising the following issues:
I.
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION
WHEN IT REVERSED THE DECISION OF THE LABOR
ARBITER A QUO AND PRONOUNCED THAT PETITIONERS
WERE NOT ILLEGALLY DISMISSED DESPITE CLEAR AND
SUBSTANTIAL EVIDENCE ON THE RECORDS SHOWING
THAT PETITIONERS WERE REGULAR EMPLOYEES TO BE
32
Labor Law II
ENTITLED TO SECURITY OF TENURE AND WERE
ILLEGALLY DISMISSED FROM THEIR EMPLOYMENT.
II.
THE NLRC HAS COMMITTED GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OR EXCESS OF
JURISDICTION WHEN IT GAVE MUCH WEIGHT TO PRIVATE
RESPONDENTS BASELESS ALLEGATIONS IN ITS [sic]
MOTION FOR RECONSIDERATION WHEN IT [sic] ALLEGED
THAT PETITIONERS HAD ABANDONED THEIR WORK BY
MEANS OF "WORK STOPPAGE" OR THEY ENGAGED IN AN
"ILLEGAL STRIKE" WHEN THEY DEMANDED FOR A
HIGHER RATE.
III.
THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT
"PETITIONERS PARALYZED HAULING AND TRUCKING
OPERATION BY STAGING A WORK STOPPAGE AT THE
PREMISES OF KJ COMMERCIAL COMPOUND BY FURTHER
BLOCKING THEIR CO-DRIVERS NOT TO REPORT FOR
WORK" WITHOUT A SINGLE EVIDENCE TO SUPPORT
SUCH ALLEGATIONS OF PRIVATE RESPONDENTS.
IV.

THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT
THE PRINCIPAL CAUSE OF PETITIONERS’ DISMISSAL WAS
DUE TO THE PURPORTED SHUTDOWN OF THE CEMENT
PLANT CITED BY THE LABOR ARBITER IN HIS DECISION.16
Petitoners cannot, for the first time, raise as issue in their
petition filed with this Court that the Labor Arbiter’s 30 October
2008 Decision had become final and executory. Points of law,
theories and arguments not raised before the Court of Appeals
will not be considered by this Court. Otherwise, KJ Commercial
will be denied its right to due process. In Tolosa v. National
Labor Relations Commission,17 the Court held:
Petitioner contends that the labor arbiter’s monetary award has
already reached finality, since private respondents were not
able to file a timely appeal before the NLRC.
This argument cannot be passed upon in this appeal,
because it was not raised in the tribunals a quo.
Well-settled is the rule that issues not raised below cannot
be raised for the first time on appeal. Thus, points of law,
theories, and arguments not brought to the attention of the
Court of Appeals need not — and ordinarily will not — be
considered by this Court. Petitioner’s allegation cannot be
accepted by this Court on its face; to do so would be
tantamount to a denial of respondent’s right to due
process.
33
Labor Law II
Furthermore, whether respondents were able to appeal on time
is a question of fact that cannot be entertained in a petition for
review under Rule 45 of the Rules of Court. In general, the
jurisdiction of this Court in cases brought before it from the
Court of Appeals is limited to a review of errors of law allegedly
committed by the court a quo.18(Emphasis supplied)
KJ Commercial’s filing of a motion to reduce bond and delayed
posting of the ₱2,562,930 surety bond did not render the Labor
Arbiter’s 30 October 2008 Decision final and executory. The
Rules of Procedure of the NLRC allows the filing of a motion to
reduce bond subject to two conditions: (1) there is meritorious
ground, and (2) a bond in a reasonable amount is posted.
Section 6 of Article VI states:
No motion to reduce bond shall be entertained except on
meritorious grounds and upon the posting of a bond in a
reasonable amount in relation to the monetary award.
The mere filing of the motion to reduce bond without compliance
with the requisites in the preceding paragraph shall not stop the
running of the period to perfect an appeal.
The filing of a motion to reduce bond and compliance with the
two conditions stop the running of the period to perfect an
appeal. In McBurnie v. Ganzon,19 the Court held:

x x x [T]he bond may be reduced upon motion by the employer,
this is subject to the conditions that (1) the motion to reduce the
bond shall be based on meritorious grounds; and (2) a
reasonable amount in relation to the monetary award is posted
by the appellant, otherwise the filing of the motion to reduce
bond shall not stop the running of the period to perfect an
appeal.20
The NLRC has full discretion to grant or deny the motion to
reduce bond,21 and it may rule on the motion beyond the 10-day
period within which to perfect an appeal. Obviously, at the time
of the filing of the motion to reduce bond and posting of a bond
in a reasonable amount, there is no assurance whether the
appellant’s motion is indeed based on "meritorious ground" and
whether the bond he or she posted is of a "reasonable amount."
Thus, the appellant always runs the risk of failing to perfect an
appeal.
Section 2, Article I of the Rules of Procedure of the NLRC states
that, "These Rules shall be liberally construed to carry out the
objectives of the Constitution, the Labor Code of the Philippines
and other relevant legislations, and to assist the parties in
obtaining just, expeditious and inexpensive resolution and
settlement of labor disputes." In order to give full effect to the
provisions on motion to reduce bond, the appellant must be
allowed to wait for the ruling of the NLRC on the motion even
beyond the 10-day period to perfect an appeal. If the NLRC
grants the motion and rules that there is indeed meritorious
34
Labor Law II
ground and that the amount of the bond posted is reasonable,
then the appeal is perfected. If the NLRC denies the motion, the
appellant may still file a motion for reconsideration as provided
under Section 15, Rule VII of the Rules. If the NLRC grants the
motion for reconsideration and rules that there is indeed
meritorious ground and that the amount of the bond posted is
reasonable, then the appeal is perfected. If the NLRC denies
the motion, then the decision of the labor arbiter becomes final
and executory.
In the present case, KJ Commercial filed a motion to reduce
bond and posted a ₱50,000 cash bond. When the NLRC denied
its motion, KJ Commercial filed a motion for reconsideration and
posted the full ₱2,562,930 surety bond. The NLRC then granted
the motion for reconsideration.
In any case, the rule that the filing of a motion to reduce bond
shall not stop the running of the period to perfect an appeal is
not absolute. The Court may relax the rule. In Intertranz
Container Lines, Inc. v. Bautista,22 the Court held:
Jurisprudence tells us that in labor cases, an appeal from a
decision involving a monetary award may be perfected only
upon the posting of a cash or surety bond. The Court, however,
has relaxed this requirement under certain exceptional
circumstances in order to resolve controversies on their merits.
These circumstances include: (1) fundamental consideration of
substantial justice; (2) prevention of miscarriage of justice or of

unjust enrichment; and (3) special circumstances of the case
combined with its legal merits, and the amount and the issue
involved.23
In Rosewood Processing, Inc. v. NLRC,24 the Court held:
The perfection of an appeal within the reglementary period and
in the manner prescribed by law is jurisdictional, and
noncompliance with such legal requirement is fatal and
effectively renders the judgment final and executory. The Labor
Code provides:
ART. 223. Appeal. — Decisions, awards or orders
of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both
parties within ten (10) calendar days from receipt
of such decisions, awards, or orders.
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.
Indisputable is the legal doctrine that the appeal of a decision
involving a monetary award in labor cases may be perfected
"only upon the posting of a cash or surety bond." The
35
Labor Law II
lawmakers intended the posting of the bond to be an
indispensable requirement to perfect an employer’s appeal.
However, in a number of cases, this Court has relaxed this
requirement in order to bring about the immediate and
appropriate resolution of controversies on the merits. Some of
these cases include: "(a) counsel’s reliance on the footnote of
the notice of the decision of the labor arbiter that the aggrieved
party may appeal within ten (10) working days; (b) fundamental
consideration of substantial justice; (c) prevention of
miscarriage of justice or of unjust enrichment, as where the
tardy appeal is from a decision granting separation pay which
was already granted in an earlier final decision; and (d) special
circumstances of the case combined with its legal merits or the
amount and the issue involved."
In Quiambao vs. National Labor Relations Commission, this
Court ruled that a relaxation of the appeal bond requirement
could be justified by substantial compliance with the rule.
In Globe General Services and Security Agency vs. National
Labor Relations Commission, the Court observed that the
NLRC, in actual practice, allows the reduction of the appeal
bond upon motion of the appellant and on meritorious grounds;
hence, petitioners in that case should have filed a motion to
reduce the bond within the reglementary period for appeal.

That is the exact situation in the case at bar. Here, petitioner
claims to have received the labor arbiter’s Decision on April 6,
1993. On April 16, 1993, it filed, together with its memorandum
on appeal and notice of appeal, a motion to reduce the appeal
bond accompanied by a surety bond for fifty thousand pesos
issued by Prudential Guarantee and Assurance, Inc. Ignoring
petitioner’s motion (to reduce bond), Respondent Commission
rendered its assailed Resolution dismissing the appeal due to
the late filing of the appeal bond.
The solicitor general argues for the affirmation of the assailed
Resolution for the sole reason that the appeal bond, even if it
was filed on time, was defective, as it was not in an amount
"equivalent to the monetary award in the judgment appealed
from." The Court disagrees.
We hold that petitioner’s motion to reduce the bond is a
substantial compliance with the Labor Code. This holding is
consistent with the norm that letter-perfect rules must yield to
the broader interest of substantial justice.25
In Ong v. Court of Appeals,26 the Court held that the bond
requirement on appeals may be relaxed when there is
substantial compliance with the Rules of Procedure of the
NLRC or when the appellant shows willingness to post a partial
bond. The Court held that, "While the bond requirement on
appeals involving monetary awards has been relaxed in certain
cases, this can only be done where there was substantial
36
Labor Law II
compliance of the Rules or where the appellants, at the very
least, exhibited willingness to pay by posting a partial bond." 27
In the present case, KJ Commercial showed willingness to post
a partial bond.1âwphi1 In fact, it posted a ₱50,000 cash bond.
In Ong, the Court held that, "Petitioner in the said case
substantially complied with the rules by posting a partial surety
bond of fifty thousand pesos issued by Prudential Guarantee
and Assurance, Inc. while his motion to reduce appeal bond
was pending before the NLRC."28
Aside from posting a partial bond, KJ Commercial immediately
posted the full amount of the bond when it filed its motion for
reconsideration of the NLRC’s 9 March 2009 Decision. In Dr.
Postigo v. Philippine Tuberculosis Society, Inc.,29 the Court
held:
x x x [T]he respondent immediately submitted
a supersedeas bond with its motion for reconsideration of the
NLRC resolution dismissing its appeal. In Ong v. Court of
Appeals, we ruled that the aggrieved party may file the appeal
bond within the ten-day reglementary period following the
receipt of the resolution of the NLRC to forestall the finality of
such resolution. Hence, while the appeal of a decision involving
a monetary award in labor cases may be perfected only upon
the posting of a cash or surety bond and the posting of the bond
is an indispensable requirement to perfect such an appeal, a

relaxation of the appeal bond requirement could be justified by
substantial compliance with the rule.30
WHEREFORE, the Court DENIES the petition
and AFFIRMS the 29 April 2011 Decision of the Court of
Appeals in CA-G.R. SP No. 115851.
SO ORDERED.
G.R. No. 152494 September 22, 2004
MARIANO ONG, doing business under the name and style
MILESTONE METAL MANUFACTURING, petitioner,
vs.
THE COURT OF APPEALS, CONRADO DABAC, BERNABE
TAYACTAC, MANUEL ABEJUELLA, LOLITO ABELONG,
RONNIE HERRERO, APOLLO PAMIAS, JAIME ONGUTAN,
NOEL ATENDIDO, CARLOS TABBAL, JOEL ATENDIDO,
37
Labor Law II
BIENVENIDO EBBER, RENATO ABEJUELLA, LEONILO
ATENDIDO, JR., LODULADO FAA and JAIME
LOZADA, respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari assailing the
decision1 of the Court of Appeals in CA-G.R. SP No. 62129,
dated October 10, 2001, which dismissed the petition for
certiorari for lack of merit, as well as the resolution,2 dated
March 7, 2002, denying the motion for reconsideration.
Petitioner is the sole proprietor of Milestone Metal
Manufacturing (Milestone), which manufactures, among others,
wearing apparels, belts, and umbrellas.3 Sometime in May 1998,
the business suffered very low sales and productivity because
of the economic crisis in the country. Hence, it adopted a
rotation scheme by reducing the workdays of its employees to
three days a week or less for an indefinite period.4
On separate dates, the 15 respondents filed before the National
Labor Relations Commission (NLRC) complaints for illegal
dismissal, underpayment of wages, non-payment of overtime
pay, holiday pay, service incentive leave pay, 13th month pay,
damages, and attorney’s fees against petitioner. These were
consolidated and assigned to Labor Arbiter Manuel Manasala.

Petitioner claimed that 9 of the 15 respondents were not
employees of Milestone but of Protone Industrial Corporation
which, however, stopped its operation due to business losses.
Further, he claims that respondents Manuel Abuela, Lolita
Abelong, Ronnie Herrero, Carlos Tabbal, Conrado Dabac, and
Lodualdo Faa were not dismissed from employment; rather,
they refused to work after the rotation scheme was adopted.
Anent their monetary claims, petitioner presented documents
showing that he paid respondents’ minimum wage, 13th month
pay, holiday pay, and contributions to the SSS, Medicare, and
Pag-Ibig Funds.5
On November 25, 1999, the Labor Arbiter rendered a decision
awarding to the respondents the aggregate amount of
P1,111,200.40 representing their wage differential, holiday pay,
service incentive leave pay and 13th month pay, plus 10%
thereof as attorney’s fees. Further, petitioner was ordered to
pay the respondents separation pay equivalent to ½ month
salary for every year of service due to the indefiniteness of the
rotation scheme and strained relations caused by the filing of
the complaints.6
Petitioner filed with the NLRC a notice of appeal with a
memorandum of appeal and paid the docket fees therefor.
However, instead of posting the required cash or surety bond,
he filed a motion to reduce the appeal bond. The NLRC, in a
resolution dated April 28, 2000, denied the motion to reduce
bond and dismissed the appeal for failure to post cash or surety
38
Labor Law II
bond within the reglementary period.7 Petitioner’s motion for
reconsideration was likewise denied.8
Petitioner filed a petition for certiorari with the Court of Appeals
alleging that the NLRC acted with grave abuse of discretion in
dismissing the appeal for non-perfection of appeal although a
motion to reduce appeal bond was seasonably filed. However,
the petition was dismissed and thereafter the motion for
reconsideration was likewise dismissed for lack of merit.9
Hence, this petition for review on the following assignment of
errors:
I.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED
SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN
AFFIRMING THE DECISION OF THE NLRC DISMISSING THE
APPEAL OF PETITIONERS (sic) FOR NON-PERFECTION
WHEN A MOTION TO REDUCE APPEAL BOND WAS
SEASONABLY FILED WHICH IS ALLOWED BY THE RULES
OF PROCEDURE OF THE NLRC.
II.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED
SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN
AFFIRMING THE DISMISSAL BY NLRC OF PETITIONER’S

APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS
DECISION OF THE LABOR ARBITER AWARDING
SEPARATION PAY TO PRIVATE RESPONDENTS DESPITE
THE FINDING THAT THERE WAS NO ILLEGAL DISMISSAL
MADE BY MILESTONE.
III.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED
SERIOUS ERROR IN AFFIRMING THE NLRC’S DISMISSAL
OF PETITIONER’S APPEAL AND IN EFFECT UPHOLDING
THE ERRONEOUS DECISION OF THE LABOR ARBITER
THAT PETITIONER MILESTONE HAS VIOLATED THE
MINIMUM WAGE LAW AND THAT PRIVATE RESPONDENTS
WERE UNDERPAID.
IV.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED
SERIOUS ERROR IN AFFIRMING THE NLRC’S DISMISSAL
OF PETITIONER’S APPEAL AND IN EFFECT UPHOLDING
THE ERRONEOUS DECISION OF THE LABOR ARBITER
THAT PETITIONER MILESTONE HAS NOT PAID PRIVATE
RESPONDENTS THEIR SERVICE INCENTIVE LEAVE PAY,
13th MONTH PAY, AND HOLIDAY PAY.
V.
39
Labor Law II
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED
SERIOUS ERROR IN AFFIRMING THE NLRC’S DISMISSAL
OF PETITIONER’S APPEAL AND IN EFFECT UPHOLDING
THE ERRONEOUS DECISION OF THE LABOR ARBITER
THAT THE EVIDENCE SUBMITTED BY PRIVATE
RESPONDENTS IN SUPPORT OF THEIR CLAIMS ARE NOT
SELF-SERVING, IRRELEVANT AND IMMATERIAL TO THE
FACTS AND LAW IN ISSUE IN THIS CASE.10
The petition lacks merit.
Time and again it has been held that the right to appeal is not a
natural right or a part of due process, it is merely a statutory
privilege, and may be exercised only in the manner and in
accordance with the provisions of law. The party who seeks to
avail of the same must comply with the requirements of the
rules. Failing to do so, the right to appeal is lost.11
Article 223 of the Labor Code, as amended, sets forth the rules
on appeal from the Labor Arbiter’s monetary award:
ART. 223. Appeal. – Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. x x x.
xxx xxx xxx

In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a
cash or surety bond issued by a reputable bonding company
duly accredited by the Commission in the amount equivalent to
the monetary award in the judgment appealed from. (Emphasis
ours)
The pertinent provisions of Rule VI of the New Rules of
Procedure of the NLRC,12 which were in effect when petitioner
filed his appeal, provide:
Section 1. Periods of Appeal. – Decisions, awards or orders of
the Labor Arbiter and the POEA Administrator shall be final and
executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such
decisions, awards or orders of the Labor Arbiter x x x.
xxx xxx xxx
Section 3. Requisites for Perfection of Appeal. – (a) The appeal
shall be filed within the reglementary period as provided in
Section 1 of this Rule; shall be under oath with proof of payment
of the required appeal fee and the posting of a cash or surety
bond as provided in Section 5 of this Rule; shall be
accompanied by a memorandum of appeal which shall state the
grounds relied upon and the arguments in support thereof; the
relief prayed for; and a statement of the date when the appellant
40
Labor Law II
received the appealed decision, order or award and proof of
service on the other party of such appeal.
A mere notice of appeal without complying with the other
requisite aforestated shall not stop the running of the period for
perfecting an appeal.
xxx xxx xxx
Section 6. Bond. – In case the decision of the Labor Arbiter, the
Regional Director or his duly authorized Hearing Officer involves
a monetary award, an appeal by the employer shall be
perfected only upon the posting of a cash or surety bond,
which shall be in effect until final disposition of the case, issued
by a reputable bonding company duly accredited by the
Commission or the Supreme Court in an amount equivalent to
the monetary award, exclusive of damages and attorney’s fees.
The employer, his counsel, as well as the bonding company,
shall submit a joint declaration under oath attesting that the
surety bond posted is genuine.
The Commission may, in justifiable cases and upon Motion of
the Appellant, reduce the amount of the bond. The filing of the
motion to reduce bond shall not stop the running of the period to
perfect appeal. (Emphasis ours)

In the case at bar, petitioner received the decision of the Labor
Arbiter on January 6, 2000. He filed his notice of appeal with
memorandum of appeal and paid the corresponding appeal fees
on January 17, 2000, the last day of filing the appeal. However,
in lieu of the required cash or surety bond, he filed a motion to
reduce bond alleging that the amount of P1,427,802,04 as bond
is "unjustified and prohibitive" and prayed that the same be
reduced to a "reasonable level." The NLRC denied the motion
and consequently dismissed the appeal for non-perfection.
Petitioner now contends that he was deprived of the chance to
post bond because the NLRC took 102 days to decide his
motion.
Petitioner’s argument is unavailing.
While, Section 6, Rule VI of the NLRC’s New Rules of
Procedure allows the Commission to reduce the amount of the
bond, the exercise of the authority is not a matter of right on the
part of the movant but lies within the sound discretion of the
NLRC upon showing of meritorious grounds.13 Petitioner’s
motion reads:
1. The appeal bond which respondents-appellants will post in
this case is P1,427,802.04. They are precisely questioning this
amount as being unjustified and prohibitive under the premises.
2. The amount of this appeal bond must be reduced to a
reasonable level by this Honorable Office.
41
Labor Law II
WHEREFORE, in view thereof, it is respectfully prayed of this
Honorable Office that the appeal bond of P1,427,802.04 be
reduced.14
After careful scrutiny of the motion to reduce appeal bond, we
agree with the Court of Appeals that the NLRC did not act with
grave abuse of discretion when it denied petitioner’s motion for
the same failed to either elucidate why the amount of the bond
was "unjustified and prohibitive" or to indicate what would be a
"reasonable level."15
In Calabash Garments, Inc. v. NLRC,16 it was held that "a
substantial monetary award, even if it runs into millions, does
not necessarily give the employer-appellant a "meritorious
case" and does not automatically warrant a reduction of the
appeal bond."
Even granting arguendo that petitioner has meritorious grounds
to reduce the appeal bond, the result would have been the
same since he failed to post cash or surety bond within the
prescribed period.
The above-cited provisions explicitly provide that an appeal
from the Labor Arbiter to the NLRC must be perfected within ten
calendar days from receipt of such decisions, awards or orders
of the Labor Arbiter. In a judgment involving a monetary award,
the appeal shall be perfected only upon (1) proof of payment of
the required appeal fee; (2) posting of a cash or surety bond

issued by a reputable bonding company; and (3) filing of a
memorandum of appeal. A mere notice of appeal without
complying with the other requisites mentioned shall not stop the
running of the period for perfection of appeal.17 The posting of
cash or surety bond is not only mandatory but jurisdictional as
well, and non-compliance therewith is fatal and has the effect of
rendering the judgment final and executory.18 This requirement
is intended to discourage employers from using the appeal to
delay, or even evade, their obligation to satisfy their employee’s
just and lawful claims.19
The intention of the lawmakers to make the bond an
indispensable requisite for the perfection of an appeal by the
employer is underscored by the provision that an appeal by the
employer may be perfected only upon the posting of a cash or
surety bond. The word "only" makes it perfectly clear that the
lawmakers intended the posting of a cash or surety bond by the
employer to be the exclusive means by which an employer’s
appeal may be perfected.20
The fact that the NLRC took 102 days to resolve the motion will
not help petitioner’s case. The NLRC Rules clearly provide that
"the filing of the motion to reduce bond shall not stop the
running of the period to perfect appeal."Petitioner should have
seasonably filed the appeal bond within the ten-day
reglementary period following the receipt of the order, resolution
or decision of the NLRC to forestall the finality of such order,
resolution or decision. In the alternative, he should have paid
42
Labor Law II
only a moderate and reasonable sum for the premium, as was
held in Biogenerics Marketing and Research Corporation v.
NLRC,21 to wit:
x x x The mandatory filing of a bond for the perfection of an
appeal is evident from the aforequoted provision that the appeal
may be perfected only upon the posting of cash or surety bond.
It is not an excuse that the over P2 million award is too much for
a small business enterprise, like the petitioner company, to
shoulder. The law does not require its outright payment, but
only the posting of a bond to ensure that the award will be
eventually paid should the appeal fail. What petitioners
have to pay is a moderate and reasonable sum for the
premium for such bond. (Emphasis ours)
While the bond requirement on appeals involving monetary
awards has been relaxed in certain cases, this can only be done
where there was substantial compliance of the Rules or where
the appellants, at the very least, exhibited willingness to pay by
posting a partial bond.22 Petitioner’s reliance on the case
of Rosewood Processing, Inc. v. NLRC23 is misplaced.
Petitioner in the said case substantially complied with the rules
by posting a partial surety bond of fifty thousand pesos issued
by Prudential Guarantee and Assurance, Inc. while his motion
to reduce appeal bond was pending before the NLRC.
In the case at bar, petitioner did not post a full or partial appeal
bond within the prescribed period, thus, no appeal was
 43

Labor Law II

perfected from the decision of the Labor Arbiter. For this reason,
the decision sought to be appealed to the NLRC had become
final and executory and therefore immutable. Clearly, then, the
NLRC has no authority to entertain the appeal, much less to
reverse the decision of the Labor Arbiter. Any amendment or
alteration made which substantially affects the final and
executory judgment is null and void for lack of jurisdiction,
including the entire proceeding held for that purpose.24

WHEREFORE, in view of the foregoing, the petition is DENIED.

The assailed decision of the Court of Appeals in CA-G.R. SP No.
62129, dated October 10, 2001, dismissing the petition for
certiorari for lack of merit, is AFFIRMED. G.R. Nos. 116476-84 May 21, 1998

No pronouncement as to costs. ROSEWOOD PROCESSING, INC., petitioner,

vs.
SO ORDERED. NATIONAL LABOR RELATIONS COMMISSION, NAPOLEON
C. MAMON, ARSENIO GAZZINGAN, ROMEO C. VELASCO,
ARMANDO L. BALLON, VICTOR E. ALDEZA, JOSE L.
CABRERA, VETERANS PHILIPPINE SCOUT SECURITY
AGENCY, and/or ENGR. SERGIO JAMILA IV, respondents.

PANGANIBAN, J.:

Under the Labor Code, an employer is solidarily liable for legal

ages due security guards for the period of time they were
 44

Labor Law II

assigned to it by its contracted security agency. However, in the In due course, Labor Arbiter Ricardo C. Nora rendered a
absence of proof that the employer itself committed the acts consolidated Decision dated March 26, 1993, which disposed
constitutive of illegal dismissal or conspired with the security as follows:1
agency in the performance of such acts, the employer shall not
be liable for back wages and/or separation pay arising as a IN VIEW OF ALL THE FOREGOING, respondents Veterans
consequence of such unlawful termination. Philippine Scout Security Agency, Sergio Jamila IV, and
third-party respondent Rosewood Processing, Inc. are hereby
The Case ordered to pay jointly and severally complainants the following
amounts, to wit:
These are the legal principles on which this Court bases its
resolution of this special civil action for certiorari, seeking the 1. Napoleon Mamon P126,411.10
nullification of the April 28, 1994 Resolution and the July 12, 2. Arsenio Gazzingan 128,639.71
1994 Order of the National Labor Relations Commission, which 3. Rodolfo Velasco 147,114.43
dismissed petitioner's appeal from the labor arbiter's Decision 4. Armando Ballon 116,894.70
and denied its Motion for Reconsideration, respectively, in 5. Jose L. Cabrera 133,047.81
NLRC NCR Case Nos. 00-05-02834-91, 00-08-04630-91, 6. Victor Aldeza 137,046.64
00-07-03966-91, 00-09-05617-91, 00-07-03967-91, __________
00-07-04455-91, 00-08-05030-91, 00-11-06389-91, and
00-03-01642-92. TOTAL P789,154.39
=========
On May 13, 1991, a complaint for illegal dismissal;
underpayment of wages; and for nonpayment of overtime pay, representing their monetary benefits in the amount of SEVEN
legal holiday pay, premium pay for holiday and rest day, HUNDRED EIGHTY NINE THOUSAND ONE HUNDRED FIFTY
thirteenth month pay, cash bond deposit, unpaid wages and FOUR PESOS AND 39/100 CENTAVOS (P789,154.39).
damages was filed against Veterans Philippine Scout Security
Agency and/or Sergio Jamila IV (collectively referred to as the Respondents are likewise ordered to pay attorney's fees in the
"security agency," for brevity). Thereafter, petitioner was amount of P78,915.43 within ten (10) days from receipt of this
impleaded as a third-party respondent by the security agency. Decision.

All other issues are hereby [d]ismissed for failure of the
complainants to fully substantiate their claims.
The appeal filed by petitioner was dismissed by the National
Labor Relations Commission2 in its Resolution promulgated
April 28, 1994, for failure of the petitioner to file the required
appeal bond within the reglementary period. 3 Pertinent portions
of the challenged Resolution are herewith quoted:
It appears on record that [petitioner] received their copy of the
[labor arbiter's] decision on April 2, 1993 and subsequently filed
a "Notice of Appeal with Memorandum of Appeal" on April 26,
1993, in violation of Rule VI, Section 1, 3, and 6 of the 1990
New Rules of Procedure of the NLRC . . . .
xxx xxx xxx
Clearly, the appeal filed by the [petitioners] on April 12, 1993
was not perfected within the reglementary period, and the
decision dated March 26, 1993 became final and executory as
of April 23, 1993.
WHEREFORE, the appeal is hereby DISMISSED.
In its motion for reconsideration, petitioner contended that it
received a copy of the labor arbiter's Decision only on April 6,
1993, and that it filed on April 16, 1993 within the prescribed
time a Notice of Appeal with a Memorandum on Appeal, a
45
Labor Law II
Motion to Reduce Appeal Bond and a surety bond issued by
Prudential Guarantee and Assurance, Inc. in the amount of
P50,000.4 Though not opposed by the complainants and the
security agency, the arguments stated in the motion were not
taken up by Respondent Commission. Reconsideration was
nonetheless denied by Respondent Commission in its Order of
July 12, 1994, quoted below:5
Section 14, Rule VII of the NLRC New Rules of Procedure
allows [u]s to entertain a motion for reconsideration only on
"palpable or patent" errors [w]e may have committed in [o]ur
disputed April 28, 1994 resolution.
There being no such assignment here, [petitioner's] motion for
reconsideration dated May 19, 1994 is hereby DENIED for lack
of merit.
Hence, this recourse. 6
In a Resolution dated March 20, 1995, this Court issued a
temporary restraining order enjoining the respondents and their
agents from implementing and enforcing the assailed
Resolution and Order until further notice.7
The Facts
Undisputed are the facts of this case, narrated by the labor
arbiter as follows:

All the complainants were employed by the [security agency] as
security guards: Napoleon Mamon on October 7, 1989; Arsenio
Gazzingan on September 25, 1988; Rodolfo C. Velasco on
January 5, 1987; Armando Ballon on June 28, 1990; Victor
Aldeza on March 21, 1990; and Jose L. Cabrera [in] January
1988.
Napoleon Mamon started working for the [security agency] on
October 7, 1989 and was assigned as office guard for three (3)
days without any pay nor allowance as it was allegedly an
on[-the-]job training so there [was] no pay[.] On October 10,
1989, he was transferred to the residence of Mr. Benito Ong
with 12 hours duty a day receiving a salary very much less than
the minimum wage for eight (8) hours work until February 3,
1990 when he received an order transferring him to Rosewood
Processing, Inc. effective that date . . . ; [a]t Rosewood
Processing, Inc., he was required to render also 12 hours duty
every day with a salary of P2,600.00/month. He was not given
his pay for February 1 and 2 by the paymaster of [the security
agency] allegedly because the payroll could not be located so
after 3 to 4 times of going back and forth to [the security
agency's] office to get his salary[;] [after] . . . two (2) days he
gave up because he was already spending more than what he
could get thru transportation alone. On May 16, 1991,
Rosewood Processing, Inc. asked for the relief of Mamon and
other guards at Rosewood because they came to know that
complainants filed a complaint for underpayment on May 13,
1991 with the National Labor Relations Commission[.] On May
46
Labor Law II
18 to 19, 1991, [the security agency] assigned him to their
[m]ain [o]ffice. After that, complainant was floated until May 29,
1991 when he was assigned to Mead Johnson Philippines
Corporation. [A]t about a week later, [the security agency]
received summons on complainant's complaint for
underpayment and he was called to [the security agency's]
office. When he reported, he was told to sign a "Quitclaim and
Waiver['] by Lt. R. Rodriguez because according to the latter, he
[could] only get a measly sum from his complaint with the NLRC
and if he (complainant) [signed] the quitclaim and waiver he
[would] be retained at his present assignment which [was]
giving quite a good salary and other benefits but if he [did] not
sign the quitclaim and waiver, he [would] be relieved from his
post and [would] no longer be given any assignment. . . . He
was given up to the end of July 1991 to think it over. At the end
of July 1991, h[e] was approached by the Security in Charge A.
Azuela and asked him to sign the quitclaim and waiver and
when he refused to sign, he was told that the following day
August 1, 1991, he [would have] no more assignment and
should report to their office. Thinking that it was only a joke, he
reported the following day to the detachment commander Mr. A.
Yadao and he was told that the main office . . . relieved him
because he did not sign the quitclaim and waiver. He reported
to their office asking for an assignment but he was told by R.
Rodriguez that "I no longer can be given an assignment so I had
better resign". He went back several times to the office of the
[security agency] but every time the answer was the same[:] that

he better tender his resignation because he cannot be given any
assignment although respondent was recruiting new guards and
posting them.
Arsenio Gazzingan started to work for the [security agency] on
September 29, 1988. [Note: the introductory paragraph stated
September 25, 1988.] He was assigned to Purefoods Breeding
Farm at Calauan, Laguna and given a salary of P54.00 a day
working eight (8) hours. After three (3) months, he was given an
examination and passed the same. On December 26, 1988, he
was given an increase and was paid P64.00/day working eight
(8) hours; [h]e remained at the same post for 8 months and
transferred to Purefoods Feed Mill at Sta. Rosa, Laguna, with
the same salary and the same tour of duty, 8 hours[.] After four
(4) months, he was transferred to Purefoods Grand Perry at Sta.
Rosa, Laguna, and after eleven (11) days on June 1989, he was
transferred to Rosewood Processing, Inc. at Meycauayan,
Bulacan and required to work for 12 hours at a salary of
P94.00/day for one year. [In] June 1990, he was assigned at
Purefoods DELPAN [to] guard . . . a barge loaded with corn and
rendered 12 hours work/day with a salary of only P148.00/day
and after 24 days, he was floated for one month. He reported to
[the security agency's] office and was assigned to Purefoods
Breeder Farm in Canlubang rendering 8 hours work per day
receiving only P178.00/day. After 11 days, he asked to be
transferred to Manila[.] [B]ecause of the distance from his
home . . . the transfer was approved but instead of being
transferred to Manila, he was assigned to Purefoods B-F-4 in
47
Labor Law II
Batangas rendering 12 hours duty/day and receiving only
P148.00 per day until January 28, 1991[;] and again he
requested for transfer which was also approved by the [security
agency's] office[,] but since then he was told to come back again
and again. [U]p to the present he has not been given any
assignment. Because of the fact that his family [was] in danger
of going hungry, he sought relief from the
NLRC-NCR-Arbitration Branch.
Rodolfo Velasco started working for the [security agency] on
January 5, 1987. He was assigned to PCI Bank Elcano, Tondo
Branch, as probationary, and [for] working 8 hours a day for 9
days he received only P400.00. On January 16, 1987, he was
assigned to [the security agency's] headquarters up to January
31, 1987, working 12 hours a day[; he] received only P650.00
for the 16 days. On September 1, 1988, he was assigned to
Imperial Synthetic Rubber Products rendering 12 hours duty per
day until December 31, 1988 and was given a salary of
P1,600.00/month. He was later transferred to various posts like
Polypaper Products working 12 hours a day given a salary of
P1,800.00 a month; Paramount Electrical, Inc. working 12 hours
a day given P1,100.00 for 15 days; Rosewood Processing, Inc.,
rendering 12 hours duty per day receiving P2,200.00/month
until May 16, 1991[;] Alen Engineering rendering 12 hours
duty/day receiving P1,100/month; Purefoods Corporation on
Delta II rendering 12 hours duty per day received P4,200.00 a
month. He was relieved on August 24 and his salary for the

period August 20 to 23 has not been paid by [the security
agency.] He was suspended for no cause at all.
Armando Ballon started as security guard with [the security
agency] July 1990 [Note: the introductory paragraph stated
June 28, 1990] and was assigned to Purefoods Corporation in
Marikina for five (5) months and received a salary of P50.00 per
day for 8 hours. He was transferred to Rosewood Processing,
Inc. on November 6, 1990 rendering 12 hours duty as
[d]etachment [c]ommander and a salary of P2,700.00/month
including P200.00 officer's allowance until May 15, 1991. On
May 16, 1991, he applied for sick leave on orders of his doctor
for 15 days but the HRM, Miss M. Andres[,] got angry and
crumpled his application for sick leave, that [was] why he was
not able to forward it to the SSS. After 15 days, he came back to
the office of [the security agency] asking for an assignment and
he was told that he [was] already terminated. Complainant
found out that the reason why Miss Andres crumpled his
application for sick leave was because of the complaint he
previously filed and was dismissed for failure to appear. He then
refiled this case to seek redress from this Office.
Jose L. Cabrera started working for the [security agency] as
security guard January, 1988 and was assigned to Alencor
Residence rendering 12 hours duty per day and received a
salary of P2,400.00 a month for 3 months[.] [I]n May, 1988, he
was transferred to E & L Restaurant rendering 12 hours duty per
day and receiv[ing] a salary of P1,500.00 per month for 6
48
Labor Law II
months[.] [I]n January, 1989, he was transferred to Paramount
rendering 12 hours duty per day receiving only P1,800.00 per
month for 6 months[.] [I]n July 1989, he was transferred to
Benito Ong['s] residence rendering 12 hours duty per day and
receiving a salary of P1,400.00 per month for 4 months[.] [I]n
December, 1989, he was transferred to Sea Trade International
rendering . . . 12 hours duty per day and receiving a salary of
P1,900 per month for 6 months[.] [I]n July, 1990, he was
transferred to Holland Pacific & Paper Mills rendering 8 hours
duty per day and receiving a salary of P2,400.00 per month until
September 1990[.] [In] October 1990, he was transferred to
RMG residence rendering 12 hours duty per day receiving a
salary of P2,200.00 per month for 3 months[.] [In] February
1991, he was transferred to Purefoods Corporation at Mabini,
Batangas rendering 12 hours duty per day with a salary of
P3,600.00 per month for only one month because he was
hospitalized due to a stab wound inflicted by his [d]etachment
[c]ommander. When he was discharged from the hospital and
after he was examined and declared "fit to work" by the doctor,
he reported back to [the security agency's] office but was given
the run-around [and was told to] "come back tomorrow[.]" [H]e
[could] see that [the agency was] posting new recruits. He then
complained to this Honorable Office to seek redress, hiring the
services of a counsel.
Victor Aldeza started working for the [security agency] on March
21, 1990 and was assigned to Meridian Condominium,
rendering 12 hours work per day and receiving a salary of

P1,500.00 per month. Although he knew that the salary was
below minimum yet he persevered because he had spent much
to get this job and stayed on until October 15, 1990[.] On
October 16, 1990, he was transferred to Rosewood Processing,
Inc., rendering 12 hours duty per day and receiving a salary of
P2,600.00 per month up to May 15, 1991[.] On the later part of
May 1991, he was assigned to UPSSA (Sandoval Shipyard)
rendering 12 hours duty per day receiving a salary of P3,200.00
per month. [Aldeza] complained to [the security agency] about
the salary but [the agency] did not heed him; thus, he filed his
complaint for underpayment[.] [The agency] upon complainant's
complaint for underpayment . . . , instead of adjusting his salary
to meet the minimum prescribed by law[,] relieved him and left
him floating[.] . . . When he complained of the treatment, he was
told to resign because he could no longer be given any
assignment. Because of this, complainant was forced to file
another complaint for illegal dismissal.
Labor Arbiter's Ruling
The labor arbiter noted the failure of the security agency to
present evidence to refute the complainants' allegation. Instead,
it impleaded the petitioner as third-party respondent, contending
that its actions were primarily caused by petitioner's
noncompliance with its obligations under the contract for
security services, and the subsequent cancellation of the said
contract.
49
Labor Law II
The labor arbiter held petitioner jointly and severally liable with
the security agency as the complainants' indirect employer
under Articles 106, 107 and 109 of the Labor Code, citing the
case of Spartan Security & Detective Agency, Inc. vs. National
Labor Relations Commission.8
Although the security agency could lawfully place the
complainants on floating status for a period not exceeding six
months, the act was "illegal" because the former had issued a
newspaper advertisement for new security guards. Since the
relation between the complainants and the agency was already
strained, the labor arbiter ordered the payment of separation
pay in lieu of reinstatement.
The award for wage differential, limited back wages and
separation pay contained the following details:
1. Napoleon Mamon
Wage Differentials P45,959.02
Backwages 72,764.38
Separation Pay 7,687.70 P126,411.10
_________
2. Arsenio Gazzingan
Wage Differentials P24,855.76
Backwages 96,096.25
 50

Labor Law II

Separation Pay 7,687.70 P128,639.71 Separation Pay 3,843.85 P137,046.64

__________ __________
P789, 154.39
3. Rodolfo Velasco ==========

Wage Differentials P66,393.58 Ruling of Respondent Commission

Backwages 69,189.30
Separation Pay 11,531.55 P147,114.43 As earlier stated, Respondent Commission dismissed
__________ petitioner's appeal, because it was allegedly not perfected
within the reglementary ten-day period. Petitioner received a
4. Armando Ballon copy of the labor arbiter's Decision on April 2, 1993, and it filed
its Memorandum of Appeal on April 12, 1993. However, it
Wage Differentials P31,176.85 submitted the appeal bond on April 26, 1993, or twelve days
Backwages 81,874.00 after the expiration of the period for appeal per Rule VI, Section
Separation Pay 3,843.85 P116,894.70 1, 3 and 6 of the 1990 Rules of Procedure of the National Labor
__________ Relations Commission. Thus, it ruled that the labor arbiter's
Decision became final and executory on April 13, 1993.
5. Jose Cabrera
In the assailed Order, Respondent Commission denied
Wage Differentials P30,032.63 reconsideration, because petitioner allegedly failed to raise any
Backwages 91,483.63 palpable or patent error committed by said commission.
Separation Pay 11,531.55 P133,047.81
__________ Assignment of Errors

6. Victor Aldeza Petitioner imputes the following errors to Respondent

Commission:
Wage Differentials P49,406.86
Backwages 83,795.93

Respondent NLRC committed grave abuse of discretion
amounting to lack of jurisdiction when it dismissed petitioner's
appeal despite the fact that the same was perfected within the
reglementary period provided by law.
Respondent NLRC committed grave abuse of discretion
amounting to lack of jurisdiction when it dismissed petitioner's
appeal despite the clearly meritorious grounds relied upon
therein.
Otherwise stated, the petition raises these two issues: first,
whether the appeal from the labor arbiter to the NLRC was
perfected on time; and second, whether petitioner is solidarily
liable with the security agency for the payment of back wages,
wage differential and separation pay.
The Court's Ruling
The petition is impressed with some merit and deserves partial
grant.
First Issue: Substantial Compliance with the
Appeal Bond Requirement
The perfection of an appeal within the reglementary period and
in the manner prescribed by law is jurisdictional, and
noncompliance with such legal requirement is fatal and
51
Labor Law II
effectively renders the judgment final and executory. 9 The
Labor Code provides:
Art. 223. Appeal. — Decisions, awards or orders of the Labor
Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. . . .
xxx xxx xxx
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.
xxx xxx xxx
Indisputable is the legal doctrine that the appeal of a decision
involving a monetary award in labor cases may be perfected
"only upon the posting of a cash or surety bond." 10 The
lawmakers intended the posting of the bond to be an
indispensable requirement to perfect an employer's appeal. 11
However, in a number of cases, this Court has relaxed this
requirement in order to bring about the immediate and
appropriate resolution of controversies on the merits. 12 Some of
these cases include: "(a) counsel's reliance on the footnote of

the notice of the decision of the labor arbiter that the aggrieved
party may appeal . . . within ten (10) working days; (b)
fundamental consideration of substantial justice; (c) prevention
of miscarriage of justice or of unjust enrichment, as where the
tardy appeal is from a decision granting separation pay which
was already granted in an earlier final decision; and (d) special
circumstances of the case combined with its legal merits or the
amount and the issue involved." 13
In Quiambao vs. National Labor Relations Commission, 14 this
Court ruled that a relaxation of the appeal bond requirement
could be justified by substantial compliance with the rule.
In Globe General Services and Security Agency vs. National
Labor Relations Commission, 15 the Court observed that the
NLRC, in actual practice, allows the reduction of the appeal
bond upon motion of the appellant and on meritorious grounds;
hence, petitioners in that case should have filed a motion to
reduce the bond within the reglementary period for appeal.
That is the exact situation in the case at bar. Here, petitioner
claims to have received the labor arbiter's Decision on April 6,
1993. 16 On April 16, 1993, it filed, together with its
memorandum on appeal 17 and notice of appeal, a motion
to reduce the appeal bond 18 accompanied by a surety
bond for fifty thousand pesos issued by prudential
Guarantee and Assurance, Inc. 19 Ignoring petitioner's
motion (to reduce bond), Respondent Commission
52
Labor Law II
rendered its assailed Resolution dismissing the appeal due
to the late filing of the appeal bond.
The solicitor general argues for the affirmation of the
assailed Resolution for the sole reason that the appeal
bond, even if it was filed on time, was defective, as it was
not in an amount "equivalent to the monetary award in the
judgment appealed from." The Court disagrees.
We hold that petitioner's motion to reduce the bond is a
substantial compliance with the Labor Code. This holding
is consistent with the norm that letter-perfect rules must
yield to the broader interest of substantial justice. 20
Where a decision may be made to rest on informed
judgment rather than rigid rules, the equities of the case
must be accorded their due weight because labor
determinations should not only be "secundum rationembut
also secundum caritatem." 21 A judicious reading of the
memorandum of appeal would have made it evident to
Respondent Commission that the recourse was
meritorious. Respondent Commission acted with grave
abuse of discretion in peremptorily dismissing the appeal
without passing upon — in fact, ignoring — the motion to
reduce the appeal bond.
We repeat: Considering the clear merits which appear, res
ipsa loquitur, in the appeal from the labor arbiter's Decision,

and the petitioner's substantial compliance with rules
governing appeals, we hold that the NLRC gravely abused
its discretion in dismissing said appeal and in failing to
pass upon the grounds alleged in the Motion for
Reconsideration.
Second Issue: Liability of an Indirect Employer
The overriding premise in the labor arbiter's Decision
holding the security agency and the petitioner liable was
that said parties offered no evidence refuting or rebutting
the complainants' computation of their monetary claims.
The arbiter ruled that petitioner was liable in solidum with
the agency for salary differentials based on Articles 106,
107 and 109 of the Labor Code which hold an employer
jointly and severally liable with its contractor or
subcontractor, as if it is the direct employer. We quote said
provisions below:
Art. 106. Contractor or subcontractor. — Whenever an
employer enters into a contract with another person for the
performance of the former's work, the employees of the
contractor and of the latter's subcontractor, if any, shall be
paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay
the wages of his employees in accordance with this Code,
the employer shall be jointly and severally liable with his
53
Labor Law II
contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the
same manner and extent that he is liable to employees
directly employed by him.
xxx xxx xxx
Art. 107. Indirect employer. — The provisions of the
immediately preceding Article shall likewise apply to any
person, partnership, association or corporation which, not
being an employer, contracts with an independent
contractor for the performance of any work, task, job or
project.
Art. 109. Solidary liability. — The provisions of existing
laws to the contrary notwithstanding, every employer or
indirect employer shall be held responsible with his
contractor or subcontractor for any violation of any
provision of this Code. For purposes of determining the
extent of their civil liability under this Chapter, they shall be
considered as direct employers.
Upon the other hand, back wages and separation pay were
awarded because the complainants were constructively
and illegally dismissed by the security agency, which
placed them on floating status and at the same time gave
assignments to newly hired security guards. Noting that
the relationship between the security agency and the

complainants was already strained, the labor arbiter
granted separation pay in lieu of reinstatement.
In its memorandum of appeal, petitioner controverts its
liability for the mentioned monetary awards on the
following grounds: 22
A. Complainant Jose Cabrera never rendered security
services to [petitioner] or was [n]ever assigned as security
guard [for] the latter's business establishment;
B. Complainants Napoleon Mamon, Arsenio Gazzingan,
Rodolfo Velasco, Armando Ballon and Victor Aldeza
rendered security services to [petitioner] for a fixed period
and were thereafter assigned to other entities or
establishments or were floated or recalled to the
headquarters of Veterans; and,
C. The relationship between [petitioner] and Veterans was
governed by a Contract for Guard Services under which
[petitioner] dutifully paid a contract price of P3,500.00 a
month for 12 hour duty per guard and later increased to
P4,250.00 a month for 12 hour duty per guard which are
within the prevailing rates in the industry and in
accordance with labor standard laws.
The first two grounds are meritorious. Legally untenable,
however, is the contention that petitioner is not liable for
54
Labor Law II
any wage differential for the reason that it paid the
employees in accordance with the contract for security
services which it had entered into with the security agency.
Notwithstanding the service contract between the
petitioner and the security agency, the former is still
solidarily liable to the employees, who were not privy to
said contract, pursuant to the aforecited provisions of the
Code. Labor standard legislations are enacted to alleviate
the plight of workers whose wages barely meet the
spiraling costs of their basic needs. They are considered
written in every contract, and stipulations in violation
thereof are considered not written. Similarly, legislated
wage increases are deemed amendments to the contract.
Thus, employers cannot hide behind their contracts in
order to evade their or their contractors' or subcontractors'
liability for noncompliance with the statutory minimum
wage.
The joint and several liability of the employer or principal
was enacted to ensure compliance with the provisions of
the Code, principally those on statutory minimum wage.
The contractor or subcontractor is made liable by virtue of
his or her status as a direct employer, and the principal as
the indirect employer of the contractor's employees. This
liability facilitates, if not guarantees, payment of the
workers' compensation, thus, giving the workers ample
protection as mandated by the 1987 Constitution. 23 This is
not unduly burdensome to the employer. Should the

indirect employer be constrained to pay the workers, it can
recover whatever amount it had paid in accordance with
the terms of the service contract between itself and the
contractor. 24
Withal, fairness likewise dictates that the petitioner should
not, however, be held liable for wage differentials incurred
while the complainants were assigned to other companies.
Under these cited provisions of the Labor Code, should the
contractor fail to pay the wages of its employees in
accordance with law, the indirect employer (the petitioner
in this case), is jointly and severally liable with the
contractor, but such responsibility should be understood
to be limited to the extent of the work performed under the
contract, in the same manner and extent that he is liable to
the employees directly employed by him. This liability of
petitioner covers the payment of the workers' performance
of any work, task, job or project. So long as the work, task,
job or project has been performed for petitioner's benefit or
on its behalf, the liability accrues for such period even if,
later on, the employees are eventually transferred or
reassigned elsewhere.
We repeat: The indirect employer's liability to the
contractor's employees extends only to the period during
which they were working for the petitioner, and the fact that
they were reassigned to another principal necessarily ends
such responsibility. The principal is made liable to his
55
Labor Law II
indirect employees, because it can protect itself from
irresponsible contractors by withholding such sums and
paying them directly to the employees or by requiring a
bond from the contractor or subcontractor for this purpose.
Similarly, the solidary liability for payment of back wages
and separation pay is limited, under Article 106, "to the
extent of the work performed under the contract"; under
Article 107, to "the performance of any work, task, job or
project"; and under Article 109, to "the extent of their civil
liability under this Chapter [on payment of wages]."
These provisions cannot apply to petitioner, considering
that the complainants were no longer working for or
assigned to it when they were illegally dismissed.
Furthermore, an order to pay back wages and separation
pay is invested with a punitive character, such that an
indirect employer should not be made liable without a
finding that it had committed or conspired in the illegal
dismissal.
The liability arising from an illegal dismissal is unlike an
order to pay the statutory minimum wage, because the
workers' right to such wage is derived from law. The
proposition that payment of back wages and separation
pay should be covered by Article 109, which holds an
indirect employer solidarily responsible with his contractor
or subcontractor for "any violation of any provision of this

Code," would have been tenable if there were proof — there
was none in this case — that the principal/employer had
conspired with the contractor in the acts giving rise to the
illegal dismissal.
With the foregoing discussion in mind, we now take up in
detail the petitioner's liability to each of the complainants.
Case No. NCR-00-08-04630-91
Mamon worked for petitioner for a period of a little more
than one year beginning February 3, 1990 until May 16,
1991. Inasmuch as petitioner was his indirect employer
during such rime, it should thus be severally liable for wage
differential from the time of his employment until his relief
from duty. He was relieved upon the request of petitioner,
after it had learned of the complaint for underpayment of
wages filed by Mamon and several other security guards.
However, this was not a dismissal from work because
Mamon was still working for the security agency and was
immediately assigned, on May 29, 1991, to its other client,
Mead Johnson Philippines. His dismissal came about later,
when he refused to sign a quitclaim and waiver in favor of
the security agency. Thus, he was illegally dismissed by
the agency when he was no longer employed by petitioner,
which cannot thus be held liable for back wages and
separation pay in his case.
56
Labor Law II
Napoleon Mamon . . . received an order transferring him to
Rosewood Processing, Inc. effective . . . February 3,
1990; . . . . On May 16, 1991, Rosewood Processing, Inc.
asked for the relief of Mamon and other guards at
Rosewood because they came to know that complainants
filed a complaint for underpayment on May 13, 1991 with
the National Labor Relations Commission[,] . . . After that,
complainant was floated until May 29, 1991 when he was
assigned to Mead Johnson Philippines Corporation. . . . [A]
week later, [the security agency] received summons on
complainant's complaint for underpayment and he was
called to [the security agency] office. When he reported, he
was told to sign a "Quitclaim and Waiver['] by Lt. R.
Rodriguez . . . and . . . if he [did] not sign the quitclaim and
waiver, he [would] be relieved from his post and [would] no
longer be given any assignment. . . . At the end of July 1991,
he was approached by the Security in Charge, A. Azuela, . . .
[for him] to sign the quitclaim and waiver[,] and when he
refused to sign, he was told that . . . he ha[d] no more
assignment and should report to their office. . . . [H]e
reported the following day to the detachment commander,
Mr. A. Yadao and he was told that the main office ha[d]
relieved him . . . . He reported to their office asking for an
assignment but he was told by R. Rodriguez that "I no
longer can be given an assignment so I had better resign."
He went back several times to the office of the [security
agency] but every time the answer was the same . . .

although respondent was recruiting new guards and
posting them. 25
Case No. NCR-00-07-03966-91
Gazzingan was assigned to petitioner as a security guard
for a period of one year. For said period, petitioner is
solidarily liable with the agency for underpayment of wages
based on Articles 106, 107 and 109 of the Code.
Arsenio Gazzingan . . . after eleven (11) days on June
1989, . . . was transferred to Rosewood Processing, Inc. . . . .
[I]n June 1990, he was assigned at Purefoods DELPAN . . . .
After 11 days, he asked to be transferred to Manila because
of the distance from his home and the transfer was
approved but instead of being transferred to Manila, he was
assigned to Purefoods B-F-4 in Batangas . . . again he
requested for transfer which was also approved by the
[security agency] office but since then he was told to come
back again and again and up to the present he has not been
given any assignment. . . . . 26
His dismissal cannot be blamed on the petitioner. Like
Mamon, Gazzingan had already been assigned to another
client of the agency when he was illegally dismissed. Thus,
Rosewood cannot be held liable, jointly and severally with
the agency, for back wages and separation pay.
57
Labor Law II
Case No. NCR-00-07-03967-91
Rodolfo Velasco was assigned to petitioner from December
31, 1988 until May 16, 1991. Thus, petitioner is solidarily
liable for wage differentials during such period. Petitioner
is not, however, liable for back wages and separation pay,
because Velasco was no longer working for petitioner at
the time of his illegal dismissal.
Rodolfo Velasco started working for the [security agency]
on January 5, 1987. . . . [On] December 31, 1988 . . . he
was . . . transferred to various posts like . . . Rosewood
Processing, Inc., . . . until May 16, 1991 . . . . He was relieved
on August 24 and his salary for the period August 20 to 23
has not been paid by [the security agency]; [h]e was
suspended for no cause at all. 27
Case No. NCR-00-07-0445-91
Petitioner was the indirect employer of Ballon during the
period beginning November 6, 1990 until May 15, 1991; thus,
it is liable for wage differentials for said period. However, it
is not liable for back wages and separation pay, as there
was no evidence presented to show that it participated in
Ballon's illegal dismissal.
. . . [H]e [Armando Ballon] was transferred to Rosewood
Processing, Inc. on November 6, 1990 rendering 12 hours

duty as [d]etachment [c]ommander and received a salary of
P2,700.00/month including P200.00 officer's allowance until
May 15, 1991. On May 16, 1991, he applied for sick leave on
orders of his doctor for 15 days but the HRM, Miss M.
Andres[,] got angry and crumpled his application for sick
leave that is why he was not able to forward it to the SSS.
After 15 days, he came back to the office of [the security
agency] asking for an assignment and he was told that he
[was] already terminated. Complainant found out that the
reason why Miss Andres crumpled his application for sick
leave was because of the complaint he previously filed and
was dismissed for failure to appear. He then refiled this
case to seek redress from this Office. 28
Case No. NCR-00-08-05030-91
Petitioner is liable for wage differentials in favor of Aldeza
during the period he worked with petitioner, that is,
October 16, 1990 until May 15, 1991.
. . . On October 16, 1990, he [Aldeza] was transferred to
Rosewood Processing, Inc., . . . up to May 15, 1991[.] On the
later part of May 1991, he was assigned to UPSSA
(Sandoval Shipyard) . . . . Complainant [sic] complained to
[the security agency] about the salary but [the security
agency] did not heed him; thus, he filed his complaint for
underpayment[.] [The security agency] upon complainant's
complaint for underpayment reacted . . . , instead of
58
Labor Law II
adjusting his salary to meet the minimum prescribed by
law[,] relieved him and left him floating[;] and when he
complained of the treatment, he was told to resign because
he could no longer be given any assignment. Because of
this, complainant was forced to file another complaint for
illegal dismissal. 29
The cause of Aldeza's illegal dismissal is imputable, not to
petitioner, but solely to the security agency. In Aldeza's
case, the solidary liability for back wages and separation
pay arising from Articles 106, 107 and 109 of the Code has
no application.
Case No. NCR-00-09-05617-91
Cabrera was an employee of the security agency, but he
never rendered security services to petitioner. This fact is
evident in the labor arbiter's findings:
Jose L. Cabrera started working for the [security agency]
as [a] security guard on January, 1988 and was assigned to
Alencor Residence . . . . [I]n May, 1988, he was transferred
to E & L, Restaurant . . . [.] [I]n January, 1989, he was
transferred to Paramount . . . [.] [I]n July 1989, he was
transferred to Benito Ong['s] residence . . . [.] [I]n December,
1989, he was transferred to Sea Trade International . . . [.]
[I]n July, 1990, he was transferred to Holland Pacific &
Paper Mills . . . [.] [I]n October 1990, he was transferred to
 59

Labor Law II

RMG [R]esidence . . . [.] [I]n February 1991, he was Commission is required to RECOMPUTE within fifteen days
transferred to Purefoods Corporation at Mabini, from the finality of this Decision. No costs.
Batangas . . . . When he was discharged from the hospital
and after he was examined and declared "fit to work" by the SO ORDERED.
doctor, he reported back to [the security agency] office but
was given the run-around [and was told to] "come back
tomorrow[,]" although he [could] see that [it was] posting
new recruits. He then complained to this Honorable Office
to seek redress, hiring the services of a counsel. 30

Hence, petitioner is not liable to Cabrera for anything.

G.R. No. 153859 December 11, 2003
In all these cases, however, the liability of the security
agency is without question, as it did not appeal from the FILIPINAS (Pre-fabricated Bldg.) SYSTEMS "FILSYSTEMS,"
Decisions of the labor arbiter and Respondent INC. and FELIPE A. CRUZ, JR., petitioners,
Commission. vs.
NATIONAL LABOR RELATIONS COMMISSION and
WHEREFORE, the petition is partially GRANTED. The CRESENCIANO BEBANCO, JUANITO R. BENZON, REY
assailed Decision is hereby MODIFIED, such that petitioner, NUALLA, BONIFACIO TORRES, ERNESTO SINCONEQUE
with the Security agency, is solidarily liable to PAY the and EMILIO ANEANO, respondents.
complainants only wage differentials during the period that
the complainants were actually under its employ, as above DECISION
detailed. Petitioner is EXONERATED from the payment of
back wages and separation pay. PUNO, J.:

The temporary restraining order issued earlier is LIFTED, The facts reveal that a complaint for illegal dismissal and
but the petitioner is deemed liable only for the monetary claims for service incentive leave, 13th month pay
aforementioned wage differentials, which Respondent and night shift differential was filed by respondents against

petitioners before the National Labor Relations Commission.1
The complaint was assigned to Labor Arbiter Donato G. Quinto,
Jr. who ordered the parties to file their position paper.
Respondents complied, but not the petitioners despite several
warnings and time extensions. The inaction was construed as a
waiver by petitioners of their right to present evidence.2
The Labor Arbiter decided the complaint on the merit and ruled
in favor of respondents. He sustained their claim of illegal
dismissal as petitioners failed to adduce contrary evidence.
Petitioners were ordered to reinstate respondents. The
monetary claims of the respondents were likewise granted.3
Petitioners appealed to the National Labor Relations
Commission. For the first time, they submitted evidence that
respondents were project employees and that their dismissal
was due to the discontinuation of the Jaka Tower I project
where they were assigned. Respondents, however, assailed the
jurisdiction of the NLRC over the appeal for failure of the
petitioners to file the appeal bond within the ten (10)-day
reglementary period. They further contended that it was too late
for petitioners to present evidence in the NLRC.
The NLRC nevertheless assumed jurisdiction over the appeal.
Due to the evidence presented by petitioners on the issue of
illegal dismissal, it remanded the case to the Labor Arbiter for
further proceedings.4 Respondents’ motion for reconsideration
was denied.5
60
Labor Law II
Respondents then repaired to the Court of Appeals on a Petition
for Certiorari. The appellate court ruled that the NLRC did not
have jurisdiction over the appeal since the appeal bond of the
petitioners was filed out of time. It reinstated the decision of the
Labor Arbiter.6 Petitioners’ motion for reconsideration proved
futile.
Hence this petition where petitioners raise the following issues:
1. Whether or not the Court of Appeals erred and committed
grave abuse of discretion in finding and ruling that the NLRC
has not acquired jurisdiction on the appeal of the petitioners for
submitting an appeal bond seven (7) days beyond the ten
(10)-day reglamentary (sic) period in perfecting an appeal;
2. Whether or not the Court of Appeals erred and committed
grave abuse of discretion in finding and ruling that:
"The remand of the case to the Labor Arbiter due to the
conflicting claims of the parties, comes as a surprise to us. As a
quasi-judicial agency vested with jurisdiction to resolve labor
disputes, it is but natural for the NLRC to encounter conflicting
claims while discharging its mandate. To insist on a policy of
remanding a case to the Labor Arbiter each time conflicting
claims arise in a case would be an abdication of duty by the
NLRC as conflicts are inherent and integral in all disputes,
whether labor or otherwise.

xxx xxx x x x"
3. Whether or not the Court a quo erred and committed grave
abuse of discretion in giving due course to the private
respondent’s petition for certiorari under Rule 65 of the 1997
Rules on Civil Procedure; and in annulling and setting aside the
Resolutions (of) the NLRC, and reinstating the Decision of the
Labor Arbiter ordering the reinstatement of the private
respondents, with full backwages, and monetary awards for
13th month pay and Service Incentive Leave pay.7
We affirm. The Labor Code provides a ten (10)-day period from
receipt of the decision of the Arbiter for the filing of an appeal
together with an appeal bond if the decision involves a monetary
award in favor of the employees, viz:
ART. 223. Appeal. – Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. x x x
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.
xxx xxx xxx
61
Labor Law II
(emphasis supplied)
The NLRC Rules of Procedure8 likewise require the appeal and
the appeal bond to be filed within the ten (10)-day reglementary
period:
Section 1. Periods of Appeal. – Decisions, awards, or orders of
the Labor Arbiter and the POEA Administrator shall be final and
executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such
decisions, awards, or orders of the Labor Arbiter or of the
Administrator, and in case of a decision or of the Regional
Director or his duly authorized Hearing Officer within five (5)
calendar days from receipt of such decisions, awards or orders.
If the 10th or 5th day, as the case may be, falls on a Saturday,
Sunday or a holiday, the last day to perfect the appeal shall be
the next working day.
xxx xxx xxx
Section 3. Requisites for Perfection of Appeal. – (a) The appeal
shall be filed within the reglementary period as provided in
Section 1 of this Rule; shall be under oath with proof of payment
of the required appeal fee and the posting of a cash surety bond
as provided in Section 5 of this Rule (which provides how much
and where the appeal fee is to be paid); shall be accompanied
by a memorandum of appeal which shall state the grounds
relied upon and the arguments in support thereof; the relief

prayed for; and a statement of the date when the appellant
received the appealed decision, order or award and proof of
service on the other party of such appeal.
A mere notice of appeal without complying with the other
requisite aforestated shall not stop the running of the period for
perfecting an appeal.
xxx xxx xxx
Section 7. No Extension of Period. – No motion or request for
extension of the period within which to perfect an appeal shall
be allowed.
xxx xxx xxx
We have consistently ruled that payment of the appeal bond is a
jurisdictional requisite for the perfection of an appeal to the
NLRC.9 It is only in rare instances that the court relaxes the rule
upon a showing of substantial compliance with it and to prevent
patent injustice.
In the case at bar, petitioners alleged that they received a copy
of the Arbiter’s decision on October 31, 1998.10 Their
memorandum of appeal was dated November 9, 1998, but their
appeal bond to stay execution of the decision was executed
only on November 17, 1998.11 The records show no partial
payment of the bond was made during the reglementary period
62
Labor Law II
nor was there any explanation for its late filing. Given these
facts, the late filing of the bond divested the NLRC of its
jurisdiction to entertain petitioners’ appeal.
Likewise, we cannot countenance the late submission of
petitioners’ evidence with the NLRC.1âwphi1 Petitioners should
have adduced their evidence on the issue of illegal dismissal
before the Labor Arbiter. They failed to do so despite the
opportunities given to them by the Arbiter. It was only when an
adverse decision was rendered against them by the Arbiter that
they offered to submit their evidence before the NLRC refuting
respondents’ complaint of illegal dismissal. Such a practice
cannot be tolerated for it will defeat the speedy administration of
justice involving our poor workers. Moreover, it smacks of
unfairness.
Yet, this is not all. Petitioners likewise ran roughshod of the
procedural rules of the appellate court. Respondents’ comment
alleges that the appellate court already declared its judgment
final and executory. An entry of judgment was made after
petitioners’ motion for reconsideration of the appellate court’s
decision was denied on October 31, 2001 and no petition was
filed before this Court. Atty. Rodolfo P. Orticio, however, moved
for cancellation of the entry of judgment on the ground that he is
the new counsel of the petitioners and that he received a copy
of the denial of their motion for reconsideration only on June 19,
2002. He contended that his request for cancellation was filed

within the allowable period. In a resolution dated August 20,
2002 denying the request, the Court of Appeals ruled that:
From the records, it appears that when the decision and
resolution denying the Motion for Reconsideration dated 31
October 2001 were received, Atty. Orticio was not yet the
counsel for private respondent. In fact, he filed his notice of
appearance on 23 November 2001 after receipt on 9 November
2001 by private respondent’s former counsel, Atty. Louis Acosta,
of the resolution denying the motion for reconsideration. A
judgment becomes final provided there was proper service of
notice thereof. In this case, the records clearly show there was
such proper service upon private respondent’s former counsel,
Atty. Louis Acosta. Therefore, the decision of 2 April 2001 did
become final and executory, leaving Us no more discretion to
recall the entry of judgment.12
It is thus contended by respondents that the petition at bar
should not be allowed as the decision of the appellate court has
already become final.
Again, we agree. Petitioners should have filed the present
petition within fifteen days under Rule 45 of the Rules of Court,
viz:
SECTION 1. Filing of petition with Supreme Court. – A party
desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals, the Sandiganbayan, the
63
Labor Law II
Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on
certiorari. The petition shall raise only questions of law which
must be distinctly set forth.
SECTION 2. Time for filing. – The petition shall be filed within
fifteen (15) days from notice of the judgment or final order or
resolution appealed from, or of the denial of the petitioner’s
motion for new trial or reconsideration filed in due time after
notice of the judgment. x x x.
Petitioners received a copy of the denial of their motion for
reconsideration of the Court of Appeals’ decision on November
9, 2001. They filed an extension of time to file the petition at bar
on June 16, 2002, alleging that they have a new counsel. We
note, however, that petitioners obtained the services of present
counsel on November 23, 2001. Thus, there was ample time for
their counsel to appeal to this Court the adverse ruling of the
appellate court. The appeal was not seasonably made by said
counsel and such procedural lapse is binding on petitioners.
IN VIEW WHEREOF, the petition is dismissed. The decision of
the Labor Arbiter is reinstated with the modification that if
reinstatement of respondents is not feasible, they should be
paid separation pay in accordance with law.
SO ORDERED.

G.R. No. 150147 January 20, 2004
LYDIA BUENAOBRA, JOSIELYN FIEL, MARGIE MADRID,
ROWENA MIRANDA, JUVY ENDAYA, JUDY CARONAN,
JOSEPHINE BARTOLOME, LITA MACALINAO, MARLITA
AMBIL, RIZA AMBIL, ANENCIA RECANA, LORENA REYES,
JULIO BALAGTAS, SALVACION FELISMENA, GINA
SINLAO, MARITA CHAVEZ, JIMENA DRADA, YOLANDA
ROLDAN, RAFAELA OLICIA, ANGELEO FUENTES,
EUFROCINA ALMERA, FELICISIMA DE GUZMAN, ADELINA
CALIM, SUSANITA SULAPAS, LOLITA MALICDEM,
TERESITA BORLAZA, ESTER OVERIO, IMELDA AGUIRRE,
MARIBEL BELTRAN, MYLENE TAMAYO, ANNIE
GREGORIO, TERESA CLARINO, TERESA VILLANUEVA,
MARIETTA ARCAYA, MILAGROS DAGDAGAN, PAULINO
PREALDE, MONINA VALLEJO, RITA MAGSINO, SOLIDAD
LABAY, MARIA BINARAO, MELCHORA DELA CRUZ,
SUSAN BITAS, EMELY CAYETANO, EMILY DELA CRUZ,
ZENAIDA SALAS, BITUIN VALDEZ, AFRICA GUEVARRA,
NELIA MORALES, ELOISA REYES, AIDA CAYETANO,
BENITA CAMPOSANO, ADELIA IGNACIO, NENITA SARCIA,
VIOLETA RONCAL, DOROTEA ALASKA, BLISELDA
GALONGAN, SHIRLEY JOCSON, MARITES VELOZ,
ROGELIO CAPUZ, MARDIOLINA ALIOC, MARIETTA
MADRID, LOURDES MERCADO, ARACELLY CERDENOLA,
REMEDIOS TAGNONG, MARISSA SANTOS, JOSEFINA
CANALDA, ZENAIDA DAMANDANTE, CONCHITA
BELARMINO, MARIVIC TRINIDAD, MARGARITA GUMBAN,
64
Labor Law II
ANGELES FERNANDEZ, MARIA BERNAL, MORALINDA
DUARTE, IMELDA TUNGOL, ALONA INNOCENCIO, MA.
TERESA CRUZ, ANALIZA GABRIEL, MELODIEN
CARANDANG, CRESENCIA ACEBO, MARILYN CASIM,
HERMINIA PINEDA, NORIE TORINO, ERLINDA TADEO,
CECILIA LLAVORE, ANA GINA GALMAN, IMELDA
SALARDA, LUISA SAROL, LOLITA MALICSE, AILEEN
PAPANIO, EDITHA GANAL, RESTIE VISTAL, LUCELYN
QUISOY, ESTELA PABIO BRIONES, AUREA TUBIS,
SAMUEL MALICSE, AURORA MISSION, ANALYN CALICA,
LEILANI ALEJAGA, LILIA BRIZUELA, ROSITA FACTOR,
MERCEDES MENDOZA, WARLITO COLOMA, PERLEEN
MUI, JOSEPHINE BALDRES, ELENA MAGDANGAL, IRMA
BENGCO, CRISTITA GERALDEZ, ROMEO PANDO,
ESTRELLITA ZILMAR, ANGELITA SANDIG, NENITA
LARIOSA, MARITA PANTI, AURORA HERNANDEZ, DINNA
SILVA, EVANGELINE CASIM, LUISA SOLAYAO,
ANNABELLE SY, MARINA REBLENCA, MARITESS
GERANDOY, ELENA AGUDA, PERCY GARCIA, GERARDO
TAPIT, AMADOR HADE, MYRA BORJA, ELVIRA ALBAY,
LELIOSA MORANO, VERONICA GUINDAY, JULIETA
ALMAYDA, VILMA SALDO, MAY ANN REPAYO, GLENDA
SARAO, NELLY CARAGA, JOSEPHINE TAQUIQUI,
TRINIDAD BARROCA, DULCE ENDAYA, RIZA TADLIP,
NENITA LAGAMAYO, EUFRENCINA ROLDAN, ELENA
VELASQUEZ, MARIVIC DEPANTI, MONINA LOCSIN, ANA
RAMOS, ANICIA LEUTIEJA, JOSEFINA MANUEL, AMALIA

DAEP, JULIE MANGANAAN, ROWENA ANYAYA,
LUNINGNING ANYAYA, CARMENCITA ANYAYA, ROWENA
FIEL, VENAMEL BEA, NIDA PABLO, LOLITA BLANCO,
ROSEMARIE MORALES, NATIVIDAD CANETE, CORAZON
GOROSPE, MADONNA RAGONOT, GEMMA DACAL, and
CLARITA MENDOZA,Petitioners,
vs.
LIM KING GUAN, JOHNNY LIM, NGO CHAP, CRISTINA NGO,
GILBERTO LIM, CHENG SEN WANG, HUNG PANG CHING,
CHEN HSIU TSUNG as corporate officers of UNIX
INTERNATIONAL EXPORT CORPORATION, and CHEN
HSIU TSUNG, LIM KING GUAN, HUNG PANG CHING, WANG
CHENG SEN, JOHNNY LIM, GILBERTO LIM, NGO CHIAP,
CRISTINA NGO, KATLEEN LIM, MARIE SOLEDAD
CLEMENTE, ROSALINA N. LO, KIM PO GONZALES, and
AMELIA NGA as stockholders of record of UNIX
INTERNATIONAL EXPORT CORPORATION, and FUJI
ZIPPER MANUFACTURING CORPORATION, Respondents.
DECISION
CORONA, J.:
This is a petition for review seeking for the reversal of the
decision1 of the Court of Appeals dated May 29, 2001,
dismissing the petition for certiorari of Lydia Buenaobra, et. al.
and affirming the orders of the National Labor Relations
Commission (NLRC), Third Division, dated November 27, 1998
65
Labor Law II
and February 15, 1999, which respectively directed private
respondents to post a cash or surety bond and dismissed
petitioners’ motion for reconsideration.
The facts follow.
Petitioners were employees of private respondent Unix
International Export Corporation (UNIX), a corporation engaged
in the business of manufacturing bags, wallets and the like.
Sometime in 1991 and 1992, petitioners filed several cases
against UNIX and its incorporators and officers for unfair labor
practice, illegal lockout/dismissal, underpayment of wages,
holiday pay, proportionate 13th month pay, unpaid wages,
interest, moral and exemplary damages and attorney’s fees.
The cases were consolidated and tried jointly. On February 23,
1993, labor arbiter Jose S. de Vera rendered a decision:
WHEREFORE, all the foregoing premises being considered,
judgment is hereby rendered ordering respondent Unix Export
Corporation to pay complainants, as follows:
1. ₱5,821,838.40 as backwages;
2. ₱1,484,912.00 as separation pay;
3. ₱527,748.00 as wage differentials;

4. ₱33,830.00 as regular holiday pay differentials; and
5. ₱365,551.95 as proportionate 13th month pay for 1990.
All other claims of the complainants are hereby dismissed for
lack of merit. Likewise, the complaint of Angelina Dimasin is
dismissed with prejudice.
There being no appeal by respondents or petitioners, the
decision of labor arbiter de Vera eventually became final and
executory. However, petitioners complained that the decision
could not be executed because UNIX allegedly diverted,
invested and transferred all its money, assets and properties to
respondent Fuji Zipper Manufacturing Corporation (FUJI) whose
stockholders and officers were also those of UNIX.
Thus, on March 25, 1997, petitioners filed another complaint
against respondents UNIX, its corporate officers and
stockholders of record, and FUJI. Petitioners mainly prayed that
respondents UNIX and FUJI be held jointly and severally held
liable for the payment of the monetary awards ordered by labor
arbiter de Vera.
On May 31, 1998, labor arbiter Felipe Pati rendered a decision
on the second complaint:
WHEREFORE, judgment is hereby rendered piercing the veil of
corporate fiction of the two respondent sister corporations which
66
Labor Law II
by virtue of this Decision are now considered as mere
associations of persons jointly and severally pay the subject
amount of ₱8,233,880.30 out of the properties and unpaid
subscription on subscribed Capital Stock of the Board of
Directors, Corporate Officers, Incorporators and Stockholders of
said respondent corporations, plus the amount of
₱3,000,000.00 and ₱1,000,000.00 in the form of moral and
exemplary damages, respectively, as well as 10% attorney’s
fees from any recoverable amounts.
Other claims are hereby dismissed for lack of merit.
On July 30, 1998, private respondents FUJI, its officers and
stockholders filed a memorandum on appeal and a motion to
dispense with the posting of a cash or surety appeal bond on
the ground that they were not the employers of petitioners. They
alleged that they could not be held responsible for petitioners’
claims and to require them to post the bond would be unjust and
unfair, and not sanctioned by law.
On November 27, 1998, the NLRC, Third Division rendered the
first assailed order2 :
PREMISES CONSIDERED, instant motion to exempt from filing
appeal bond is hereby DENIED for lack of merit. Respondents
are hereby directed to post cash or surety bond in the amount of
₱8,233,880.30 within an unextendible period of ten (10) days
upon receipt. Otherwise the appeal shall be dismissed.

Petitioners moved for reconsideration of the said order, arguing
that the timely posting of an appeal bond is mandatory for the
perfection of an appeal and should be complied with.
On February 15, 1999, the NLRC, Third Division rendered the
second assailed order:
WHEREFORE, premises considered, complainants’ Motion for
Reconsideration is hereby DISMISSED for lack of merit.
Respondents’ Supplemental Memorandum of Appeal is
admitted. Respondents and counsel are likewise hereby
directed to submit a joint declaration under oath within five (5)
days upon receipt. Otherwise the appeal shall be dismissed.
Petitioners filed a petition in the Court of Appeals imputing grave
abuse of discretion to the NLRC, Third Division when it allowed
private respondents to post the mandated cash or surety bond
four months after the filing of their memorandum on appeal.
On May 29, 2001, the Court of Appeals dismissed the petition
for lack of merit. Hence, this petition under Rule 45 of the Rules
of Court, seeking to set aside the decision of the Court of
Appeals and praying that the orders dated February 15, 1999
and November 27, 1998 of the NLRC, Third Division be set
aside for having been issued without or in excess of its
jurisdiction and with grave abuse of discretion.
The petition has no merit.
67
Labor Law II
The provision of Article 223 of the Labor Code requiring the
posting of bond on appeals involving monetary awards must be
given liberal interpretation in line with the desired objective of
resolving controversies on the merits.3 If only to achieve
substantial justice, strict observance of the reglementary
periods may be relaxed if warranted. The NLRC, Third Division
could not be said to have abused its discretion in requiring the
posting of bond after it denied private respondents’ motion to be
exempted therefrom.
It is true that the perfection of an appeal in the manner and
within the period prescribed by law is not only mandatory but
jurisdictional, and failure to perfect an appeal has the effect of
making the judgment final and executory. However, technicality
should not be allowed to stand in the way of equitably and
completely resolving the rights and obligations of the parties.4
We have allowed appeals from the decisions of the labor arbiter
to the NLRC, even if filed beyond the reglementary period, in
the interest of justice. The facts and circumstances of the instant
case warrant liberality considering the amount involved and the
fact that petitioners already obtained a favorable judgment on
February 23, 1993 against their employer UNIX.1âwphi1
In the same decision which has already become final and
executory, labor arbiter de Vera held:
This Branch upholds and maintains in the absence of
substantial evidence to the contrary that both respondent
 68

Labor Law II

corporations have legitimate distinct and separate juridical

personalities. Thus, respondent Fuji Zipper Manufacturing, Inc.
has been erroneously impleaded in this case.5

It is only fair and just that respondent FUJI be afforded the

opportunity to be heard on appeal before the NLRC, specially in
the light of labor arbiter Pati’s later decision holding FUJI jointly
and severally liable with UNIX in the payment of the monetary
awards adjudged by labor arbiter de Vera against UNIX.

In the absence of any showing that the NLRC committed grave

abuse of discretion, or otherwise acted without or in excess of
jurisdiction, this Court is bound by its findings. Furthermore, the
Court of Appeals upheld the assailed orders of the said
Commission.

WHEREFORE, the petition is hereby DENIED.

SO ORDERED.
 69

Labor Law II

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

Petitioner Ma. Isabel T. Santos was the Human Resource

Manager of respondent Servier Philippines, Inc. since 1991 until
her termination from service in 1999. On March 26 and 27, 1998,
petitioner attended a meeting3 of all human resource managers
of respondent, held in Paris, France. Since the last day of the
meeting coincided with the graduation of petitioner’s only child,
she arranged for a European vacation with her family right after
the meeting. She, thus, filed a vacation leave effective March 30,
G.R. No. 166377 November 28, 2008 1998.4

MA. ISABEL T. SANTOS, represented by ANTONIO P.
SANTOS,petitioner,
vs.
SERVIER PHILIPPINES, INC. and NATIONAL LABOR
RELATIONS COMMISSION, respondents.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari under
Rule 45 of the Rules of Court, seeking to set aside the Court of
Appeals (CA) Decision,1 dated August 12, 2004 and its
Resolution2 dated December 17, 2004, in CA-G.R. SP No.
75706.
On March 29, 1998, petitioner, together with her husband
Antonio P. Santos, her son, and some friends, had dinner
at Leon des Bruxelles, a Paris restaurant known for mussels5 as
their specialty. While having dinner, petitioner complained of
stomach pain, then vomited. Eventually, she was brought to the
hospital known as Centre Chirurgical de L’Quest where she fell
into coma for 21 days; and later stayed at the Intensive Care
Unit (ICU) for 52 days. The hospital found that the probable
cause of her sudden attack was "alimentary allergy," as she had
recently ingested a meal of mussels which resulted in a
concomitant uticarial eruption.6
During the time that petitioner was confined at the hospital, her
husband and son stayed with her in Paris. Petitioner’s
hospitalization expenses, as well as those of her husband and
son, were paid by respondent.7

In June 1998, petitioner’s attending physicians gave a prognosis
of the former’s condition; and, with the consent of her family,
allowed her to go back to the Philippines for the continuation of
her medical treatment. She was then confined at the St. Luke’s
Medical Center for rehabilitation.8 During the period of
petitioner’s rehabilitation, respondent continued to pay the
former’s salaries; and to assist her in paying her hospital bills.
In a letter dated May 14, 1999, respondent informed the
petitioner that the former had requested the latter’s physician to
conduct a thorough physical and psychological evaluation of her
condition, to determine her fitness to resume her work at the
company. Petitioner’s physician concluded that the former had
not fully recovered mentally and physically. Hence, respondent
was constrained to terminate petitioner’s services effective
August 31, 1999.9
As a consequence of petitioner’s termination from employment,
respondent offered a retirement package which consists of:
Retirement Plan Benefits: P 1,063,841.76
Insurance Pension at
20,000.00/month for 60 months
from company-sponsored group
life policy: P 1,200,000.00
70
Labor Law II
Educational assistance: P 465,000.00
Medical and Health Care: P 200,000.0010
Of the promised retirement benefits amounting
to P1,063,841.76, only P701,454.89 was released to
petitioner’s husband, the balance11 thereof was withheld
allegedly for taxation purposes. Respondent also failed to give
the other benefits listed above.12
Petitioner, represented by her husband, instituted the instant
case for unpaid salaries; unpaid separation pay; unpaid balance
of retirement package plus interest; insurance pension for
permanent disability; educational assistance for her son;
medical assistance; reimbursement of medical and
rehabilitation expenses; moral, exemplary, and actual damages,
plus attorney’s fees. The case was docketed as NLRC-NCR
(SOUTH) Case No. 30-06-02520-01.
On September 28, 2001, Labor Arbiter Aliman D. Mangandog
rendered a Decision13 dismissing petitioner’s complaint. The
Labor Arbiter stressed that respondent had been generous in
giving financial assistance to the petitioner.14 He likewise noted
that there was a retirement plan for the benefit of the employees.
In denying petitioner’s claim for separation pay, the Labor
Arbiter ratiocinated that the same had already been integrated
in the retirement plan established by respondent. Thus,

petitioner could no longer collect separation pay over and above
her retirement benefits.15 The arbiter refused to rule on the
legality of the deductions made by respondent from petitioner’s
total retirement benefits for taxation purposes, as the issue was
beyond the jurisdiction of the NLRC.16 On the matter of
educational assistance, the Labor Arbiter found that the same
may be granted only upon the submission of a certificate of
enrollment.17 Lastly, as to petitioner’s claim for damages and
attorney’s fees, the Labor Arbiter denied the same as the
former’s dismissal was not tainted with bad faith.18
On appeal to the National Labor Relations Commission (NLRC),
the tribunal set aside the Labor Arbiter’s decision, ruling that:
WHEREFORE, premises considered, Complainant’s appeal is
partly GRANTED. The Labor Arbiter’s decision in the
above-entitled case is hereby SET ASIDE. Respondent is
ordered to pay Complainant’s portion of her separation pay
covering the following: 1) P200,000.00 for medical and health
care from September 1999 to April 2001; and 2) P35,000.00 per
year for her son’s high school (second year to fourth year)
education and P45,000.00 per semester for the latter’s
four-year college education, upon presentation of any
applicable certificate of enrollment.
SO ORDERED.19
71
Labor Law II
The NLRC emphasized that petitioner was not retired from the
service pursuant to law, collective bargaining agreement (CBA)
or other employment contract; rather, she was dismissed from
employment due to a disease/disability under Article 284 20 of
the Labor Code.21 In view of her non-entitlement to retirement
benefits, the amounts received by petitioner should then be
treated as her separation pay.22 Though not legally obliged to
give the other benefits, i.e., educational assistance, respondent
volunteered to grant them, for humanitarian consideration. The
NLRC therefore ordered the payment of the other benefits
promised by the respondent.23 Lastly, it sustained the denial of
petitioner’s claim for damages for the latter’s failure to
substantiate the same.24
Unsatisfied, petitioner elevated the matter to the Court of
Appeals which affirmed the NLRC decision.25
Hence, the instant petition.
At the outset, the Court notes that initially, petitioner raised the
issue of whether she was entitled to separation pay, retirement
benefits, and damages. In support of her claim for separation
pay, she cited Article 284 of the Labor Code, as amended.
However, in coming to this Court via a petition for review on
certiorari, she abandoned her original position and alleged that
she was, in fact, not dismissed from employment based on the
above provision. She argued that her situation could not be
characterized as a disease; rather, she became disabled. In

short, in her petition before us, she now changes her theory by
saying that she is not entitled to separation pay but to retirement
pay pursuant to Section 4,26 Article V of the Retirement Plan, on
disability retirement. She, thus, prayed for the full payment of
her retirement benefits by giving back to her the amount
deducted for taxation purposes.
In our Resolution27 dated November 23, 2005 requiring the
parties to submit their respective memoranda, we specifically
stated:
No new issues may be raised by a party in the Memorandum
and the issues raised in the pleadings but not included in the
Memorandum shall be deemed waived or abandoned.
Being summations of the parties’ previous pleadings, the Court
may consider the Memoranda alone in deciding or resolving this
petition.
Pursuant to the above resolution, any argument raised in her
petition, but not raised in her Memorandum,28 is deemed
abandoned.29 Hence, the only issue proper for determination is
the propriety of deducting P362,386.87 from her total benefits,
for taxation purposes. Nevertheless, in order to resolve the
legality of the deduction, it is imperative that we settle, once and
for all, the ground relied upon by respondent in terminating the
services of the petitioner, as well as the nature of the benefits
given to her after such termination. Only then can we decide
72
Labor Law II
whether the amount deducted by the respondent should be paid
to the petitioner.
Respondent dismissed the petitioner from her employment
based on Article 284 of the Labor Code, as amended, which
reads:
Art. 284. DISEASE AS GROUND FOR TERMINATION
An employer may terminate the services of an employee who
has been found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his
health as well as to the health of his co-employees: Provided,
That he is paid separation pay equivalent to at least one (1)
month salary or to one-half (1/2) month salary for every year of
service, whichever is greater, a fraction of at least six (6)
months being considered as one (1) whole year.
As she was dismissed on the abovementioned ground, the law
gives the petitioner the right to demand separation pay.
However, respondent established a retirement plan in favor of
all its employees which specifically provides for "disability
retirement," to wit:
Sec. 4. DISABILITY RETIREMENT
In the event that a Member is retired by the Company due to
permanent total incapacity or disability, as determined by a

competent physician appointed by the Company, his disability
retirement benefit shall be the Full Member’s Account Balance
determined as of the last valuation date. x x x. 30
On the basis of the above-mentioned retirement plan,
respondent offered the petitioner a retirement package which
consists of retirement plan benefits, insurance pension, and
educational assistance.31The amount of P1,063,841.76
represented the disability retirement benefit provided for in the
plan; while the insurance pension was to be paid by their insurer;
and the educational assistance was voluntarily undertaken by
the respondent as a gesture of compassion to the petitioner.32
We have declared in Aquino v. National Labor Relations
Commission33 that the receipt of retirement benefits does not
bar the retiree from receiving separation pay. Separation pay is
a statutory right designed to provide the employee with the
wherewithal during the period that he/she is looking for another
employment. On the other hand, retirement benefits are
intended to help the employee enjoy the remaining years of his
life, lessening the burden of worrying about his financial support,
and are a form of reward for his loyalty and service to the
employer.34 Hence, they are not mutually exclusive. However,
this is only true if there is no specific prohibition against the
payment of both benefits in the retirement plan and/or in the
Collective Bargaining Agreement (CBA).35
73
Labor Law II
In the instant case, the Retirement Plan bars the petitioner from
claiming additional benefits on top of that provided for in the
Plan. Section 2, Article XII of the Retirement Plan provides:
Section 2. NO DUPLICATION OF BENEFITS
No other benefits other than those provided under this Plan
shall be payable from the Fund. Further, in the event the
Member receives benefits under the Plan, he shall be precluded
from receiving any other benefits under the Labor Code or
under any present or future legislation under any other contract
or Collective Bargaining Agreement with the Company.36
There being such a provision, as held in Cruz v. Philippine
Global Communications, Inc.,37 petitioner is entitled only to
either the separation pay under the law or retirement benefits
under the Plan, and not both.
Clearly, the benefits received by petitioner from the respondent
represent her retirement benefits under the Plan. The question
that now confronts us is whether these benefits are taxable. If
so, respondent correctly made the deduction for tax purposes.
Otherwise, the deduction was illegal and respondent is still
liable for the completion of petitioner’s retirement benefits.
Respondent argues that the legality of the deduction from
petitioner’s total benefits cannot be taken cognizance of by this

Court since the issue was not raised during the early stage of
the proceedings.38
We do not agree.
Records reveal that as early as in petitioner’s position paper
filed with the Labor Arbiter, she already raised the legality of
said deduction, albeit designated as "unpaid balance of the
retirement package." Petitioner specifically averred
that P362,386.87 was not given to her by respondent as it was
allegedly a part of the former’s taxable income.39 This is likewise
evident in the Labor Arbiter and the NLRC’s decisions although
they ruled that the issue was beyond the tribunal’s jurisdiction.
They even suggested that petitioner’s claim for illegal deduction
could be addressed by filing a tax refund with the Bureau of
Internal Revenue.40
Contrary to the Labor Arbiter and NLRC’s conclusions,
petitioner’s claim for illegal deduction falls within the tribunal’s
jurisdiction. It is noteworthy that petitioner demanded the
completion of her retirement benefits, including the amount
withheld by respondent for taxation purposes. The issue of
deduction for tax purposes is intertwined with the main issue of
whether or not petitioner’s benefits have been fully given her. It
is, therefore, a money claim arising from the
employer-employee relationship, which clearly falls within the
jurisdiction41 of the Labor Arbiter and the NLRC.
74
Labor Law II
This is not the first time that the labor tribunal is faced with the
issue of illegal deduction. In Intercontinental Broadcasting
Corporation (IBC) v. Amarilla,42 IBC withheld the salary
differentials due its retired employees to offset the tax due on
their retirement benefits. The retirees thus lodged a complaint
with the NLRC questioning said withholding. They averred that
their retirement benefits were exempt from income tax; and IBC
had no authority to withhold their salary differentials. The Labor
Arbiter took cognizance of the case, and this Court made a
definitive ruling that retirement benefits are exempt from income
tax, provided that certain requirements are met.
Nothing, therefore, prevents us from deciding this main issue of
whether the retirement benefits are taxable.
We answer in the affirmative.
Section 32 (B) (6) (a) of the New National Internal Revenue
Code (NIRC) provides for the exclusion of retirement benefits
from gross income, thus:
(6) Retirement Benefits, Pensions, Gratuities, etc. –
a) Retirement benefits received under Republic Act 7641 and
those received by officials and employees of private firms,
whether individual or corporate, in accordance with a
reasonable private benefit plan maintained by the
employer: Provided, That the retiring official or employee has
 75

Labor Law II

been in the service of the same employer for at least ten (10) SO ORDERED.
years and is not less than fifty (50) years of age at the time of
his retirement: Provided further, That the benefits granted under
this subparagraph shall be availed of by an official or employee
only once. x x x.

Thus, for the retirement benefits to be exempt from the

withholding tax, the taxpayer is burdened to prove the
concurrence of the following elements: (1) a reasonable private
benefit plan is maintained by the employer; (2) the retiring
official or employee has been in the service of the same
employer for at least ten (10) years; (3) the retiring official or
employee is not less than fifty (50) years of age at the time of his
retirement; and (4) the benefit had been availed of only once.43
As discussed above, petitioner was qualified for disability
retirement. At the time of such retirement, petitioner was only 41
years of age; and had been in the service for more or less eight
(8) years. As such, the above provision is not applicable for
failure to comply with the age and length of service
requirements. Therefore, respondent cannot be faulted for
deducting from petitioner’s total retirement benefits the amount
of P362,386.87, for taxation purposes.
WHEREFORE, the petition is DENIED for lack of merit. The
Court of Appeals Decision dated August 12, 2004 and its
Resolution dated December 17, 2004, in CA-G.R. SP No.
75706 are AFFIRMED.
G.R. No. 152329 April 22, 2003
ALEJANDRO ROQUERO, petitioner,
vs.
PHILIPPINE AIRLINES, INC., respondent.
PUNO, J.:
Brought up on this Petition for Review is the decision of the
Court of Appeals dismissing Alejandro Roquero as an employee
of the respondent Philippine Airlines, Inc.
Roquero, along with Rene Pabayo, were ground equipment
mechanics of respondent Philippine Airlines, Inc. (PAL for
brevity). From the evidence on record, it appears that Roquero
and Pabayo were caught red-handed possessing and
using Methampethamine Hydrochloride or shabu in a raid
conducted by PAL security officers and NARCOM personnel.

The two alleged that they did not voluntarily indulge in the said
act but were instigated by a certain Jojie Alipato who was
introduced to them by Joseph Ocul, Manager of the Airport
Maintenance Division of PAL. Pabayo alleged that Alipato often
bragged about the drugs he could smuggle inside the company
premises and invited other employees to take the prohibited
drugs. Alipato was unsuccessful, until one day, he was able to
persuade Pabayo to join him in taking the drugs. They met
Roquero along the way and he agreed to join them. Inside the
company premises, they locked the door and Alipato lost no
time in preparing the drugs to be used. When they started the
procedure of taking the drugs, armed men entered the room,
arrested Roquero and Pabayo and seized the drugs and the
paraphernalia used.1 Roquero and Pabayo were subjected to a
physical examination where the results showed that they were
positive of drugs. They were also brought to the security office
of PAL where they executed written confessions without the
benefit of counsel.2
On March 30, 1994, Roquero and Pabayo received a "notice of
administrative charge"3 for violating the PAL Code of Discipline.
They were required to answer the charges and were placed
under preventive suspension.
Roquero and Pabayo, in their "reply to notice of administrative
charge,"4 assailed their arrest and asserted that they were
instigated by PAL to take the drugs. They argued that Alipato
was not really a trainee of PAL but was placed in the premises
76
Labor Law II
to instigate the commission of the crime. They based their
argument on the fact that Alipato was not arrested. Moreover,
Alipato has no record of employment with PAL.
In a Memorandum dated July 14, 1994, Roquero and Pabayo
were dismissed by PAL.5 Thus, they filed a case for illegal
dismissal.6
In the Labor Arbiter's decision, the dismissal of Roquero and
Pabayo was upheld. The Labor Arbiter found both parties at
fault — PAL for applying means to entice the complainants into
committing the infraction and the complainants for giving in to
the temptation and eventually indulging in the prohibited activity.
Nonetheless, the Labor Arbiter awarded separation pay and
attorney's fees to the complainants.7
While the case was on appeal with the National Labor Relations
Commission (NLRC), the complainants were acquitted by the
Regional Trial Court (RTC) Branch 114, Pasay City, in the
criminal case which charged them with "conspiracy for
possession and use of a regulated drug in violation of Section
16, Article III of Republic Act 6425," on the ground of instigation.
The NLRC ruled in favor of complainants as it likewise found
PAL guilty of instigation. It ordered reinstatement to their former
positions but without backwages.8 Complainants did not appeal
from the decision but filed a motion for a writ of execution of the
order of reinstatement. The Labor Arbiter granted the motion but

PAL refused to execute the said order on the ground that they
have filed a Petition for Review before this Court. 9 In
accordance with the case of St. Martin Funeral Home vs. NLRC
and Bienvenido Aricayos,10 PAL's petition was referred to the
Court of Appeals.11
During the pendency of the case with the Court of Appeals, PAL,
and Pabayo filed a Motion to Withdraw/Dismiss the case with
respect to Pabayo, after they voluntarily entered into a
compromise agreement.12 The motion was granted in a
Resolution promulgated by the Former Thirteenth Division of the
Court of Appeals on January 29, 2002.13
The Court of Appeals later reversed the decision of the NLRC
and reinstated the decision of the Labor Arbiter insofar as it
upheld the dismissal of Roquero. However, it denied the award
of separation pay and attorney's fees to Roquero on the ground
that one who has been validly dismissed is not entitled to those
benefits.14
The motion for reconsideration by Roquero was denied. In this
Petition for Review on Certiorari under Rule 45, he raises the
following issues:
1. Whether or not the instigated employee shall be solely
responsible for an action arising from the instigation perpetrated
by the employer;
77
Labor Law II
2. Can the executory nature of the decision, more so the
reinstatement aspect of a labor tribunal's order be halted by a
petition having been filed in higher courts without any
restraining order or preliminary injunction having been ordered
in the meantime?
3. Would the employer who refused to reinstate an employee
despite a writ duly issued be held liable to pay the salary of the
subject employee from the time that he was ordered reinstated
up to the time that the reversed decision was handed down? 15
I
There is no question that petitioner Roquero is guilty of serious
misconduct for possessing and using shabu. He violated
Chapter 2, Article VII, section 4 of the PAL Code of Discipline
which states:
"Any employee who, while on company premises or on duty,
takes or is under the influence of prohibited or controlled drugs,
or hallucinogenic substances or narcotics shall be dismissed." 16
Serious misconduct is defined as "the transgression of some
established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful
intent and not mere error in judgment."17 For serious
misconduct to warrant the dismissal of an employee, it (1) must
be serious; (2) must relate to the performance of the employee's

duty; and (3) must show that the employee has become unit to
continue working for the employer.18
It is of public knowledge that drugs can damage the mental
faculties of the user. Roquero was tasked with the repair and
maintenance of PAL's airplanes. He cannot discharge that duty
if he is a drug user. His failure to do his job can mean great loss
of lives and properties. Hence, even if he was instigated to take
drugs he has no right to be reinstated to his position. He took
the drugs fully knowing that he was on duty and more so that it
is prohibited by company rules. Instigation is only a defense
against criminal liability. It cannot be used as a shield against
dismissal from employment especially when the position
involves the safety of human lives.
Petitioner cannot complain he was denied procedural due
process. PAL complied with the twin-notice requirement before
dismissing the petitioner. The twin-notice rule requires (1) the
notice which apprises the employee of the particular acts or
omissions for which his dismissal is being sought along with the
opportunity for the employee to air his side, and (2) the
subsequent notice of the employer's decision to dismiss
him.19 Both were given by respondent PAL.
II
Article 223 (3rd paragraph) of the Labor Code20 as amended by
Section 12 of Republic Act No. 6715,21 and Section 2 of the
78
Labor Law II
NLRC Interim Rules on Appeals under RA No. 6715, Amending
the Labor Code,22 provide that an order of reinstatement by the
Labor Arbiter is immediately executory even pending appeal.
The rationale of the law has been explained in Aris (Phil.) Inc. vs.
NLRC:23
"In authorizing execution pending appeal of the reinstatement
aspect of a decision of the Labor Arbiter reinstating a dismissed
or separated employee, the law itself has laid down a
compassionate policy which, once more, vivifies and enhances
the provisions of the 1987 Constitution on labor and the working
man.
xxx xxx xxx
These duties and responsibilities of the State are imposed not
so much to express sympathy for the workingman as to
forcefully and meaningfully underscore labor as a primary social
and economic force, which the Constitution also expressly
affirms with equal intensity. Labor is an indispensable partner
for the nation's progress and stability.
xxx xxx xxx
. . . In short, with respect to decisions reinstating employees, the
law itself has determined a sufficiently overwhelming reason for
its execution pending appeal.
 79

Labor Law II

xxx xxx xxx obligatory on the part of the employer to reinstate and pay the
wages of the dismissed employee during the period of appeal
. . . Then, by and pursuant to the same power (police power), until reversal by the higher court. On the other hand, if the
the State may authorize an immediate implementation, pending employee has been reinstated during the appeal period and
appeal, of a decision reinstating a dismissed or separated such reinstatement order is reversed with finality, the employee
employee since that saving act is designed to stop, although is not required to reimburse whatever salary he received for he
temporarily since the appeal may be decided in favor of the is entitled to such, more so if he actually rendered services
appellant, a continuing threat or danger to the survival or even during the period.
the life of the dismissed or separated employee and his family."
IN VIEW WHEREOF, the dismissal of petitioner Roquero is
The order of reinstatement is immediately executory. The AFFIRMED, but respondent PAL is ordered to pay the wages to
unjustified refusal of the employer to reinstate a dismissed which Roquero is entitled from the time the reinstatement order
employee entitles him to payment of his salaries effective from was issued until the finality of this decision.
the time the employer failed to reinstate him despite the
issuance of a writ of execution.24 Unless there is a restraining SO ORDERED.
order issued, it is ministerial upon the Labor Arbiter to
implement the order of reinstatement. In the case at bar, no
restraining order was granted. Thus, it was mandatory on PAL
to actually reinstate Roquero or reinstate him in the payroll.
Having failed to do so, PAL must pay Roquero the salary he is
entitled to, as if he was reinstated, from the time of the decision
of the NLRC until the finality of the decision of this Court.

We reiterate the rule that technicalities have no room in labor

cases where the Rules of Court are applied only in a suppletory G.R. NO. 148247 August 7, 2006
manner and only to effectuate the objectives of the Labor Code
and not to defeat them.25 Hence, even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is

AIR PHILIPPINES CORPORATION, Petitioner,
vs.
ENRICO E. ZAMORA, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Only those pleadings, parts of case records and documents
which are material and pertinent, in that they may provide the
basis for a determination of a prima facie case of abuse of
discretion, are required to be attached to a petition for certiorari.
A petition lacking such documents contravenes paragraph 2,
Section 1, Rule 65 and may be dismissed outright under Section
3, Rule 46. However, if it is shown that the omission has been
rectified by the subsequent submission of the documents
required, the petition must be given due course or reinstated, if
it had been previously dismissed. 1
Other pleadings and portions of case records need not
accompany the petition, unless the court will require them in
order to aid it in its review of the case. Omission of these
documents from the petition will not warrant its dismissal. 2
For being allegedly contrary to the foregoing rule, the
Resolutions dated January 11, 2001 and May 23, 2001 of the
Court of Appeals in CA G.R. SP No. 62388 entitled, "Air
Philippines Corporation, Petitioner, versus, National Labor
80
Labor Law II
Relations Commission (5th Division) and Enrico Zamora,
Respondents" are sought to be annuled in the Petition for
Review on Certiorari under Rule 45 that is now before us. 3
The facts are not in dispute.
Enrico Zamora (Zamora) was employed with Air Philippines
Corporation (APC) as a B-737 Flight Deck Crew. 4 He applied
for promotion to the position of airplane captain and underwent
the requisite training program. After completing training, he
inquired about his promotion but APC did not act on it; instead, it
continued to give him assignments as flight deck crew. Thus,
Zamora filed a Complaint with the Labor Arbiter. He argued that
the act of APC of withholding his promotion rendered his
continued employment with it oppressive and unjust. He
therefore asked that APC be held liable for constructive
dismissal. 5
APC denied that it dismissed complainant. It pointed out that,
when the complaint was filed on May 14, 1997, complainant
was still employed with it. It was only on May 22, 1997 that
complainant stopped reporting for work, not because he was
forced to resign, but because he had joined a rival airline, Grand
Air. 6
In a Decision dated September 16, 1998, the Labor Arbiter ruled
in favor of Zamora and declared APC liable for constructive
dismissal. It held:

WHEREFORE, judgment is hereby rendered finding respondent
liable for illegal dismissal and ordering the respondent to:
1. Reinstate complainant to his position as B-737 Captain
without loss of seniority right immediately upon receipt thereof
(sic);
2. Pay complainant his full backwages from May 15, 1997 up to
the promulgation of this decision on (sic) the amount of
P1,732,500 (sic);
3. Pay complainant the amount of TWO MILLION PESOS
(P2,000,000.00) in the concept of moral damages and ONE
MILLION PESOS (P1,000,000.00) as exemplary damages;
4. Pay attorney’s fees equivalent to TEN PERCENT (10%) of
the total award. (Emphasis supplied)
SO ORDERED. 7
Zamora immediately filed a Motion for Execution of the order of
reinstatement. On November 6, 1998, the Labor Arbiter granted
the motion and issued a writ of execution directing APC to
reinstate complainant to his former position. 8
Meanwhile, APC filed with the NLRC an appeal assailing the
finding of the Labor Arbiter that it was liable for constructive
dismissal. 9
81
Labor Law II
The NLRC granted the appeal in a Resolution dated February
10, 1999. It held that no dismissal, constructive or otherwise,
took place for it was Zamora himself who voluntarilly terminated
his employment by not reporting for work and by joining a
competitor Grand Air. 10
However, upon Motion for Reconsideration 11 filed by Zamora,
the NLRC, in a Resolution dated December 17, 1999, modified
its earlier Resolution, thus:
WHEREFORE, the instant Motion for Reconsideration filed by
complainant is DENIED for lack of merit and the appealed
decision AFFIRMED, while the instant petition for injunction filed
by respondent is GRANTED.
However, respondent Air Philippines Corporation is ordered to
pay complainant his unpaid salaries and allowances in the total
amount of P198,502.30 within fifteen (15) days from receipt of
this resolution. 12 (Emphasis supplied)
Displeased with the modification, APC sought a partial
reconsideration of the foregoing resolution 13 but the NLRC
denied the same. In its Resolution of October 11, 2000, the
NLRC justifed the award of unpaid salaries in this manner:
The grant of salaries and allowances to complainant arose from
the order of his reinstatement which is executory even pending
appeal of respondent questioning the same, pursuant to Article

223 of the Labor Code. In the eyes of the law, complainant was
as if actually working from the date respondent received the
copy of the appealed decision of the Labor Arbiter directing the
reinstatement of complainant based on his finding that the latter
was illegally dismissed from employment. 14 (Emphasis
supplied)
This prompted APC (hereafter referred to as petitioner) to file a
Petition for Certiorari with the Court of Appeals to have the
December 17, 1999 Resolution of the NLRC partially annulled
and its October 11, 2000 Resolution set aside on the ground
that these were issued with grave abuse of discretion. Petitioner
attached to its petition, certified true copies of the Resolutions of
the NLRC dated February 10, 1999, December 17, 1999 and
October 11, 2000 and the Decision of the Labor Arbiter dated
September 16, 1998, and photocopies of the February 24, 1999
notice of garnishment, March 11, 1999 Order of the Labor
Arbiter authorizing Sheriff Fulgencio Lavarez to implement the
writ of execution, and March 23, 1999 Resolution of the NLRC
enjoining implementation of the writ of execution. 15
In a Resolution dated January 11, 2001, the Court of Appeals
dismissed the petition for failure of petitioner to "x x x attach
copies of all pleadings (such complaint, answer, position paper)
and other material portions of the record as would support the
allegations therein x x x." 16
82
Labor Law II
Petitioner filed a Motion for Reconsideration from the said
Resolution and attached to it the pleadings and portions of the
case record required by the Court of Appeals. 17 Zamora
(hereafter referred to as respondent) filed an Opposition to
Motion for Reconsideration. 18
In a Resolution dated May 23, 2001, the Court of Appeals
denied the motion for reconsideration, thus:
Up for consideration is petitioner’s motion for reconsideration
(pages 64-71 of the Rollo) of this Court’s resolution of dismissal
(page 54, id.), which was promulgated on January 11, 2001.
Considering private respondent’s undisputed comment on said
motion (pages 159-161. id.), the same is hereby DENIED. The
resolution of dismissal stands. 19(Emphasis supplied)
And so, herein Petition for Review on Certiorari under Rule 45.
Petitioner would have us annul and set aside the January 11,
2001 and May 23, 2001 Resolutions of the Court of Appeals on
the following grounds:
A. The Honorable Court of Appeals did not rule in accordance
with prevailing laws and jurisprudence when it dismissed the
petition for certiorari filed by petitioner APC on the ground that
petitioner APC supposedly failed to attach copies of all
pleadings (such as complaint, answer, position papers) and
other materials portions of the record as would support the
allegations therein.

B. The Honorable Court of Appeals did not rule in accordance
with prevailing laws and jurisprudence when it denied petitioner
APC’s motion for reconsideration in spite of the fact that
petitioner APC submitted copies of all pleadings and documents
mentioned in its petition for certiorari.
C. The Honorable Court of Appeals did not rule in accordance
with prevailing laws and jurisprudence when it denied petitioner
APC’s motion for reconsideration on a new ground namely, the
alleged failure of petitioner APC to dispute respondent Zamora’s
comment and/or opposition to motion for reconsideration
("Opposition"), in spite of the fact that (i) the Honorable Court of
Appeals did not order petitioner APC to reply to the said
opposition; and (ii) the said Opposition is patently
unmeritorious. 20
Respondent filed his Comment to the petition. 21
We grant the petition.
We agree with petitioner on the first and second issues.
In its Resolution of January 11, 2001, the Court of Appeals cited
as ground for the dismissal of the petition for certiorari its lack of
certified true copies of the pleadings and material portions of the
case record. This is an erroneous ruling, petitioner insists, for
the deficiency was excusable: pleadings and other portions of
the case records were not attached to the petition because
83
Labor Law II
these documents had no bearing on the sole issue raised
therein, which was, whether the NLRC committed grave abuse
of discretion in awarding unpaid salaries to respondent despite
having adjudged the latter at fault for abandonment of
employment. 22
Respondent disagrees. He argues that the requirements under
Section 1, Rule 65 are mandatory and jurisdictional; petitioner’s
failure to comply with them was a valid ground for the dismissal
of its petition. 23
Both views are actually correct.
Certiorari, being an extraordinary remedy, the party seeking it
must strictly observe the requirements for its issuance. 24 Some
of these requirements are found in paragraph 2, Section 1 of
Rule 65, which reads:
SECTION. 1. Petition for certiorari.–
xxxx
The petition shall be accompanied by a certified true copy of the
judgment, order or resolution subject thereof, copies of all
pleadings and documents relevant and pertinent thereto x x x.
These requirements are emphasized in Section 3, Rule 46,
thus:

SEC. 3. Contents and filing of petition; effect of non-compliance
with requirements. –
xxxx
[The petition] shall be x x x accompanied by a clearly legible
duplicate original or certified true copy of the judgment, order,
resolution, or ruling subject thereof, such material portions of
the record as are referred to therein, and other documents
relevant or pertinent thereto x x x.
xxxx
The failure of the petitioner to comply with any of the foregoing
requirements shall be sufficient ground for the dismissal of the
petition.
Note that the foregoing rules speak of two sets of documents to
be attached to the petition. The first set consists of certified true
copies of the judgment, order or resolution subject of the petition.
Duplicate originals or certified true copies thereof must be
appended to enable the reviewing court to determine whether
the court, body or tribunal, which rendered the same committed
grave abuse of discretion. 25 The second set consists of the
pleadings, portions of the case record and other documents
which are material and pertinent to the petition. 26 Mere
photocopies thereof may be attached to the petition. 27 It is this
second set of documents which is relevant to this case.
84
Labor Law II
As a general rule, a petition lacking copies of essential
pleadings and portions of the case record may be
dismissed.28 This rule, however, is not petrified. As the exact
nature of the pleadings and parts of the case record which must
accompany a petition is not specified, much discretion is left to
the appellate court to determine the necessity for copies of
pleading and other documents. 29 There are, however,
guideposts it must follow.
First, not all pleadings and parts of case records are required to
be attached to the petition. Only those which are relevant and
pertinent must accompany it. The test of relevancy is whether
the document in question will support the material allegations in
the petition, whether said document will make out a prima
facie case of grave abuse of discretion as to convince the court
to give due course to the petition. 30
Second, even if a document is relevant and pertinent to the
petition, it need not be appended if it is shown that the contents
thereof can also found in another document already attached to
the petition. Thus, if the material allegations in a position paper
are summarized in a questioned judgment, it will suffice that
only a certified true copy of the judgment is attached. 31
Third, a petition lacking an essential pleading or part of the case
record may still be given due course or reinstated (if earlier
dismissed) upon showing that petitioner later submitted the

documents required, 32 or that it will serve the higher interest of
justice that the case be decided on the merits. 33
It is readily apparent in this case that the Court of Appeals was
overzealous in its enforcement of the rules.
To begin with, the pleadings and other documents it required of
petitioner were not at all relevant to the petition. It is noted that
the only issue raised by petitioner was whether the NLRC
committed grave abuse of discretion in granting respondent
unpaid salaries while declaring him guilty of abandonment of
employment. Certainly, copies of the Resolutions of the NLRC
dated February 10, 1999, December 17, 1999 and October 11,
2000 would have sufficed as basis for the Court of Appeals to
resolve this issue. After all, it is in these Resolutions that the
NLRC purportedly made contrary findings.
There was no need at all for copies of the position papers and
other pleadings of the parties; these would have only cluttered
the docket. Besides, a summary of the material allegations in
the position papers can be found in both the September 16,
1998 Decision of the Labor Arbiter and the February 10, 1999
Resolution of the NLCR. Quick reference to copies of the
decision and resolution would have already satisfied any
question the court may have had regarding the pleadings of the
parties.
85
Labor Law II
The attachments of petitioner to its petition for certiorari were
already sufficient even without the pleadings and portions of the
case record. It was therefore unreasonable of the Court of
Appeals to have dismissed it. More so that petitioner later
corrected the purported deficiency by submitting copies of the
pleadings and other documents.
This brings us to the third issue. Again, we agree with petitioner
that the Court of Appeals erred in denying its motion for
reconsideration.
In its May 23, 2001 Resolution, the Court of Appeals cited as
basis for denying the motion for reconsideration of petitioner
from the January 11, 2000 Resolution the latter’s purported
failure to contravene the Opposition filed by respondent. 34 This
is certainly a curious ground to deny a motion for
reconsideration. As pointed out by petitioner, a reply to an
opposition to a motion for reconsideration is not filed as a matter
of course. An order from the court may issue though to direct
the movant to file a reply. In this case, no such order came from
the Court of Appeals instructing petitioner to counter the
Opposition filed by respondent. Hence, it cannot be assumed
that in failing to file a reply, petitioner, in effect, conceded to the
Opposition of respondent.
It is not as if the Opposition which respondent filed required any
answer. The matters discussed therein were not even germane
to the issue raised in the motion for reconsideration. It was as

though respondent passed in silence petitioner’s arguments
against the January 11, 2000 Resolution. If we are to be
technical about it, it was instead the motion for reconsideration
of petitioner which was not contravened by respondent. It was
error on the part of the Court of Appeals to have denied it.
In sum, we annul and set aside the January 11, 2000 and May
23, 2001 Resolutions of the Court of Appeals. There is no more
obstacle then to the petition for certiorari taking its course.
However, rather than remand it to the Court of Appeals for
resolution, we resolve it here and now to expedite matters. 35
We hold that the NLRC did not commit grave abuse of
discretion in holding petitioner liable to respondent
for P198,502.30.
The premise of the award of unpaid salary to respondent is that
prior to the reversal by the NLRC of the decision of the Labor
Arbiter, the order of reinstatement embodied therein was
already the subject of an alias writ of execution even pending
appeal. Although petitioner did not comply with this writ of
execution, its intransigence made it liable nonetheless to the
salaries of respondent pending appeal. There is logic in this
reasoning of the NLRC. In Roquerov. Philippine Airlines, Inc.,
we resolved the same issue as follows:
We reiterate the rule that technicalities have no room in labor
cases where the Rules of Court are applied only in a suppletory
86
Labor Law II
manner and only to effectuate the objectives of the Labor Code
and not to defeat them. [36][25] Hence, even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it
is obligatory on the part of the employer to reinstate and
pay the wages of the dismissed employee during the period
of appeal until reversal by the higher court. On the other
hand, if the employee has been reinstated during the appeal
period and such reinstatement order is reversed with finality, the
employee is not required to reimburse whatever salary he
received for he is entitled to such, more so if he actually
rendered services during the period. 37
There is a policy elevated in this ruling. In Aris (Phil.) Inc. v.
National Labor Relations Commission, we held:
In short, with respect to decisions reinstating employees, the
law itself has determined a sufficiently overwhelming reason for
its execution pending appeal.
xxxx
x x x Then, by and pursuant to the same power (police power),
the State may authorize an immediate implementation, pending
appeal, of a decision reinstating a dismissed or separated
employee since that saving act is designed to stop, although
temporarily since the appeal may be decided in favor of the
appellant, a continuing threat or danger to the survival or even
 87

Labor Law II

the life of the dismissed or separated employee and his x----------------------------------------------

family. 38 - - - - -x

We cannot do less. The petition for certiorari in CA G.R. SP No. DECISION

62388 must be dismissed.
WHEREFORE, the petition is GRANTED.The January 11, 2000
and May 23, 2001 Resolutions of the Court of Appeals
are ANNULLED AND SET ASIDE, and the Petition
for Certiorari docketed as CA G.R. SP No. 62388
is DISMISSED. The Resolutions dated December 17, 1999 and
October 11, 2000 of the National Labor Relations Commission
are AFFIRMED.
Costs against petitioner.
SO ORDERED.
CARPIO MORALES, J.:
An anonymous e-mail was sent to the General Manager of
Amkor Technology Philippines (respondent) detailing
allegations of malfeasance on the part of its supervisory
employees Lunesa Lansangan and Rosita Cendaña (petitioners)
for "stealing company time."1 Respondent thus investigated the
matter, requiring petitioners to submit their written explanation.
In handwritten letters, petitioners admitted their
wrongdoing.2 Respondent thereupon terminated petitioners for
"extremely serious offenses" as defined in its Code of
Discipline,3 prompting petitioners to file a complaint for illegal
dismissal against it.4

Labor Arbiter Arthur L. Amansec, by Decision of October 20,

2004,5 dismissed petitioners’ complaint, he having found them
guilty of
G.R. No. 177026 January 30, 2009
"[s]wiping another employees’ [sic] I.D. card or requesting
LUNESA O. LANSANGAN AND ROCITA another employee to swipe one’s I.D. card to gain personal
CENDAñA, Petitioners, advantage and/or in the interest of cheating", an offense
vs. of dishonesty punishable as a serious form of misconduct and
AMKOR TECHNOLOGY PHILIPPINES, INC., Respondent. fraud or breach of trust under Article 282 of the Labor Code:

xxxx
which allows the dismissal of an employee for a valid cause.
(Emphasis and underscoring supplied)
The Arbiter, however, ordered the reinstatement of petitioners to
their former positions without backwages "as a measure of
equitable and compassionate relief" owing mainly to petitioners’
prior unblemished employment records, show of remorse,
harshness of the penalty and defective attendance monitoring
system of respondent.6
Respondent assailed the reinstatement aspect of the Arbiter’s
order before the National Labor Relations Commission (NLRC).
In the meantime, petitioners, without appealing the Arbiter’s
finding them guilty of "dishonesty as a form of serious
misconduct and fraud or breach of trust," moved for the
issuance of a "writ of reinstatement."7
After a series of oppositions, motions and orders,8 the Arbiter
issued an alias writ of execution following which respondent’s
bank account at Equitable-PCI Bank was garnished.
Respondent thereupon moved for the quashal of the alias writ of
execution and lifting of the notice of garnishment, which the
Arbiter denied by Order of January 26, 2005, drawing
respondent to appeal to the NLRC.
88
Labor Law II
After consolidating respondent’s appeal from the Labor Arbiter’s
order of reinstatement and subsequent appeal/order denying
the quashal of the alias writ of execution and lifting of the notice
of garnishment, the NLRC, by Resolution of June 30,
2005,9 granted respondent’s appeals by deleting the
reinstatement aspect of the Arbiter’s decision and setting aside
the Arbiter’s Alias Writ of Execution and Notice of Garnishment.
Thus the NLRC disposed as follows:
ACCORDINGLY, the appeal is hereby GRANTED. The Labor
Arbiter’s Decision dated October 20, 2004 is hereby MODIFIED
by DELETING the portion that ruled for appelle[e]s’
reinstatement. Consequently, the Writ of Execution dated
November 19, 2004, the subsequent Alias Writ of Execution
dated January 26, 2005, and the Notice of Garnishment dated
January 14, 2005 served upon Equitable PCI Bank by Sheriff
Agripina Sangel are hereby ordered to be SET ASIDE.
SO ORDERED. (Underscoring supplied)
Petitioners’ motion for reconsideration of the NLRC Resolution
having been denied, they filed a petition for certiorari before the
Court of Appeals which, by Decision10 of September 19, 2006,
while affirming the finding that petitioners were guilty of
misconduct and the like, ordered respondent to "pay petitioners
their corresponding backwageswithout qualification and
deduction for the period covering October 20, 2004 (date of the
Arbiter’s decision) up to June 30, 2005 (date of the NLRC

Decision)," citing Article 223 of the Labor Code and Roquero v.
Philippine Airlines.11
Both parties’ filed their respective motions for partial
reconsideration which were denied.12 Only petitioners have
come to this Court via the present petition for
review,13 contending that:
I decision, the said court’s order for it to pay backwages to
WITH ALL DUE RESPECT, THE ORDER OF
THE HONORABLE COURT OF
APPEALS LIMITING THE PAYMENT OF
BACKWAGES [TO] THE PETITIONERS FROM
OCTOBER 20, 2004 (ARBITER DECISION) UP
TO JUNE 30, 2005 (NLRC DECISION) ONLY IS
CONTRARY TO THE CASE OF ALEJANDRO
ROQUERO VS. PHILIPPINE AIRLINES, INC.[,]
G.R. NO. 152329, APRIL [22,] 2003 [AND]
II
. . . THE HONORABLE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION
IN CONCLUDING THAT THE PETITIONERS
COMMITTED SERIOUS MISCONDUCT, FRAUD,
DISHONESTY AND BREACH OF TRUST. BUT
EVEN ASSUMING THAT THE PETITIONERS
89
Labor Law II
COMMITTED THE SWIPING IN OF
IDENTIFICATION CARD, THE PENALTY OF
DISMISSAL IS TOO SEVERE, HARSH AND
CONTRARY TO ARTICLE 282 OF THE LABOR
CODE OF THE PHILIPPINES AND EXISTING
JURISPRUDENCE.14
Since respondent did not appeal from the appellate court’s
petitioners for the therein specified period has become final.
Petitioners highlight the Court’s ruling in Roquero v. Philippine
Airlines15 where the therein employer was ordered to pay the
wages to which the therein employee was entitled from the time
the reinstatement order was issued until the finality of this
Court’s decision16 in favor of the therein employee. Thus,
petitioners contend that the payment of backwages
should not be computed only up to the promulgation by the
NLRC of its decision.
In its Comment,17 respondent asserts that, inter alia, petitioners’
reliance on Roquero is misplaced in view of the glaring factual
differences between said case and the present case.
The petition fails.
The decision of the Arbiter finding that petitioners committed
"dishonesty as a form of serious misconduct and fraud, or
 90

Labor Law II

breach of trust" had become final, petitioners not having compensation was withheld from him up to the time of his actual
appealed the same before the NLRC as in fact they even moved reinstatement (Emphasis, underscoring and italics supplied),
for the execution of the reinstatement aspect of the decision. It
bears recalling that it was only respondent which assailed the petitioners are not entitled to full backwages as their dismissal
Arbiter’s decision to the NLRC – to solely question the propriety was not found to be illegal. Agabon v. NLRC19 so states ––
of the order for reinstatement, and it succeeded.1avvphil.zw+ payment of backwages and other benefits is justified only if the
employee was unjustly dismissed.
Roquero, as well as Article 22318 of the Labor Code on which
the appellate court also relied, finds no application in the WHEREFORE, the petition is DENIED.
present case. Article 223 concerns itself with an interim relief,
granted to a dismissed or separated employee while the case No costs.
for illegal dismissal is pending appeal, as what happened in
Roquero. It does not apply where there is no finding of illegal SO ORDERED.
dismissal, as in the present case.
G.R. Nos. 142732-33 December 4, 2007
The Arbiter found petitioners’ dismissal to be valid. Such finding
had, as stated earlier, become final, petitioners not having MARILOU S. GENUINO, petitioner,
appealed it. Following Article 279 which provides: vs.
NATIONAL LABOR RELATIONS COMMISSION, CITIBANK,
xxxx N.A., WILLIAM FERGUSON, and AZIZ
RAJKOTWALA, respondents.
In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or x - - - - - - - - - - - - - - - - - - - - - - -x
when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without G.R. Nos. 142753-54
loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or CITIBANK, N.A., WILLIAM FERGUSON, and AZIZ
their monetary equivalent computed from the time his RAJKOTWALA, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and
MARILOU GENUINO, respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks to set
aside the September 30, 1999 Decision1 and March 31, 2000
Resolution2 of the Court of Appeals (CA) in the consolidated
cases docketed as CA-G.R. SP Nos. 51532 and 51533. The
appellate court dismissed the parties' petitions involving the
National Labor Relations Commission's (NLRC's) Decision3 and
Resolution,4 which held that Marilou S. Genuino was validly
dismissed by Citibank, N.A. (Citibank). The NLRC likewise
ordered the payment of salaries from the time that Genuino was
reinstated in the payroll to the date of the NLRC decision. Upon
reconsideration, however, the CA modified its decision and held
that Citibank failed to observe due process in CA-G.R. SP No.
51532; hence, Citibank should indemnify Genuino in the amount
of PhP 5,000. Both parties are now before this Court assailing
portions of the CA's rulings. In G.R. Nos. 142732-33, Genuino
assails the CA's finding that her dismissal was valid. In G.R.
Nos. 142753-54, Citibank questions the CA's finding that
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Labor Law II
Citibank violated Genuino's right to procedural due process and
that Genuino has a right to salaries.
Citibank is an American banking corporation duly licensed to do
business in the Philippines. William Ferguson was the Manila
Country Corporate Officer and Business Head of the Global
Finance Bank of Citibank while Aziz Rajkotwala was the
International Business Manager for the Global Consumer Bank
of Citibank.5
Genuino was employed by Citibank sometime in January 1992
as Treasury Sales Division Head with the rank of Assistant
Vice-President. She received a monthly compensation of PhP
60,487.96, exclusive of benefits and privileges.6
On August 23, 1993, Citibank sent Genuino a letter charging her
with "knowledge and/or involvement" in transactions "which
were irregular or even fraudulent." In the same letter, Genuino
was informed she was under preventive suspension.7
Genuino wrote Citibank on September 13, 1993 and asked the
bank the following:
a. Confront our client with the factual and legal basis of your
charges, and afford her an opportunity to explain;
b. Substantiate your charge of fraudulent transactions against
our client; or if the same cannot be substantiated;

c. Correct/repair/compensate the damage you have caused our
client.8
On September 13, 1993, Citibank, through Victorino P. Vargas,
its Country Senior Human Resources Officer, sent a letter to
Genuino, the relevant portions of which read:
As you are well aware, the bank served you a letter dated
August 23, 1993 advising you that ongoing investigations show
that you are involved and/or know of irregular transactions
which are at the very least in conflict with the bank's interest,
and, may even be fraudulent in nature.
These transactions are those involving Global Pacific and/or
Citibank and the following bank clients, among others:
1. Norma T. de Jesus
2. Carmen Intengan/Romeo Neri
3. Mario Mamon
4. Vienna Ochoa/IETI
5. William Samara
6. Roberto Estandarte
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Labor Law II
7. Rita Browner
8. Ma. Redencion Sumpaico
9. Cesar Bautista
10. Teddy Keng
11. NDC-Guthrie
12. Olivia Sy
In view of the foregoing, you are hereby directed to explain in
writing three (3) days from your receipt hereof why your
employment should not be terminated in view of your
involvement in these irregular transactions. You are also
directed to appear in an administrative investigation of the
matter which is set on Tuesday, Sept. 21, 1993 at 2:00 P.M. at
the HR Conference Room, 6th Floor, Citibank Center. You may
bring your counsel if you so desire.9
Genuino's counsel replied through a letter dated September 17,
1993, demanding for a bill of particulars regarding the charges
against Genuino. Citibank's counsel replied on September 20,
1993, as follows:
1.2. [T]he bank has no intention of converting the administrative
investigation of this case to a full blown trial. What it is prepared

to do is give your client, as required by law and Supreme Court
decisions, an opportunity to explain her side on the issue of
whether she violated the conflict of interest rule—either in
writing (which could be in the form of a letter-reply to the
September 13, 1993 letter to Citibank, N.A.) or in person, in the
administrative investigation which is set for tomorrow afternoon
vis-à-vis the bank clients/parties mentioned in the letter of
Citibank, N.A.
xxxx
2.2. You will certainly not deny that we have already fully
discussed with you what is meant by the conflict with the bank's
interest vis-à-vis the bank clients/parties named in the
September 13, 1993 letter of Citibank to Ms. Genuino. As we
have repeatedly explained to you, what the bank meant by it is
that your client and Mr. Dante Santos, using the facilities of their
family corporations (Torrance and Global) appear to have
participated in the diversion of bank clients' funds from Citibank
to, and investment thereof in, other companies and that they
made money in the process, in violation of the conflict of law
rule. It is her side of this issue that Citibank, N.A. is waiting to
receive/hear from Ms. Genuino.10
Genuino did not appear in the administrative investigation held
on September 21, 1993. Her lawyers wrote a letter to Citibank's
counsel asking "what bank clients' funds were diverted from the
bank and invested in other companies, the specific amounts
93
Labor Law II
involved, the manner by which and the date when such
diversions were purportedly affected." In reply, Citibank's
counsel noted Genuino's failure to appear in the investigation
and gave Genuino up to September 23, 1993 to submit her
written explanation. Genuino did not submit her written
explanation.11
On September 27, 1993, Citibank informed Genuino of the
result of their investigation. It found that Genuino with Santos
used "facilities of Genuino's family corporation, namely, Global
Pacific, personally and actively participated in the diversion of
bank clients' funds to products of other companies that yielded
interests higher than what Citibank products offered, and that
Genuino and Santos realized substantial financial gains, all in
violation of existing company policy and the Corporation Code,
which for your information, carries a penal sanction."12
Genuino's employment was terminated by Citibank on grounds
of (1) serious misconduct, (2) willful breach of the trust reposed
upon her by the bank, and (3) commission of a crime against the
bank.13
On October 15, 1993, Genuino filed before the Labor Arbiter a
Complaint14 against Citibank docketed as NLRC Case No.
00-10-06450-93 for illegal suspension and illegal dismissal with
damages and prayer for temporary restraining order and/or writ
of preliminary injunction. The Labor Arbiter rendered a

Decision15 on May 2, 1994, the dispositive portion of which
reads:
WHEREFORE, finding the dismissal of the complainant Marilou
S. Genuino to be without just cause and in violation of her right
to due process, respondent CITIBANK, N.A., and any and all
persons acting on its behalf or by or under their authority are
hereby ordered to reinstate complainant immediately to her
former position as Treasury Sales Division Head or its
equivalent without loss of seniority rights and other benefits,
with backwages from August 23, 1993 up to April 30, 1994 in
the amount of P493,800.00 (P60,000 x 8.23 mos.) subject to
adjustment until reinstated actually or in the payroll.
Respondents are likewise ordered to pay complainant the
amount of 1.5 Million Pesos and P500,000.00 by way of moral
and exemplary damages plus 10% of the total monetary award
as attorney's fees.16
Both parties appealed to the NLRC. The NLRC, in its
September 3, 1994 Decision in NLRC-NCR Case No.
00-10-06450-93 (CA No. 006947-94), reversed the Labor
Arbiter's decision with the following modification:
WHEREFORE, Judgment is hereby rendered (1) SETTING
ASIDE the appealed decision of the Labor Arbiter; (2)
DECLARING the dismissal of the complainant valid and legal on
the ground of serious misconduct and breach of trust and
94
Labor Law II
confidence and consequently DISMISSING the complaint a quo;
but (3) ORDERING the respondent bank to pay the salaries due
to the complainant from the date it reinstated complainant in the
payroll (computed at P60,000.00 a month, as found by the
Labor Arbiter) up to and until the date of this decision.
SO ORDERED.17
The parties' motions for reconsideration were denied by the
NLRC in a resolution dated October 28, 1994.18
The Ruling of the Court of Appeals
On December 6, 1994, Genuino filed a petition for certiorari
docketed as G.R. No. 118023 with this Court. Citibank's petition
for certiorari, on the other hand, was docketed as G.R. No.
118667. In the January 27, 1999 Resolution, we referred these
petitions to the CA pursuant to our ruling in St. Martin Funeral
Home v. NLRC.19
Genuino's petition before the CA was docketed as CA-G.R. SP
No. 51532 while Citibank's petition was docketed as CA-G.R.
SP No. 51533. Genuino prayed for the reversal of the NLRC's
decision insofar as it declared her dismissal valid and legal.
Meanwhile, Citibank questioned the NLRC's order to pay
Genuino's salaries from the date of reinstatement until the date
of the NLRC's decision.

The CA promulgated its decision on September 30, 1999,
denying due course to and dismissing both petitions.20Both
parties filed motions for reconsideration and on March 31, 2000,
the appellate court modified its decision and held:
WHEREFORE, save for the MODIFICATION ordering Citibank,
N.A. to pay Ms. Marilou S. Genuino five thousand pesos
(P5,000.00) as indemnity for non-observance of due process in
CA-G.R. SP No. 51532, this Court's 30 September 1999
decision is REITERATED and AFFIRMED in all other respects.
SO ORDERED.21
Hence, we have this petition.
The Issue
WHETHER OR NOT THE DISMISSAL OF GENUINO IS FOR A
JUST CAUSE AND IN ACCORDANCE WITH DUE PROCESS
In G.R. Nos. 142732-33, Genuino contends that Citibank failed
to observe procedural due process in terminating her
employment. This failure is allegedly an indication that there
were no valid grounds in dismissing her. In G.R. Nos.
142753-54, Citibank questions the ruling that Genuino has a
right to reinstatement under Article 223 of the Labor Code.
Citibank contends that the Labor Arbiter's finding is not
supported by evidence; thus, the decision is void. Since a void
95
Labor Law II
decision cannot give rise to any rights, Citibank opines that
there can be no right to payroll reinstatement.
The dismissal was for just cause but lacked due process
We affirm that Genuino was dismissed for just cause but without
the observance of due process.
In a string of cases, 22 we have repeatedly said that the
requirement of twin notices must be met. In the recent case
of King of Kings Transport, Inc. v. Mamac, we explained:
To clarify, the following should be considered in terminating the
services of employees:
(1) The first written notice to be served on the employees
should contain the specific causes or grounds for termination
against them, and a directive that the employees are given the
opportunity to submit their written explanation within a
reasonable period. "Reasonable opportunity" under the
Omnibus Rules means every kind of assistance that
management must accord to the employees to enable them to
prepare adequately for their defense. This should be construed
as a period of at least five (5) calendar days from receipt of the
notice to give the employees an opportunity to study the
accusation against them, consult a union official or lawyer,
gather data and evidence, and decide on the defenses they will
raise against the complaint. Moreover, in order to enable the

employees to intelligently prepare their explanation and
defenses, the notice should contain a detailed narration of the
facts and circumstances that will serve as basis for the charge
against the employees. A general description of the charge will
not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule
and conduct a hearing or conferencewherein the employees
will be given the opportunity to: (1) explain and clarify their
defenses to the charge against them; (2) present evidence in
support of their defenses; and (3) rebut the evidence presented
against them by the management. During the hearing or
conference, the employees are given the chance to defend
themselves personally, with the assistance of a representative
or counsel of their choice. Moreover, this conference or hearing
could be used by the parties as an opportunity to come to an
amicable settlement.
(3) After determining that termination of employment is justified,
the employers shall serve the employees a written notice of
termination indicating that: (1) all circumstances involving the
charge against the employees have been considered; and (2)
grounds have been established to justify the severance of their
employment.23
96
Labor Law II
The Labor Arbiter found that Citibank failed to adequately notify
Genuino of the charges against her. On the contrary, the NLRC
held that "the function of a 'notice to explain' is only to state the
basic facts of the employer's charges, which x x x the letters of
September 13 and 17, 1993 in question have fully served." 24
We agree with the CA that the dismissal was valid and legal,
and with its modification of the NLRC ruling that PhP 5,000 is
due Genuino for failure of Citibank to observe due process.
The Implementing Rules and Regulations of the Labor Code
provide that any employer seeking to dismiss a worker shall
furnish the latter a written notice stating the particular acts or
omissions constituting the grounds for dismissal.25 The purpose
of this notice is to sufficiently apprise the employee of the acts
complained of and enable him/her to prepare his/her defense.
In this case, the letters dated August 23, September 13 and 20,
1993 sent by Citibank did not identify the particular
acts or omissions allegedly committed by Genuino. The
August 23, 1993 letter charged Genuino with having "some
knowledge and/or involvement" in some transactions "which
have the appearance of being irregular at the least and may
even be fraudulent." The September 13, 1993 letter, on the
other hand, mentioned "irregular transactions" involving Global
Pacific and/or Citibank and 12 bank clients. Lastly, the
September 20, 1993 letter stated that Genuino and "Mr. Dante
Santos, using the facilities of their family corporations (Torrance

and Global) appear to have participated in the diversion of bank
clients' funds from Citibank to, and investment thereof in, other
companies and that they made money in the process, in
violation of the conflict of law rule [sic]." The extent of Genuino's
alleged knowledge and participation in the diversion of bank's
clients' funds, manner of diversion, and amounts involved; the
acts attributed to Genuino that conflicted with the bank's
interests; and the circumstances surrounding the alleged
irregular transactions, were not specified in the notices/letters.
While the bank gave Genuino an opportunity to deny the truth of
the allegations in writing and participate in the administrative
investigation, the fact remains that the charges were too general
to enable Genuino to intelligently and adequately prepare her
defense.
The two-notice requirement of the Labor Code is an essential
part of due process. The first notice informing the employee of
the charges should neither be pro-forma nor vague. It should
set out clearly what the employee is being held liable for. The
employee should be afforded ample opportunity to be heard and
not mere opportunity. As explained in King of Kings Transport,
Inc., ample opportunity to be heard is especially accorded the
employees sought to be dismissed after they are specifically
informed of the charges in order to give them an opportunity to
refute such accusations leveled against them. Since the notice
of charges given to Genuino is inadequate, the dismissal could
not be in accordance with due process.
97
Labor Law II
While we hold that Citibank failed to observe procedural due
process, we nevertheless find Genuino's dismissal justified.
Citibank maintains that Genuino was aware of the bank's
Corporate Policy Manual specifically Chapter 3 on "Principles
and Policies" with regard to avoiding conflicts of interest. She
had even submitted a Conflict of Interest Survey to Citibank. In
that survey, she denied any knowledge of engaging in
transactions in conflict with Citibank's interests. Citibank, for its
part, submitted evidence showing 99% ownership of Global
stocks by Genuino and Santos. In July 1993, Citibank
discovered that Genuino and Santos were instrumental in the
withdrawal by bank depositors of PhP 120 million of
investments in Citibank. This amount was subsequently
invested in another foreign bank, Internationale Nederlanden
Bank, N.V., under the control of Global and Torrance, another
corporation controlled by Genuino and Santos. 26 Citibank also
filed two criminal complaints against Genuino and Santos for
violations of the conflict of interest rule provided in Sec. 31 in
relation to Sec. 14427 of the Corporation Code.28
We note also that during the proceedings before the Labor
Arbiter, Citibank presented the following affidavits, with
supporting documentary evidence against Genuino:
1) Vic Lim, an officer of Citibank who investigated the anomalies
of Genuino and Santos, concluded that Genuino and Santos

realized substantial financial gains out of the transfer of monies
as supported by the following documents:
1) [S]ome of the Term Investment Applications (TIA),
Applications for Money Transfer, all filled up in the handwriting
of Ms. Marilou Genuino. These documents cover/show the
transfer of the monies of the Citibank clients from their money
placements/deposits with Citibank, N.A. to Global and/or
Torrance.
2) [S]ome of the checks that were drawn by Global and
Torrance against their Citibank accounts in favor of the other
companies by which Global and Torrance transferred the
monies of the bank clients to the other companies.
3) [S]ome of the checks drawn by the other companies in favor
of Global or Torrance by which the other companies remitted
back to Global and/or Torrance the monies of the bank clients
concerned.
4) [S]ome of the checks drawn by Global and Torrance against
their Citibank accounts in favor of Mr. Dante Santos and Ms.
Marilou Genuino, covering the shares of the latter in the spreads
or margins Global and Torrance had derived from the
investments of the monies of the Citibank clients in the other
companies.
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Labor Law II
5) [S]ome of the checks drawn by Torrance and Global in favor
of Citibank clients by which Global and Torrance remitted back
to said bank clients their principal investments (or portions
thereof) and the rates of interests realized from their investment
placed with the other companies less the spreads made by
Global and/or Torrance, Mr. Dante L. Santos and Ms. Marilou
Genuino.29
In Lim's Reply-Affidavit with attached supporting documents, he
stated that out of the competing money placement activities,
Genuino and Santos derived financial gains amounting to PhP
2,027,098.08 and PhP 2,134,863.80, respectively.30
2) Marilyn Bautista, a Treasury Sales Specialist in the Treasury
Department of the Global Consumer Bank of Citibank and
whose superiors were Genuino and Santos, stated that:
Based on documents that have subsequently come to my
knowledge, I realized that the two (Genuino and Dante L.
Santos), with the active cooperation of Redencion Sumpaico
(the Accountant of Global) had … brokered for their own
benefits and/or of Global the sale of the financial products of
Citibank called "Mortgage Backed Securities" or MBS and in the
process made money at the expense of the (Citibank) investors
and the bank.31
3) Patrick Cheng attested to other transactions from which
Genuino, Santos, and Global brokered the Mortgage Backed

Securities (MBS), namely: ICC/Nemesio and Olivia Sy
transaction, San Miguel Corporation/ICC, CIPI/Asiatrust, FAPE,
PERAA and Union Bank, and NDC-Guthrie transactions.32
In her defense, Genuino asserts that Citibank has no evidence
of any wrongful act or omission imputable to her. According to
her, she did not try to conceal from the bank her participation in
Global and she even disclosed the information when Global
designated Citibank as its depositary. She avers there was no
conflict of interest because Global was not engaged in
Citibank's accepting deposits and granting loans, nor in money
placement activities that compete with Citibank's activities; and
neither does Citibank invest in the outlets used by Global. She
claims that the controversy between Santos and Global had
already been amicably resolved in a Compromise Agreement
between the two parties.33
Genuino further asserts that the letter of termination did not
indicate what existing company policy had been violated, and
what acts constituted serious misconduct or willful breach of the
trust reposed by the bank. She claims that Lim's testimony that
the checks issued by Global in her name were profits was
malicious, hearsay, and lacked factual basis. She also posits
that as to the withdrawals of clients, she could not possibly
dictate on the depositors. She pointed out that the depositors
even sent Citibank a letter dated August 25, 1993 informing the
bank that the withdrawals were made upon their express
instructions. Genuino avers the bank's loss of confidence
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Labor Law II
should have to be proven by substantial evidence, setting out
the facts upon which loss of confidence in the employee may be
made to rest.34
Contrary to the Labor Arbiter's finding, the NLRC found the
following facts supported by the records:
a) Respondent bank has a conflict of interest rule, embodied in
Chapter 3 of its Corporate Policy Manual, prohibiting the officers
of the bank from engaging in business activities, situations or
circumstances that are in conflict with the interest of the bank.
b) Complainant was familiar with said conflict of interest rule of
the bank and of her duty to disclose to the bank in writing any
personal circumstances which conflicts or appears to be in
conflict with Citibank's interest.
c) Complainant is a substantial stockholder of Global Pacific,
but she did not disclose fact to the bank.
d) Global Pacific is engaged in money placement business like
Citibank, N.A.; that in carrying out its said money placement
business, it used funds belonging to Citibank clients which were
withdrawn from Citibank with participation of complainant and
Dante L. Santos. In one transaction of this nature,
P120,000,000.00 belonging to Citibank clients was withdrawn
from Citibank, N.A. and placed in another foreign bank, under
the control of Global Pacific. Said big investment money was

returned to Citibank, N.A. only when Citibank, N.A. filed an
injunction suit.
e) Global Pacific also engaged in the brokering of the ABS or
MBS, another financial product of Citibank. It was the duty of
complainant Genuino and Dante L. Santos to sell said product
on behalf of Citibank, N.A. and for Citibank N.A.'s benefit. In the
brokering of the ABS or MBS, Global Pacific made substantial
profits which otherwise would have gone to Citibank, N.A. if only
they brokered the ABS or MBS for and on behalf of Citibank,
N.A.
Art. 282(c) of the Labor Code provides that an employer may
terminate an employment for fraud or willful breach by the
employee of the trust reposed in him/her by his/her employer or
duly authorized representative. In order to constitute as just
cause for dismissal, loss of confidence should relate to acts
inimical to the interests of the employer.35 Also, the act
complained of should have arisen from the performance of the
employee's duties.36 For loss of trust and confidence to be a
valid ground for an employee's dismissal, it must be substantial
and not arbitrary, and must be founded on clearly established
facts sufficient to warrant the employee's separation from
work.37 We also held that:
[L]oss of confidence is a valid ground for dismissing an
employee and proof beyond reasonable doubt of the
employee's misconduct is not required. It is sufficient if there is
100
Labor Law II
some basis for such loss of confidence or if the employer has
reasonable ground to believe or to entertain the moral
conviction that the employee concerned is responsible for the
misconduct and that the nature of his participation therein
rendered him unworthy of the trust and confidence demanded
by his position.38
As Assistant Vice-President of Citibank's Treasury Department,
Genuino was tasked to solicit investments, and peso and dollar
deposits for, and keep them in Citibank; and to sell and/or push
for the sale of Citibank's financial products, such as the MBS,
for the account and benefit of Citibank.39 She held a position of
trust and confidence. There is no way she could deny any
knowledge of the bank's policies nor her understanding of these
policies as reflected in the survey done by the bank. She could
not likewise feign ignorance of the businesses of Citibank, and
of Global and Torrance. Assuming that Citibank did not engage
in the same securities dealt with by Global and Torrance;
nevertheless, it is to the interests of Citibank to retain its clients
and continue investing in Citibank. Curiously, Genuino did not
even dissuade the depositors from withdrawing their monies
from Citibank, and was even instrumental in the transfers of
monies from Citibank to a competing bank through Global and
Torrance, the corporations under Genuino's control.
All the pieces of evidence compel us to conclude that Genuino
did not have her employer's interest. The letter of the bank's
clients which attested that the withdrawals from Citibank were

made upon their instructions is of no import. It did not explain
why they preferred to invest in Global and Torrance, nor did it
mention that Genuino tried to dissuade them from withdrawing
their deposits. Genuino herself admitted her relationship with
some of the depositors in her affidavit, to wit:
6. Contrary to the allegations of Mr. Lim in par. 6.1 up to 8.1
concerning the alleged scheme employed in the questioned
transactions, insinuating an "in" and "out" movement of funds of
the seven (7) depositors, the truth is that after said
"depositors" instructed/authorized us to effect the
withdrawal of their respective monies from Citibank to
attain the common goal of higher yields utilizing Global as
the vehicle for bulk purchases of securities or papers not
dealt with/offered by Citibank, said pooled investment
remained with Global, and were managed through Global for
over a year until the controversy arose;
10. The seven (7) "depositors" mentioned in Mr. Lim's
Affidavits are the long-time friends of affiant Genuino who
had formed a loosely constituted investment group for purposes
of realizing higher yields derivable from pooled investments,
and as the advisor of the group she had in effect chosen
Citibank as the initial repository of their respective monies prior
to the implementation of plans for pooled investments under
Global. Hence, she had known and dealt with said "depositors"
before they became substantial depositors of Citibank. She did
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Labor Law II
not come across them because of Citibank.40 (Emphasis
supplied.)
All told, Citibank had valid grounds to dismiss Genuino on
ground of loss of confidence.
In view of Citibank's failure to observe due process, however,
nominal damages are in order but the amount is hereby raised
to PhP 30,000 pursuant to Agabon v. NLRC. The NLRC's order
for payroll reinstatement is set aside.
In Agabon, we explained:
The violation of the petitioners' right to statutory due process by
the private respondent warrants the payment of indemnity in the
form of nominal damages. The amount of such damages is
addressed to the sound discretion of the court, taking into
account the relevant circumstances. Considering the prevailing
circumstances in the case at bar, we deem it proper to fix it at
P30,000.00. We believe this form of damages would serve to
deter employers from future violations of the statutory due
process rights of employees. At the very least, it provides a
vindication or recognition of this fundamental right granted to
the latter under the Labor Code and its Implementing Rules.41
Thus, the award of PhP 5,000 to Genuino as indemnity for
non-observance of due process under the CA's March 31, 2000

Resolution in CA-G.R. SP No. 51532 is increased to PhP
30,000.
Anent the directive of the NLRC in its September 3, 1994
Decision ordering Citibank "to pay the salaries due to the
complainant from the date it reinstated complainant in the
payroll (computed at P60,000.00 a month, as found by the
Labor Arbiter) up to and until the date of this decision," the Court
hereby cancels said award in view of its finding that the
dismissal of Genuino is for a legal and valid ground.
Ordinarily, the employer is required to reinstate the employee
during the pendency of the appeal pursuant to Art. 223,
paragraph 3 of the Labor Code, which states:
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement
aspect is concerned, shall immediately be executory, even
pending appeal. The employee shall either be admitted back to
work under the same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the employer
shall not stay the execution for reinstatement provided herein.
If the decision of the labor arbiter is later reversed on appeal
upon the finding that the ground for dismissal is valid, then the
employer has the right to require the dismissed employee on
payroll reinstatement to refund the salaries s/he received while
102
Labor Law II
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
42
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.
WHEREFORE, the petitions of Genuino in G.R. Nos.
142732-33 are DENIED for lack of merit. The petitions of
Citibank in G.R. Nos. 142753-54 are GRANTED. The
September 30, 1999 Decision and March 31, 2000 Resolution in
CA-G.R. SP Nos. 51532 and 51533
are AFFIRMED with MODIFICATION that Genuino is entitled to
PhP 30,000 as indemnity for non-observance of due process.
Item (3) in the dispositive portion of the September 3, 1994
Decision of the NLRC in NLRC-NCR Case No. 00-10-06450-93
(CA No. 006947-94) is DELETED and SET ASIDE, and said
NLRC decision is MODIFIED as follows:
WHEREFORE, Judgment is hereby rendered (1) SETTING
ASIDE the appealed decision of the Labor Arbiter; (2)
 103

Labor Law II

DECLARING the dismissal of the complainant valid and legal on
the ground of serious misconduct and breach of trust and
confidence and consequently DISMISSING the complaint a quo;
but (3) ORDERING the respondent bank to pay the
complainant nominal damages in the amount of PhP
30,000.
SO ORDERED.
CARPIO MORALES, J.:
Petitioners Juanito A. Garcia and Alberto J. Dumago assail the
December 5, 2003 Decision and April 16, 2004 Resolution of
the Court of Appeals1 in CA-G.R. SP No. 69540 which granted
the petition for certiorari of respondent, Philippine Airlines, Inc.
(PAL), and denied petitioners’ Motion for Reconsideration,
respectively. The dispositive portion of the assailed Decision
reads:

WHEREFORE, premises considered and in view of the

foregoing, the instant petition is hereby GIVEN DUE COURSE.
The assailed November 26, 2001 Resolution as well as the
January 28, 2002 Resolution of public respondent National
Labor Relations Commission [NLRC] is hereby ANNULLED and
SET ASIDE for having been issued with grave abuse of
discretion amounting to lack or excess of jurisdiction.
Consequently, the Writ of Execution and the Notice of
Garnishment issued by the Labor Arbiter are hereby likewise
G.R. No. 164856 January 20, 2009 ANNULLED and SET ASIDE.

JUANITO A. GARCIA and ALBERTO J. SO ORDERED.2

DUMAGO, Petitioners,
vs. The case stemmed from the administrative charge filed by PAL
PHILIPPINE AIRLINES, INC., Respondent. against its employees-herein petitioners3 after they were
allegedly caught in the act of sniffing shabu when a team of
DECISION company security personnel and law enforcers raided the PAL
Technical Center’s Toolroom Section on July 24, 1995.

After due notice, PAL dismissed petitioners on October 9, 1995
for transgressing the PAL Code of Discipline,4prompting them to
file a complaint for illegal dismissal and damages which was, by
Decision of January 11, 1999,5resolved by the Labor Arbiter in
their favor, thus ordering PAL to, inter alia, immediately comply
with the reinstatement aspect of the decision.
Prior to the promulgation of the Labor Arbiter’s decision, the
Securities and Exchange Commission (SEC) placed PAL
(hereafter referred to as respondent), which was suffering from
severe financial losses, under an Interim Rehabilitation
Receiver, who was subsequently replaced by a Permanent
Rehabilitation Receiver on June 7, 1999.
From the Labor Arbiter’s decision, respondent appealed to the
NLRC which, by Resolution of January 31, 2000, reversed said
decision and dismissed petitioners’ complaint for lack of merit.6
Petitioners’ Motion for Reconsideration was denied by
Resolution of April 28, 2000 and Entry of Judgment was issued
on July 13, 2000.7
Subsequently or on October 5, 2000, the Labor Arbiter issued a
Writ of Execution (Writ) respecting the reinstatement aspect of
his January 11, 1999 Decision, and on October 25, 2000, he
issued a Notice of Garnishment (Notice). Respondent
thereupon moved to quash the Writ and to lift the Notice while
petitioners moved to release the garnished amount.
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Labor Law II
In a related move, respondent filed an Urgent Petition for
Injunction with the NLRC which, by Resolutions of November 26,
2001 and January 28, 2002, affirmed the validity of the Writ and
the Notice issued by the Labor Arbiter but suspended and
referred the action to the Rehabilitation Receiver for appropriate
action.
Respondent elevated the matter to the appellate court which
issued the herein challenged Decision and Resolution nullifying
the NLRC Resolutions on two grounds, essentially espousing
that: (1) a subsequent finding of a valid dismissal removes the
basis for implementing the reinstatement aspect of a labor
arbiter’s decision (the first ground), and (2) the impossibility to
comply with the reinstatement order due to corporate
rehabilitation provides a reasonable justification for the failure to
exercise the options under Article 223 of the Labor Code (the
second ground).
By Decision of August 29, 2007, this Court PARTIALLY
GRANTED the present petition and effectively reinstated the
NLRC Resolutions insofar as it suspended the proceedings, viz:
Since petitioners’ claim against PAL is a money claim for their
wages during the pendency of PAL’s appeal to the NLRC, the
same should have been suspended pending the rehabilitation
proceedings. The Labor Arbiter, the NLRC, as well as the Court
of Appeals should have abstained from resolving petitioners’

case for illegal dismissal and should instead have directed them
to lodge their claim before PAL’s receiver.
However, to still require petitioners at this time to re-file their
labor claim against PAL under peculiar circumstances of the
case– that their dismissal was eventually held valid with only the
matter of reinstatement pending appeal being the issue– this
Court deems it legally expedient to suspend the proceedings in
this case.
WHEREFORE, the instant petition is PARTIALLY GRANTED in
that the instant proceedings herein are SUSPENDED until
further notice from this Court. Accordingly, respondent
Philippine Airlines, Inc. is hereby DIRECTED to quarterly update
the Court as to the status of its ongoing rehabilitation. No costs.
SO ORDERED.8 (Italics in the original; underscoring supplied)
By Manifestation and Compliance of October 30, 2007,
respondent informed the Court that the SEC, by Order of
September 28, 2007, granted its request to exit from
rehabilitation proceedings.9
In view of the termination of the rehabilitation proceedings, the
Court now proceeds to resolve the remaining issuefor
consideration, which is whether petitioners may collect their
wages during the period between the Labor Arbiter’s order of
reinstatement pending appeal and the NLRC decision
105
Labor Law II
overturning that of the Labor Arbiter, now that respondent has
exited from rehabilitation proceedings.
Amplification of the First Ground
The appellate court counted on as its first ground the view that a
subsequent finding of a valid dismissal removes the basis for
implementing the reinstatement aspect of a labor arbiter’s
decision.
On this score, the Court’s attention is drawn to seemingly
divergent decisions concerning reinstatement pending appeal
or, particularly, the option of payroll reinstatement. On the one
hand is the jurisprudential trend as expounded in a line of cases
including Air Philippines Corp. v. Zamora,10 while on the other is
the recent case of Genuino v. National Labor Relations
Commission.11 At the core of the seeming divergence is the
application of paragraph 3 of Article 223 of the Labor Code
which reads:
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement
aspect is concerned, shall immediately be executory, pending
appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the employer

shall not stay the execution for reinstatement provided herein.
(Emphasis and underscoring supplied)
The view as maintained in a number of cases is that:
x x x [E]ven if the order of reinstatement of the Labor Arbiter
is reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the
higher court. On the other hand, if the employee has been
reinstated during the appeal period and such reinstatement
order is reversed with finality, the employee is not required to
reimburse whatever salary he received for he is entitled to such,
more so if he actually rendered services during the
period.12 (Emphasis in the original; italics and underscoring
supplied)
In other words, a dismissed employee whose case was
favorably decided by the Labor Arbiter is entitled to receive
wages pending appeal upon reinstatement, which is
immediately executory. Unless there is a restraining order, it is
ministerial upon the Labor Arbiter to implement the order of
reinstatement and it is mandatory on the employer to comply
therewith.13
The opposite view is articulated in Genuino which states:
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Labor Law II
If the decision of the labor arbiter is later reversed on appeal
upon the finding that the ground for dismissal is valid, then the
employer has the right to require the dismissed employee
on payroll reinstatement to refund the salaries s/he
received while the case was pending appeal, or it can be
deducted from the accrued benefits that the dismissed
employee was entitled to receive from his/her employer under
existing laws, collective bargaining agreement provisions, and
company practices. However, if the employee was reinstated to
work during the pendency of the appeal, then the employee is
entitled to the compensation received for actual services
rendered without need of refund.
Considering that Genuino was not reinstated to work or placed
on payroll reinstatement, and her dismissal is based on a just
cause, then she is not entitled to be paid the salaries stated in
item no. 3 of the fallo of the September 3, 1994 NLRC
Decision.14 (Emphasis, italics and underscoring supplied)
It has thus been advanced that there is no point in releasing the
wages to petitioners since their dismissal was found to be valid,
and to do so would constitute unjust enrichment.
Prior to Genuino, there had been no known similar case
containing a dispositive portion where the employee was
required to refund the salaries received on payroll reinstatement.
In fact, in a catena of cases,15 the Court did not order the refund
of salaries garnished or received by payroll-reinstated

employees despite a subsequent reversal of the reinstatement
order.
The dearth of authority supporting Genuino is not difficult to
fathom for it would otherwise render inutile the rationale of
reinstatement pending appeal.
x x x [T]he law itself has laid down a compassionate policy
which, once more, vivifies and enhances the provisions of the
1987 Constitution on labor and the working man.
xxxx
These duties and responsibilities of the State are imposed not
so much to express sympathy for the workingman as to
forcefully and meaningfully underscore labor as a primary social
and economic force, which the Constitution also expressly
affirms with equal intensity. Labor is an indispensable partner
for the nation's progress and stability.
xxxx
x x x In short, with respect to decisions reinstating employees,
the law itself has determined a sufficiently overwhelming reason
for its execution pending appeal.
xxxx
107
Labor Law II
x x x Then, by and pursuant to the same power (police power),
the State may authorize an immediate implementation, pending
appeal, of a decision reinstating a dismissed or separated
employee since that saving act is designed to stop, although
temporarily since the appeal may be decided in favor of the
appellant, a continuing threat or danger to the survival or even
the life of the dismissed or separated employee and his family.16
The social justice principles of labor law outweigh or render
inapplicable the civil law doctrine of unjust enrichment espoused
by Justice Presbitero Velasco, Jr. in his Separate Opinion. The
constitutional and statutory precepts portray the otherwise
"unjust" situation as a condition affording full protection to labor.
Even outside the theoretical trappings of the discussion and into
the mundane realities of human experience, the "refund
doctrine" easily demonstrates how a favorable decision by the
Labor Arbiter could harm, more than help, a dismissed
employee. The employee, to make both ends meet, would
necessarily have to use up the salaries received during the
pendency of the appeal, only to end up having to refund the sum
in case of a final unfavorable decision. It is mirage of a stop-gap
leading the employee to a risky cliff of insolvency.
Advisably, the sum is better left unspent. It becomes more
logical and practical for the employee to refuse payroll
reinstatement and simply find work elsewhere in the interim, if
any is available. Notably, the option of payroll reinstatement

belongs to the employer, even if the employee is able and raring
to return to work. Prior to Genuino, it is unthinkable for one to
refuse payroll reinstatement. In the face of the grim possibilities,
the rise of concerned employees declining payroll reinstatement
is on the horizon.
Further, the Genuino ruling not only disregards the social justice
principles behind the rule, but also institutes a scheme unduly
favorable to management. Under such scheme, the salaries
dispensed pendente lite merely serve as a bond posted in
installment by the employer. For in the event of a reversal of the
Labor Arbiter’s decision ordering reinstatement, the employer
gets back the same amount without having to spend ordinarily
for bond premiums. This circumvents, if not directly contradicts,
the proscription that the "posting of a bond [even a cash bond]
by the employer shall not stay the execution for
reinstatement."17
In playing down the stray posture in Genuino requiring the
dismissed employee on payroll reinstatement to refund the
salaries in case a final decision upholds the validity of the
dismissal, the Court realigns the proper course of the prevailing
doctrine on reinstatement pending appeal vis-à-vis the effect of
a reversal on appeal.
Respondent insists that with the reversal of the Labor Arbiter’s
Decision, there is no more basis to enforce the reinstatement
aspect of the said decision. In his Separate Opinion, Justice
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Labor Law II
Presbitero Velasco, Jr. supports this argument and finds the
prevailing doctrine in Air Philippines and allied cases
inapplicable because, unlike the present case, the writ of
execution therein was secured prior to the reversal of the Labor
Arbiter’s decision.
The proposition is tenuous. First, the matter is treated as a mere
race against time. The discussion stopped there without
considering the cause of the delay. Second, it requires the
issuance of a writ of execution despite the immediately
executory nature of the reinstatement aspect of the decision. In
Pioneer Texturing Corp. v. NLRC,18which was cited
in Panuncillo v. CAP Philippines, Inc.,19 the Court observed:
x x x The provision of Article 223 is clear that an award [by the
Labor Arbiter] for reinstatement shall be immediately executory
even pending appeal and the posting of a bond by the employer
shall not stay the execution for reinstatement. The legislative
intent is quite obvious, i.e., to make an award of reinstatement
immediately enforceable, even pending appeal. To require the
application for and issuance of a writ of execution as
prerequisites for the execution of a reinstatement award would
certainly betray and run counter to the very object and intent of
Article 223, i.e., the immediate execution of a reinstatement
order. The reason is simple. An application for a writ of
execution and its issuance could be delayed for numerous
reasons. A mere continuance or postponement of a scheduled
hearing, for instance, or an inaction on the part of the Labor

Arbiter or the NLRC could easily delay the issuance of the writ
thereby setting at naught the strict mandate and noble purpose
envisioned by Article 223. In other words, if the requirements of
Article 224 [including the issuance of a writ of execution] were to
govern, as we so declared in Maranaw, then the executory
nature of a reinstatement order or award contemplated by
Article 223 will be unduly circumscribed and rendered
ineffectual. In enacting the law, the legislature is presumed to
have ordained a valid and sensible law, one which operates no
further than may be necessary to achieve its specific purpose.
Statutes, as a rule, are to be construed in the light of the
purpose to be achieved and the evil sought to be remedied. x x
x In introducing a new rule on the reinstatement aspect of a
labor decision under Republic Act No. 6715, Congress should
not be considered to be indulging in mere semantic exercise. x x
x20 (Italics in the original; emphasis and underscoring supplied)
The Court reaffirms the prevailing principle that even if the order
of reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the
wages of the dismissed employee during the period of appeal
until reversal by the higher court.21 It settles the view that the
Labor Arbiter's order of reinstatement is immediately executory
and the employer has to either re-admit them to work under the
same terms and conditions prevailing prior to their dismissal, or
to reinstate them in the payroll, and that failing to exercise the
options in the alternative, employer must pay the employee’s
salaries.22
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Labor Law II
Amplification of the Second Ground
The remaining issue, nonetheless, is resolved in the negative
on the strength of the second ground relied upon by the
appellate court in the assailed issuances. The Court sustains
the appellate court’s finding that the peculiar predicament of a
corporate rehabilitation rendered it impossible for respondent to
exercise its option under the circumstances.
The spirit of the rule on reinstatement pending appeal animates
the proceedings once the Labor Arbiter issues the decision
containing an order of reinstatement. The immediacy of its
execution needs no further elaboration. Reinstatement pending
appeal necessitates its immediate execution during the
pendency of the appeal, if the law is to serve its noble purpose.
At the same time, any attempt on the part of the employer to
evade or delay its execution, as observed in Panuncillo and as
what actually transpired in Kimberly,23 Composite,24 Air
25 26
Philippines, and Roquero, should not be countenanced.
After the labor arbiter’s decision is reversed by a higher
tribunal, the employee may be barred from collecting the
accrued wages, if it is shown that the delay in enforcing the
reinstatement pending appeal was without fault on the part
of the employer.
The test is two-fold: (1) there must be actual delay or the fact
that the order of reinstatement pending appeal was not

executed prior to its reversal; and (2) the delay must not be due
to the employer’s unjustified act or omission. If the delay is due
to the employer’s unjustified refusal, the employer may still be
required to pay the salaries notwithstanding the reversal of the
Labor Arbiter’s decision.
In Genuino, there was no showing that the employer refused to
reinstate the employee, who was the Treasury Sales Division
Head, during the short span of four months or from the
promulgation on May 2, 1994 of the Labor Arbiter’s Decision up
to the promulgation on September 3, 1994 of the NLRC
Decision. Notably, the former NLRC Rules of Procedure did not
lay down a mechanism to promptly effectuate the self-executory
order of reinstatement, making it difficult to establish that the
employer actually refused to comply.
In a situation like that in International Container Terminal
Services, Inc. v. NLRC27 where it was alleged that the employer
was willing to comply with the order and that the employee
opted not to pursue the execution of the order, the Court upheld
the self-executory nature of the reinstatement order and ruled
that the salary automatically accrued from notice of the Labor
Arbiter's order of reinstatement until its ultimate reversal by the
NLRC. It was later discovered that the employee indeed moved
for the issuance of a writ but was not acted upon by the Labor
Arbiter. In that scenario where the delay was caused by the
Labor Arbiter, it was ruled that the inaction of the Labor Arbiter
who failed to act upon the employee’s motion for the issuance of
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Labor Law II
a writ of execution may no longer adversely affect the cause of
the dismissed employee in view of the self-executory nature of
the order of reinstatement.28
The new NLRC Rules of Procedure, which took effect on
January 7, 2006, now require the employer to submit a report of
compliance within 10 calendar days from receipt of the Labor
Arbiter’s decision,29 disobedience to which clearly denotes a
refusal to reinstate. The employee need not file a motion for the
issuance of the writ of execution since the Labor
Arbiter shall thereafter motu proprio issue the writ. With the
new rules in place, there is hardly any difficulty in
determining the employer’s intransigence in immediately
complying with the order.
In the case at bar, petitioners exerted efforts30 to execute the
Labor Arbiter’s order of reinstatement until they were able to
secure a writ of execution, albeit issued on October 5, 2000
after the reversal by the NLRC of the Labor Arbiter’s decision.
Technically, there was still actual delay which brings to the
question of whether the delay was due to
respondent’s unjustified act or omission.
It is apparent that there was inaction on the part of respondent
to reinstate them, but whether such omission was justified
depends on the onset of the exigency of corporate
rehabilitation.

It is settled that upon appointment by the SEC of a rehabilitation
receiver, all actions for claims before any court, tribunal or board
against the corporation shall ipso jure be suspended.31 As
stated early on, during the pendency of petitioners’ complaint
before the Labor Arbiter, the SEC placed respondent under an
Interim Rehabilitation Receiver. After the Labor Arbiter rendered
his decision, the SEC replaced the Interim Rehabilitation
Receiver with a Permanent Rehabilitation Receiver.
Case law recognizes that unless there is a restraining order, the
implementation of the order of reinstatement is ministerial and
mandatory.32 This injunction or suspension of claims by
legislative fiat33 partakes of the nature of a restraining order that
constitutes a legal justification for respondent’s non-compliance
with the reinstatement order. Respondent’s failure to exercise
the alternative options of actual reinstatement and payroll
reinstatement was thus justified. Such being the case,
respondent’s obligation to pay the salaries pending appeal, as
the normal effect of the non-exercise of the options, did not
attach.
While reinstatement pending appeal aims to avert the
continuing threat or danger to the survival or even the life of the
dismissed employee and his family, it does not contemplate the
period when the employer-corporation itself is similarly in
a judicially monitored state of being resuscitated in order to
survive.
111
Labor Law II
The parallelism between a judicial order of corporation
rehabilitation as a justification for the non-exercise of its options,
on the one hand, and a claim of actual and imminent substantial
losses as ground for retrenchment, on the other hand, stops at
the red line on the financial statements. Beyond the analogous
condition of financial gloom, as discussed by Justice Leonardo
Quisumbing in his Separate Opinion, are more salient
distinctions. Unlike the ground of substantial losses
contemplated in a retrenchment case, the state of corporate
rehabilitation was judicially pre-determined by a competent
court and not formulated for the first time in this case by
respondent.
More importantly, there are legal effects arising from a judicial
order placing a corporation under rehabilitation. Respondent
was, during the period material to the case, effectively deprived
of the alternative choices under Article 223 of the Labor Code,
not only by virtue of the statutory injunction but also in view of
the interim relinquishment of management control to give way to
the full exercise of the powers of the rehabilitation receiver. Had
there been no need to rehabilitate, respondent may have opted
for actual physical reinstatement pending appeal to optimize the
utilization of resources. Then again, though the management
may think this wise, the rehabilitation receiver may decide
otherwise, not to mention the subsistence of the injunction on
claims.
 112

Labor Law II

In sum, the obligation to pay the employee’s salaries upon the

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

WHEREFORE, the petition is PARTIALLY DENIED. Insofar as

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

SO ORDERED.

G.R. No. 173076 October 10, 2007

MT. CARMEL COLLEGE, petitioner,

vs.
JOCELYN RESUENA, EDDIE VILLALON, SYLVIA SEDAYON
and ZONSAYDA EMNACE, respondents.

DECISION
CHICO-NAZARIO, J.:
In this Petition for Review on Certiorari under Rule 45 of the
Revised Rules of Court, petitioner seeks the reversal of the
Decision1 dated 2 June 2006 of the Court of Appeals in CA-G.R.
CEB-SP No. 01615 entitled, Mt. Carmel College v. National
Labor Relations Commission, Labor Arbiter Phibun D. Pura,
Jocelyn Resuena, et al. Petitioner seeks remedy from this Court
for an alleged illegal execution of the Decision2 dated 30
October 2001 by the National Labor Relations Commission
(NLRC) in NLRC CASE No. V-000176-2000 (RAB CASE Nos.
06-06-10393-98; 06-06-10394-98; 06-06-10395-98;
06-06-10414-98) as affirmed by the Court of Appeals in CA-G.R.
SP No. 80639 in a Decision3 dated 17 March 2004, insisting it
was not in accord with the dispositive portion thereof. Petitioner
is not appealing the judgment itself but the manner of execution
of the same.
The following are the factual antecedents of the instant Petition:
Petitioner Mt. Carmel College is a private educational institution.
It is administered by the Carmelite Fathers at New Escalante,
Negros Occidental. Respondents were employees of petitioner,
namely: Jocelyn Resuena (Accounting Clerk), Eddie Villalon
(Elementary Department Principal); Sylvia Sedayon (Treasurer),
and Zonsayda Emnace (Secretary to the Director).
113
Labor Law II
On 21 November 1997, respondents, together with several
faculty members, non-academic personnel, and other students,
participated in a protest action against petitioner. Thereafter,
petitioner’s Director, Rev. Fr. Modesto E. Malandac, issued a
Memorandum to each of the respondents. The Memorandum
directed respondents to explain in writing why they should not
be dismissed for loss of trust and confidence for joining the
protest action against the school administration. Petitioner
maintained that respondents were occupying positions of highly
confidential nature. After a hearing conducted by petitioner’s
Fact-Finding Committee and submission of its Report on 25
April 1998, recommending dismissal or suspension of
respondents, petitioner issued written notices of termination to
respondents on 7 May 1998. Respondents were terminated by
petitioner on 15 May 1998.
Separate complaints were filed by each of the four respondents
against petitioner before Regional Arbitration Branch VI of the
NLRC in Bacolod City. Respondents charged petitioner with
illegal dismissal and claimed 13thmonth pay, separation pay,
damages and attorney’s fees. The cases were docketed as
RAB Cases No. 06-06-10393-98, 06-06-10394-98,
06-06-10395-98, and 06-06-10414-98. All four cases were
consolidated, and Labor Arbiter Ray T. Drilon thereafter issued
a Decision4 dated 25 May 1999 affirming the validity of
respondents’ termination by petitioner on the ground of loss of
trust and confidence. Although the Decision found respondents
to have been legally dismissed, as equitable relief, however,

they were awarded separation pay computed at one month pay
for every year of service,5 their proportionate 13th month pay,
and attorney’s fees. Their claims for moral and exemplary
damages were denied. In issuing the aforesaid Decision, the
Labor Arbiter ruled:
WHEREFORE, premises considered, judgment is hereby
rendered ordering [herein petitioner] Mount Carmel College
represented by Fr. Modesto Malandac to pay [herein
respondents] Jocelyn Resuena, Zonsayda Emnace, Eddie
Villalon and Sylvia Sedayon, their respective 13th month pay,
separation pay and attorney’s fee in the total sum of THREE
HUNDRED THIRTY-FOUR THOUSAND EIGHT HUNDRED
SEVENTY-FIVE PESOS AND 67/100 (P334,875.47) to be
deposited with this office within ten (10) days from receipt of this
decision.
The complaint for moral and exemplary damages is hereby
dismissed for lack of legal basis.
All other claims are hereby dismissed for lack of merit.6
On 9 September 1999, Labor Arbiter Drilon issued to the parties
a Notice of Judgment/Decision of his 25 May 1999 Decision.
The notice indicated that a "decision of the Labor Arbiter
reinstating a dismissed or separated employee, in so far as the
reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be
114
Labor Law II
admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or at the option of
the employee (sic) merely reinstated in the payroll."7
In the meantime, petitioner appealed to the NLRC Fourth
Division in Cebu City, seeking the reversal of the portion of the
Labor Arbiter’s Decision dated 25 May 1999 awarding
separation pay to respondents. The NLRC dismissed the appeal
in its Decision dated 30 October 2001. In the same Decision
dismissing the appeal, the NLRC reversed and modified the 25
May 1999 Decision of the Labor Arbiter, and declared the
termination of respondents to be illegal. It ordered the
reinstatement of respondents, with payment of backwages or
payment of separation pay in lieu thereof. The pertinent portion
of the 30 October 2001 NLRC Decision reads:
We rule that complainants were illegally dismissed and must
therefore be ordered reinstated with payment of backwages
from the time they were illegally dismissed up to the time of their
actual reinstatement.
All other claims are hereby dismissed for lack of merit.
WHEREFORE, premises considered the instant appeal is
hereby DISMISSED for lack of merit and the appealed decision
is hereby AFFIRMED with modification ordering the [herein
petitioner] the payment of the backwages of the [herein
respondents] from May 15, 1998 up to May 25, 1999, further

directing the reinstatement of the [respondents] to their original
positions without loss of seniority or in lieu thereof the payment
of their separation pay as computed in the appealed decision.8
Petitioner filed a Motion for Reconsideration of the 30 October
2001 Decision of the NLRC. The said Motion was denied in the
19 June 2003 Resolution of the NLRC.
The case was elevated to the Court of Appeals via a Special
Civil Action for Certiorari and Prohibition, docketed as CA-G.R.
SP No. 80639 where petitioner assailed the aforementioned
NLRC Decision dated 30 October 2001 and Resolution dated
19 June 2003, arguing that there is more than enough basis for
loss of trust and confidence as ground for dismissing
respondents. It also reiterated compliance with the twin
requirements of notice and hearing. The Court of Appeals
denied the petition in a Decision promulgated on 17 March 2004,
ruling thus:
Consequently, we find no grave abuse of discretion committed
by the NLRC in ruling that [herein respondents] have been
illegally dismissed. Likewise, said [NLRC] correctly held that
even if such participation of [respondents] in the protest picket is
rather improper under the circumstances or disappointing to the
School Administrator who had rightly expected them to take the
side of the administration or at least stayed neutral on the
demand for ouster of Fr. Malandac and Barairo, dismissal is
definitely too harsh where a less punitive action such as
115
Labor Law II
reprimand or disciplinary action would have been sufficient.
Considering the long years of faithful service of [respondents] in
the School without previous record of misconduct, as duly noted
by the NLRC in its decision, their termination on the basis of
alleged loss of confidence by taking part in an otherwise
legitimate and constitutionally-protected right to free speech and
peaceful assembly, is certainly illegal and unjustified.
xxxx
Having been illegally dismissed, [respondents] are entitled to
back wages from the time of their termination until reinstatement,
and if reinstatement is no longer possible, the grant of
separation pay equivalent to one (1) month for every year of
service. However, in this case since the Labor Arbiter did not
order reinstatement, the NLRC correctly excluded the period of
the appeal in the computation of back wages due to
[respondents].
Finally, on the prayer for injunctive relief sought by petitioner on
the ground that [public respondent] Labor Arbiter exceeded his
jurisdiction in issuing the writ of execution despite the fact that
his decision did not order reinstatement and that he is bereft of
authority to implement the decision of the NLRC (Fourth
Division).
xxxx

Considering that there is already an entry of judgment on the
Decision dated October 30, 2001, and in view of Our disposition
of this petition, we find no more obstacle for the enforcement of
the said judgment even pending appeal, in accordance with
Sections 1 and 2, Rule VIII of the NLRC Rules of Procedure, as
amended, as well as Sections 2, 4 and 6, Rule III of the NLRC
Manual on Execution of Judgment.
xxxx
WHEREFORE, premises considered, the present petition is
hereby DENIED DUE COURSE and accordingly DISMISSED
for lack of merit. The assailed Decision and Resolution are
AFFIRMED.9
No Motion for Reconsideration of the afore-quoted Court of
Appeals Decision in CA-G.R. SP No. 80639 was filed and it
became final and executory on 14 April 2004.
At about the same time as the foregoing developments in
CA-G.R. SP No. 80639, Labor Arbiter Phibun D. Pura issued an
Order on 19 May 2003 opining on the self-executory nature of a
reinstatement order:
To be sure the Court has not been consistent in its interpretation
of Art. 223. The nagging issue has always been whether the
reinstatement order is self-executory. Citing the divergent views
of the court beginning with Inciong v. NLRC followed by the
116
Labor Law II
deviation in interpretation in Maranaw Hotel Corporation
(Century Park Sheraton Manila) v. NLRC, as reiterated and
adopted in Archilles Manufacturing Corporation v. NLRC and
Purificacion Ram v. NLRC, the Court in the 1997 Pioneer case
has laid down the doctrine that henceforth an Order or award for
reinstatement is self-executory, meaning that it does not require
a writ of execution, much less a motion for its issuance, as
maintained by petitioner. x x x.
Successive writs of execution pertaining to the backwages and
accrued salaries of the respondents were issued by Labor
Arbiter Pura on these dates: 9 June 2003, 10 10 December
2003,11 and 20 January 2004.12
The first writ of execution, issued on 9 June 2003, directed the
sheriff to collect from petitioner, the amount of P503,028.05
representing backwages from 15 May 1998 to 25 May 1999.
Based on the Sheriff’s Report dated 25 June 2003,
reinstatement had not been effected. There was a Notice of
Garnishment issued to the Equitable-PCI Bank Escalante
Branch. Labor Arbiter Pura ordered the release of the garnished
amount of P508,168.05 with the said bank for deposit to the
Cashier of NLRC Regional Arbitration Branch VI in Bacolod City.
Petitioner moved to quash the Writ of Execution dated 9 June
2003. It was denied.
By 4 December 2003, the NLRC entered in its Book of Entries of
Judgment its Decision dated 30 October 2001. The records of

the case were endorsed back to NLRC Regional Arbitration
Branch VI for the execution of its final and executory decision,
as no restraining order was issued by the Court of Appeals.
After an exchange of pleadings, respondents filed
an Ex-Parte Motion for Issuance of Writ of Execution with the
Labor Arbiter considering that the Entry of Judgment was
already issued by the NLRC. On 10 December 2003, the Labor
Arbiter granted the Motion and issued the second Writ of
Execution. On motion of respondents, the Labor Arbiter ordered
the release to them of the garnished amount of P503,028.05
deposited with the Cashier of NLRC Regional Arbitration Branch
VI.
However, the foregoing amount was considered to be only a
partial payment of the monetary awards due the respondents
and the unpaid balance thereof continued to grow
to P1,307,806.50. Respondents thus filed a motion for partial
writ of execution, which the Labor Arbiter granted by issuing the
third Writ of Execution on 20 January 2004.13 Under the
foregoing writs of execution, the aggregate amount
of P1,736.592.0814 was garnished by Bailiff/Acting Sheriff
Romeo D. Pasustento, representing respondents’ accrued
salaries, backwages, attorney’s fees and sheriff’s fees
computed from the promulgation of the NLRC Decision 30
October 2001.
117
Labor Law II
Respondents filed on 14 July 2004 yet another Motion to Issue
a Writ of Execution to collect backwages from 1 January 2004 to
30 June 2004. Petitioner opposed the motion, but the Motion to
Issue a Writ of Execution was granted.
On 31 January 2005, Labor Arbiter Pura issued an
Order15 adopting the computation of the Fiscal Examiner of
NLRC Regional Arbitration Branch VI and issuing a writ of
execution to enforce the NLRC Decision dated 30 October 2001.
The dispositive portion of the said Order reads:
In light of the foregoing, we have no choice but to adopt the
computation of the RAB Fiscal Examiner, hereto attached and
forming part of the record of these cases and conformably
thereto, we grant the Motion to Issue Writ of Execution on
backwages for the period stated in this computation, taking into
consideration the grant of differentials as there are benefits
which accrued to the [herein respondents] and which they
should have enjoyed had they been employed and/or reinstated,
as the case may be, and such other amount as may accrue until
actually reinstated or in lieu of reinstatement, to pay
[respondents] separation pay to be computed at one (1) month
salary for every year of service in addition to backwages the
formula adopted by the Labor Arbiter in the Decision dated May
25, 1999, page 7, paragraph 1.
Let therefore a Writ of Execution be, as it is hereby issued to
enforce judgment in the above entitled cases.16

On 8 February 2005, petitioner filed a Motion for
Reconsideration of the foregoing Order contending that the
judgment of the NLRC mandated the payment of separation pay
as computed in the appealed decision. Respondents likewise
filed a Manifestation and Motion to include the month of
November 2004 in the computation. In an Order dated 10
February 2005, the Labor Arbiter denied the petitioner’s Motion
for Reconsideration. On 22 February 2005, he issued an Alias
Writ of Execution17 for the collection from petitioner of the
amount of P1,131,035.00 representing respondents’
backwages, separation pay, and attorney’s fees. Petitioner filed
a Motion to Quash the Alias Writ of Execution on 17 March
2005.18
On 15 April 2005, the Labor Arbiter issued an Order where it
found no compelling reason to warrant the grant of the Motion to
Quash the Alias Writ of Execution. The afore-stated Order thus
reads:
WHEREFORE, for lack of merit the Motion to Quash the Alias
Writ dated March 17, 2005 is denied. [Respondents’] Motion to
Include February and March 2005 in the Computation of wages
is hereby GRANTED. The entry of appearance of the
collaborating counsel is duly noted.19
From the said Order of the Labor Arbiter, petitioner filed with the
NLRC an appeal with an application for issuance of a writ of
preliminary injunction on the execution of judgment, docketed
118
Labor Law II
as NLRC Case No. V-000377-05. Petitioner assailed the 15
April 2005 Order of the Labor Arbiter averring that the latter
seriously committed errors when he ordered the payment and
garnishment of backwages beyond the period 15 May 1998 to
25 May 1999. The NLRC dismissed the petitioner’s appeal in a
Resolution20 dated 15 August 2005 for lack of merit. Petitioner
filed a Motion for Reconsideration but it was denied by the
NLRC in a Resolution dated 30 November 2005, disposed of as
follows:
WHEREFORE, premises considered, the appeal of
respondents is hereby DISMISSED for lack of merit. The 15
April 2005 Order of Labor Arbiter Phibun Pura is AFFIRMED.21
From the foregoing, petitioner filed with the Court of Appeals a
Special Civil Action for Certiorari and Prohibition, docketed as
CA-G.R. CEB-SP No. 01615, praying for the setting aside and
nullification of the Resolutions dated 15 August 2005 and 30
November 2005 of the NLRC in NLRC Case No. V-000377-05.
Petitioner contended that the NLRC acted with grave abuse of
discretion when it denied its appeal and motion for
reconsideration and in not ruling that there was already
satisfaction of judgment. The crux of petitioner’s case, as
succinctly worded by the Court of Appeals in CA-G.R. CEB-SP
No. 01615:
[P]etitioner seeks to annul and set aside the resolutions dated
August 15, 2005 and November 30, 2005 of the respondent

NLRC in NLRC Case No. V-000377-05 when the latter refuses
to invalidate the various writs of executions and to refund
petitioner of whatever excess there might be on the theory that
the execution done by the respondent Labor Arbiter was illegal
and in fact goes beyond what is stated in the decision dated
October 30, 2001 of the respondent NLRC in NLRC Case No.
V-000176-2000.22
The Court of Appeals eventually dismissed CA-G.R. CEB-SP
No. 01615, ruling as follows:
Thus, petitioner’s avowal that their liability for private
respondents’ backwages is limited from May 15, 1998 up to May
25, 1999 is untenable on these grounds:
First, there is no showing, in the case at bench, that petitioner
exercised its option to reinstate private respondents to their
former position or to grant them separation pay. Accordingly,
backwages have to be granted to private respondents until their
reinstatement to their former position is effected or upon
petitioner’s payment of separation pay to private respondents if
reinstatement is no longer feasible; and
Second, the decision dated March 17, 2004 of the 17 th Division
of the Court of Appeals in CA-G.R. SP No. 80639 acquiesced
the propriety of the issuance of the writs of execution by the
respondent labor arbiter on June 9, 2003, December 10, 2003
and January 30, 2004. On April 14, 2004, the said decision
119
Labor Law II
which sanctioned the payment of backwages even beyond May
25, 1999, became final and executory x x x.
xxxx
In light of the foregoing disquisition, we hereby find public
respondent NLRC to have acted accordingly and without grave
abuse of discretion when it issued the questioned Resolutions
dated August 15, 2005 and November 30, 2005, respectively.
Grave abuse of discretion means such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction, or, in
other words where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and
it must be so patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform the duty enjoined
or to act at all in contemplation of law. It is not sufficient that a
tribunal, in the exercise of power, abused its discretion; such
abuse must be grave.
WHEREFORE, in view of the foregoing, the present petition is
hereby DISMISSED and the assailed Resolutions dated August
15, 2005 and November 30, 2005, respectively, issued by the
respondent NLRC in NLRC Case No. V-000377-05 are hereby
AFFIRMED.23
Hence, petitioner filed the instant Petition for Review on
Certiorari, raising the following issues:

I.
THE HONORABLE COURT OF APPEALS ERRED IN
UPHOLDING THE LABOR ARBITER AND THE NLRC THAT
THE AWARD OF BACKWAGES GOES BEYOND THE
PERIOD FROM 15 MAY 1998 UP TO 25 MAY 1999 ON THE
SUPPOSITION THAT REINSTATEMENT IS
SELF-EXECUTORY AND DOES NOT NEED A WRIT OF
EXECUTION FOR ITS ENFORCEMENT.
II.
THE HONORABLE COURT OF APPEALS ERRED IN NOT
FINIDING THAT THE CONTINUING GRANT AND AWARD OF
BACKWAGES UP TO THE PRESENT IS CONTRARY TO LAW
AND JURISPRUDENCE AS LAID DOWN BY THIS
HONORABLE SUPREME COURT.
Petitioner prays that this Court render judgment (a) annulling
and setting aside the assailed Decision on 02 June 2006 of the
Court of Appeals in CA-G.R. CEB-SP No. 01615 and all its
orders and issuances; (b) ordering that backwages be
computed and executed corresponding only to the period from
15 May 1998 to 25 May 1999; (c) ordering that separation pay
be computed based on the computation as originally submitted
by the Labor Arbiter, P344,875.47, which corresponds to the
date of respondents’ employment until 15 May 1998; (d) that no
other award except for backwages for the period 15 May 1998
120
Labor Law II
to 25 May 1999 and separation pay amounting to P344,875.47
shall be paid by petitioner; and (e) that the respondents be
ordered to refund and pay the alleged excess in the amounts
garnished by virtue of the Writs of Execution dated 9 June 2003,
10 December 2003, and 30 January 2004.
In sum, the resolution of this petition hinges on the following
issues: (1) whether reinstatement in the instant case is
self-executory and does not need a writ of execution for its
enforcement; and (2) whether the continuing award of
backwages is proper.
Petitioner insists that what is at issue is the manner of execution
of the NLRC Decision dated 30 October 2001 in NLRC CASE
No. V-000176-2000 (RAB CASE Nos. 06-06-10393-98;
06-06-10394-98; 06-06-10395-98; 06-06-10414-98), as affirmed
by the Decision dated 17 March 2004 of the Court of Appeals in
CA-G.R. No. 80639.
In ruling on the consolidated complaints filed by the four
respondents, Labor Arbiter Drilon found that they were not
illegally dismissed but ordered that they be awarded 13 th month
pay, separation pay and attorney’s fees in the amount
of P334,875.47. Upon appeal to the NLRC, the NLRC reversed
the findings of the Labor Arbiter ruling that the termination of
respondents was illegal and ordering the payment of
backwages of respondents from 15 May 1998 up to 25 May
1999. It further directed the reinstatement of respondents or

payment of separation pay, with backwages. This was affirmed
by the Court of Appeals.
While petitioner concedes that the case pertaining to the
complaints for illegal dismissal filed by the respondents before
the Labor Arbiter had been resolved with finality by the Court of
Appeals in CA-G.R. No. 80639, no other remedy having been
taken therefrom, it however assails the correctness and validity
of the execution of the judgment therein. Petitioner avers that
the Court of Appeals erred in upholding the Labor Arbiter and
the NLRC that the award of backwages goes beyond the period
15 May 1998 to 25 May 1999 on the supposition that
reinstatement is self-executory and does not need a writ of
execution for its enforcement. Petitioner postulates that the
Labor Arbiter went beyond the terms of the NLRC Decision, as
affirmed by the Court of Appeals, and erroneously used as
bases inapplicable law24 and jurisprudence25 in the execution of
the same. Petitioner contends that the Labor Arbiter’s reliance
on Pioneer Texturizing Corp. v. National Labor Relations
Commission26 is misplaced, for it applied Article 223 of the
Labor Code 27 since reinstatement was ordered at the Labor
Arbiter’s level while in the instant case, reinstatement was
ordered upon appeal to the NLRC. Petitioner argues that the
relevant statutory and regulatory provisions herein are Article
224 of the Labor Code,28 and Rule III of the NLRC Manual for
Execution of Judgment,29 given that there was no order of
reinstatement at the Labor Arbiter level but only at the NLRC
level. Petitioner insists that, applying Article 224 of the Labor
121
Labor Law II
Code in the instant case, any reinstatement aspect of the NLRC
Decision, as affirmed by the Court of Appeals, should have
been done through the issuance of a Writ of Execution as it is
no longer self-executory. It furthermore contends that it was
impossible to reinstate respondents, whether by way of an
immediate execution or by way of a self-executory nature, since
there was nothing to execute pending appeal because there
was no order for reinstatement.
Petitioner vehemently raises the argument that the award of
backwages subject to execution is limited to the period prior to
the appeal and does not include the period during the pendency
of the appeal, on the contention that reinstatement during
appeal is warranted only when the Labor Arbiter rules that the
dismissed employee should be reinstated. In support of its
foregoing argument, petitioner invokes Filflex Industrial &
Manufacturing Corporation v. National Labor Relations
Commission30 where this Court ruled:
In other words, reinstatement during appeal is warranted only
when the labor arbiter (LA) himself rules that the dismissed
employee should be reinstated. In the present case, neither the
dispositive portion nor the text of the labor arbiter’s decision
ordered the reinstatement of private respondent. Further, the
back wages granted to private respondent were specifically
limited to the period prior to the filing of the appeal with
Respondent NLRC. In fact, the LA’s decision ordered her
separation from service for the parties’ "mutual advantage and

most importantly to physical and health welfare of the
complainant." Hence, it is an error and an abuse of discretion for
the NLRC to hold that the award of limited back wages, by
implication, included an order for private respondent’s
reinstatement.
An order for reinstatement must be specifically declared and
cannot be presumed; like back wages, it is a separate and
distinct relief given to an illegally dismissed employee. There
being no specific order for reinstatement and the order being for
complainant’s separation, there can be no basis for the award of
salaries/back wages during the pendency of appeal.
Petitioner’s reliance on Filflex is misplaced and inapplicable to
the case at bar. Indeed in Filflex, this Court ruled that the award
of backwages is limited to the period prior to the filing of the
appeal with the NLRC. This Court had declared in the aforesaid
case that reinstatement during appeal is warranted only when
the Labor Arbiter himself rules that the dismissed employee
should be reinstated. But this was precisely because on appeal
to the NLRC, it found that there was no illegal dismissal; thus,
neither reinstatement nor backwages may be awarded. In
fact, Filfexdeleted the award of backwages granted during
appeal, reiterating that an award of backwages by the NLRC
during the period of appeal is totally inconsistent with its finding
of a valid dismissal. In the instant petition, the NLRC Decision
dated 30 October 2001 finding the termination of respondents
122
Labor Law II
illegal, had the effect of reversing Labor Arbiter Drilon’s
Decision dated 25 May 1999.
This Court sees no cogent reason as to the relevance of a
discussion on whether or not reinstatement is self-executory.
However, since petitioner raised this issue, this Court has opted
to discuss it. Verily, Article 223 of the Labor Code is not
applicable in the instant case. The said provision stipulates that
the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending
appeal.
Petitioner contends that the statutory provision applicable is
Article 224 of the Labor Code, as well as Rule III, Section 2(b) of
the NLRC Manual on Execution of Judgment, because the case
was decided on appeal. Furthermore, it is a decision which is of
a final and executory nature. The provisions invoked by
petitioner reads:
Art. 224. Execution of decisions, orders or awards. -- (a) The
Secretary of Labor and Employment or any Regional Director,
the Commission or any Labor Arbiter, or med-arbiter or
voluntary arbitrator may, motu proprio or on motion of any
interested party, issue a writ of execution on a judgment within
five (5) years from the date it becomes final and executory x x
x.31

If the execution be for the reinstatement of any person to any
position, office or employment, such writ shall be served by the
sheriff upon the losing party or upon any other person required
by law to obey the same, and such party or person may be
punished for contempt if he disobeys such decisions, order for
reinstatement.32
The records of the case indicate that when Labor Arbiter Drilon
issued its 25 May 1999 Decision, there was no order of
reinstatement yet although the dispositive portion of the 31
January 2005 Order issued by Labor Arbiter Pura already
provided for reinstatement or payment of separation pay, to wit:
In light of the foregoing, we have no choice but to adopt the
computation of the RAB Fiscal Examiner, hereto attached and
forming part of the record of these cases and conformably
thereto, we grant the Motion to Issue Writ of Execution on
backwages for the period stated in this computation, taking into
consideration the grant of differentials as there are benefits
which accrued to the complainants and which they should have
enjoyed had they been employed and/or reinstated, as the case
may be, and such other amount as may accrue until actually
reinstated or in lieu of reinstatement, to pay complainants
separation pay to be computed at one (1) month salary for every
year of service in addition to backwages the formula adopted by
the Labor Arbiter in the Decision dated May 25, 1999, page 7,
paragraph 1.
123
Labor Law II
Let therefore a Writ of Execution be, as it is hereby issued to
enforce judgment in the above entitled cases.33
Art. 223 of the Labor Code provides that reinstatement is
immediately executory even pending appeal only when the
Labor Arbiter himself ordered the reinstatement. In this case,
the original Decision of Labor Arbiter Drilon did not order
reinstatement. Reinstatement in this case was actually ordered
by the NLRC, affirmed by the Court of Appeals. The order of
Labor Arbiter Pura on 31 January 2005 directing reinstatement
was issued after the Court of Appeals Decision dated 17 March
2004 which affirmed the NLRC’s order of reinstatement. Thus,
Art. 223 finds no application in the instant case. Considering
that the order for reinstatement was first decided upon appeal to
the NLRC and affirmed with finality by the Court of Appeals in
CA-G.R. SP 80369 on 17 March 2004, petitioner rightly invoked
Art. 224 of the Labor Code. As contemplated by Article 224 of
the Labor Code, the Secretary of Labor and Employment or any
Regional Director, the Commission or any Labor Arbiter, or
med-arbiter or voluntary arbitrator may, motu proprio or on
motion of any interested party, issue a writ of execution on a
judgment within five (5) years from the date it becomes final and
executory. Consequently, under Rule III of the NLRC Manual on
the Execution of Judgment, it is provided that if the execution be
for the reinstatement of any person to a position, an office or an
employment, such writ shall be served by the sheriff upon the
losing party or upon any other person required by law to obey
the same, and such party or person may be punished for

contempt if he disobeys such decision or order for
reinstatement.34
However, as we can glean from the succeeding discussion, the
above findings will not affect the award of backwages for the
period beyond 25 May 1999.
Anent the second issue, petitioner contends that the 25 May
1999 Decision of Labor Arbiter Drilon did not order the
reinstatement of respondents. Petitioner posits that since there
was no finding of illegal dismissal at the Labor Arbiter’s level,
then it follows that there was no reinstatement aspect, and its
liability for backwages is limited to the period from 15 May 1998
up to 25 May 1999, i.e., from dismissal to promulgation of the
Labor Arbiter’s Decision only, as allegedly determined by the
NLRC in its Decision dated 30 October 2001. It argues that
while the said NLRC Decision awarded backwages from 15 May
1998 to 25 May 1999 only, the Writs of Execution issued
pursuant thereto ordered the payment of backwages way
beyond the period stated in the Decision35 it is supposed to
execute.
Petitioner’s argument is absurd. Abbott v. National Labor
Relations Commission,36 as cited by petitioner, declared that
there exists a big difference when what is sought to be reviewed
is the manner of execution of a decision and not the decision
itself. "While it is true that the decision itself has become final
and executory and so can no longer be challenged, there is no
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Labor Law II
question that it must be enforced in accordance with its terms
and conditions. Any deviation therefrom can be the subject of a
proper appeal."37 In the instant case, however, the manner of
execution falls squarely within the terms of the Decision it seeks
to implement.
The 30 October 2001 NLRC Decision ruled as follows:
We rule that complainants were illegally dismissed and must
therefore be ordered reinstated with payment of backwages
from the time they were illegally dismissed up to the time of their
actual reinstatement.
All other claims are hereby dismissed for lack of merit.
WHEREFORE, premises considered the instant appeal is
hereby DISMISSED for lack of merit and the appealed decision
is hereby AFFIRMED with modification ordering the
respondents the payment of the backwages of the complainants
from May 15, 1998 up to May 25, 1999, further directing the
reinstatement of the complainants to their original positions
without loss of seniority or in lieu thereof the payment of their
separation pay as computed in the appealed decision.38
When the afore-quoted NLRC Decision was appealed to the
Court of Appeals in CA-G.R. SP No. 80639, there seemed to be
a contradiction between the body and the fallo of the appellate

court’s Decision dated 17 March 2004. Petitioner cites the
following from the text of the Court of Appeals Decision:
However, in this case since the Labor Arbiter did not order
reinstatement, the NLRC correctly excluded the period of the
appeal in the computation of back wages due to private
respondents.39
The dispositive portion of the same Decision, however,
concludes:
WHEREFORE, premises considered, the present petition is
hereby DENIED DUE COURSE and accordingly DISMISSED
for lack of merit. The assailed Decision and Resolution are
AFFIRMED.40
The general rule is that where there is conflict between the
dispositive portion or the fallo and the body of the decision,
the fallo controls. This rule rests on the theory that the fallo is
the final order while the opinion in the body is merely a
statement ordering nothing.41 Clearly, the award of backwages
to respondents does not merely cover the period from 15 May
1998 up to 25 May 1999 alone.42 The findings of the NLRC,
which were affirmed with finality in CA-G.R. SP No. 80639, and
subject of execution in the instant petition, pronounced:
We rule that [respondents] were illegally dismissed and must
therefore be ordered reinstated with payment of backwages
125
Labor Law II
from the time they were illegally dismissed up to the time of their
actual reinstatement.
All other claims are hereby dismissed for lack of merit.
WHEREFORE, premises considered the instant appeal is
hereby DISMISSED for lack of merit and the appealed decision
is hereby AFFIRMED with modification ordering the [petitioner]
payment of the backwages of the [respondents] from May 15,
1998 up to May 25, 1999, further directing the reinstatement of
the [respondents] to their original positions without loss of
seniority or in lieu thereof the payment of their separation pay as
computed in the appealed decision.43
The above ruling of the NLRC in its Decision dated 30 October
2001 had the effect of reversing and modifying the findings of
the Labor Arbiter. Under Article 218(c) of the Labor Code, the
Commission is empowered to "correct, amend, or waive any
error, defect or irregularity whether in substance or form," in the
exercise of its appellate jurisdiction.44 The dispositive portion of
the Labor Arbiter’s Decision as worded is clear and needs no
further interpretation. The NLRC found respondents to have
been illegally dismissed by petitioner, and ordered
reinstatement and payment of backwages. Additionally, it stated
that where reinstatement is not possible, separation pay as
computed in the appealed decision should be awarded to
respondents. Petitioner interprets the dispositive portion of the
NLRC Decision to mean that it is ordered to pay respondents

backwages from 15 May 1998 to 25 May 1999 only. Petitioner
seems to have missed that the aforestated NLRC Decision also
directed it to reinstate respondents, or in lieu thereof, pay
separation pay. This, petitioner failed to do. Petitioner did not
exercise the option of either reinstatement or paying the
separation pay of respondents.
Backwages are to be computed from the time of illegal dismissal
until reinstatement or upon petitioner’s payment of separation
pay to respondents if reinstatement is no longer possible. Article
279 of the Labor Code, as amended, states:
Art. 279. Security of Tenure. – x x x
In cases of regular employment the employer shall not
terminate the services of an employee except for a just cause or
when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or
their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.
Thus, an illegally dismissed employee is entitled to two reliefs:
backwages and reinstatement. The two reliefs provided are
separate and distinct. In instances where reinstatement is no
longer feasible because of strained relations between the
126
Labor Law II
employee and the employer, separation pay is granted. In effect,
an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no
longer viable, and backwages.45
The normal consequences of respondents’ illegal dismissal,
then, are reinstatement without loss of seniority rights, and
payment of backwages computed from the time compensation
was withheld up to the date of actual reinstatement. Where
reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service
should be awarded as an alternative.46 The payment of
separation pay is in addition to payment of backwages.
Concomitantly, it is evident that respondents’ backwages should
not be limited to the period from 15 May 1998 to 25 May 1999.
The backwages due respondents must be computed from the
time they were unjustly dismissed until their actual
reinstatement to their former position or upon petitioner’s
payment of separation pay to them if reinstatement is no longer
feasible. Thus, until petitioner actually implements the
reinstatement aspect of the NLRC Decision dated 30 October
2001, as affirmed in the Court of Appeals Decision dated 17
March 2004 in CA-G.R. SP No. 80639, its obligation to
respondents, insofar as accrued backwages and other benefits
are concerned, continues to accumulate.
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Labor Law II

This Court takes this occasion to reiterate that execution is the Arbiter for proper computation of the subject money claims as
final stage of litigation, the end of the suit. It can not and should discussed above. Costs against petitioner.
not be frustrated except for serious reasons demanded by
justice and equity.47 "Litigation must end sometime and SO ORDERED.
somewhere. An effective and efficient administration of justice
requires that, once a judgment has become final, the winning
party be not, through a mere subterfuge, be deprived of the
fruits of the verdicts. Courts must, therefore, guard against any
scheme calculated to bring about that result. Constituted as
they are to put an end to controversies, courts should frown
upon any attempt to prolong them."48

WHEREFORE, the instant petition is dismissed. The Decision

dated 2 June 2006 of the Court of Appeals in CA-G.R. CEB-SP
No. 01615 is AFFIRMED. Petitioner is ORDERED to (1)
reinstate respondents to their original positions without loss of
seniority rights, with payment of (a) backwages computed from
15 May 1998, the time compensation of respondents was
withheld from them when they were unjustly terminated, up to
G.R. No. 147806 November 12, 2002
the time of reinstatement; and (b) accrued 13th month pay for
the same period; OR in lieu of reinstatement, (2) pay
NERISSA BUENVIAJE, SONIA FLORES, BELMA OLIVIO,
respondents (a) separation pay, in the amount equivalent to one
GENALYN PELOBELLO, MARY JANE MENOR, JOSIE
(1) month pay for every year of service; and (b) backwages,
RAQUERO,
computed from 15 May 1998, the time compensation of
ESTRELITA MANAHAN, REBECCA EBOL, and ERLINDA
respondents was withheld from them when they were unjustly
ARGA, petitioners,
terminated, up to the time of payment thereof; and (c) the
vs.
accrued 13th month pay for the same period. For this purpose,
THE HONORABLE COURT OF APPEALS (SPECIAL
the records of this case are hereby REMANDED to the Labor

FORMER SEVENTH DIVISION),
HONORABLE ARBITER ROMULUS PROTASIO,
COTTONWAY MARKETING CORPORATION and MICHAEL
G. TONG, President and General Manager, respondents.
DECISION
PUNO, J.:
This petition seeks to set aside the Decision dated March 13,
2000 and Resolution dated February 13, 2001 of the Court of
Appeals in CA-G.R. SP No. 53204 entitled "Cottonway
Marketing Corp. vs. National Labor Relations Commission, et
al."
The facts are as follows:
Petitioners were former employees of Cottonway Marketing
Corp. (Cottonway), hired as promo girls for their garment
products. In October, 1994, after their services were terminated
as the company was allegedly suffering business losses,
petitioners filed with the National Labor Relations Commission
(NLRC) a complaint for illegal dismissal, underpayment of
salary, and non-payment of premium pay for rest day, service
incentive leave pay and thirteenth month pay against Cottonway
Marketing Corp. and Network Fashion Inc./JCT International
Trading.1
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Labor Law II
On December 19, 1995, Labor Arbiter Romulus S. Protasio
issued a Decision finding petitioners' retrenchment valid and
ordering Cottonway to pay petitioners' separation pay and their
proportionate thirteenth month pay.2
On appeal, the NLRC, in its Decision dated March 26, 1996,
reversed the Decision of the Labor Arbiter and ordered the
reinstatement of petitioners without loss of seniority rights and
other privileges. It also ordered Cottonway to pay petitioners
their proportionate thirteenth month pay and their full
backwages inclusive of allowances and other benefits, or their
monetary equivalent computed from the time their salaries were
withheld from them up to the date of their actual reinstatement.3
Cottonway filed a motion for reconsideration which was denied
by the Commission in a Resolution dated July 31, 1996. 4
On August 30, 1996, Cottonway filed with the NLRC a
manifestation stating that they have complied with the order of
reinstatement by sending notices dated June 5, 1996 requiring
the petitioners to return to work, but to no avail; and
consequently, they sent letters to petitioners dated August 1,
1996 informing them that they have lost their employment for
failure to comply with the return to work order.5 Cottonway also
filed a petition for certiorari with the Supreme Court which was
dismissed on October 14, 1996.6

On November 6, 1997, petitioners filed with the NLRC a motion
for execution of its Decision on the ground that it had become
final and executory.7
On December 4, 1996, the Research and Investigation Unit of
the NLRC issued a computation of the monetary award in
accordance with the March 26 Decision of the NLRC.8
Meanwhile, Cottonway filed a motion for reconsideration of the
Supreme Court Resolution of October 14, 1996 dismissing the
petition for certiorari. The motion for reconsideration was denied
with finality on January 13, 1997.9
On March 4, 1997, Cottonway filed a manifestation with the
NLRC reiterating their allegations in their manifestation dated
August 30, 1996, and further alleging that petitioners have
already found employment elsewhere.10
On March 13, 1997, the Research and Investigation Unit of the
NLRC issued an additional computation of petitioners' monetary
award in accordance with the March 26 NLRC decision.11
On the same date, Cottonway filed with the NLRC a
supplemental manifestation praying that the Commission allow
the reception of evidence with respect to their claim that
petitioners have found new employment. The Commission
denied Cottonway’s prayer in an Order dated March 24,
199712 and Resolution dated July 24, 1997.13
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Labor Law II
Nonetheless, on April 8, 1998, Labor Arbiter Romulus S.
Protasio issued an Order declaring that the award of backwages
and proportionate thirteenth month pay to petitioners should be
limited from the time of their illegal dismissal up to the time they
received the notice of termination sent by the company upon
their refusal to report for work despite the order of reinstatement.
He cited the fact that petitioners failed to report to their posts
without justifiable reason despite respondent's order requiring
them to return to work immediately. The Labor Arbiter ordered
the Research and Investigation Unit to recompute the monetary
award in accordance with its ruling.14
The April 8 Order of the Labor Arbiter, however, was set aside
by the Commission in its Resolution dated September 21, 1998.
The Commission ruled that its Decision dated March 26, 1996
has become final and executory and it is the ministerial duty of
the Labor Arbiter to issue the corresponding writ of execution to
effect full and unqualified implementation of said decision.15 The
Commission thus ordered that the records of the case be
remanded to the Labor Arbiter for execution. Cottonway moved
for reconsideration of said resolution, to no avail.
Hence, Cottonway filed a petition for certiorari with the Court of
Appeals seeking the reversal of the ruling of the NLRC and the
reinstatement of the Order dated April 8, 1998 issued by Labor
Arbiter Romulus S. Protasio.

The appellate court granted the petition in its Decision dated
March 13, 2000.16 It ruled that petitioners' reinstatement was no
longer possible as they deliberately refused to return to work
despite the notice given by Cottonway. The Court of Appeals
thus held that the amount of backwages due them should be
computed only up to the time they received their notice of
termination. It said:
"Petitioner's termination of private respondents' employment by
reason of their failure to report for work despite due notice being
valid, it would change the substance of the questioned March 26,
1996 decision which awards backwages to the complainants up
to their reinstatement. Again, private respondents'
reinstatement is no longer possible because of the supervening
event which is their valid termination. The deliberate failure to
report for work after notice to return bars reinstatement. It would
be unjust and inequitable then to require petitioner to pay
private respondents their backwages even after the latter were
validly terminated when in fact petitioner dutifully complied with
the reinstatement aspect of the decision. Thus, the period within
which the monetary award of private respondents should be
based is limited up to the time of private respondents' receipt of
the respective notices of termination on August 27, 1998." 17
The Court of Appeals denied petitioners' motion for
reconsideration in a Resolution issued on February 13, 2001.18
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Labor Law II
Petitioners now question the Decision and Resolution of the
Court of Appeals. They impute the following errors:
"I. That the Honorable Court of Appeals gravely abused its
discretion amounting to lack of and/or in excess of jurisdiction in
rendering the assailed decision in CA-G.R. No. SP 53204
without first performing its ministerial duty of taking initial judicial
action thereon unlawfully depriving the petitioners the
opportunity to comment and/or file responsive pleadings to the
petition resulting to their being unlawfully denied a day in court;
II. That the Honorable Court of Appeals gravely abused its
discretion amounting to lack of and/or in excess of jurisdiction in
rendering a decision in CA-G.R. No. SP 53204 reversing and
setting aside the lawful and appropriate September 21, 1998
and March 31, 1999 resolutions of the Honorable NLRC and
reinstating the irregular and illegal April 8, 1998 Order of
Honorable Arbiter Romulus Protasio; and
III. That the Honorable Court of Appeals gravely abused its
discretion amounting to lack of and/or in excess of jurisdiction in
issuing the February 13, 2001 Resolution which denied
petitioners' motion for reconsideration from the decision of
March 13, 2000 without stating the legal basis therefor."19
We proceed directly to the central issue in this case which is the
computation of petitioners' backwages—whether it should be
limited from the time they were illegally dismissed until they

received the notice of termination sent by Cottonway on August
1, 1996 as argued by respondent company, or whether it should
be computed from the time of their illegal dismissal until their
actual reinstatement as argued by the petitioners.
We agree with the petitioners.
The issue of the legality of the termination of petitioners’
services has been settled in the NLRC decision dated March 26,
1996. Thus, Cottonway was ordered to reinstate petitioners to
their former position without loss of seniority rights and other
privileges and to pay them full backwages. The dispositive
portion of the decision read:
"WHEREFORE, the decision appealed from is hereby
REVERSED. Respondent Cottonway Marketing Corporation is
hereby ordered to reinstate the complainants without loss of
seniority rights and other privileges and to pay them the
following: (1) their proportionate 13th month pay for 1994; and
(2) their full backwages inclusive of allowances and other
benefits, or their monetary equivalent computed from the time
their salaries were withheld from them up to the date of their
actual reinstatement.
SO ORDERED."
These are the reliefs afforded to employees whose employment
is unlawfully severed. Reinstatement restores the employee to
131
Labor Law II
the position from which he was removed, i.e., to his status quo
ante dismissal, while the grant of backwages allows the same
employee to recover from the employer that which he lost by
way of wages because of his dismissal.20
Under R.A. 6715, employees who are illegally dismissed are
entitled to full backwages, inclusive of allowances and other
benefits or their monetary equivalent, computed from the time
their actual compensation was withheld from them up to the
time of their actual reinstatement. If reinstatement is no longer
possible, the backwages shall be computed from the time of
their illegal termination up to the finality of the decision.21 The
Court explained the meaning of "full backwages" in the case of
Bustamante vs. NLRC:22
"The Court deems it appropriate, however, to reconsider such
earlier ruling on the computation of backwages as enunciated in
said Pines City Educational Center case, by now holding that
conformably with the evident legislative intent as expressed in
Rep. Act No. 6715, above-quoted, backwages to be awarded to
an illegally dismissed employee, should not, as a general rule,
be diminished or reduced by the earnings derived by him
elsewhere during the period of his illegal dismissal. The
underlying reason for this ruling is that the employee, while
litigating the legality (illegality) of his dismissal, must still earn a
living to support himself and family, while full backwages have
to be paid by the employer as part of the price or penalty he has
to pay for illegally dismissing his employee. The clear legislative

intent of the amendment in Rep. Act No. 6715 is to give more
benefits to workers than was previously given them under the
Mercury Drug rule or the "deduction of earnings elsewhere" rule.
Thus, a closer adherence to the legislative policy behind Rep.
Act No. 6715 points to "full backwages" as meaning exactly that,
i.e., without deducting from backwages the earnings derived
elsewhere by the concerned employee during the period of his
illegal dismissal. In other words, the provision calling for "full
backwages" to illegally dismissed employees is clear, plain and
free from ambiguity and, therefore, must be applied without
attempted or strained interpretation. Index animi sermo est."
(emphasis supplied)
The Court does not see any reason to depart from this rule in
the case of herein petitioners. The decision of the NLRC dated
March 26, 1996 has become final and executory upon the
dismissal by this Court of Cottonway’s petition for certiorari
assailing said decision and the denial of its motion for
reconsideration. Said judgment may no longer be disturbed or
modified by any court or tribunal. It is a fundamental rule that
when a judgment becomes final and executory, it becomes
immutable and unalterable, and any amendment or alteration
which substantially affects a final and executory judgment is
void, including the entire proceedings held for that purpose.
Once a judgment becomes final and executory, the prevailing
party can have it executed as a matter of right, and the issuance
of a writ of execution becomes a ministerial duty of the court. A
decision that has attained finality becomes the law of the case
132
Labor Law II
regardless of any claim that it is erroneous. The writ of
execution must therefore conform to the judgment to be
executed and adhere strictly to the very essential particulars.23
To justify the modification of the final and executory decision of
the NLRC dated March 26, 1996, the Court of Appeals cited the
existence of a supervening event, that is, the valid termination of
petitioners' employment due to their refusal to return to work
despite notice from respondents reinstating them to their former
position.
We cannot concur with said ruling. Petitioners' alleged failure to
return to work cannot be made the basis for their termination.
Such failure does not amount to abandonment which would
justify the severance of their employment. To warrant a valid
dismissal on the ground of abandonment, the employer must
prove the concurrence of two elements: (1) the failure to report
for work or absence without valid or justifiable reason, and (2) a
clear intention to sever the employer-employee relationship.24
The facts of this case do not support the claim of Cottonway that
petitioners have abandoned their desire to return to their
previous work at said company. It appears that three months
after the NLRC had rendered its decision ordering petitioners’
reinstatement to their former positions, Cottonway sent
individual notices to petitioners mandating them to immediately
report to work. The standard letter, signed by the company’s

legal counsel, Atty. Ambrosio B. De Luna, and sent to each of
the petitioners read:
"June 5, 1996
Dear Ms. Alivid,25
By virtue of the decision of the National Labor
Relation(s) Commission dated March 26, 1996 in
Belma Alivid vs. Network Fashion, Inc., JCT Int’l
Trading and, Cotton Mktg., Corp., NLRC CASE
NO. NCR-010210-96 and NLRC
NCR-00-10-07238-94, you are hereby ordered to
report for work within five (5) days from receipt of
this letter, otherwise, your failure will be deemed
lack of interest to continue and considered to have
abandoned your employment with the company.
Please give this matter your utmost attention.
Very truly your(s),
(Sgd) AMBROSIO B. DE LUNA
Legal Counsel"
The petitioners, however, were not able to promptly comply with
the order. Instead, their counsel, Atty. Roberto LL. Peralta, sent
a reply letter to Atty. De Luna stating that his clients were not in
133
Labor Law II
a position to comply with said order since the NLRC has not yet
finally disposed of the case. The reply letter stated:26
"June 20, 1996
ATTY. AMBROSIO B. DE LUNA
Unit 2-D Bouganvilla (sic) Mansions
91 P. Tuazon Street, Cubao
Quezon City
Compañero,
Your letter dated June 5, 1996 to our clients,
Erlinda Arga, et al., complainants in NLRC NCR
CASE NO. 00-10-07238-94, Genalyn Pelobello, et
al. vs. Network Fashion, et al., was referred to us
for reply.
Please be informed that our said clients are not in
a position now to comply with your order for them
to report for work within five (5) days from receipt
thereof since the National Labor Relations
Commission, First Division, has yet to finally
disposed off (sic) the case.
However, if it is now a case that your client, Mr.
Michael Tong, is yielding to the Decision dated
March 26, 1996 of the NLRC, we are then willing
 134

Labor Law II

to sit down with you relative to the satisfaction of For your failure to report for work as per letter
the same to avoid said decision from being dated June 5, 1996 within the period of five days
enforced by the sheriff. from receipt of the same, you are considered to
have lost your employment status effective this
Trusting your cooperation on this matter. date with the company on the ground of failure to
report for work.
Thank you.
Please be guided accordingly.
Very truly yours,
Very truly yours,
(Sgd) ROBERTO LL. PERALTA
Counsel For The Complainants" (Sgd) Ambrosio B. De Luna
Legal Counsel of
Consequently, Cottonway sent the petitioners individual notices Network Fashion(,) Inc."
of termination. The standard letter of termination which was
likewise signed by counsel and individually addressed to We note that Cottonway, before finally deciding to dispense with
petitioners stated: their services, did not give the petitioners the opportunity to
explain why they were not able to report to work. The records
"August 1, 1996 also do not bear any proof that all the petitioners received a
copy of the letters. Cottonway merely claimed that some of them
BELMA ALIVID have left the country and some have found other employment.
c/o Sonia Flores This, however, does not necessarily mean that petitioners were
#1256-A St. Nino Street no longer interested in resuming their employment at Cottonway
Tondo(,) Manila as it has not been shown that their employment in the other
companies was permanent. It should be expected that
Dear Ms. Alivid,27 petitioners would seek other means of income to tide them over
during the time that the legality of their termination is under
litigation. Furthermore, petitioners never abandoned their suit

against Cottonway. While the case was pending appeal before
the NLRC, the Court of Appeals and this Court, petitioners
continued to file pleadings to ensure that the company would
comply with the directive of the NLRC to reinstate them and to
pay them full backwages in case said decision is upheld.
Moreover, in his reply to the company’s first letter, petitioners’
counsel expressed willingness to meet with the company’s
representative regarding the satisfaction of the NLRC decision.
It appears that the supposed notice sent by Cottonway to the
petitioners demanding that they report back to work immediately
was only a scheme to remove the petitioners for good.
Petitioners’ failure to instantaneously abide by the directive
gave them a convenient reason to dispense with their services.
This the Court cannot allow. Cottonway cited Article 223 of the
Labor Code providing that the decision ordering the
reinstatement of an illegally dismissed employee is immediately
executory even pending appeal as basis for its decision to
terminate the employment of petitioners. We are not convinced.
Article 223 of the Labor Code provides:
"ART. 223. Appeal. – Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. x x x
xxxxxxxxx
135
Labor Law II
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement
aspect is concerned, shall immediately be executory, even
pending appeal. The employee shall either be admitted back to
work under the same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the employer
shall not stay the execution for reinstatement provided herein. x
xx
x x x x x x x x x."
The foregoing provision is intended for the benefit of the
employee and cannot be used to defeat their own interest. The
law mandates the employer to either admit the dismissed
employee back to work under the same terms and conditions
prevailing prior to his dismissal or to reinstate him in the payroll
to abate further loss of income on the part of the employee
during the pendency of the appeal. But we cannot stretch the
language of the law as to give the employer the right to remove
an employee who fails to immediately comply with the
reinstatement order, especially when there is reasonable
explanation for the failure. If Cottonway were really sincere in its
offer to immediately reinstate petitioners to their former
positions, it should have given them reasonable time to wind up
their current preoccupation or at least to explain why they could
not return to work at Cottonway at once. Cottonway did not do
either. Instead, it gave them only five days to report to their

posts and when the petitioners failed to do so, it lost no time in
serving them their individual notices of termination. We are,
therefore, not impressed with the claim of respondent company
that petitioners have been validly dismissed on August 1, 1996
and hence their backwages should only be computed up to that
time. We hold that petitioners are entitled to receive full
backwages computed from the time their compensation was
actually withheld until their actual reinstatement, or if
reinstatement is no longer possible, until the finality of the
decision, in accordance with the Decision of the NLRC dated
March 26, 1996 which has attained finality.28
IN VIEW WHEREOF, the petition is GRANTED. The Decision of
the Court of Appeals dated March 13, 2000 and Resolution
dated February 13, 2001 in CA-G.R. SP No. 53204 are
REVERSED and SET ASIDE. Let the records of this case be
remanded to the Labor Arbiter for execution in accordance with
the Decision of the NLRC dated March 26, 1996.
SO ORDERED.
G.R. No. 177467 March 9, 2011
PFIZER, INC. AND/OR REY GERARDO BACARRO, AND/OR
FERDINAND CORTES, AND/OR ALFRED MAGALLON,
AND/OR ARISTOTLE ARCE, Petitioners,
136
Labor Law II
vs.
GERALDINE VELASCO, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
This is a petition for review on certiorari under Rule 45 of the
Rules of Civil Procedure to annul and set aside the
Resolution1 dated October 23, 2006 as well as the
Resolution2 dated April 10, 2007 both issued by the Court of
Appeals in CA-G.R. SP No. 88987 entitled, "Pfizer, Inc. and/or
Rey Gerardo Bacarro, and/or Ferdinand Cortes, and/or Alfred
Magallon, and/or Aristotle Arce v. National Labor Relations
Commission Second Division and Geraldine Velasco." The
October 23, 2006 Resolution modified upon respondent’s
motion for reconsideration the Decision3 dated November 23,
2005 of the Court of Appeals by requiring PFIZER, Inc. (PFIZER)
to pay respondent’s wages from the date of the Labor Arbiter’s
Decision4 dated December 5, 2003 until it was eventually
reversed and set aside by the Court of Appeals. The April 10,
2007 Resolution, on the other hand, denied PFIZER’s motion
for partial reconsideration.
The facts of this case, as stated in the Court of Appeals
Decision dated November 23, 2005, are as follows:

Private respondent Geraldine L. Velasco was employed with
petitioner PFIZER, INC. as Professional Health Care
Representative since 1 August 1992. Sometime in April 2003,
Velasco had a medical work up for her high-risk pregnancy and
was subsequently advised bed rest which resulted in her
extending her leave of absence. Velasco filed her sick leave for
the period from 26 March to 18 June 2003, her vacation leave
from 19 June to 20 June 2003, and leave without pay from 23
June to 14 July 2003.
On 26 June 2003, while Velasco was still on leave, PFIZER
through its Area Sales Manager, herein petitioner Ferdinand
Cortez, personally served Velasco a "Show-cause Notice"
dated 25 June 2003. Aside from mentioning about an
investigation on her possible violations of company work rules
regarding "unauthorized deals and/or discounts in money or
samples and unauthorized withdrawal and/or pull-out of stocks"
and instructing her to submit her explanation on the matter
within 48 hours from receipt of the same, the notice also
advised her that she was being placed under "preventive
suspension" for 30 days or from that day to 6 August 2003 and
consequently ordered to surrender the following
"accountabilities;" 1) Company Car, 2) Samples and Promats, 3)
CRF/ER/VEHICLE/SOA/POSAP/MPOA and other related
Company Forms, 4) Cash Card, 5) Caltex Card, and 6)
MPOA/TPOA Revolving Travel Fund. The following day,
petitioner Cortez together with one Efren Dariano retrieved the
above-mentioned "accountabilities" from Velasco’s residence.
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Labor Law II
In response, Velasco sent a letter addressed to Cortez dated 28
June 2003 denying the charges. In her letter, Velasco claimed
that the transaction with Mercury Drug, Magsaysay Branch
covered by her check (no. 1072) in the amount of ₱23,980.00
was merely to accommodate two undisclosed patients of a
certain Dr. Renato Manalo. In support thereto, Velasco attached
the Doctor’s letter and the affidavit of the latter’s secretary.
On 12 July 2003, Velasco received a "Second Show-cause
Notice" informing her of additional developments in their
investigation. According to the notice, a certain Carlito Jomen
executed an affidavit pointing to Velasco as the one who
transacted with a printing shop to print PFIZER discount
coupons. Jomen also presented text messages originating from
Velasco’s company issued cellphone referring to the printing of
the said coupons. Again, Velasco was given 48 hours to submit
her written explanation on the matter. On 16 July 2003, Velasco
sent a letter to PFIZER via Aboitiz courier service asking for
additional time to answer the second Show-cause Notice.
That same day, Velasco filed a complaint for illegal suspension
with money claims before the Regional Arbitration Branch. The
following day, 17 July 2003, PFIZER sent her a letter inviting her
to a disciplinary hearing to be held on 22 July 2003. Velasco
received it under protest and informed PFIZER via the receiving
copy of the said letter that she had lodged a complaint against
the latter and that the issues that may be raised in the July 22
hearing "can be tackled during the hearing of her case" or at the

preliminary conference set for 5 and 8 of August 2003. She
likewise opted to withhold answering the Second Show-cause
Notice. On 25 July 2003, Velasco received a "Third Show-cause
Notice," together with copies of the affidavits of two Branch
Managers of Mercury Drug, asking her for her comment within
48 hours. Finally, on 29 July 2003, PFIZER informed Velasco of
its "Management Decision" terminating her employment.
On 5 December 2003, the Labor Arbiter rendered its decision
declaring the dismissal of Velasco illegal, ordering her
reinstatement with backwages and further awarding moral and
exemplary damages with attorney’s fees. On appeal, the NLRC
affirmed the same but deleted the award of moral and
exemplary damages.5
The dispositive portion of the Labor Arbiter’s Decision dated
December 5, 2003 is as follows:
WHEREFORE, judgment is hereby rendered declaring that
complainant was illegally dismissed. Respondents are ordered
to reinstate the complainant to her former position without loss
of seniority rights and with full backwages and to pay the
complainant the following:
1. Full backwages (basic salary, company
₱572,780.00);
benefits, all allowances
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Labor Law II
as of December 5, 2003 in the amount of
2. 13th Month Pay, Midyear, Christmas and
performance bonuses
in the amount of ₱105,300.00;
3. Moral damages of ₱50,000.00;
4. Exemplary damages in the amount of ₱30,000.00;
5. Attorney’s Fees of 10% of the award
excluding damages in the
amount of ₱67,808.00.
The total award is in the amount of ₱758,080.00.6
PFIZER appealed to the National Labor Relations Commission
(NLRC) but its appeal was denied via the NLRC
Decision7 dated October 20, 2004, which affirmed the Labor
Arbiter’s ruling but deleted the award for damages, the
dispositive portion of which is as follows:
WHEREFORE, premises considered, the instant appeal and the
motion praying for the deposit in escrow of complainant’s payroll
reinstatement are hereby denied and the Decision of the Labor
Arbiter is affirmed with the modification that the award of moral

and exemplary damages is deleted and attorney’s fees shall be
based on the award of 13th month pay pursuant to Article III of
the Labor Code.8
PFIZER moved for reconsideration but its motion was denied for
lack of merit in a NLRC Resolution9 dated December 14, 2004.
Undaunted, PFIZER filed with the Court of Appeals a special
civil action for the issuance of a writ of certiorari under Rule 65
of the Rules of Court to annul and set aside the aforementioned
NLRC issuances. In a Decision dated November 23, 2005, the
Court of Appeals upheld the validity of respondent’s dismissal
from employment, the dispositive portion of which reads as
follows:
WHEREFORE, the instant petition is GRANTED. The assailed
Decision of the NLRC dated 20 October 2004 as well as its
Resolution of 14 December 2004 is hereby ANNULED and SET
ASIDE. Having found the termination of Geraldine L. Velasco’s
employment in accordance with the two notice rule pursuant to
the due process requirement and with just cause, her complaint
for illegal dismissal is hereby DISMISSED.10
Respondent filed a Motion for Reconsideration which the Court
of Appeals resolved in the assailed Resolution dated October
23, 2006 wherein it affirmed the validity of respondent’s
dismissal from employment but modified its earlier ruling by
directing PFIZER to pay respondent her wages from the date of
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Labor Law II
the Labor Arbiter’s Decision dated December 5, 2003 up to the
Court of Appeals Decision dated November 23, 2005, to wit:
IN VIEW WHEREOF, the dismissal of private respondent
Geraldine Velasco is AFFIRMED, but petitioner PFIZER, INC. is
hereby ordered to pay her the wages to which she is entitled to
from the time the reinstatement order was issued until
November 23, 2005, the date of promulgation of Our Decision.11
Respondent filed with the Court a petition for review under Rule
45 of the Rules of Civil Procedure, which assailed the Court of
Appeals Decision dated November 23, 2005 and was docketed
as G.R. No. 175122. Respondent’s petition, questioning the
Court of Appeals’ dismissal of her complaint, was denied by this
Court’s Second Division in a minute Resolution12 dated
December 5, 2007, the pertinent portion of which states:
Considering the allegations, issues and arguments adduced in
the petition for review on certiorari, the Court resolves to DENY
the petition for failure to sufficiently show any reversible error in
the assailed judgment to warrant the exercise of this Court’s
discretionary appellate jurisdiction, and for raising substantially
factual issues.
On the other hand, PFIZER filed the instant petition assailing
the aforementioned Court of Appeals Resolutions and offering
for our resolution a single legal issue, to wit:

Whether or not the Court of Appeals committed a serious but
reversible error when it ordered Pfizer to pay Velasco wages
from the date of the Labor Arbiter’s decision ordering her
reinstatement until November 23, 2005, when the Court of
Appeals rendered its decision declaring Velasco’s dismissal
valid.13
The petition is without merit.
PFIZER argues that, contrary to the Court of Appeals’
pronouncement in its assailed Decision dated November 23,
2005, the ruling in Roquero v. Philippine Airlines, Inc.14 is not
applicable in the case at bar, particularly with regard to the
nature and consequences of an order of reinstatement, to wit:
The order of reinstatement is immediately executory. The
unjustified refusal of the employer to reinstate a dismissed
employee entitles him to payment of his salaries effective from
the time the employer failed to reinstate him despite the
issuance of a writ of execution. Unless there is a restraining
order issued, it is ministerial upon the Labor Arbiter to
implement the order of reinstatement. In the case at bar, no
restraining order was granted. Thus, it was mandatory on PAL
to actually reinstate Roquero or reinstate him in the payroll.
Having failed to do so, PAL must pay Roquero the salary he is
entitled to, as if he was reinstated, from the time of the decision
of the NLRC until the finality of the decision of the
Court.15 (Emphases supplied.)
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Labor Law II
It is PFIZER’s contention in its Memorandum16 that "there was
no unjustified refusal on [its part] to reinstate [respondent]
Velasco during the pendency of the appeal,"17 thus, the
pronouncement in Roquero cannot be made to govern this case.
During the pendency of the case with the Court of Appeals and
prior to its November 23, 2005 Decision, PFIZER claimed that it
had already required respondent to report for work on July 1,
2005. However, according to PFIZER, it was respondent who
refused to return to work when she wrote PFIZER, through
counsel, that she was opting to receive her separation pay and
to avail of PFIZER’s early retirement program.
In PFIZER’s view, it should no longer be required to pay wages
considering that (1) it had already previously paid an enormous
sum to respondent under the writ of execution issued by the
Labor Arbiter; (2) it was allegedly ready to reinstate respondent
as of July 1, 2005 but it was respondent who unjustifiably
refused to report for work; (3) it would purportedly be
tantamount to allowing respondent to choose "payroll
reinstatement" when by law it was the employer which had the
right to choose between actual and payroll reinstatement; (4)
respondent should be deemed to have "resigned" and therefore
not entitled to additional backwages or separation pay; and (5)
this Court should not mechanically apply Roquero but rather
should follow the doctrine in Genuino v. National Labor
Relations Commission18 which was supposedly "more in accord
with the dictates of fairness and justice."19

We do not agree.
At the outset, we note that PFIZER’s previous payment to
respondent of the amount of ₱1,963,855.00 (representing her
wages from December 5, 2003, or the date of the Labor Arbiter
decision, until May 5, 2005) that was successfully garnished
under the Labor Arbiter’s Writ of Execution dated May 26, 2005
cannot be considered in its favor. Not only was this sum legally
due to respondent under prevailing jurisprudence but also this
circumstance highlighted PFIZER’s unreasonable delay in
complying with the reinstatement order of the Labor Arbiter. A
perusal of the records, including PFIZER’s own submissions,
confirmed that it only required respondent to report for work on
July 1, 2005, as shown by its Letter20 dated June 27, 2005,
which is almost two years from the time the order of
reinstatement was handed down in the Labor Arbiter’s Decision
dated December 5, 2003.
As far back as 1997 in the seminal case of Pioneer Texturizing
Corporation v. National Labor Relations Commission,21 the
Court held that an award or order of reinstatement is
immediately self-executory without the need for the issuance of
a writ of execution in accordance with the third paragraph of
Article 22322 of the Labor Code. In that case, we discussed in
length the rationale for that doctrine, to wit:
The provision of Article 223 is clear that an award [by the Labor
Arbiter] for reinstatement shall be immediately executory even
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Labor Law II
pending appeal and the posting of a bond by the employer shall
not stay the execution for reinstatement. The legislative intent is
quite obvious, i.e., to make an award of reinstatement
immediately enforceable, even pending appeal. To require the
application for and issuance of a writ of execution as
prerequisites for the execution of a reinstatement award would
certainly betray and run counter to the very object and intent of
Article 223, i.e., the immediate execution of a reinstatement
order. The reason is simple. An application for a writ of
execution and its issuance could be delayed for numerous
reasons. A mere continuance or postponement of a scheduled
hearing, for instance, or an inaction on the part of the Labor
Arbiter or the NLRC could easily delay the issuance of the writ
thereby setting at naught the strict mandate and noble purpose
envisioned by Article 223. In other words, if the requirements of
Article 224 [including the issuance of a writ of execution] were to
govern, as we so declared in Maranaw, then the executory
nature of a reinstatement order or award contemplated by
Article 223 will be unduly circumscribed and rendered
ineffectual. In enacting the law, the legislature is presumed to
have ordained a valid and sensible law, one which operates no
further than may be necessary to achieve its specific purpose.
Statutes, as a rule, are to be construed in the light of the
purpose to be achieved and the evil sought to be prevented. x x
x In introducing a new rule on the reinstatement aspect of a
labor decision under Republic Act No. 6715, Congress should

not be considered to be indulging in mere semantic exercise. x x
x23 (Italics in the original; emphasis and underscoring supplied.)
In the case at bar, PFIZER did not immediately admit
respondent back to work which, according to the law, should
have been done as soon as an order or award of reinstatement
is handed down by the Labor Arbiter without need for the
issuance of a writ of execution. Thus, respondent was entitled to
the wages paid to her under the aforementioned writ of
execution. At most, PFIZER’s payment of the same can only be
deemed partial compliance/execution of the Court of Appeals
Resolution dated October 23, 2006 and would not bar
respondent from being paid her wages from May 6, 2005 to
November 23, 2005.
It would also seem that PFIZER waited for the resolution of its
appeal to the NLRC and, only after it was ordered by the Labor
Arbiter to pay the amount of ₱1,963,855.00 representing
respondent’s full backwages from December 5, 2003 up to May
5, 2005, did PFIZER decide to require respondent to report back
to work via the Letter dated June 27, 2005.
PFIZER makes much of respondent’s non-compliance with its
return- to-work directive by downplaying the reasons forwarded
by respondent as less than sufficient to justify her purported
refusal to be reinstated. In PFIZER’s view, the return-to-work
order it sent to respondent was adequate to satisfy the
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Labor Law II
jurisprudential requisites concerning the reinstatement of an
illegally dismissed employee.
It would be useful to reproduce here the text of PFIZER’s Letter
dated June 27, 2005:
Dear Ms. Velasco:
Please be informed that, pursuant to the
resolutions dated 20 October 2004 and 14
December 2004 rendered by the National Labor
Relations Commission and the order dated 24
May 2005 issued by Executive Labor Arbiter Vito
C. Bose, you are required to report for work on 1
July 2005, at 9:00 a.m., at Pfizer’s main office at
the 23rd Floor, Ayala Life–FGU Center, 6811
Ayala Avenue, Makati City, Metro Manila.
Please report to the undersigned for a briefing on
your work assignments and other responsibilities,
including the appropriate relocation benefits.
For your information and compliance.
Very truly yours,
(Sgd.)
Ma. Eden Grace Sagisi

Labor and Employee Relations Manager24
To reiterate, under Article 223 of the Labor Code, an employee
entitled to reinstatement "shall either be admitted back to
work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer,
merely reinstated in the payroll."
It is established in jurisprudence that reinstatement means
restoration to a state or condition from which one had been
removed or separated. The person reinstated assumes the
position he had occupied prior to his dismissal. Reinstatement
presupposes that the previous position from which one had
been removed still exists, or that there is an unfilled position
which is substantially equivalent or of similar nature as the one
previously occupied by the employee.25
Applying the foregoing principle to the case before us, it cannot
be said that with PFIZER’s June 27, 2005 Letter, in belated
fulfillment of the Labor Arbiter’s reinstatement order, it had
shown a clear intent to reinstate respondent to her former
position under the same terms and conditions nor to a
substantially equivalent position. To begin with, the
return-to-work order PFIZER sent respondent is silent with
regard to the position or the exact nature of employment that it
wanted respondent to take up as of July 1, 2005. Even if we
assume that the job awaiting respondent in the new location is
of the same designation and pay category as what she had
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Labor Law II
before, it is plain from the text of PFIZER’s June 27, 2005 letter
that such reinstatement was not "under the same terms and
conditions" as her previous employment, considering that
PFIZER ordered respondent to report to its main office in Makati
City while knowing fully well that respondent’s previous job had
her stationed in Baguio City (respondent’s place of residence)
and it was still necessary for respondent to be briefed regarding
her work assignments and responsibilities, including her
relocation benefits.
The Court is cognizant of the prerogative of management to
transfer an employee from one office to another within the
business establishment, provided that there is no demotion in
rank or diminution of his salary, benefits and other privileges
and the action is not motivated by discrimination, made in bad
faith, or effected as a form of punishment or demotion without
sufficient cause.26 Likewise, the management prerogative to
transfer personnel must be exercised without grave abuse of
discretion and putting to mind the basic elements of justice and
fair play. There must be no showing that it is unnecessary,
inconvenient and prejudicial to the displaced employee.27
The June 27, 2005 return-to-work directive implying that
respondent was being relocated to PFIZER’s Makati main office
would necessarily cause hardship to respondent, a married
woman with a family to support residing in Baguio City. However,
PFIZER, as the employer, offered no reason or justification for
the relocation such as the filling up of respondent’s former

position and the unavailability of substantially equivalent
position in Baguio City. A transfer of work assignment without
any justification therefor, even if respondent would be
presumably doing the same job with the same pay, cannot be
deemed faithful compliance with the reinstatement order. In
other words, in this instance, there was no real, bona fide
reinstatement to speak of prior to the reversal by the Court of
Appeals of the finding of illegal dismissal.
In view of PFIZER’s failure to effect respondent's actual or
payroll reinstatement, it is indubitable that the Roqueroruling is
applicable to the case at bar. The circumstance that respondent
opted for separation pay in lieu of reinstatement as manifested
in her counsel’s Letter28 dated July 18, 2005 is of no moment.
We do not see respondent’s letter as taking away the option
from management to effect actual or payroll reinstatement but,
rather under the factual milieu of this case, where the employer
failed to categorically reinstate the employee to her former or
equivalent position under the same terms, respondent was not
obliged to comply with PFIZER’s ambivalent return-to-work
order. To uphold PFIZER’s view that it was respondent who
unjustifiably refused to work when PFIZER did not reinstate her
to her former position, and worse, required her to report for work
under conditions prejudicial to her, is to open the doors to
potential employer abuse. Foreseeably, an employer may
circumvent the immediately enforceable reinstatement order of
the Labor Arbiter by crafting return-to-work directives that are
ambiguous or meant to be rejected by the employee and then
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Labor Law II
disclaim liability for backwages due to non-reinstatement by
capitalizing on the employee’s purported refusal to work. In sum,
the option of the employer to effect actual or payroll
reinstatement must be exercised in good faith.
Moreover, while the Court has upheld the employer’s right to
choose between actually reinstating an employee or merely
reinstating him in the payroll, we have also in the past
recognized that reinstatement might no longer be possible
under certain circumstances. In F.F. Marine Corporation v.
National Labor Relations Commission,29 we had the occasion to
state:
It is well-settled that when a person is illegally dismissed, he is
entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages. In the event, however,
that reinstatement is no longer feasible, or if the employee
decides not be reinstated, the employer shall pay him
separation pay in lieu of reinstatement. Such a rule is likewise
observed in the case of a strained employer-employee
relationship or when the work or position formerly held by the
dismissed employee no longer exists. In sum, an illegally
dismissed employee is entitled to: (1) either reinstatement if
viable or separation pay if reinstatement is no longer viable, and
(2) backwages.30 (Emphasis supplied.)
Similarly, we have previously held that an employee’s demand
for separation pay may be indicative of strained relations that

may justify payment of separation pay in lieu of
reinstatement.31 This is not to say, however, that respondent is
entitled to separation pay in addition to backwages. We stress
here that a finding of strained relations must nonetheless still be
supported by substantial evidence.32
In the case at bar, respondent’s decision to claim separation
pay over reinstatement had no legal effect, not only because
there was no genuine compliance by the employer to the
reinstatement order but also because the employer chose not to
act on said claim. If it was PFIZER’s position that respondent’s
act amounted to a "resignation" it should have informed
respondent that it was accepting her resignation and that in view
thereof she was not entitled to separation pay. PFIZER did not
respond to respondent’s demand at all. As it was, PFIZER’s
failure to effect reinstatement and accept respondent’s offer to
terminate her employment relationship with the company meant
that, prior to the Court of Appeals’ reversal in the November 23,
2005 Decision, PFIZER’s liability for backwages continued to
accrue for the period not covered by the writ of execution dated
May 24, 2005 until November 23, 2005.
Lastly, PFIZER exhorts the Court to re-examine the application
of Roquero with a view that a mechanical application of the
same would cause injustice since, in the present case,
respondent was able to gain pecuniary benefit notwithstanding
the circumstance of reversal by the Court of Appeals of the
rulings of the Labor Arbiter and the NLRC thereby allowing
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Labor Law II
respondent to profit from the dishonesty she committed against
PFIZER which was the basis for her termination. In its stead,
PFIZER proposes that the Court apply the ruling in Genuino v.
National Labor Relations Commission33 which it believes to be
more in accord with the dictates of fairness and justice. In that
case, we canceled the award of salaries from the date of the
decision of the Labor Arbiter awarding reinstatement in light of
our subsequent ruling finding that the dismissal is for a legal and
valid ground, to wit:
Anent the directive of the NLRC in its September 3, 1994
Decision ordering Citibank "to pay the salaries due to the
complainant from the date it reinstated complainant in the
payroll (computed at ₱60,000.00 a month, as found by the
Labor Arbiter) up to and until the date of this decision," the Court
hereby cancels said award in view of its finding that the
dismissal of Genuino is for a legal and valid ground.
Ordinarily, the employer is required to reinstate the employee
during the pendency of the appeal pursuant to Art. 223,
paragraph 3 of the Labor Code, which states:
xxxx
If the decision of the labor arbiter is later reversed on appeal
upon the finding that the ground for dismissal is valid, then the
employer has the right to require the dismissed employee on
payroll reinstatement to refund the salaries s/he received while

the case was pending appeal, or it can be deducted from the
accrued benefits that the dismissed employee was entitled to
receive from his/her employer under existing laws, collective
bargaining agreement provisions, and company practices.
However, if the employee was reinstated to work during the
pendency of the appeal, then the employee is entitled to the
compensation received for actual services rendered without
need of refund.
Considering that Genuino was not reinstated to work or placed
on payroll reinstatement, and her dismissal is based on a just
cause, then she is not entitled to be paid the salaries stated in
item no. 3 of the fallo of the September 3, 1994 NLRC
Decision.34 (Emphases supplied.)
Thus, PFIZER implores the Court to annul the award of
backwages and separation pay as well as to require respondent
to refund the amount that she was able to collect by way of
garnishment from PFIZER as her accrued salaries.
The contention cannot be given merit since this question has
been settled by the Court en banc.
In the recent milestone case of Garcia v. Philippine Airlines,
Inc.,35 the Court wrote finis to the stray posture
in Genuino requiring the dismissed employee placed on payroll
reinstatement to refund the salaries in case a final decision
upholds the validity of the dismissal. In Garcia, we clarified the
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Labor Law II
principle of reinstatement pending appeal due to the emergence
of differing rulings on the issue, to wit:
On this score, the Court's attention is drawn to seemingly
divergent decisions concerning reinstatement pending appeal or,
particularly, the option of payroll reinstatement. On the one
hand is the jurisprudential trend as expounded in a line of cases
including Air Philippines Corp. v. Zamora, while on the other is
the recent case of Genuino v. National Labor Relations
Commission. At the core of the seeming divergence is the
application of paragraph 3 of Article 223 of the Labor Code x x
x.
xxxx
The view as maintained in a number of cases is that:
x x x [E]ven if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the part of
the employer to reinstate and pay the wages of the
dismissed employee during the period of appeal until
reversal by the higher court. On the other hand, if the
employee has been reinstated during the appeal period and
such reinstatement order is reversed with finality, the employee
is not required to reimburse whatever salary he received for he
is entitled to such, more so if he actually rendered services
during the period. (Emphasis in the original; italics and
underscoring supplied)

In other words, a dismissed employee whose case was
favorably decided by the Labor Arbiter is entitled to receive
wages pending appeal upon reinstatement, which is
immediately executory. Unless there is a restraining order, it is
ministerial upon the Labor Arbiter to implement the order of
reinstatement and it is mandatory on the employer to comply
therewith.
The opposite view is articulated in Genuino which states:
If the decision of the labor arbiter is later reversed on appeal
upon the finding that the ground for dismissal is valid, then the
employer has the right to require the dismissed
employee on payroll reinstatement to refund the salaries
[he] received while the case was pending appeal, or it can be
deducted from the accrued benefits that the dismissed
employee was entitled to receive from [his] employer under
existing laws, collective bargaining agreement provisions, and
company practices. However, if the employee was reinstated to
work during the pendency of the appeal, then the employee is
entitled to the compensation received for actual services
rendered without need of refund.
Considering that Genuino was not reinstated to work or placed
on payroll reinstatement, and her dismissal is based on a just
cause, then she is not entitled to be paid the salaries stated in
item no. 3 of the fallo of the September 3, 1994 NLRC Decision.
(Emphasis, italics and underscoring supplied)
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Labor Law II
It has thus been advanced that there is no point in releasing the
wages to petitioners since their dismissal was found to be valid,
and to do so would constitute unjust enrichment.
Prior to Genuino, there had been no known similar case
containing a dispositive portion where the employee was
required to refund the salaries received on payroll reinstatement.
In fact, in a catena of cases, the Court did not order the refund
of salaries garnished or received by payroll-reinstated
employees despite a subsequent reversal of the reinstatement
order.
The dearth of authority supporting Genuino is not difficult to
fathom for it would otherwise render inutile the rationale of
reinstatement pending appeal.
xxxx
x x x Then, by and pursuant to the same power (police power),
the State may authorize an immediate implementation, pending
appeal, of a decision reinstating a dismissed or separated
employee since that saving act is designed to stop, although
temporarily since the appeal may be decided in favor of the
appellant, a continuing threat or danger to the survival or even
the life of the dismissed or separated employee and his family.36

Furthermore, in Garcia, the Court went on to discuss the
illogical and unjust effects of the "refund doctrine" erroneously
espoused in Genuino:
Even outside the theoretical trappings of the discussion and into
the mundane realities of human experience, the "refund
doctrine" easily demonstrates how a favorable decision by the
Labor Arbiter could harm, more than help, a dismissed
employee. The employee, to make both ends meet, would
necessarily have to use up the salaries received during the
pendency of the appeal, only to end up having to refund the sum
in case of a final unfavorable decision. It is mirage of a stop-gap
leading the employee to a risky cliff of insolvency.1avvphi1
Advisably, the sum is better left unspent. It becomes more
logical and practical for the employee to refuse payroll
reinstatement and simply find work elsewhere in the interim, if
any is available. Notably, the option of payroll reinstatement
belongs to the employer, even if the employee is able and raring
to return to work. Prior to Genuino, it is unthinkable for one to
refuse payroll reinstatement. In the face of the grim possibilities,
the rise of concerned employees declining payroll reinstatement
is on the horizon.
Further, the Genuino ruling not only disregards the social justice
principles behind the rule, but also institutes a scheme unduly
favorable to management. Under such scheme, the salaries
dispensed pendente lite merely serve as a bond posted in
148
Labor Law II
installment by the employer. For in the event of a reversal of the
Labor Arbiter's decision ordering reinstatement, the employer
gets back the same amount without having to spend ordinarily
for bond premiums. This circumvents, if not directly contradicts,
the proscription that the "posting of a bond [even a cash bond]
by the employer shall not stay the execution for reinstatement."
In playing down the stray posture in Genuino requiring the
dismissed employee on payroll reinstatement to refund the
salaries in case a final decision upholds the validity of the
dismissal, the Court realigns the proper course of the prevailing
doctrine on reinstatement pending appeal vis-à-vis the effect of
a reversal on appeal.
xxxx
The Court reaffirms the prevailing principle that even if the
order of reinstatement of the Labor Arbiter is reversed on
appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee
during the period of appeal until reversal by the higher
court. x x x.37 (Emphasis supplied.)
In sum, the Court reiterates the principle that reinstatement
pending appeal necessitates that it must be immediately
self-executory without need for a writ of execution during the
pendency of the appeal, if the law is to serve its noble purpose,
and any attempt on the part of the employer to evade or delay
 149

Labor Law II

its execution should not be allowed. Furthermore, we likewise CARMEN PORTUGUEZ, LYDIA
restate our ruling that an order for reinstatement entitles an o
PENNULAR, EMERENCIANA WOOD,
employee to receive his accrued backwages from the moment PRISCILLAoESPINEDA, NANCY FERNANDEZ,
the reinstatement order was issued up to the date when the EVAo MANDURIAGA, CONSOLACION SERRANO, SIONY
same was reversed by a higher court without fear of refunding CASILLAN, LUZVIMINDA GABUYA, MYRNA TAMIN,
what he had received. It cannot be denied that, under our EVELYN REYES, EVA AYENG, EDNA YAP, RIZAo DELA
statutory and jurisprudential framework, respondent is entitled CRUZ ZUÑIGA, TRINIDAD RELOX, MARLON FALLA,
to payment of her wages for the period after December 5, 2003 MARICEL OCON, and ELVIRA MACAPAGAL, Petitioners,
until the Court of Appeals Decision dated November 23, 2005, vs.
notwithstanding the finding therein that her dismissal was legal FAIRLAND KNITCRAFT CO., INC., Respondent.
and for just cause. Thus, the payment of such wages cannot be
deemed as unjust enrichment on respondent’s part. x - - - - - - - - - - - - - - - - - - - - - - -x

WHEREFORE, the petition is DENIED and the assailed
Resolution dated October 23, 2006 as well as the Resolution
dated April 10, 2007 both issued by the Court of Appeals in
CA-G.R. SP No. 88987 are hereby AFFIRMED.
SO ORDERED.
G.R. No. 182915 December 12, 2011
MARIALY O. SY, VIVENCIA PENULLAR, AURORA
AGUINALDO, GINA ANIANO,o GEMMA DELA PEÑA,
EFREMIAoMATIAS, ROSARIO BALUNSAY, ROSALINDA
PARUNGAO, ARACELIoRUAZA, REGINA RELOX,
TEODORA VENTURA, AMELIA PESCADERO, LYDIA DE
GUZMAN, HERMINIA HERNANDEZ, OLIVIA ABUAN,
G.R. No. 189658
SUSAN T. DE LEON, Petitioner,
vs.
FAIRLAND KNITCRAFT CO., INC., MARIALY O. SY,
VIVENCIA PENULLAR, AURORA AGUINALDO, GINA
ANIANO, GEMMA DELA PEÑA, EFREMIA MATIAS,
ROSARIO BALUNSAY, ROSALINDA PARUNGAO, ARACELI
RUAZA, REGINA RELOX, TEODORA VENTURA, AMELIA
PESCADERO, RICHON APARRE, LYDIA DE GUZMAN,
HERMINIA HERNANDEZ, OLIVIA ABUAN, CARMEN
PORTUGUEZ, LYDIA PENNULAR, EMERENCIANA WOOD,
PRISCILLA ESPINEDA, NANCY FERNANDEZ, EVA
MANDURIAGA, CONSOLACION SERRANO, SIONY
CASILLAN, LUZVIMINDA GABUYA, MYRNA TAMIN,
 150

Labor Law II

EVELYN REYES, EVA AYENG, EDNA YAP, RIZA DELA November 30, 2004 Decision and August 26, 2005 Resolution
CRUZ ZUÑIGA, TRINIDAD RELOX, MARLON FALLA, of the NLRC. Likewise assailed is the October 1, 2009 CA
MARICEL OCON, and ELVIRA MACAPAGAL, Respondents. Resolution7 denying the Motion for Reconsideration thereto.

DECISION Factual Antecedents

DEL CASTILLO, J.: Fairland is a domestic corporation engaged in garments

business, while Susan de Leon (Susan) is the
The issues of labor-only contracting and the acquisition of a owner/proprietress of Weesan Garments (Weesan).
labor tribunal of jurisdiction over the person of a respondent are
the matters up for consideration in these consolidated Petitions On the other hand, the complaining workers (the workers) are
for Review on Certiorari. sewers, trimmers, helpers, a guard and a secretary who were
hired by Weesan as follows:
Assailed in G.R. No. 182915 is the May 9, 2008 Resolution 1 of
the Special Ninth Division of the Court of Appeals (CA) in DATE
CA-G.R. SP No. 93204 which reversed and set aside the July NAME SALARIES
HIRED
25, 2007 Decision2 of the CA’s First Division and ordered the
exclusion of Fairland Knitcraft Co., Inc. (Fairland) from the Marialy O. Sy 6/23/1997 P 1,500.00/week
decisions of the labor tribunals. Said July 25, 2007 Decision, on
the other hand, affirmed the November 30, 2004 Decision 3 and Lydia Penullar Apr-99 1,000.00/week
August 26, 2005 Resolution4of the National Labor Relations
Commission (NLRC) which, in turn, reversed and set aside the Lydia De Guzman 8/1/1998 1,000.00/week
November 26, 2003 Decision5 of the Labor Arbiter finding the
dismissal as valid. Olivia Abuan Aug-95 1,300.00/week

On the other hand, assailed in G.R. No. 189658 is the July 20, Evelyn Reyes Nov-00 1,000.00/week
2009 Decision6 of the CA’s Special Former Special Eighth
Division in CA-G.R. SP No. 93860, which affirmed the aforesaid
 151

Labor Law II

Myrna Tamin Nov-00 1,000.00/week Teodora Ventura Jan-00 1,000.00/week

Elvira Macapagal 4/1/2002 1,000.00/week Regina Relox May-97 1,500.00/week

Edna Yap 10/24/1999 700.00/week Eufemia Matias Mar-00 1,000.00/week

Rosario Balunsay 1/21/1998 1,400.00/week Herminia

Aug-95 1,000.00/week
Hernandez
Rosalinda P.
3/2/2001 1,000.00/week
Parungao Richon Aparre Jul-99 1,200.00/week

Gemma Dela Peña 11/24/1999 1,000.00/week Eve Manduriaga Feb-00 1,000.00/week

Emerenciana Wood Jan-98 1,400.00/week Priscila Espineda Nov-00 1,300.00/week

Carmen Portuguez Nov-00 800.00/week Aracelli Ruaza Mar-00 1,000.00/week

Gina G. Anano Sep-98 1,500.00/week Nancy Fernandez Nov-00 1,400.00/week

Aurora Aguinaldo Jan-00 1,000.00/week Eva Ayeng Nov-00 1,000.00/week

Amelia Pescadero Jan-96 1,000.00/week Luzviminda

Nov-00 1,000.00/week
Gabuya
Siony Casillan May-02 1,000.00/week
Liza Dela Cuz
Consolacion Oct-01 1,200.00/week
Oct-01 900.00/week Zuñiga
Serrano
Vivencia Penullar Jan-00 1,500.00/week
 152

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Trinidad Relox Aug-96 1,200.00/week A Notice of Hearing12 was thereafter sent to Weesan requesting
it to appear before Labor Arbiter Ramon Valentin C. Reyes
Marlon Falla 6/24/2000 840.00/week (Labor Arbiter Reyes) on April 3, 2003, at 10:00 a.m. On said
date and time, Atty. Antonio A. Geronimo (Atty. Geronimo)
Maricel Ocon 1/15/2001 1,500.00/week8 appeared as counsel for Weesan and requested for an
extension of time to file his client’s position paper.13 On the next
hearing on April 28, 2003, Atty. Geronimo also entered his
On December 23, 2002, workers Marialy O. Sy, Vivencia appearance for Fairland and again requested for an extension
Penullar, Aurora Aguinaldo, Gina Aniano, Gemma dela Peña of time to file position paper.14
and Efremia Matias filed with the Arbitration Branch of the
NLRC a Complaint9 for underpayment and/or non-payment of On May 16, 2003, Atty. Geronimo filed two separate position
wages, overtime pay, premium pay for holidays, 13th month pay papers – one for Fairland15 and another for
and other monetary benefits against Susan/Weesan. In January 16
Susan/Weesan. The Position Paper for Fairland was verified
2003, the rest of the aforementioned workers also filed similar by Debbie while the one for Susan/Weesan was verified by
complaints. Eventually all the cases were consolidated as they Susan. To these pleadings, the workers filed a Reply.17
involved the same causes of action.
Atty. Geronimo then filed a Consolidated Reply18 verified19 both
On February 5, 2003, Weesan filed before the Department of by Susan and Debbie.
Labor and Employment-National Capital Region (DOLE-NCR) a
report on its temporary closure for a period of not less than six On November 25, 2003, the workers submitted their
months. As the workers were not anymore allowed to work on Rejoinder.20
that same day, they filed on February 18, 2003 an Amended
Complaint,10 and on March 13, 2003, another pleading entitled Ruling of the Labor Arbiter
Amended Complaints and Position Paper for Complainants, 11 to
include the charge of illegal dismissal and impleaded Fairland On November 26, 2003, Labor Arbiter Reyes rendered his
and its manager, Debbie Manduabas (Debbie), as additional Decision,21 the dispositive portion of which reads:
respondents.

WHEREFORE, premises all considered, judgment is hereby
rendered, as follows:
Dismissing the complaint for lack of merit; and ordering the
respondents to pay each complainant ₱5,000.00 by way of
financial assistance.
SO ORDERED.22
Ruling of the National Labor Relations Commission
The workers filed their appeal which was granted by the NLRC.
The dispositive portion of the NLRC Decision23reads:
WHEREFORE, premises considered, the appealed decision is
hereby set aside and the dismissal of complainants is declared
illegal.
Respondents are, therefore, ordered to reinstate complainants
to their original or equivalent position with full backwages with
legal interests thereon from February 5, 2003, until actually
reinstated and fully paid, with retention of seniority rights and
are further ordered to pay solidarily to the complainants the
difference of their underpaid/unpaid wages, unpaid holidays,
unpaid 13th month pays and unpaid service incentive leaves
with legal interests thereon, to wit:
xxxx
153
Labor Law II
In the event that reinstatement is not possible, respondents are
ordered to pay solidarily to complainants their respective
separation pays computed as follows:
xxxx
Respondents are likewise ordered to pay ten (10%) percent of
the gross award as and by way of attorney’s fees.
SO ORDERED.24
Hence, Atty. Geronimo filed a Motion for
25
Reconsideration. However, Fairland filed another Motion for
Reconsideration26 through Atty. Melina O. Tecson (Atty. Tecson)
assailing the jurisdiction of the Labor Arbiter and the NLRC over
it, claiming that it was never summoned to appear, attend or
participate in all the proceedings conducted therein. It also
denied that it engaged the services of Atty. Geronimo.
The NLRC however, denied both motions for lack of merit.27
Fairland and Susan thus filed their separate Petitions
for Certiorari before the CA docketed as CA-G.R. SP No. 93204
and CA-G.R. SP No. 93860, respectively.
Ruling of the Court of Appeals in CA-G.R. SP No. 93204

On July 25, 2007, the CA’s First Division denied Fairland’s
petition.28 It affirmed the NLRC’s ruling that the workers were
illegally dismissed and that Weesan and Fairland are solidarily
liable to them as labor-only contractor and principal,
respectively.
Fairland filed its Motion for Reconsideration29 as well as a
30
Motion for Voluntary Inhibition of Associate Justices Celia C.
Librea-Leagogo and Regalado E. Maambong from handling the
case. As the Motion for Voluntary Inhibition was granted through
a Resolution31 dated November 8, 2007, the case was
transferred to the CA’s Special Ninth Division for resolution of
Fairland’s Motion for Reconsideration.32
On May 9, 2008, the CA’s Special Ninth Division reversed33 the
First Division’s ruling. It held that the labor tribunals did not
acquire jurisdiction over the person of Fairland, and even
assuming they did, Fairland is not liable to the workers since
Weesan is not a mere labor-only contractor but a bona fide
independent contractor. The Special Ninth Division thus
annulled and set aside the assailed NLRC Decision and
Resolution insofar as Fairland is concerned and excluded the
latter therefrom. The dispositive portion of said Resolution
reads:
WHEREFORE, the Motion for Reconsideration filed by the
movant is GRANTED.
154
Labor Law II
The July 25, 2007 Decision of the First Division of this Court
finding that the NLRC did not act with grave abuse of discretion
amounting to lack or excess of jurisdiction and denying the
Petition is REVERSED and SET ASIDE.
Consequently, the Decision and Resolution issued by the public
respondent on November 30, 2004 and August 26, 2005,
respectively, are hereby ANNULLED and SET ASIDE insofar as
[it] concerns the petitioner Fairland Knitcraft Co., Inc. [which] is
hereby ordered dropped and excluded therefrom.
SO ORDERED.34
Aggrieved, the workers filed before us their Petition for Review
on Certiorari docketed as G.R. No. 182915.
Ruling of the Court of Appeals in CA-G.R. SP No. 93860
With regard to Susan’s petition, the CA Special Ninth Division
issued on May 11, 2006 a Resolution35 temporarily restraining
the NLRC from enforcing its assailed November 30, 2004
Decision and thereafter the CA Special Eighth Division issued a
writ of preliminary prohibitory injunction.36 On July 20, 2009, the
Special Former Special Eighth Division of the CA resolved the
case through a Decision,37 the dispositive portion of which
reads:

WHEREFORE, premises considered, the present petition is
hereby DENIED DUE COURSE and accordingly DISMISSED
for lack of merit. The Decision dated November 30, 2004 and
Resolution dated August 26, 2005 of the National Labor
Relations Commission (NLRC) in CA No. 039375-04 (NLRC
NCR 00-12-11294-02, 00-01-00027-03, 00-01-00131-03,
00-01-00820-03 and 00-01-01249-03) are hereby AFFIRMED
and UPHELD.
The writ of preliminary prohibitory injunction issued by this Court
on July 13, 2006 is hereby LIFTED and SET ASIDE.
With cost against petitioner.
SO ORDERED.38
Susan moved for reconsideration39 which was denied by the CA
in its October 1, 2009 Resolution.40
Hence, she filed before this Court a Petition for Review on
Certiorari docketed as G.R. No. 189658 which was denied in
this Court’s December 16, 2009 Resolution41 on technicality and
for failure to sufficiently show any reversible error in the assailed
judgment.
Susan and Fairland filed their respective Motions for
Reconsideration.42 But before said motions could be resolved,
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Labor Law II
the Court ordered the consolidation of Susan’s petition with that
of the workers.43
Susan’s Motion for Reconsideration of this Court’s December
16, 2009 Resolution in G.R No. 189658 is granted.
Consequently, her Petition for Review on Certiorari is
reinstated.
With Susan and Fairland’s respective Motions for
Reconsideration still unresolved, this Court shall first address
them.
One of the grounds for the denial of Susan’s petition was her
failure to indicate the date of filing her Motion for
Reconsideration with the CA as required under Section
4(b),44 Rule 45 of the Rules of Court. However, "failure to
comply with the rule on a statement of material [date] in the
petition may be excused [if] the [date is] evident from the
records."45 In the case of Susan, records show that she
received the copy of the Decision of the CA on July 24, 2009.
She then timely filed her Motion for Reconsideration via
registered mail on August 7, 2009 as shown by the
envelope46 with stamped receipt of the Batangas City Post
Office bearing the date August 7, 2009. The fact of such filing
was also stated in the Motion for Extension of Time to File
Petition for Review47 that she filed before this Court which forms
part of the records of this case. Hence, it is clear that Susan
seasonably filed her Motion for Reconsideration.

Moreover, while we note that Susan’s petition was also denied
on the ground of no reversible error committed by the CA, we
deem it proper, in the interest of justice, to take a second look
on the merits of Susan’s petition and reinstate G.R. No. 189658.
This is also to harmonize our ruling in these consolidated
petitions and avoid confusion that may arise in their execution.
Hence, we grant Susan’s Motion for Reconsideration and
consequently, reinstate her Petition for Review on Certiorari.
As to Fairland’s Motion for Reconsideration, we shall treat the
same as its comment to Susan’s petition, Fairland being one of
the respondents therein.
Issues
In G.R. No. 189658, Susan imputes upon the CA the following
errors:
I.
The Court of Appeals erred in finding that petitioner is a
labor-only contractor acting as an agent of respondent Fairland.
II.
The Court of Appeals erred in finding that the individual private
respondents were illegally dismissed.
156
Labor Law II
III.
The Court of Appeals erred in not resolving the issue raised by
petitioner in her reply DATED JULY 8, 2006 regarding the
propriety of the appeal taken by private respondent Richon
Cainoy Aparre who was already dead prior to the filing of the
memorandum of appeal before the NLRC.48
Susan’s Arguments
Susan insists that the CA erred in ruling that Weesan is a
labor-only contractor based on the finding that its workplace is
owned by Fairland. She maintains that the place is owned by De
Luxe Shirt Factory, Inc. (De Luxe) and not by Fairland as shown
by the Contracts of Lease between Weesan and De Luxe.
Susan also avers that the CA erred in ruling that Weesan was
guilty of illegal dismissal. She maintains that the termination of
the workers was due to financial losses suffered by Weesan as
shown by various documents submitted by the latter to the
tribunals below. In fact, Weesan submitted its Establishment
Termination Report with the DOLE-NCR and same was duly
received by the latter.
Lastly, Susan argues that the appeal of one of the workers,
Richon Cainoy Aparre (Richon), should not have been given
due course because in the Notice of Appeal with Appeal
Memorandum filed with the NLRC, a certain Luzvilla A. Rayon

(Luzvilla), whose identity was never established, signed for and
on his behalf. However, there is no information submitted before
the NLRC that Richon is already dead, and in any event, no
proper substitution was ever made.
The Workers’ Arguments
The workers claim that Weesan is a labor-only contractor
because it does not have substantial capital or investment in the
form of tools, equipment, machineries, and work premises,
among others, and that the workers it recruited are performing
activities which are directly related to the garments business of
Fairland. Hence, Weesan should be considered as a mere
agent of Fairland, who shall be responsible to the workers as if
they were directly employed by it (Fairland).49
The workers also allege that the temporary suspension of
operations of Weesan was motivated not by a desire to prevent
further losses, but to discourage the workers from ventilating
their claims for non-payment/underpayment of wages and
benefits. The fact that Weesan was experiencing serious
business losses was not sufficiently established and therefore
the termination of the workers due to alleged business losses is
invalid.50
Fairland’s Arguments
157
Labor Law II
Fairland maintains that it was never served with summons to
appear in the proceedings before the Labor Arbiter nor
furnished copies of the Labor Arbiter’s Decision and Resolution
on the workers’ complaints for illegal dismissal; that it never
voluntarily appeared before the labor tribunals through Atty.
Geronimo;51 that it is a separate and distinct business entity
from Weesan; that Weesan is a legitimate job contractor, hence,
the workers were actually its (Weesan’s) employees; and that,
consequently, the workers have no cause of action against
Fairland.52
At any rate, assuming that the workers have a cause of action
against Fairland, their claims are already barred by prescription.
Of the 34 individual complainants (the workers), only six were
employees of Weesan during the period of its contractual
relationship with Fairland in 1996 and 1997. They were Marialy
Sy, Olivia Abuan, Amelia Pescadero, Regina Relox, Hermina
Hernandez and Trinidad Relox. These workers filed their
complaints in December 2002 and January 2003 or more than
four years from the expiration of Weesan’s contractual
arrangement with Fairland in 1997. Article 291 of the Labor
Code provides that all money claims arising from
employer-employee relationship shall be filed within three years
from the time the cause of action accrued; otherwise, they shall
be forever barred. Illegal dismissal prescribes in four years and
damages due to separation from employment for alleged
unjustifiable causes injuring a plaintiff’s right must likewise be
brought within four years under the Civil Code. Clearly, the

claims of said six employees are already barred by
prescription.53
In G.R. No. 182915, the workers advance the following issues:
I.
Whether x x x the National Labor Relations Commission
acquired jurisdiction over the [person of the] respondent[;]
II.
Whether x x x the decision of the National Labor Relations
Commission became final and executory[; and]
III.
Whether x x x respondent is solidarily liable with WEESAN
GARMENT/ SUSAN DE LEON[.]54
The Workers’ Arguments
The workers contend that the Labor Arbiter and the NLRC
properly acquired jurisdiction over the person of Fairland
because the latter voluntarily appeared and actively participated
in the proceedings below when Atty. Geronimo submitted on its
behalf a Position Paper verified by its manager, Debbie. As
manager, Debbie knew of all the material and significant events
158
Labor Law II
which transpired in Fairland since she had constant contact with
the people in the day-to-day operations of the company. Thus,
the workers maintain that the Labor Arbiter and the NLRC
acquired jurisdiction over the person of Fairland and the
Decisions rendered by the said tribunals are valid and binding
upon it.
Lastly, the workers aver that Fairland is solidarily liable with
Susan/ Weesan because it was shown that the latter was
indeed the sewing arm of the former and is a mere "labor-only
contractor".
Fairland’s Arguments
In gist, Fairland contests the labor tribunals’ acquisition of
jurisdiction over its person either through service of summons or
voluntary appearance. It denies that it engaged the services of
Atty. Geronimo and asserts that it has its own legal counsel,
Atty. Tecson, who would have represented it had it known of the
pendency of the complaints against Fairland.
Fairland likewise emphasizes that when it filed its Motion for
Reconsideration with the NLRC, it made an express reservation
that the same was without prejudice to its right to question the
jurisdiction over its person and the binding effect of the assailed
decision. In the absence, therefore, of a valid service of
summons or voluntary appearance, the proceedings conducted
and the judgment rendered by the labor tribunals are null and

void as against it. Hence, Fairland cannot be held solidarily
liable with Susan/Weesan.
Our Ruling
We grant the workers’ petition (G.R. No. 182915) but deny the
petition of Susan (G.R. No. 189658).
G.R. No. 189658
Susan/Weesan is a mere labor-only contractor.
"There is labor-only contracting when the contractor or
subcontractor merely recruits, supplies or places workers to
perform a job, work or service for a principal. In labor-only
contracting, the following elements are present:
(a) The person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others; and
(b) The workers recruited and placed by such person are
performing activities which are directly related to the principal
business of the employer."55
Here, there is no question that the workers, majority of whom
are sewers, were recruited by Susan/Weesan and that they
performed activities which are directly related to Fairland’s
159
Labor Law II
principal business of garments. What must be determined is
whether Susan/Weesan has substantial capital or investment in
the form of tools, equipment, machineries, work premises,
among others.
We have examined the records but found nothing therein to
show that Weesan has investment in the form of tools,
equipment or machineries. The records show that Fairland has
to furnish Weesan with sewing machines for it to be able to
provide the sewing needs of the former.56 Also, save for the
Balance Sheets57 purportedly submitted by Weesan to the
Bureau of Internal Revenue (BIR) indicating its fixed assets
(factory equipment) in the amount of ₱243,000.00, Weesan was
unable to show that apart from the borrowed sewing machines,
it owned and possessed any other tools, equipment, and
machineries necessary to its being a contractor or
sub-contractor for garments. Neither was Weesan able to prove
that it has substantial capital for its business.
Likewise significant is the fact that there is doubt as to who
really owns the work premises occupied by Weesan. As may be
recalled, the workers emphasized in their Appeal
Memorandum58 filed with the NLRC that Susan/Weesan was a
labor-only contractor and that Fairland was its principal. To
buttress this, they alleged that the work premises utilized by
Weesan is owned by Fairland, which significantly, was not in the
business of renting properties. They also advanced that there
was no showing that Susan/Weesan paid any rentals for the use

of the premises. They contended that all that Susan had was a
Mayor’s Permit for
Weesan indicating 715 Ricafort Street, Tondo, Manila as its
address.
Susan failed to refute these allegations before the NLRC and
attributed such failure to her former counsel, Atty. Geronimo.
But when Susan’s petition for certiorari was given due course by
the CA, she finally had the chance to answer the same by
denying that Fairland owned the work premises. Susan instead
claimed that Weesan rented the premises from another entity,
De Luxe. To support this, she attached to her petition two
Contracts of Lease59purportedly entered into by her and De
Luxe for the lease of the premises covering the periods August
1, 1997 to July 31, 2000 and January 1, 2001 to December 31,
2004.
On the other hand, the workers in their Comment60 filed in
CA-G.R. SP No. 93204 (Fairland’s petition for certiorari before
the CA), pointed out that in Fairland’s Amended Articles of
Incorporation,61 five out of the seven incorporators listed therein
appeared to be residents of the same 715 Ricafort St., Tondo,
Manila. To the workers, this is a clear indication that Fairland
indeed owned Weesan’s work premises. Fairland, for its part,
tried to explain this by saying that its incorporators, just like
Weesan, were also mere lessees of a portion of the multi-storey
building owned by De Luxe located at 715 Ricafort St., Tondo,
160
Labor Law II
Manila. It also claimed that two years prior to Weesan’s
occupation of said premises in 1996, the five incorporators
alluded to already transferred.62
We cannot, however, ignore the apt observation on the matter
made by the CA’s Special Former Special Eighth Division in its
Decision in CA-G.R. SP No. 93860, viz:
The work premises are likewise owned by Fairland, which
petitioner tried to disprove by presenting a purported Contract of
Lease with another entity, De Luxe Shirt Factory Co.,
Inc. However, there is no competent proof it paid the
supposed rentals to said ‘owner’. Curiously, under the item
‘Rent Expenses’ in its audited financial statement, only
equipment rental was listed therein without any
disbursement/expense for rental of factory premises, which
only buttressed the claim of private respondents that the place
where they reported to and performed sewing jobs for petitioner
[Susan] and Fairland at No. 715 Ricafort St., Tondo, Manila,
belonged to Fairland.63 (Emphasis supplied.)
Susan contests this pronouncement by pointing out that
although only sewing machines were specified under the entry
"Rent Expenses" in its financial statement, the rent for the
factory premises is already deemed included therein since the
contracts of lease she entered into with De Luxe referred to both
the factory premises and machineries.

We, however, find this contention implausible.
We went over the said contracts of lease and noted that same
were principally for the lease of the premises in 715 Ricafort St.,
Tondo, Manila. Only incidental thereto is the inclusion therein of
the equipment found in said premises. Hence, we cannot see
why the rentals for the work premises, for which Susan even
went to the extent of executing a contract with the purported
lessor, was not included in the entry for rent expenses in
Weesan’s financial statement. Even if we are to concede to
Susan’s claim that the entry for rent expenses already includes
the rentals for the work premises, we wonder why the rental
expenses for the year 2000 which was ₱396,000.00 is of the
same amount with the rental expenses for the year 2001. As
borne out by the Contract of Lease covering the period August 1,
1997 to July 31, 2000, the monthly rent for the work premises
was pegged at ₱25,000.00.64 However, in January to December
2001, same was increased to ₱27,500.00.65 There being an
increase in the rentals for the work premises, how come that
Weesan’s rental expenses for the year 2001 is still ₱396,000.00?
This could only mean that said entry really only refers to the
rentals of sewing machines and does not include the rentals for
the work premises. Moreover, we note that Susan could have
just simply submitted receipts for her payments of rentals to De
Luxe. However, she failed to present even a single receipt
evidencing such payment.
161
Labor Law II
In an attempt to prove that it is De Luxe and not Fairland which
owned the work premises, Susan attached to her petition the
following: (1) a plain copy of Transfer Certificate of Title (TCT)
No. 13979066 and Declaration of Real Property67 both under the
name of De Luxe; and, (2) Real Property Tax receipts issued to
De Luxe for the years 2000-2004.68 However, the Court finds
these documents wanting. Nowhere from the said TCT and
Declaration of Real Property can it be inferred that the property
they refer to is the same property as that located at 715 Ricafort
St., Tondo, Manila. Although in said Declaration, 715 Ricafort
St., Tondo is the indicated address of the declarant (De Luxe),
the address of the property declared is merely "Ricafort, Tondo
I-A". The same thing can also be said with regard to the real
property tax receipts. The entry under the box Location of
Property in the receipt for 2001 is "I - 718 Ricafort" and in the
receipts for 2002, 2003, and 2004, the entries are either "I –
Ricafort St., Tondo" or merely "I-Ricafort St."
In sum, the Court finds that Susan’s effort to negate Fairland’s
ownership of the work premises is futile. The logical conclusion
now is that Weesan does not have its own workplace and is only
utilizing the workplace of Fairland to whom it supplied workers
for its garment business.
Suffice it to say that "[t]he presumption is that a contractor is a
labor-only contractor unless such contractor overcomes the
burden of proving that it has substantial capital, investment,
tools and the like."69 As Susan/Weesan was not able to adduce

evidence that Weesan had any substantial capital, investment
or assets to perform the work contracted for, the presumption
that Weesan is a labor-only contractor stands.70
The National Labor Relations Commission and the Court of
Appeals did not err in their findings of illegal dismissal.
To negate illegal dismissal, Susan relies on the due closure of
Weesan pursuant to the Establishment Termination Report it
submitted to the DOLE-NCR.
Indeed, Article 28371 of the Labor Code allows as a mode of
termination of employment the closure or termination of
business. "Closure or cessation of business is the complete or
partial cessation of the operations and/or shut-down of the
establishment of the employer. It is carried out to either stave off
the financial ruin or promote the business interest of the
employer."72 "The decision to close business [or to temporarily
suspend operation] is a management prerogative exclusive to
the employer, the exercise of which no court or tribunal can
meddle with, except only when the employer fails to prove
compliance with the requirements of Art. 283, to wit: a) that the
closure/cessation of business is bona fide, i.e., its purpose is to
advance the interest of the employer and not to defeat or
circumvent the rights of employees under the law or a valid
agreement; b) that written notice was served on the employees
and the DOLE at least one month before the intended date of
closure or cessation of business; and c) in case of
162
Labor Law II
closure/cessation of business not due to financial losses, that
the employees affected have been given separation pay
equivalent to ½ month pay for every year of service or one
month pay, whichever is higher."73
Here, Weesan filed its Establishment Termination
74
Report allegedly due to serious business losses and other
economic reasons. However, we are mindful of the doubtful
character of Weesan’s application for closure given the
circumstances surrounding the same.
First, workers Marialy Sy, Vivencia Penullar, Aurora Aguinaldo,
Gina Aniano, Gemma Dela Peña and Efremia Matias filed
before the Labor Arbiter their complaint for underpayment of
salary, non-payment of benefits, damages and attorney’s fees
against Weesan on December 23, 2002.75 Summons76 was
accordingly issued and same was received by Susan on
January 15, 2003.77 Meanwhile, other workers followed suit and
filed their respective complaints on January 2, 6, 17 and 28,
2003.78 Shortly thereafter or merely eight days after the filing of
the last complaint, Weesan filed with the DOLE-NCR its
Establishment Termination Report.
Second, the Income Tax Returns79 for the years 2000, 2001 and
2002 attached to the Establishment Termination Report,
although bearing the stamped receipt of the Revenue District
Office where they were purportedly filed, contain no signature or
initials of the receiving officer. The same holds true with

Weesan’s audited financial statements.80 This engenders doubt
as to whether these documents were indeed filed with the
proper authorities.
Third, there was no showing that Weesan served upon the
workers written notice at least one month before the intended
date of closure of business, as required under Art. 283 of the
Labor Code. In fact, the workers alleged that when Weesan filed
its Establishment Termination Report on February 5, 2003, it
already closed the work premises and did not anymore allow
them to report for work. This is the reason why the workers on
February 18, 2003 amended their complaint to include the
charge of illegal dismissal.81
It bears stressing that "[t]he burden of proving that x x x a
temporary suspension is bona fide falls upon the
82
employer." Clearly here, Susan/Weesan was not able to
discharge this burden. The documents Weesan submitted to
support its claim of severe business losses cannot be
considered as proof of financial crisis to justify the temporary
suspension of its operations since they clearly appear to have
not been duly filed with the BIR. Weesan failed to satisfactorily
explain why the Income Tax Returns and financial statements it
submitted do not bear the signature of the receiving officers.
Also hard to ignore is the absence of the mandatory 30-day
prior notice to the workers.
163
Labor Law II
Hence, the Court finds that Susan failed to prove that the
suspension of operations of Weesan was bona fide and that it
complied with the mandatory requirement of notice under the
law. Susan likewise failed to discharge her burden of proving
that the termination of the workers was for a lawful cause.
Therefore, the NLRC and the CA, in CA-G.R. SP No. 93860, did
not err in their findings that the workers were illegally dismissed
by Susan/Weesan.
The formal substitution of the deceased
worker Richon Aparre is not necessary as his heir voluntarily
appeared and participated in the proceedings before the
National Labor Relations Commission.
In Sarsaba v. Fe Vda. de Te, we held that:83
The rule on substitution of parties is governed by Section
16,84 Rule 3 of the [Rules of Court].
Strictly speaking, the rule on substitution by heirs is not a matter
of jurisdiction, but a requirement of due process. The rule on
substitution was crafted to protect every party's right to due
process. It was designed to ensure that the deceased party
would continue to be properly represented in the suit through his
heirs or the duly appointed legal representative of his estate.
Moreover, non-compliance with the Rules results in the denial of
the right to due process for the heirs who, though not duly

notified of the proceedings, would be substantially affected by
the decision rendered therein. Thus, it is only when there is a
denial of due process, as when the deceased is not represented
by any legal representative or heir, that the court nullifies the
trial proceedings and the resulting judgment therein.
Here, the lack of formal substitution of the deceased worker
Richon did not result to denial of due process as to affect the
validity of the proceedings before the NLRC since his heir,
Luzvilla, was aware of the proceedings therein. In fact, she is
considered to have voluntarily appeared before the said tribunal
when she signed the workers’ Memorandum of Appeal filed
therewith. "This Court has ruled that formal substitution of
parties is not necessary when the heirs themselves voluntarily
appeared, participated, and presented evidence during the
proceedings."85Hence, the NLRC did not err in giving due
course to the appeal with respect to Richon.
Fairland’s claim of prescription deserves scant consideration.
Fairland asserts that assuming that the workers have valid
claims against it, same only pertain to six out of the 34
workers-complainants. According to Fairland, these six workers
were the only ones who were in the employ of Weesan at the
time Fairland and Weesan had existing contractual relationship
in 1996 to 1997. But then, Fairland contends that the claims of
these six workers have already been barred by prescription as
they filed their complaint more than four years from the
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Labor Law II
expiration of the alleged contractual relationship in 1997.
However, the Court notes that the records are bereft of anything
that provides for such alleged contractual relationship and the
period covered by it. Absent anything to support Fairland’s claim,
same deserves scant consideration.
Interestingly, we noticed Fairland’s letter86 dated January 31,
2003 informing Weesan that it would temporarily not be availing
of the latter’s sewing services and at the same time requesting
for the return of the sewing machines it lent to Weesan.
Assuming said letter to be true, why was Fairland terminating
Weesan’s services only on January 31, 2003 when it is now
claiming that its contractual relationship with the latter only
lasted until 1997? Thus, we find the contentions rather abstruse.
G.R. No. 182915
"It is basic that the Labor Arbiter cannot acquire jurisdiction over
the person of the respondent without the latter being served with
summons."87 However, "if there is no valid service of summons,
the court can still acquire jurisdiction over the person of the
defendant by virtue of the latter’s voluntary appearance."88
Although not served with summons, jurisdiction over Fairland
and Debbie was acquired through their voluntary appearance.
It can be recalled that the workers’ original complaints for
non-payment/ underpayment of wages and benefits were only

against Susan/Weesan. For these complaints, the Labor Arbiter
issued summons89 to Susan/Weesan which was received by the
latter on January 15, 2003.90 The workers thereafter amended
their then already consolidated complaints to include illegal
dismissal as an additional cause of action as well as Fairland
and Debbie as additional respondents. We have, however,
scanned the records but found nothing to indicate that
summons with respect to the said amended complaints was
ever served upon Weesan, Susan, or Fairland. True to their
claim, Fairland and Debbie were indeed never summoned by
the Labor Arbiter.
The crucial question now is: Did Fairland and Debbie voluntarily
appear before the Labor Arbiter as to submit themselves to its
jurisdiction?
Fairland argued before the CA that it did not engage Atty.
Geronimo as its counsel. However, the Court held in Santos v.
National Labor Relations Commission,91 viz:
In the instant petition for certiorari, petitioner Santos reiterates
that he should not have been adjudged personally liable by
public respondents, the latter not having validly acquired
jurisdiction over his person whether by personal service of
summons or by substituted service under Rule 19 of the Rules
of Court.
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Labor Law II
Petitioner’s contention is unacceptable. The fact that Atty.
Romeo B. Perez has been able to timely ask for a deferment of
the initial hearing on 14 November 1986, coupled with his
subsequent active participation in the proceedings, should
disprove the supposed want of service of legal processes.
Although as a rule, modes of service of summons are strictly
followed in order that the court may acquire jurisdiction over the
person of a defendant, such procedural modes, however, are
liberally construed in quasi-judicial proceedings, substantial
compliance with the same being considered adequate.
Moreover, jurisdiction over the person of the defendant in civil
cases is acquired not only by service of summons but also by
voluntary appearance in court and submission to its authority.
‘Appearance’ by a legal advocate is such ‘voluntary submission
to a court’s jurisdiction’. It may be made not only by actual
physical appearance but likewise by the submission of
pleadings in compliance with the order of the court or tribunal.
To say that petitioner did not authorize Atty. Perez to represent
him in the case is to unduly tax credulity. Like the Solicitor
General, the Court likewise considers it unlikely that Atty. Perez
would have been so irresponsible as to represent petitioner if he
were not, in fact, authorized. Atty. Perez is an officer of the court,
and he must be presumed to have acted with due propriety. The
employment of a counsel or the authority to employ an attorney,
it might be pointed out, need not be proved in writing; such fact
could [be] inferred from circumstantial evidence. x x
x92 (Citations omitted.)

From the records, it appears that Atty. Geronimo first entered
his appearance on behalf of Susan/Weesan in the hearing held
on April 3, 2003.93 Being then newly hired, he requested for an
extension of time within which to file a position paper for said
respondents. On the next scheduled hearing on April 28, 2003,
Atty. Geronimo again asked for another extension to file a
position paper for all the respondents considering that he
likewise entered his appearance for Fairland.94 Thereafter, said
counsel filed pleadings such as Respondents’ Position
Paper95 and Respondents’ Consolidated Reply96 on behalf of all
the respondents namely, Susan/Weesan, Fairland and Debbie.
The fact that Atty. Geronimo entered his appearance for
Fairland and Debbie and that he actively defended them before
the Labor Arbiter raised the presumption that he is authorized to
appear for them. As held in Santos, it is unlikely that Atty.
Geronimo would have been so irresponsible as to represent
Fairland and Debbie if he were not in fact authorized. As an
officer of the Court, Atty. Geronimo is presumed to have acted
with due propriety. Moreover, "[i]t strains credulity that a counsel
who has no personal interest in the case would fight for and
defend a case with persistence and vigor if he has not been
authorized or employed by the party concerned." 97
We do not agree with the reasons relied upon by the CA’s
Special Ninth Division in its May 9, 2008 Resolution in CA-G.R.
No. 93204 when it ruled that Fairland, through Atty. Geronimo,
did not voluntarily submit itself to the Labor Arbiter’s jurisdiction.
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Labor Law II
In so ruling, the CA noted that Atty. Geronimo has no prior
authorization from the board of directors of Fairland to handle
the case. Also, the alleged verification signed by Debbie, who is
not one of Fairland’s duly authorized directors or officers, is
defective as no board resolution or secretary’s certificate
authorizing her to sign the same was attached thereto. Because
of these, the Special Ninth Division held that the Labor Arbiter
committed grave abuse of discretion in not requiring Atty.
Geronimo to show his proof of authority to represent Fairland
considering that the latter is a corporation.
The presumption of authority of counsel to appear on behalf of a
client is found both in the Rules of Court and in the New Rules
of Procedure of the NLRC.98
Sec. 21, Rule 138 of the Rules of Court provides:
Sec. 21. Authority of attorney to appear – An attorney is
presumed to be properly authorized to represent any cause in
which he appears, and no written power of attorney is required
to authorize him to appear in court for his client, but the
presiding judge may, on motion of either party and reasonable
grounds therefor being shown, require any attorney who
assumes the right to appear in a case to produce or prove the
authority under which he appears, and to disclose whenever
pertinent to any issue, the name of the person who employed
him, and may thereupon make such order as justice requires.
An attorney willfully appearing in court for a person without

being employed, unless by leave of the court, may be punished
for contempt as an officer of the court who has misbehaved in
his official transactions.
On the other hand, Sec. 8, Rule III of the New Rules of
Procedure of the NLRC,99 which is the rules prevailing at that
time, states in part:
SECTION 8. APPEARANCES. - An attorney appearing for a
party is presumed to be properly authorized for that purpose.
However, he shall be required to indicate in his pleadings his
PTR and IBP numbers for the current year.
Between the two provisions providing for such authority of
counsel to appear, the Labor Arbiter is primarily bound by the
latter one, the NLRC Rules of Procedure being specifically
applicable to labor cases. As Atty. Geronimo consistently
indicated his PTR and IBP numbers in the pleadings he filed,
there is no reason for the Labor Arbiter not to extend to Atty.
Geronimo the presumption that he is authorized to represent
Fairland.
Even if we are to apply Sec. 21, Rule 138 of the Rules of Court,
the Labor Arbiter cannot be expected to require Atty. Geronimo
to prove his authority under said provision since there was no
motion to that effect from either party showing reasonable
grounds therefor. Moreover, the fact that Debbie signed the
verification attached to the position paper filed by Atty.
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Labor Law II
Geronimo, without a secretary’s certificate or board resolution
attached thereto, is not sufficient reason for the Labor Arbiter to
be on his guard and require Atty. Geronimo to prove his
authority. Debbie, as General Manager of Fairland is one of the
officials of the company who can sign the verification without
need of a board resolution because as such, she is in a position
to verify the truthfulness and correctness of the
allegations in the petition.100
Although we note that Fairland filed a disbarment case against
Atty. Geronimo due to the former’s claim of unauthorized
appearance, we hold that same is not sufficient to overcome the
presumption of authority. Such mere filing is not proof of Atty.
Geronimo’s alleged unauthorized appearance. Suffice it to say
that an attorney’s presumption of authority is a strong one.101 "A
mere denial by a party that he authorized an attorney to appear
for him, in the absence of a compelling reason, is insufficient to
overcome the presumption, especially when the denial comes
after the rendition of an adverse judgment," 102 such as in the
present case.
Citing PNOC Dockyard and Engineering Corporation v. National
Labor Relations Commission,103 the CA likewise emphasized
that in labor cases, both the party and his counsel must be duly
served their separate copies of the order, decision or resolution
unlike in ordinary proceedings where notice to counsel is

deemed notice to the party. It then quoted Article 224 of the
Labor Code as follows:
ARTICLE 224. Execution of decisions, orders or awards. – (a)
the Secretary of Labor and Employment or any Regional
Director, the Commission or any Labor Arbiter, or med-arbiter or
voluntary arbitrator may, motu proprio or on motion of any
interested party, issue a writ of execution on a judgment within
five (5) years from the date it becomes final and executory,
requiring a sheriff or a duly deputized officer to execute or
enforce final decisions, orders or awards of the Secretary of
Labor and Employment or [R]egional Director, the Commission,
the Labor Arbiter or Med-Arbiter, or Voluntary Arbitrators. In any
case, it shall be the duty of the responsible officer to separately
furnish immediately the counsels of record and the parties
with copies of said decision, orders or awards. Failure to
comply with the duty prescribed herein shall subject such
responsible officer to appropriate administrative sanctions x x x
(Emphasis in the original).104
The CA then concluded that since Fairland and its counsel were
not separately furnished with a copy of the August 26, 2005
NLRC Resolution denying the motions for reconsideration of its
November 30, 2004 Decision, said Decision cannot be enforced
against Fairland. The CA likewise concluded that because of
this, said November 30, 2004 Decision which held
Susan/Weesan and Fairland solidarily liable to the workers, has
not attained finality.
168
Labor Law II
We cannot agree. In Ginete v. Sunrise Manning Agency105 we
held that:
The case of PNOC Dockyard and Engineering Corporation vs.
NLRC cited by petitioner enunciated that ‘in labor
cases, both the party and its counsel must be duly served their
separate copies of the order, decision or resolution; unlike in
ordinary judicial proceedings where notice to counsel is deemed
notice to the party.’ Reference was made therein to Article 224
of the Labor Code. But, as correctly pointed out by private
respondent in its Comment to the petition, Article 224 of the
Labor Code does not govern the procedure for filing a petition
for certiorari with the Court of Appeals from the decision of the
NLRC but rather, it refers to the execution of ‘final decisions,
orders or awards’ and requires the sheriff or a duly deputized
officer to furnish both the parties and their counsel with copies
of the decision or award for that purpose. There is no reference,
express or implied, to the period to appeal or to file a petition
for certiorari as indeed the caption is ‘execution of decisions,
orders or awards’. Taken in proper context, Article 224
contemplates the furnishing of copies of ‘final decisions, orders
or awards’ and could not have been intended to refer to the
period for computing the period for appeal to the Court of
Appeals from a non-final judgment or order. The period or
manner of ‘appeal’ from the NLRC to the Court of Appeals is
governed by Rule 65 pursuant to the ruling of the Court in the
case of St. Martin Funeral Homes vs. NLRC. Section 4 of Rule
65, as amended, states that the ‘petition may be filed not later

than sixty (60) days from notice of the judgment, or resolution
sought to be assailed’.
Corollarily, Section 4, Rule III of the New Rules of Procedure of
the NLRC expressly mandates that ‘(F)or the purposes of
computing the period of appeal, the same shall be counted from
receipt of such decisions, awards or orders by the counsel of
record.’ Although this rule explicitly contemplates an appeal
before the Labor Arbiter and the NLRC, we do not see any
cogent reason why the same rule should not apply to petitions
for certiorari filed with the Court of Appeals from decisions of the
NLRC. This procedure is in line with the established rule
that notice to counsel is notice to party and when a party is
represented by counsel, notices should be made upon the
counsel of record at his given address to which notices of
all kinds emanating from the court should be sent. It is to
be noted also that Section 7 of the NLRC Rules of
Procedure provides that ‘(A)ttorneys and other
representatives of parties shall have authority to bind their
clients in all matters of procedure’’ a provision which is
similar to Section 23, Rule 138 of the Rules of Court. More
importantly, Section 2, Rule 13 of the 1997 Rules of Civil
Procedure analogously provides that if any party has
appeared by counsel, service upon him shall be made upon
his counsel. (Citations omitted; emphasis supplied)
To stress, Article 224 contemplates the furnishing of copies of
final decisions, orders or awards both to the parties and their
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Labor Law II
counsel in connection with the execution of such final decisions,
orders or awards. However, for the purpose of computing the
period for filing an appeal from the NLRC to the CA, same shall
be counted from receipt of the decision, order or award by the
counsel of record pursuant to the established rule that notice to
counsel is notice to party. And since the period for filing of an
appeal is reckoned from the counsel’s receipt of the decision,
order or award, it necessarily follows that the reckoning period
for their finality is likewise the counsel’s date of receipt thereof, if
a party is represented by counsel. Hence, the date of receipt
referred to in Sec. 14, Rule VII of the then in force New Rules of
Procedure of the NLRC106 which provides that decisions,
resolutions or orders of the NLRC shall become executory after
10 calendar days from receipt of the same, refers to the date of
receipt by counsel. Thus contrary to the CA’s conclusion, the
said NLRC Decision became final, as to Fairland, 10 calendar
days after Atty. Tecson’s receipt107 thereof.108 In sum, we hold
that the Labor Arbiter had validly acquired jurisdiction over
Fairland and its manager, Debbie, through the appearance of
Atty. Geronimo as their counsel and likewise, through the
latter’s filing of pleadings on their behalf.
Fairland is Weesan’s principal.
In addition to our discussion in G.R. No. 189658 with respect to
the finding that Susan/Weesan is a mere labor-only contractor
which we find to be likewise significant here, a careful
examination of the records reveals other telling facts that

Fairland is Susan/Weesan’s principal, to wit: (1) aside from
sewing machines, Fairland also lent Weesan other equipment
such as fire extinguishers, office tables and chairs, and plastic
chairs;109 (2) no proof evidencing the contractual arrangement
between Weesan and Fairland was ever submitted by Fairland;
(3) while both Weesan and Fairland assert that the former had
other clients aside from the latter, no proof of Weesan’s
contractual relationship with its other alleged client is extant on
the records; and (4) there is no showing that any of the workers
were assigned to other clients aside from Fairland. Moreover,
as found by the NLRC and affirmed by both the Special Former
Special Eighth Division in CA-G.R. SP No. 93860 and the First
Division in CA-G.R. SP No. 93204, the activities, the manner of
work and the movement of the workers were subject to
Fairland’s control. It bears emphasizing that "factual findings of
quasi-judicial agencies like the NLRC, when affirmed by the
Court of Appeals, as in the present case, are conclusive upon
the parties and binding on this Court."110
Viewed in its entirety, we thus declare that Fairland is the
principal of the labor-only contractor, Weesan.
Fairland, therefore, as the principal employer, is solidarily liable
with Susan/Weesan, the labor-only contractor, for the rightful
claims of the employees. Under this set-up, Susan/Weesan, as
the "labor-only" contractor, is deemed an agent of the principal,
Fairland, and the law makes the principal responsible to the
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Labor Law II
employees of the "labor-only" contractor as if the principal itself
directly hired or employed the employees.111
WHEREFORE, the Court,
1) in G.R. No. 189658, denies the Petition for Review
on Certiorari. The assailed Decision dated July 20, 2009 and
Resolution dated October 1, 2009 of the Special Former Special
Eighth Division of the Court of Appeals in CA-G.R. No. 93860
are AFFIRMED.
2) in G.R. No. 182915, grants the Petition for Review
on Certiorari. The assailed Resolution dated May 9, 2008 of the
Special Ninth Division of the Court of Appeals in CA-G.R. No.
93204 is hereby REVERSED and SET ASIDE and the Decision
dated July 25, 2007 of the First Division of the Court of Appeals
is REINSTATED and AFFIRMED.
SO ORDERED.

G.R. No. 126322 January 16, 2002
YUPANGCO COTTON MILLS, INC., petitioner,
vs.
COURT OF APPEALS, HON. URBANO C. VICTORIO, SR.,
Presiding Judge, RTC Branch 50, Manila, RODRIGO SY
MENDOZA, SAMAHANG MANGGAGAWA NG ARTEX
(SAMAR-ANGLO) represented by its Local President
RUSTICO CORTEZ, and WESTERN GUARANTY
CORPORATION, respondents.
PARDO, J.:
The Case
The case is a petition for review on certiorari of the decision of
the Court of Appeals1 dismissing the petition ruling that
petitioner was guilty of forum shopping and that the proper
remedy was appeal in due course, not certiorari or mandamus.
In its decision, the Court of Appeals sustained the trial court's
ruling that the remedies granted under Section 17, Rule 39 of
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Labor Law II
the Rules of Court are not available to the petitioner because
the Manual of Instructions for Sheriffs of the NLRC does not
include the remedy of an independent action by the owner to
establish his right to his property.
The Facts
The facts, as found by the Court of Appeals, are as follows:
"From the records before us and by petitioner's own allegations
and admission, it has taken the following actions in connection
with its claim that a sheriff of the National Labor Relations
Commission "erroneously and unlawfully levied" upon certain
properties which it claims as its own.
"1. It filed a notice of third-party claim with the Labor Arbiter on
May 4, 1995.
"2. It filed an Affidavit of Adverse Claim with the National Labor
Relations Commission (NLRC) on July 4, 1995, which was
dismissed on August 30, 1995, by the labor Arbiter.
"3. It filed a petition for certiorari and prohibition with the
Regional Trial Court of Manila, Branch 49, docketed as Civil
Case No. 95-75628 on October 6, 1995. The Regional Trial
Court dismissed the case on October 11, 1995 for lack of merit.

"4. It appealed to the NLRC the order of the Labor Arbiter dated
August 13, 1995 which dismissed the appeal for lack of merit on
December 8, 1995.
"5. It filed an original petition for mandatory injunction with the
NLRC on November 16, 1995. This was docketed as Case No.
NLRC-NCR-IC. 0000602-95. This case is still pending with that
Commission.
"6. It filed a complaint in the Regional Trial Court in Manila
which was docketed as Civil Case No. 95-76395. The dismissal
of this case by public respondent triggered the filing of the
instant petition.
"In all of the foregoing actions, petitioner raised a common issue,
which is that it is the owner of the properties located in the
compound and buildings of Artex Development Corporation,
which were erroneously levied upon by the sheriff of the NLRC
as a consequence of the decision rendered by the said
Commission in a labor case docketed as NLRC-NCR Case No.
00-05-02960-90."2
On March 29, 1996, the Court of Appeals promulgated a
decision3 dismissing the petition on the ground of forum
shopping and that petitioner's remedy was to seek relief from
this Court.
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Labor Law II
On April 18, 1996, petitioner filed with the Court of Appeals a
motion for reconsideration of the decision.4 Petitioner argued
that the filing of a complaint for accion reinvindicatoria with the
Regional Trial Court was proper because it is a remedy
specifically granted to an owner (whose properties were
subjected to a writ of execution to enforce a decision rendered
in a labor dispute in which it was not a party) by Section 17 (now
16), Rule 39, Revised Rules of Court and by the doctrines laid
down in Sy v. Discaya,5 Santos v. Bayhon6 and Manliguez v.
Court of Appeals.7
In addition, petitioner argued that the reliefs sought and the
issues involved in the complaint for recovery of property and
damages filed with the Regional Trial Court of Manila, presided
over by respondent judge, were entirely distinct and separate
from the reliefs sought and the issues involved in the
proceedings before the Labor Arbiter and the NLRC. Besides,
petitioner pointed out that neither the NLRC nor the Labor
Arbiter is empowered to adjudicate matters involving ownership
of properties.
On August 27, 1996, the Court of Appeals denied petitioner's
motion for reconsideration.8
Hence, this appeal.9
The Issues

The issues raised are (1) whether the Court of Appeals erred in
ruling that petitioner was guilty of forum shopping, and (2)
whether the Court of Appeals erred in dismissing the
petitioner's accion reinvindicatoria on the ground of lack of
jurisdiction of the trial court.
The Court's Ruling
On the first issue raised, we rule that there was no forum
shopping:
In Golangco v. Court of Appeals,10 we held:
"What is truly important to consider in determining whether
forum shopping exists or not is the vexation caused the courts
and parties-litigant by a party who asks different courts and/or
administrative agencies to rule on the same on related caused
and/or grant the same or substantially the same reliefs, in the
process creating possibility of conflicting decisions being
rendered by the different for a upon the same issues.
"xxx xxx xxx
"There is no forum-shopping where two different orders were
questioned, two distinct causes of action and issues were raised,
and two objectives were sought." (Underscoring ours)
173
Labor Law II
In the case at bar, there was no identity of parties, rights and
causes of action and reliefs sought.
The case before the NLRC where Labor Arbiter Reyes issued a
labor dispute between Artex and Samar-Anglo. Petitioner was
not a party to the case. The only issue petitioner raised before
the NLRC was whether or not the writ of execution issued by the
labor arbiter could be satisfied against the property of petitioner,
not a party to the labor case.
On the other hand, the accion reinvindicatoria filed by petitioner
in the trial court was to recover the property illegally levied upon
and sold at auction. Hence, the causes of action in these cases
were different.
The rule is that "for forum-shopping to exist both actions must
involve the same transactions, the same circumstances. The
actions must also raise identical causes of action, subject
matter and issues.11
In Chemphil Export & Import Corporation v. Court of Appeals, 12
we ruled that:
"Forum-shopping or the act of a party against whom an adverse
judgment has been rendered in one forum, of seeking another
(and possible) opinion in another forum (other than by appeal or
the special civil action of certiorari), or the institution of two (2) or
more actions or proceedings grounded on the same cause on

the supposition that one or the other would make a favorable
disposition."
On the second issue, a third party whose property has been
levied upon by a sheriff to enforce a decision against a
judgment debtor is afforded with several alternative remedies to
protect its interests. The third party may avail himself of
alternative remedies cumulatively, and one will not preclude the
third party from availing himself of the other alternative
remedies in the event he failed in the remedy first availed of.
Thus, a third party may avail himself of the following alternative
remedies:
a) File a third party claim with the sheriff of the Labor Arbiter,
and
b) If the third party claim is denied, the third party may appeal
the denial to the NLRC.13
Even if a third party claim was denied, a third party may still file
a proper action with a competent court to recover ownership of
the property illegally seized by the sheriff. This finds support in
Section 17 (now 16), Rule 39, Revised Rules of Court, to wit:
"SEC. 17 (now 16). Proceedings where property claimed by
third person. - If property claimed by any other person than the
judgment debtor or his agent, and such person makes an
174
Labor Law II
affidavit of his title thereto or right to the possession thereof,
stating the grounds of such right or title, and serve the same
upon the officer making the levy, and a copy thereof upon the
judgment creditor, the officer shall not be bound to keep the
property, unless such judgment creditor or his agent, on
demand of the officer, indemnify the officer against such claim
by a bond in a sum not greater than the value of the property
levied on. In case of disagreement as to such value, the same
shall be determined by the court issuing the writ of
execution. 1âwphi1.nêt
"The officer is not liable for damages, for the taking or keeping
of the property, to any third-party claimant unless a claim is
made by the latter and unless an action for damages is brought
by him against the officer within one hundred twenty (120) days
from the date of the filing of the bond. But nothing herein
contained shall prevent such claimant or any third person from
vindicating his claim to the property by any proper action.
"When the party in whose favor the writ of execution runs, is the
Republic of the Philippines, or any officer duly representing it,
the filing of such bond shall not be required, and in case the
sheriff or levying officer is sued for damages as a result of the
levy, he shall be represented by the Solicitor General and if held
liable therefor, the actual damages adjudged by the court shall
be paid by the National Treasurer out of such funds as may be
appropriated for the purpose." (Underscoring ours)

In Sy v. Discaya,14 we ruled that:
"The right of a third-party claimant to file an independent action
to vindicate his claim of ownership over the properties seized is
reserved by Section 17 (now 16), Rule 39 of the Rules of Court,
xxx:
"xxx xxx xxx
"As held in the case of Ong v. Tating, et. al., construing the
aforecited rule, a third person whose property was seized by a
sheriff to answer for the obligation of a judgment debtor may
invoke the supervisory power of the court which authorized such
execution. Upon due application by the third person and after
summary hearing, the court may command that the property be
released from the mistaken levy and restored to the rightful
owner or possession. What said court do in these instances,
however, is limited to a determination of whether the sheriff has
acted rightful or wrongly in the performance of his duties in the
execution of judgment, more specifically, if he has indeed take
hold of property not belonging to the judgment debtor. The
court does not and cannot pass upon the question of title to the
property, with any character of finality. It can treat of the matter
only insofar as may be necessary to decide if the sheriff has
acted correctly or not. It can require the sheriff to restore the
property to the claimant's possession if warranted by the
evidence. However, if the claimant's proof do not persuade the
175
Labor Law II
court of the validity of his title or right of possession thereto, the
claim will be denied.
"Independent of the above-stated recourse, a third-party
claimant may also avail of the remedy known as "terceria',
provided in Section 17 (now 16), Rule 39, by serving on the
officer making the levy an affidavit of his title and a copy thereof
upon the judgment creditor. The officer shall not be bound to
keep the property, unless such judgment creditor or his agent,
on demand of the officer, indemnifies the officer against such
claim by a bond in a sum not greater than the value of the
property levied on. An action for damages may be brought
against the sheriff within one hundred twenty (120) days from
the filing of the bond.
"The aforesaid remedies are nevertheless without prejudice to
'any proper action' that a third-party claimant may deem suitable
to vindicate 'his claim to the property.' Such a 'proper action' is,
obviously, entirely distinct from that explicitly prescribed in
Section 17 of Rule 39, which is an action for damages brought
by a third-party claimant against the officer within one hundred
twenty (120) days from the date of the filing of the bond for the
taking or keeping of the property subject of the 'terceria'.
"Quite obviously, too, this 'proper action' would have for its
object the recovery of ownership or possession of the property
seized by the sheriff, as well as damages resulting from the
allegedly wrongful seizure and detention thereof despite the

third-party claim; and it may be brought against the sheriff and
such other parties as may be alleged to have colluded with him
in the supposedly wrongful execution proceedings, such as the
judgment creditor himself. Such 'proper action', as above
pointed out, is and should be an entirely separate and distinct
action from that in which execution has issued, if instituted by a
stranger to the latter suit.
"The remedies above mentioned are cumulative and may be
resorted to by a third-party claimant independent of or
separately from and without need of availing of the
others. If a third-party claimant opted to file a proper action to
vindicate his claim of ownership, he must institute an action,
distinct and separate from that in which the judgment is being
enforced, with the court of competent jurisdiction even before or
without need of filing a claim in the court which issued the writ,
the latter not being a condition sine qua non for the former. In
such proper action, the validity and sufficiency of the title of the
third-party claimant will be resolved and a writ of preliminary
injunction against the sheriff may be issued." (Emphasis and
underscoring ours)
In light of the above, the filing of a third party claim with the
Labor Arbiter and the NLRC did not preclude the petitioner from
filing a subsequent action for recovery of property and damages
with the Regional Trial Court. And, the institution of such
complaint will not make petitioner guilty of forum shopping.15
176
Labor Law II
In Santos v. Bayhon,16 wherein Labor Arbiter Ceferina Diosana
rendered a decision in NLRC NCR Case No. 1-313-85 in favor
of Kamapi, the NLRC affirmed the decision. Thereafter, Kamapi
obtained a writ of execution against the properties of
Poly-Plastic Products or Anthony Ching. However, respondent
Priscilla Carrera filed a third-party claim alleging that Anthony
Ching had sold the property to her. Nevertheless, upon posting
by the judgment creditor of an indemnity bond, the NLRC Sheriff
proceeded with the public auction sale. Consequently,
respondent Carrera filed with Regional Trial Court, Manila an
action to recover the levied property and obtained a temporary
restraining order against Labor Arbiter Diosana and the NLRC
Sheriff from issuing a certificate of sale over the levied property.
Eventually, Labor Arbiter Santos issued an order allowing the
execution to proceed against the property of Poly-Plastic
Products. Also, Labor Arbiter Santos and the NLRC Sheriff filed
a motion to dismiss the civil case instituted by respondent
Carrera on the ground that the Regional Trial Court did not have
jurisdiction over the labor case. The trial court issued an order
enjoining the enforcement of the writ of execution over the
properties claimed by respondent Carrera pending the
determination of the validity of the sale made in her favor by the
judgment debtor Poly-Plastic Products and Anthony Ching.
In dismissing the petition for certiorari filed by Labor Arbiter
Santos, we ruled that:

"x x x. The power of the NLRC to execute its judgments extends
only to properties unquestionably belonging to the judgment
debtor (Special Servicing Corp. v. Centro La Paz, 121 SCRA
748).
"The general rule that no court has the power to interfere by
injunction with the judgments or decrees of another court with
concurrent or coordinate jurisdiction possessing equal power to
grant injunctive relief, applies only when no third-party claimant
is involved (Traders Royal Bank v. Intermediate Appellate Court,
133 SCRA 141 [1984]). When a third-party, or a stranger to the
action, asserts a claim over the property levied upon, the
claimant may vindicate his claim by an independent action in the
proper civil court which may stop the execution of the judgment
on property not belonging to the judgment debtor."
(Underscoring ours)
in Consolidated Bank and Trust Corp. v. Court of Appeals, 193
SCRA 158 [1991], we ruled that:
"The well-settled doctrine is that a 'proper levy' is indispensable
to a valid sale on execution. A sale unless preceded by a valid
levy is void. Therefore, since there was no sufficient levy on the
execution in question, the private respondent did not take any
title to the properties sold thereunder x x x.
177
Labor Law II
"A person other than the judgment debtor who claims ownership
or right over the levied properties is not precluded, however,
from taking other legal remedies." (Underscoring ours)
Jurisprudence is likewise replete with rulings that since the
third-party claimant is not one of the parties to the action, he
could not, strictly speaking, appeal from the order denying his
claim, but should file a separate reinvindicatory action against
the execution creditor or the purchaser of the property after the
sale at public auction, or a complaint for damages against the
bond filed by the judgment creditor in favor of the sheriff. 17
And in Lorenzana v. Cayetano,18 we ruled that:
"The rights of a third-party claimant should not be decided in the
action where the third-party claim has been presented, but in a
separate action to be instituted by the third person. The appeal
that should be interposed if the term 'appeal' may properly be
employed, is a separate reinvidincatory action against the
execution creditor or the purchaser of the property after the sale
at public auction, or complaint for damages to be charged
against the bond filed by the judgment creditor in favor of the
sheriff. Such reinvindicatory action is reserved to the third-party
claimant."
A separate civil action for recovery of ownership of the property
would not constitute interference with the powers or processes
of the Arbiter and the NLRC which rendered the judgment to
 178

Labor Law II

enforce and execute upon the levied properties. The property

levied upon being that of a stranger is not subject to levy. Thus,
a separate action for recovery, upon a claim
and prima-facie showing of ownership by the petitioner, cannot
be considered as interference.

The Fallo G.R. No. 184007 February 16, 2011

WHEREFORE, the Court REVERSES the decision of the Court
of Appeals and the resolution denying reconsideration.19 In lieu
thereof, the Court renders judgment ANNULLING the sale on
execution of the subject property conducted by NLRC Sheriff
Anam Timbayan in favor of respondent SAMAR-ANGLO and
the subsequent sale of the same to Rodrigo Sy Mendoza. The
Court declares the petitioner to be the rightful owner of the
property involved and remands the case to the trial court to
determine the liability of respondents SAMAR-ANGLO, Rodrigo
Sy Mendoza, and WESTERN GUARANTY CORPORATION to
pay actual damages that petitioner claimed.
Costs against respondents, except the Court of
Appeals.1âwphi1.nêt
SO ORDERED.
PAQUITO V. ANDO, Petitioner,
vs.
ANDRESITO Y. CAMPO, ET AL., Respondents.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari1 under
Rule 45 of the Rules of Court. Petitioner Paquito V. Ando
(petitioner) is assailing the Decision2 dated February 21, 2008
and the Resolution3 dated July 25, 2008 of the Court of Appeals
(CA) in CA-G.R. CEB-SP. No. 02370.
Petitioner was the president of Premier Allied and Contracting
Services, Inc. (PACSI), an independent labor contractor.
Respondents were hired by PACSI as pilers or haulers tasked
to manually carry bags of sugar from the warehouse of Victorias
Milling Company and load them on trucks.4 In June 1998,
respondents were dismissed from employment. They filed a

case for illegal dismissal and some money claims with the
National Labor Relations Commission (NLRC), Regional
Arbitration Branch No. VI, Bacolod City.5
On June 14, 2001, Labor Arbiter Phibun D. Pura
(Labor Arbiter) promulgated a decision, ruling in
respondents’ favor.6 PACSI and petitioner were
directed to pay a total of ₱422,702.28,
representing respondents’ separation pay and the
award of attorney’s fees.7
Petitioner and PACSI appealed to the NLRC. In a
decision8 dated October 20, 2004, the NLRC ruled that
petitioner failed to perfect his appeal because he did not pay the
supersedeas bond. It also affirmed the Labor Arbiter’s decision
with modification of the award for separation pay to four other
employees who were similarly situated. Upon finality of the
decision, respondents moved for its execution.9
To answer for the monetary award, NLRC Acting Sheriff Romeo
Pasustento issued a Notice of Sale on Execution of Personal
Property10 over the property covered by Transfer Certificate of
Title (TCT) No. T-140167 in the name of "Paquito V. Ando x x x
married to Erlinda S. Ando."
This prompted petitioner to file an action for prohibition and
damages with prayer for the issuance of a temporary restraining
order (TRO) before the Regional Trial Court (RTC), Branch 50,
179
Labor Law II
Bacolod City. Petitioner claimed that the property belonged to
him and his wife, not to the corporation, and, hence, could not
be subject of the execution sale. Since it is the corporation that
was the judgment debtor, execution should be made on the
latter’s properties.11
On December 27, 2006, the RTC issued an Order12 denying the
prayer for a TRO, holding that the trial court had no jurisdiction
to try and decide the case. The RTC ruled that, pursuant to the
NLRC Manual on the Execution of Judgment, petitioner’s
remedy was to file a third-party claim with the NLRC Sheriff.
Despite lack of jurisdiction, however, the RTC went on to decide
the merits of the case.
Petitioner did not file a motion for reconsideration of the RTC
Order. Instead, he filed a petition for certiorari under Rule
6513 before the CA. He contended that the RTC acted without or
in excess of jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction in issuing the Order.
Petitioner argued that the writ of execution was issued
improvidently or without authority since the property to be levied
belonged to him – in his personal capacity – and his wife. The
RTC, respondent contended, could stay the execution of a
judgment if the same was unjust.14 He also contended that,
pursuant to a ruling of this Court, a third party who is not a
judgment creditor may choose between filing a third-party claim
with the NLRC sheriff or filing a separate action with the
courts.15

In the Decision now assailed before this Court, the CA affirmed
the RTC Order in so far as it dismissed the complaint on the
ground that it had no jurisdiction over the case, and nullified all
other pronouncements in the same Order. Petitioner moved for
reconsideration, but the motion was denied.lawph!l
Petitioner then filed the present petition seeking the nullification
of the CA Decision. He argues that he was never sued in his
personal capacity, but in his representative capacity as
president of PACSI. Neither was there any indication in the body
of the Decision that he was solidarily liable with the
corporation.16 He also concedes that the Labor Arbiter’s
decision has become final. Hence, he is not seeking to stop the
execution of the judgment against the properties of PACSI. He
also avers, however, that there is no evidence that the sheriff
ever implemented the writ of execution against the properties of
PACSI.17
Petitioner also raises anew his argument that he can choose
between filing a third-party claim with the sheriff of the NLRC or
filing a separate action.18 He maintains that this special civil
action is purely civil in nature since it "involves the manner in
which the writ of execution in a labor case will be implemented
against the property of petitioner which is not a corporate
property of PACSI."19 What he is seeking to be restrained,
petitioner maintains, is not the Decision itself but the manner of
its execution.20 Further, he claims that the property levied has
180
Labor Law II
been constituted as a family home within the contemplation of
the Family Code.21
The petition is meritorious.
Initially, we must state that the CA did not, in fact, err in
upholding the RTC’s lack of jurisdiction to restrain the
implementation of the writ of execution issued by the Labor
Arbiter.
The Court has long recognized that regular courts have no
jurisdiction to hear and decide questions which arise from and
are incidental to the enforcement of decisions, orders, or
awards rendered in labor cases by appropriate officers and
tribunals of the Department of Labor and Employment. To hold
otherwise is to sanction splitting of jurisdiction which is
obnoxious to the orderly administration of justice.22
Thus, it is, first and foremost, the NLRC Manual on the
Execution of Judgment that governs any question on the
execution of a judgment of that body. Petitioner need not look
further than that. The Rules of Court apply only by analogy or in
a suppletory character.23
Consider the provision in Section 16, Rule 39 of the Rules of
Court on third-party claims:

SEC. 16. Proceedings where property claimed by third
person.—If the property levied on is claimed by any person
other than the judgment obligor or his agent, and such person
makes an affidavit of his title thereto or right to the possession
thereof, stating the grounds of such right or title, and serves the
same upon the officer making the levy and a copy thereof upon
the judgment obligee, the officer shall not be bound to keep the
property, unless such judgment obligee, on demand of the
officer, files a bond approved by the court to indemnify the
third-party claimant in a sum not less than the value of the
property levied on. In case of disagreement as to such value,
the same shall be determined by the court issuing the writ of
execution. No claim for damages for the taking or keeping of the
property may be enforced against the bond unless the action
therefor is filed within one hundred twenty (120) days from the
date of the filing of the bond.
The officer shall not be liable for damages for the taking or
keeping of the property, to any third-party claimant if such bond
is filed. Nothing herein contained shall prevent such claimant or
any third person from vindicating his claim to the property in a
separate action, or prevent the judgment obligee from claiming
damages in the same or a separate action against a third-party
claimant who filed a frivolous or plainly spurious claim.
When the writ of execution is issued in favor of the Republic of
the Philippines, or any officer duly representing it, the filing of
such bond shall not be required, and in case the sheriff or
181
Labor Law II
levying officer is sued for damages as a result of the levy, he
shall be represented by the Solicitor General and if held liable
therefor, the actual damages adjudged by the court shall be
paid by the National Treasurer out of such funds as may be
appropriated for the purpose.
On the other hand, the NLRC Manual on the Execution of
Judgment deals specifically with third-party claims in cases
brought before that body. It defines a third-party claim as one
where a person, not a party to the case, asserts title to or right to
the possession of the property levied upon.24 It also sets out the
procedure for the filing of a third-party claim, to wit:
SECTION 2. Proceedings. — If property levied upon be claimed
by any person other than the losing party or his agent, such
person shall make an affidavit of his title thereto or right to the
possession thereof, stating the grounds of such right or title and
shall file the same with the sheriff and copies thereof served
upon the Labor Arbiter or proper officer issuing the writ and
upon the prevailing party. Upon receipt of the third party claim,
all proceedings with respect to the execution of the property
subject of the third party claim shall automatically be suspended
and the Labor Arbiter or proper officer issuing the writ shall
conduct a hearing with due notice to all parties concerned and
resolve the validity of the claim within ten (10) working days
from receipt thereof and his decision is appealable to the
Commission within ten (10) working days from notice, and the
Commission shall resolve the appeal within same period.

There is no doubt in our mind that petitioner’s complaint is a
third- party claim within the cognizance of the NLRC. Petitioner
may indeed be considered a "third party" in relation to the
property subject of the execution vis-à-vis the Labor Arbiter’s
decision. There is no question that the property belongs to
petitioner and his wife, and not to the corporation. It can be said
that the property belongs to the conjugal partnership, not to
petitioner alone. Thus, the property belongs to a third party, i.e.,
the conjugal partnership. At the very least, the Court can
consider that petitioner’s wife is a third party within
contemplation of the law.
The Court’s pronouncements in Deltaventures Resources, Inc.
v. Hon. Cabato25 are instructive:
Ostensibly the complaint before the trial court was for the
recovery of possession and injunction, but in essence it was an
action challenging the legality or propriety of the
levy vis-a-vis the alias writ of execution, including the acts
performed by the Labor Arbiter and the Deputy Sheriff
implementing the writ. The complaint was in effect a motion to
quash the writ of execution of a decision rendered on a case
properly within the jurisdiction of the Labor Arbiter, to wit: Illegal
Dismissal and Unfair Labor Practice. Considering the factual
setting, it is then logical to conclude that the subject matter of
the third party claim is but an incident of the labor case, a matter
beyond the jurisdiction of regional trial courts.
182
Labor Law II
xxxx
x x x. Whatever irregularities attended the issuance an
execution of the alias writ of execution should be referred to the
same administrative tribunal which rendered the decision. This
is because any court which issued a writ of execution has the
inherent power, for the advancement of justice, to correct errors
of its ministerial officers and to control its own processes.
The broad powers granted to the Labor Arbiter and to the
National Labor Relations Commission by Articles 217, 218 and
224 of the Labor Code can only be interpreted as vesting in
them jurisdiction over incidents arising from, in connection with
or relating to labor disputes, as the controversy under
consideration, to the exclusion of the regular courts.26
There is no denying that the present controversy arose from the
complaint for illegal dismissal. The subject matter of petitioner’s
complaint is the execution of the NLRC decision. Execution is
an essential part of the proceedings before the NLRC.
Jurisdiction, once acquired, continues until the case is finally
terminated,27 and there can be no end to the controversy
without the full and proper implementation of the commission’s
directives.
Further underscoring the RTC’s lack of jurisdiction over
petitioner’s complaint is Article 254 of the Labor Code, to wit:

ART. 254. INJUNCTION PROHIBITED. – No temporary or
permanent injunction or restraining order in any case involving
or growing out of labor disputes shall be issued by any court or
other entity, except as otherwise provided in Articles 218 and
264 of this Code.
That said, however, we resolve to put an end to the controversy
right now, considering the length of time that has passed since
the levy on the property was made.
Petitioner claims that the property sought to be levied does not
belong to PACSI, the judgment debtor, but to him and his wife.
Since he was sued in a representative capacity, and not in his
personal capacity, the property could not be made to answer for
the judgment obligation of the corporation.
The TCT28 of the property bears out that, indeed, it belongs to
petitioner and his wife. Thus, even if we consider petitioner as
an agent of the corporation – and, therefore, not a stranger to
the case – such that the provision on third-party claims will not
apply to him, the property was registered not only in the name of
petitioner but also of his wife. She stands to lose the property
subject of execution without ever being a party to the case. This
will be tantamount to deprivation of property without due
process.
Moreover, the power of the NLRC, or the courts, to execute its
judgment extends only to properties unquestionably belonging
183
Labor Law II
to the judgment debtor alone.29 A sheriff, therefore, has no
authority to attach the property of any person except that of the
judgment debtor.30 Likewise, there is no showing that the sheriff
ever tried to execute on the properties of the corporation.
In sum, while petitioner availed himself of the wrong remedy to
vindicate his rights, nonetheless, justice demands that this
Court look beyond his procedural missteps and grant the
petition.
WHEREFORE, the foregoing premises considered, the petition
is GRANTED. The Decision dated February 21, 2008 and the
Resolution dated July 25, 2008 of the Court of Appeals in
CA-G.R. CEB-SP. No. 02370 are hereby REVERSED and SET
ASIDE, and a new one is entered declaring NULL and VOID (1)
the Order of the Regional Trial Court of Negros Occidental
dated December 27, 2006 in Civil Case No. 06-12927; and (2)
the Notice of Sale on Execution of Personal Property dated
December 4, 2006 over the property covered by Transfer
Certificate of Title No. T-140167, issued by the Acting Sheriff of
the National Labor Relations Commission.
SO ORDERED.