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JUANITO A. GARCIA and ALBERTO J. G.R. No. 164856


DUMAGO, Present:
Petitioners,
PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
- versus - CORONA,
CARPIO MORALES,
AZCUNA,
TINGA,
CHICO-NAZARIO,
PHILIPPINE AIRLINES, INC., VELASCO, JR.,
Respondent. NACHURA,
LEONARDO-DE CASTRO, and
BRION, JJ.

Promulgated:

January 20, 2009


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

DECISION

CARPIO MORALES, J.:

Petitioners Juanito A. Garcia and Alberto J. Dumago assail the December 5, 2003 Decision and April 16, 2004 Resolution

of the Court of Appeals[1] in CA-G.R. SP No. 69540 which granted the petition for certiorari of respondent, Philippine

Airlines, Inc. (PAL), and denied petitioners Motion for Reconsideration, respectively. The dispositive portion of the

assailed Decision reads:

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

SO ORDERED.[2]

The case stemmed from the administrative charge filed by PAL against its employees-herein petitioners[3] after they were

allegedly caught in the act of sniffing shabu when a team of company security personnel and law enforcers raided the PAL

Technical Centers Toolroom Section on July 24, 1995.

After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL Code of Discipline, [4] prompting

them to file a complaint for illegal dismissal and damages which was, by Decision of January 11, 1999, [5] resolved by the
Labor Arbiter in their favor, thus ordering PAL to, inter alia, immediately comply with the reinstatement aspect of the

decision.

Prior to the promulgation of the Labor Arbiters decision, the Securities and Exchange Commission (SEC) placed PAL

(hereafter referred to as respondent), which was suffering from severe financial losses, under an Interim Rehabilitation

Receiver, who was subsequently replaced by a Permanent Rehabilitation Receiver on June 7, 1999.

From the Labor Arbiters decision, respondent appealed to the NLRC which, by Resolution of January 31, 2000, reversed

said decision and dismissed petitioners complaint for lack of merit.[6]

Petitioners Motion for Reconsideration was denied by Resolution of April 28, 2000 and Entry of Judgment was

issued on July 13, 2000.[7]

Subsequently or on October 5, 2000, the Labor Arbiter issued a Writ of Execution (Writ) respecting the reinstatement

aspect of his January 11, 1999 Decision, and on October 25, 2000, he issued a Notice of Garnishment

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

garnished amount.

In a related move, respondent filed an Urgent Petition for Injunction with the NLRC which, by Resolutions of November

26, 2001and 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 arbiters 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 PALs appeal
to the NLRC, the same should have been suspended pending the rehabilitation proceedings. The Labor
Arbiter, the NLRC, as well as the Court of Appeals should have abstained from resolving petitioners case
for illegal dismissal and should instead have directed them to lodge their claim before PALs receiver.
However, to still require petitioners at this time to re-file their labor claim against PAL under peculiar
circumstances of the case that their dismissal was eventually held valid with only the matter of
reinstatement pending appeal being the issue this Court deems it legally expedient to suspend the
proceedings in this case.

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

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

By Manifestation and Compliance of October 30, 2007, respondent informed the Court that the SEC, by Order

of September 28, 2007, granted its request to exit from rehabilitation proceedings. [9]

In view of the termination of the rehabilitation proceedings, the Court now proceeds to resolve the remaining issue for

consideration, which is whether petitioners may collect their wages during the period between the Labor Arbiters

order of reinstatement pending appeal and the NLRC decision overturning that of the Labor Arbiter, now that

respondent has exited from rehabilitation proceedings.

Amplification of the First Ground

The appellate court counted on as its first ground the view that a subsequent finding of a valid dismissal removes the

basis for implementing the reinstatement aspect of a labor arbiters decision.

On this score, the Courts attention is drawn to seemingly divergent decisions concerning reinstatement pending appeal

or,particularly, the option of payroll reinstatement. On the one hand is the jurisprudential trend as expounded in a line

of cases including Air Philippines Corp. v. Zamora,[10] while on the other is the recent case of Genuino v. National Labor

Relations Commission.[11] At the core of the seeming divergence is the application of paragraph 3 of Article 223 of the

Labor Code which reads:


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

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


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

In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages

pending appeal upon reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial

upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to comply

therewith.[13]

The opposite view is articulated in Genuino which states:


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

It has thus been advanced that there is no point in releasing the wages to petitioners since their dismissal was found to be

valid, and to do so would constitute unjust enrichment.

Prior to Genuino, there had been no known similar case containing a dispositive portion where the employee was required

to refund the salaries received on payroll reinstatement. In fact, in a catena of cases,[15] the Court did not order the refund

of salaries garnished or received by payroll-reinstated employees despite a subsequent reversal of the reinstatement

order.

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

reinstatement pending appeal.

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

xxxx

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

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

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

The social justice principles of labor law outweigh or render inapplicable the civil law doctrine of unjust

enrichment espoused by Justice Presbitero Velasco, Jr. in his Separate Opinion. The constitutional and statutory

precepts portray the otherwise unjust situation as a condition affording full protection to labor.

Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the refund

doctrine easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a dismissed

employee. The employee, to make both ends meet, would necessarily have to use up the salaries received during the

pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable decision. It is mirage of a

stop-gap leading the employee to a risky cliff of insolvency.

Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll

reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option of payroll reinstatement

belongs to the employer, even if the employee is able and raring to return to work. Prior to Genuino, it is unthinkable for

one to refuse payroll reinstatement.In the face of the grim possibilities, the rise of concerned employees declining payroll

reinstatement is on the horizon.

Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also institutes a scheme

unduly favorable to management. Under such scheme, the salaries dispensed pendente lite merely serve as a bond

posted in installment by the employer. For in the event of a reversal of the Labor Arbiters 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--vis the effect of a reversal on appeal.

Respondent insists that with the reversal of the Labor Arbiters Decision, there is no more basis to enforce the

reinstatement aspect of the said decision. In his Separate Opinion, Justice Presbitero Velasco, Jr. supports this argument

and finds the prevailing doctrine in Air Philippines and allied cases inapplicable because, unlike the present case, the writ

of execution therein was secured prior to the reversal of the Labor Arbiters decision.

The proposition is tenuous. First, the matter is treated as a mere race against time. The discussion stopped there without

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

executory nature of the reinstatement aspect of the decision. In Pioneer Texturing Corp. v. NLRC,[18] which was cited

in Panuncillo v. CAP Philippines, Inc.,[19] the Court observed:

x x x The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be
immediately executory even pending appeal and the posting of a bond by the employer shall not stay the
execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement
immediately enforceable, even pending appeal. To require the application for and issuance of a writ of
execution as prerequisites for the execution of a reinstatement award would certainly betray and run
counter to the very object and intent of Article 223, i.e., the immediate execution of a reinstatement
order. The reason is simple. An application for a writ of execution and its issuance could be delayed for
numerous reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an
inaction on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby
setting at naught the strict mandate and noble purpose envisioned by Article 223. In other words, if the
requirements of Article 224 [including the issuance of a writ of execution] were to govern, as we so
declared in Maranaw, then the executory nature of a reinstatement order or award contemplated by Article
223 will be unduly circumscribed and rendered ineffectual. In enacting the law, the legislature is presumed
to have ordained a valid and sensible law, one which operates no further than may be necessary to
achieve its specific purpose. Statutes, as a rule, are to be construed in the light of the purpose to be
achieved and the evil sought to be remedied. x x x In introducing a new rule on the reinstatement aspect of
a labor decision under Republic Act No. 6715, Congress should not be considered to be indulging in mere
semantic exercise. x x x[20] (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 employees salaries.[22]


Amplification of the Second Ground

The remaining issue, nonetheless, is resolved in the negative on the strength of the second ground relied upon by the

appellate court in the assailed issuances. The Court sustains the appellate courts finding that the peculiar predicament of

a corporate rehabilitation rendered it impossible for respondent to exercise its option under the circumstances.

The spirit of the rule on reinstatement pending appeal animates the proceedings once the Labor Arbiter issues the

decision containing an order of reinstatement. The immediacy of its execution needs no further

elaboration. Reinstatement pending appeal necessitates its immediate execution during the pendency of the appeal, if the

law is to serve its noble purpose. At the same time, any attempt on the part of the employer to evade or delay its

execution, as observed in Panuncillo and as what actually transpired

in Kimberly,[23] Composite,[24] Air Philippines,[25] and Roquero,[26] should not be countenanced.

After the labor arbiters 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 employers unjustified act or omission. If the delay is

due to the employers unjustified refusal, the employer may still be required to pay the salaries notwithstanding the

reversal of the Labor Arbiters 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 Arbiters

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. NLRC [27] where it was alleged that the employer

was willing to comply with the order and that the employee opted not to pursue the execution of the order, the Court

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 employees

motion for the issuance of a writ of execution may no longer adversely affect the cause of the dismissed employee in view

of the self-executory nature of the order of reinstatement.[28]

The new NLRC Rules of Procedure, which took effect on January 7, 2006, now require the employer to submit a report of

compliance within 10 calendar days from receipt of the Labor Arbiters 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 thereaftermotu proprio issue the writ. With the new rules in place, there is hardly any difficulty in

determining the employers intransigence in immediately complying with the order.

In the case at bar, petitioners exerted efforts [30] to execute the Labor Arbiters 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 Arbiters

decision. Technically, there was still actual delay which brings to the question of whether the delay was due to

respondents 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 fiat[33] partakes of the nature of a restraining order

that constitutes a legal justification for respondents non-compliance with the reinstatement order. Respondents failure to

exercise the alternative options of actual reinstatement and payroll reinstatement was thus justified. Such being the case,

respondents obligation to pay the salaries pending appeal, as the normal effect of the non-exercise of the options, did not

attach.
While reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even the life of the

dismissed employee and his family, it does not contemplate the period when the employer-corporation itself is similarly in

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

The parallelism between a judicial order of corporation rehabilitation as a justification for the non-exercise of its options,

on the one hand, and a claim of actual and imminent substantial losses as ground for retrenchment, on the other hand,

stops at the red line on the financial statements. Beyond the analogous condition of financial gloom, as discussed by

Justice Leonardo Quisumbing in his Separate Opinion, are more salient distinctions. Unlike the ground of substantial

losses contemplated in a retrenchment case, the state of corporate rehabilitation was judicially pre-determined by a

competent court and not formulated for the first time in this case by respondent.

More importantly, there are legal effects arising from a judicial order placing a corporation under

rehabilitation. Respondent was, during the period material to the case, effectively deprived of the alternative choices

under Article 223 of the Labor Code, not only by virtue of the statutory injunction but also in view of the interim

relinquishment of management control to give way to the full exercise of the powers of the rehabilitation receiver. Had

there been no need to rehabilitate, respondent may have opted for actual physical reinstatement pending appeal to

optimize the utilization of resources. Then again, though the management may think this wise, the rehabilitation receiver

may decide otherwise, not to mention the subsistence of the injunction on claims.

In sum, the obligation to pay the employees salaries upon the employers failure to exercise the alternative options under

Article 223 of the Labor Code is not a hard and fast rule, considering the inherent constraints of corporate rehabilitation.

WHEREFORE, the petition is PARTIALLY DENIED. Insofar as the Court of Appeals Decision of December 5,

2003 and Resolution of April 16, 2004 annulling the NLRC Resolutions affirming the validity of the Writ of Execution and

the Notice of Garnishment are concerned, the Court finds no reversible error.

SO ORDERED.

CONCHITA CARPIO MORALES


Associate Justice
FIRST DIVISION

G.R. No. 161006, October 14, 2015

ROGELIO BARONDA, Petitioner, v. HON. COURT OF APPEALS, AND HIDECO SUGAR MILLING CO.,
INC., Respondents.

DECISION

BERSAMIN, J.:

The reinstatement aspect of the Voluntary Arbitrator's award or decision is immediately executory from its receipt by the
parties.chanRoblesvirtualLawlibrary

The Case

The petitioner assails the decision1 promulgated on August 21, 2003 in CA-G.R. SP No. 67059, whereby the Court of
Appeals (CA) annulled and set aside the order issued by the Voluntary Arbitrator 2 granting his motion for the issuance of
the writ of execution.3chanRoblesvirtualLawlibrary

Antecedents

Respondent Hideco Sugar Milling Co., Inc. (HIDECO) employed the petitioner as a mud press truck driver with a daily
salary of P281.00. On May 1, 1998, he hit HIDECO's transmission lines while operating a dump truck, causing a total
factory blackout from 9:00 pm until 2:00 am of the next day. Power was eventually restored but the restoration cost
HIDECO damages totaling P26,481.11. Following the incident, HIDECO served a notice of offense requiring him to
explain the incident within three days from notice. He complied. Thereafter, the management conducted its investigation,
and, finding him guilty of negligence, recommended his dismissal. 4 On June 15, 1998, the resident manager served a
termination letter and informed him of the decision to terminate his employment effective at the close of office hours of
that day. Hence, HIDECO no longer allowed him to report to work on the next day. 5chanroblesvirtuallawlibrary

In August 1998, the petitioner, along with another employee also dismissed by HIDECO, filed in the Office of the
Voluntary Arbitrator of the National Conciliation and Mediation Board in Tacloban City a complaint for illegal dismissal
against HIDECO.

Voluntary Arbitrator Antonio C. Lopez, Jr. handled the case and eventually rendered his decision on January 13, 1999 by
finding the petitioner's dismissal illegal, and ordering his reinstatement. Voluntary Arbitrator Lopez, Jr. deemed the
petitioner's separation from the service from June 16, 1998 to January 15, 1999 as a suspension from work without pay,
and commanded him to pay on installment basis the damages sustained by HIDECO from the May 1, 1998 incident he
had caused,6 to wit:7chanroblesvirtuallawlibrary

Wherefore, in so far as the case of ROGELIO BARONDA is concerned, this Office finds his dismissal illegal and
reinstatement is therefore ordered. His separation on June 16, 1998 up to January 15, 1999 is deemed suspension
without pay for his negligent acts, and is further ordered to pay respondent employer the sum of P26,484.41 for actual
damages at P1,500.00 every month deductible from his salary until complete payment is made.

HIDECO filed a motion for reconsideration,8 but the Voluntary Arbitrator denied the motion on August 11,
2000.9 Accepting the outcome, HIDECO reinstated the petitioner on September 29, 2000.10chanroblesvirtuallawlibrary

Thereafter, on October 9, 2000, the petitioner filed his manifestation with motion for the issuance of the writ of execution in
the Office of the Voluntary Arbitrator,11 praying for the execution of the decision, and insisting on being entitled to
backwages and other benefits corresponding to the period from January 16, 1999 up to September 28, 2000 totaling
P192,268.66 based on Article 279 of the Labor Code ("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'').

HIDECO opposed the petitioner's motion for execution,12 and simultaneously presented its own motion for execution to
enforce the decision of the Voluntary Arbitrator directing the petitioner to pay the actual damages totaling P26,484.41 at
the rate of P1,500.00/month deductible from his salary starting in January 2001 until complete payment was
made.13chanroblesvirtuallawlibrary

In his order dated March 20, 2001, 14 the Voluntary Arbitrator denied the petitioner's motion for execution on the ground
that the decision did not award any backwages; and granted HIDECO's motion for execution by directing the petitioner to
pay HIDECO P26,484.41 at the rate of P1,500.00/month.

On May 17, 2001, the petitioner filed another motion for execution praying that a writ of execution requiring HIDECO to
pay to him unpaid wages, 13th month pay and bonuses from January 16, 2001, the date when his reinstatement was
effected, until his actual reinstatement.15 HIDECO opposed the petitioner's second motion for execution because "the
items prayed for by the complainant in his Motion for Issuance of Writ of Execution are not included in the dispository
portion of the decision of the voluntary arbitrator, neither are the said items mentioned in any part of the same
decision."16chanroblesvirtuallawlibrary

On July 25, 2001, however, the Voluntary Arbitrator granted the petitioner's second motion for execution, 17 to wit:

Wherefore, for failure of complainant to re-admit complainant nor reinstate him in the payroll for the period from January
21, [1999] up to September 28, 2000, let an order or execution issue for the satisfaction of his reinstatement wages in the
amount of P155,647.00 (554 days at P281.00 per day), 13 month pay in the amount of P7,200.00, bonus in the amount of
P8,000.00 for 1999, and P8,000.00 for his signing bonus.

The sheriff of the National Labor Relations Commission, Regional Arbitration Branch No. VIII is directed to implement the
writ.

So ordered.

The Voluntary Arbitrator cited as basis Article 223 of the Labor Code, which pertinently provides:

Art. 223. Appeal -

x x x x

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

Having received a copy of the order of July 25, 2001 on August 7, 2001, 18 HIDECO instituted a special civil action
for certiorari in the Court of Appeals (CA) on October 2, 2001.19chanRoblesvirtualLawlibrary

Decision of the CA

HIDECO's petition for certiorari averred that the Voluntary Arbitrator had acted with grave abuse of discretion amounting
to lack or excess of jurisdiction in issuing the July 25, 2001 order. It listed the following issues, namely:

I. The voluntary arbitrator, in rendering the assailed order actually granted an award without giving due process to the
herein petitioner.20chanroblesvirtuallawlibrary

II. The voluntary arbitrator resolved the (second) motion by applying Art. 223 of the Labor Code. Was this the correct law
to apply under the circumstances? Did he have jurisdiction to apply this law? 21chanroblesvirtuallawlibrary

III. The decision dated January 13, 1999 clearly stated the relief that had been granted to the complainant Baronda, which
was reinstatement. Baronda was reinstated on September 29, 2000, thus [HIDECO] had complied with the decision. The
questions therefore: Could a relief that is not written in the decision be executed? Since the voluntary arbitrator clearly did
this in this case, is it not correct to say that he committed grave abuse of discretion? 22chanroblesvirtuallawlibrary

IV. In the assailed Order dated July 25, 2001 the Voluntary Arbitrator said, among others, that it treated a second motion
for the issuance of a writ of execution, and that a first motion had already been denied on the ground that no backwages
had been awarded to the complainant Baronda. Did he have any legal basis then to issue two different and contradictory
orders for what are essentially similar motions?23chanrobleslaw

In his comment,24 the petitioner countered that the petition for certiorari should be dismissed considering that HIDECO
should have appealed the decision of the Voluntary Arbitrator under Rule 43 of the Rules of Court because certiorari was
not a substitute for a lost appeal; that HIDECO did not file a motion for reconsideration of the questioned order, which
would have been an adequate remedy at law; that the petition for certiorari did not raise any jurisdictional error on the part
of the Voluntary Arbitrator but only factual and legal issues not proper in certiorari; and that the Voluntary Arbitrator did not
commit any error, much less grave abuse of discretion amounting to lack or excess of jurisdiction in rendering the
questioned order.

In the decision promulgated on August 21, 2003,25 the CA treated HIDECO's petition for certiorari as a petition for review
brought under Rule 43, and brushed aside the matters raised by the petitioner. It observed that the petition
for certiorari included the contents required by Section 6, Rule 43 for the petition for review; that the writ of execution was
proper only when the decision to be executed carried an award in favor of the movant; that the Voluntary Arbitrator had
issued the writ of execution for backwages despite his decision lacking such award for backwages; and that the reliance
by the Voluntary Arbitrator on Article 223 of the Labor Code was misplaced because said provision referred to decisions,
awards or orders of the Labor Arbiter, not the Voluntary Arbitrator. It disposed as follows:

WHEREFORE, the instant petition is hereby GRANTED and the questioned Order dated July 25, 2001 of the public
respondent ANNULLED and SET ASIDE.

SO ORDERED.26chanroblesvirtuallawlibrary

Issues

In this appeal, the petitioner submits the following issues, 27 namely

I.

THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW WHEN IT CONSIDERED THE PETITION
FOR CERTIORARI FILED BY PRIVATE RESPONDENT AS ONE FILED UNDER RULE 43 OF THE RULES OF COURT
WHEN SAID PETITION EXPRESSLY DECLARED THAT IT WAS FILED UNDER RULE 65 OF THE RULES OF COURT.
EVEN GRANTING FOR THE SAKE OF ARGUMENT THAT SAID PETITION COULD BE CONSIDERED AS FILED
UNDER RULE 43 OF THE RULES OF COURT, THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF
LAW IN NOT CONSIDERING THAT IT WAS FILED OUT OF TIME.chanRoblesvirtualLawlibrary

II.

THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW WHEN IT DID NOT DISMISS THE
PETITION FILED BY THE PRIVATE RESPONDENT FOR NOT HAVING PREVIOUSLY FILED A MOTION FOR
RECONSIDERATION BEFORE RESORTING TO THE PETITION FOR CERTIORARI.chanRoblesvirtualLawlibrary

III.

THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW WHEN IT CONSIDERED THE WRIT OF
EXECUTION AS ISSUED FOR THE SATISFACTION OF BACKWAGES INSTEAD OF FOR REINSTATEMENT
WAGES.chanRoblesvirtualLawlibrary

IV.

THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW AND SANCTIONED A VIOLATION OF
THE EQUAL PROTECTION OF THE LAWS WHEN IT RULED THAT THE REINSTATEMENT ASPECT OF THE
DECISION OF THE VOLUNTARY ARBITRATOR IS NOT IMMEDIATELY EXECUTORY.chanRoblesvirtualLawlibrary

V.
THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW WHEN IT DECLARED THAT PRIVATE
RESPONDENT WAS DENIED DUE PROCESS OF LAW.

In other words, the decisive issues for consideration and resolution are: (a) whether or not the CA erred in granting
HIDECO's petition for certiorari despite its procedural flaws; and (b) whether or not the reinstatement aspect of the
Voluntary Arbitrator's decision was executory pending appeal.chanRoblesvirtualLawlibrary

Ruling

The appeal is meritorious.chanRoblesvirtualLawlibrary

I
HIDECO's proper recourse was to appeal
by petition for review; hence, the CA erred
in granting HIDECO's petition for certiorari

The order issued on July 25, 2001 by the Voluntary Arbitrator, albeit directing the execution of the award or decision of
January 13, 1999, was a final order, as contrasted from a merely interlocutory order, because its issuance left nothing
more to be done or taken by the Voluntary Arbitrator in the case. 28 It thus completely disposed of what the reinstatement
of the petitioner as ordered by the Voluntary Arbitrator in the award or decision of January 13, 1999 signified.

The proper remedy from such order was to appeal to the CA by petition for review under Rule 43 of the Rules of
Court, whose Section 1 specifically provides:

Section 1. Scope. - This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from
awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-
judicial functions. Among these agencies are the Civil Service Commission, Central Boards of Assessment Appeals,
Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security Commission,
Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration,
Energy Regulation Board, National Telecommunications Commission, Department of Agrarian Reform under Republic Act
No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board,
Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, Construction Industry Arbitration
Commission, and voluntary arbitrators authorized by law.

The period of appeal was 10 days from receipt of the copy of the order of July 25, 2001 by the parties. It is true that
Section 4 of Rule 43 stipulates that the appeal shall be taken within 15 days from notice of the award, judgment, final
order or resolution, or from the date of its last publication, if publication is required by law for its effectivity, or of the denial
of the petitioner's motion for new trial or reconsideration duly filed in accordance with the governing law of the court or
agency a quo. However, Article 262-A of the Labor Code, the relevant portion of which follows, expressly states that the
award or decision of the Voluntary Arbitrator shall be final and executory after 10 calendar days from receipt of the copy of
the award or decision by the parties, viz.:

Art. 262-A. Procedures. -

x x x x

The award or decision of the Voluntary Arbitrator or panel of Voluntary Arbitrators shall contain the facts and the law on
which it is based. It shall be final and executory after ten (10) calendar days from receipt of the copy of the award
or decision by the parties.

Upon motion of any interested party, the Voluntary Arbitrator or panel of Voluntary Arbitrators or the Labor Arbiter in the
region where the movant resides, in case of the absence or incapacity of the Voluntary Arbitrator or panel of Voluntary
Arbitrators for any reason, may issue a writ of execution requiring either the sheriff of the Commission or regular courts or
any public official whom the parties may designate in the submission agreement to execute the final decision, order or
award. (Emphasis supplied)

On account of Article 262-A of the Labor Code, the period to appeal was necessarily 10 days from receipt of the copy of
the award or decision of the Voluntary Arbitrator or panel of Voluntary Arbitrators; otherwise, the order of July 25, 2001
would become final and immutable, because only a timely appeal or motion for reconsideration could prevent the award or
decision from attaining finality and immutability.

Yet, HIDECO filed the petition for certiorari, not a petition for review under Rule 43, and the CA liberally treated the
petition for certiorari as a petition for review under Rule 43.

We hold that such treatment by the CA was procedurally unwarranted.

To begin with, even if the error sought to be reviewed concerned grave abuse of discretion on the part of the Voluntary
Arbitrator,29 the remedy was an appeal in due course by filing the petition for review within 10 days from notice of the
award or decision. This was because certiorari, as an extraordinary remedy, was available only when there was no
appeal, or any plain, speedy and adequate remedy in the ordinary course of law. 30 In other words, the justification for
HIDECO's resort to the extraordinary equitable remedy of certiorari did not exist due to the availability of appeal, or other
ordinary remedies in law to which HIDECO as the aggrieved party could resort.

Although it is true that certiorari cannot be a substitute for a lost appeal, and that either remedy was not an alternative of
the other, we have at times permitted the resort to certiorari despite the availability of appeal, or of any plain speedy and
adequate remedy in the ordinary course of law in exceptional situations, such as: (1) when the remedy of certiorari is
necessary to prevent irreparable damages and injury to a party; (2) where the trial judge capriciously and whimsically
exercised his judgment; (3) where there may be danger of a failure of justice; (4) where appeal would be slow, inadequate
and insufficient; (5) where the issue raised is one purely of law; (6) where public interest is involved; and (7) in case of
urgency.31 Verily, as pointed out in Jaca v. Davao Lumber Company,32 the availability of the ordinary course of appeal
does not constitute sufficient ground to prevent a party from making use of certiorari where the appeal is not an adequate
remedy or equally beneficial, speedy and sufficient; for it is inadequacy, not the mere absence of all other legal remedies
and the danger of failure of justice without the writ that must usually determine the propriety of certiorari. It is nonetheless
necessary in such exceptional situations for the petitioner to make a strong showing in such situations that the respondent
judicial or quasi-judicial official or tribunal lacked or exceeded its jurisdiction, or gravely abused its discretion amounting to
lack or excess of jurisdiction.

HIDECO did not establish that its case came within any of the aforestated exceptional situations.

And, secondly, HIDECO filed the petition for certiorari on October 2, 2001. Even assuming, as the CA held, that the
petition for certiorari contained the matters required by Rule 43, such filing was not timely because 56 days had already
lapsed from HIDECO's receipt of the denial by the Voluntary Arbitrator of the motion for reconsideration. In short, HIDECO
had thereby forfeited its right to appeal. We have always emphasized the nature of appeal as a merely statutory right for
the aggrieved litigant, and such nature requires the strict observance of all the rules and regulations as to the manner of
its perfection and as to the time of its taking. Whenever appeal is belatedly resorted to, therefore, the litigant forfeits the
right to appeal, and the higher court ipso facto loses the authority to review, reverse, modify or otherwise alter the
judgment. The loss of such authority is jurisdictional, and renders the adverse judgment both final and
immutable.chanRoblesvirtualLawlibrary

II
Voluntary Arbitrator's order of reinstatement of
the petitioner was immediately executory

The next query is whether the order of reinstatement of the petitioner by the Voluntary Arbitrator was immediately
executory or not.

We answer the query in the affirmative. Although the timely filing of a motion for reconsideration or of an appeal forestalls
the finality of the decision or award of the Voluntary Arbitrator,33 the reinstatement aspect of the Voluntary Arbitrator's
decision or award remains executory regardless of the filing of such motion for reconsideration or appeal.

The immediate reinstatement of the employee pending the appeal has been introduced by Section 12 of Republic Act No.
6715, which amended Article 223 of the Labor Code, to wit:

SEC. 12. Article 223 of the same code is amended to read as follows:

Art. 223. Appeal. -

x x x x

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

The normal consequences of a finding that an employee was illegally dismissed are, firstly, that the employee becomes
entitled to reinstatement to his former position without loss of seniority rights; and, secondly, the payment of wages
corresponding to the period from his illegal dismissal up to the time of actual reinstatement. These two consequences give
meaning and substance to the constitutional right of labor to security of tenure. 34 Reinstatement pending appeal thus
affirms the constitutional mandate to protect labor and to enhance social justice, for, as the Court has said in Aris (Phil.)
Inc. v. National Labor Relations Commission:35chanroblesvirtuallawlibrary

In authorizing execution pending appeal of the reinstatement aspect of a decision of a 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.

x x x x

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.

If in ordinary civil actions execution of judgment pending appeal is authorized for reasons the determination of which is
merely left to the discretion of the judge, We find no plausible reason to withhold it in cases of decisions reinstating
dismissed or separated employees. In such cases, the poor employees had been deprived of their only source of
livelihood, their only means of support for their family their lifeblood. To Us, this special circumstance is far better than any
other which a judge, in his sound discretion, may determine. In short, with respect to decisions reinstating employees, the
law itself has determined sufficiently overwhelming reason for its execution pending appeal.

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 its family. 36chanroblesvirtuallawlibrary

We also see no reason to obstruct the reinstatement decreed by the Voluntary Arbitrator, or to treat it any less than the
reinstatement that is ordered by the Labor Arbiter. Voluntary arbitration really takes precedence over other dispute
settlement devices. Such primacy of voluntary arbitration is mandated by no less than the Philippine Constitution,37 and is
ingrained as a policy objective of our labor relations law. 38 The reinstatement order by the Voluntary Arbitrator should
have the same authority, force and effect as that of the reinstatement order by the Labor Arbiter not only to encourage
parties to settle their disputes through this mode, but also, and more importantly, to enforce the constitutional mandate to
protect labor, to provide security of tenure, and to enhance social justice.

The 2001 Procedural Guidelines in the Execution of Voluntary Arbitration Awards/Decisions (Guidelines), albeit not
explicitly discussing the executory nature of the reinstatement order, seems to align with the Court's stance by punishing
the noncompliance by a party of the decision or order for reinstatement. Section 2, Rule III of the Guidelines states:

Sec. 2. Issuance, Form and Contents of a Writ of Execution. -

x x x x

b) 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 in case of death of the losing party upon his successor-in-interest, executor or
administrator andsuch party or person may be punished for contempt if he disobeys such decision or order for
reinstatement. (bold underscoring supplied for emphasis)

The 2005 NCMB Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings also supports this
Court's position, for Section 6 of its Rule VIII reads:

Sec. 6. Effect of Filing of Petition for Ceriiorari on Execution. The filing of a petition for certiorari with the Court of Appeals
or the Supreme Court shall not stay the execution of the assailed decision unless a temporary restraining order or
injunction is issued by the Court of Appeals or the Supreme Court pending resolution of such petition.(Emphasis Ours)

We declare, therefore, that the reinstatement decreed by the Voluntary Arbitrator was immediately executory upon the
receipt of the award or decision by the parties.

WHEREFORE, the Court GRANTS the petition for review on certiorari; REINSTATES the order dated July 25, 2001 of the
Voluntary Arbitrator; and ORDERS respondent Hideco Sugar Milling Co., Inc. to pay the costs of suit.

SO ORDERED.cralawlawlibrary

Sereno, C.J., Leonardo-De Castro, Perez, and Perlas-Bernabe, JJ., concur.


Republic of the Philippines
SUPREME COURT
Baguio City

SECOND DIVISION

G.R. No. 207983 April 7, 2014

WENPHIL CORPORATION, Petitioner,


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

DECISION

BRION, J.:

We resolve this petition for review on certiorari1

45 of the Rules of Court, challenging the August 31, 2012 decision 2 and the June 20, 2013 resolution3 (assailed CA
rulings) of the Court of Appeals (CA) in CA-G.R. SP No. 117366.

These assailed CA rulings annulled and set aside the March 26, 2010 Decision 4 and September 15, 20105resolution
(NLRC rulings) of the National Labor Relations Commission (NLRC) in NLRC CA No. 02-8233-01 (Rl-08).

The NLRC rulings, in turn, fully affirmed the November 16, 2007 Order 6 of the Labor Arbiter (LA) in NLRC-NCR Case Nos.
30-03-00993-00 and 30-03-01020-00. The LA’s order found that an illegal dismissal took place. Thus, the LA directed
petitioner Wenphil Corporation (Wenphil) to pay respondents Almer Abing and Anabelle Tuazon (respondents) their
backwages for the period from February 15, 2002 to November 8, 2002, pursuant to the rule that an order of
reinstatement is immediately executory even pending appeal.7

Factual Antecedents

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

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

Because of the unfavorable LA decision, Wenphil appealed to the NLRC on April 16, 2001 11. In the meantime, the
respondents moved for the immediate execution of the LA’s December 8, 2000 decision.12

On October 29, 2001, Wenphil and the respondents entered into a compromise agreement 13 before LA Bartolabac. They
agreed to the respondents’ payroll reinstatement while Wenphil’s appeal with the NLRC was ongoing. Wenphil also
agreed to pay the accumulated salaries of the respondents for the payroll period from April 5, 2001 until October 15,
2001.14 As for the remaining payroll period starting October 16, 2001, Wenphil committed itself to credit the respective
salaries of the respondents to their ATM payroll accounts until such time that the questioned decision of LA Bartolabac is
either modified, amended or reversed by the Honorable National Labor Relations Commission. 15

On January 30, 2002, the NLRC issued a resolution16 affirming LA Bartolabac’s decision with modifications. Instead of
ordering the respondents’ reinstatement, the NLRC directed Wenphil to pay the respondents their respective separation
pay at the rate of one (1) month salary for every year of service. Also, the NLRC found that while the respondents had
been illegally dismissed, they had not been illegally suspended. Thus, the period from February 3 to February 28, 2000
during which the respondents were on preventive suspension – was excluded by the NLRC in the computation of the
respondents’ backwages.17
Subsequently, Wenphil moved for the reconsideration18 of the NLRC’s January 30, 2002 resolution, but the NLRC denied
the motion in another resolution dated September 24, 2002.19

Wenphil thereafter went up to the CA via a petition for certiorari to question the NLRC’s January 30, 2002 and September
24, 2002 resolutions.20 On August 27, 2003, the CA rendered its decision 21 reversing the NLRC’s finding that the
respondents had been illegally dismissed. According to the CA, there was enough evidence to show that the respondents
had been guilty of serious misconduct; thus, their dismissal was for a valid cause. 22 The respondents moved for the
reconsideration of the CA’s decision.23 In a resolution24 dated February 23, 2004, the CA denied the respondents’ motion.

On appeal to the Supreme Court (SC) via Rule 45 (docketed as G.R. No. 162447 25 and dated December 27, 2006), the
SC denied the respondents petition for review on certiorari26 and affirmed the CA’s August 27, 2003 decision and
February 23, 2004 resolution. The respondents did not file any motion for reconsideration to question the SC’s decision;
thus, the decision became final and executory on February 15, 2007. 27

The Labor Arbitration Rulings

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

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

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

The respondents questioned in their appeal the determined period for the computation of their backwages; they posited
that the period for payment should end, not on November 8, 2002, but on February 14, 2007, since the SC’s decision
which upheld the CA’s ruling became final and executory on February 15, 2007. 33

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

The CA’s Ruling

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

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

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

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

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

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

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

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

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

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

The Court’s Ruling

We resolve to DENY the petition. An order of reinstatement is immediately executory even pending appeal. The employer
has the obligation to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by
the higher court.

Under Article 223 of the Labor Code, "the decision of the Labor Arbiter reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee
shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation,
or at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement."

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

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

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

In the case of payroll reinstatement, even if the employer’s appeal turns the tide in its favor, the reinstated employee has
no duty to return or reimburse the salary he received during the period that the lower court or tribunal’s governing decision
was for the employee’s illegal dismissal.
Otherwise, the situation would run counter to the immediately executory nature of an order of reinstatement. The case of
Garcia v. Philippine Airlines46 is enlightening on this point:

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

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

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

Thus, when the NLRC rendered its decision on the appeal affirming the LA’s finding that the respondents were illegally
dismissed, but modifying the award of reinstatement to payment of separation pay, Wenphil stopped paying the
respondents’ wages.

The reinstatement salaries due to the respondents were, by their nature, payment of unworked backwages. These were
salaries due to the respondents because they had been prevented from working despite the LA and the NLRC findings
that they had been illegally dismissed.

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

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

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

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

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

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

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

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

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

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

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

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

Period for Computation of Backwages

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

According to the LA, whose ruling the NLRC affirmed, the period for computation should be from February 15, 2002 until
November 8, 2002 since the NLRC’s decision which affirmed the LA’s finding of illegal dismissal became final and
executory on November 8, 2002. The LA started the counting of the period on February 15, 2002 since that was the day
when Wenphil last paid the respondents’ backwages.

On the other hand, the CA, in setting aside the NLRC’s rulings, relied on the case of Pfizer v. Velasco where we ruled that
the backwages of the dismissed employee should be granted during the period of appeal until reversal by a higher court.
Since the first CA decision which found that the respondents had not been illegally dismissed was promulgated on August
27, 2003, then the reversal by the higher court was effectively made on August 27, 2003.

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

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

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

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

SO ORDERED.

ARTURO D. BRION
Associate Justice
SECOND DIVISION

[G.R. No. 110419. March 3, 1997.]

UERM-MEMORIAL MEDICAL CENTER and DR. ISIDRO CARINO, Petitioners, v. National Labor Relations
Commission and UERM Employees ASSOCIATION, Priscillo Dalogdog and 516 Members-Employees of UERM
Hospital, Respondents.

Jimenez & Associates and Gancayco Law Offices, for Petitioners.

FFW Legal Center for Private Respondents.

SYLLABUS

LABOR AND SOCIAL LEGISLATION; LABOR CODE; JUDGMENT INVOLVING MONETARY AWARD; LAW ON
POSTING OF BOND LIBERALLY CONSTRUED; POSTING OF PROPERTY BOND WILL PERFECT AN APPEAL; CASE
AT BAR. — The applicable law is Article 223 of the Labor Code, as amended by Republic Act No. 6715, which provides:
"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." We have given a liberal interpretation to this provision.
In YBL (Your Bus Line) v. NLRC , 190 SCRA 164 (1990) we ruled: ". . . that while Article 223 of the Labor Code, as
amended by Republic Act No. 6715, requiring a cash or surety bond in the amount equivalent to the monetary award in
the judgment appealed from for the appeal to be perfected, may be considered a jurisdictional requirement, nevertheless,
adhering to the principle that substantial justice is better served by allowing the appeal on the merits threshed out by the
NLRC, the Court finds and so holds that the foregoing requirement of the law should be given a liberal interpretation."
Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations Commission (246 SCRA 801 [1995]),
we held: "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. The requirement is
intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their
employees’ just and lawful claims. Considering, however, that the current policy is not to strictly follow technical rules but
rather to take into account the spirit and intention of the Labor Code, it would be prudent for us to look into the merits of
the case, especially since petitioner disputes the allegation that private respondent was illegally dismissed."

DECISION

PUNO, J.:

The question presented in this petition for certiorari under Rule 65 is whether or not in perfecting an appeal to the National
Labor Relations Commission (NLRC) a property bond is excluded by the two forms of appeal bond — cash or surety — as
enumerated in Article 223 of the Labor Code.chanroblesvirtual|awlibrary

The facts show that on 14 December 1987 Republic Act No. 6640 took effect which mandated a ten (P10.00) peso
increase on the prevailing daily minimum wage of P54.00. In applying said law, the petitioners granted salary increases to
their employees based on the following computation, to wit:jgc:chanrobles.com.ph

"1. To members of the faculty who are non-union members, P304.17 per month; and

2. To rank-and-file employees (individual complainants who are union members), P209.17 per month."cralaw virtua1aw
library
There was a difference of P95.00 in the salaries of the two classes of employees. Private respondents who are rank and
file employees demanded payment of the difference. Before the parties could settle their dispute, Republic Act No. 6727
took effect on 1 July 1989 which again increased the daily minimum wage in the private sector (whether agricultural or
non-agricultural) by P25.00. In compliance, petitioners paid their employees using the following computation, to
wit:jgc:chanrobles.com.ph

"1. To members of the faculty who are non-union members, P760.42 per month; and

2. To rank-and-file employees (individual complainants who are union members), P523.00 a month."cralaw virtua1aw
library

Again, there was a difference of P237.42 per month between the salaries of union members and non-union members. In
September 1987, petitioners increased the hiring rate of the new employees to P188.00 per month. Private respondents
once more demanded from the petitioners payment of the salary differential mandated by RA No. 6727 and correction of
the wage distortion brought about by the increase in the hiring rate of new employees.

On 12 April 1988, Policy Instruction No. 54 was issued by the then Secretary of Labor Franklin Drilon, the pertinent
provision of which reads:jgc:chanrobles.com.ph

". . . the personnel in subject hospitals and clinics are entitled to a full weekly wage of seven days if they have completed
the 40-hour/5-day workweek in any given workweek.

All enforcement and adjudicatory agencies of this Department shall be guided by this issuance in the disposition of cases
involving the personnel of covered hospitals and clinics.

Done in the City of Manila, this 12th day of April, 1988.

(Sgd) FRANKLIN M. DRILON

Secretary"

Petitioners challenged the validity of said Policy Instruction and refused to pay the salaries of the private respondents for
Saturdays and Sundays.

Consequently, a complaint was filed by the private respondents, represented by the Federation of Free Workers (FFW),
claiming salary differentials under Republic Act Nos. 6640 and 6727, correction of the wage distortion and the payment of
salaries for Saturdays and Sundays under Policy Instruction No. 54.

Labor Arbiter Nieves de Castro sustained the private respondents except for their claim of wage distortion. The dispositive
portion of the decision reads:jgc:chanrobles.com.ph

"PREMISES CONSIDERED, respondents are hereby directed to pay the 517 individual
complainants:chanroblesvirtuallawlibrary

(1) Their Salary Differentials, to wit:chanrob1es virtual 1aw library

1.1 Under RA 6640 — P1,743,582.50

1.2 Under RA 6727 — P3,559,613.06

1.3 Policy Instruction 54 — P11,779,328.00

——————

Total P17,082,448.56

(2) Exemplary Damages of P2,000.00 each.

SO ORDERED." 1

Within the reglementary period for appeal, the petitioners filed their Notice and Memorandum of Appeal with a Real Estate
Bond consisting of land and various improvements therein worth P102,345,650. 2 The private respondents moved to
dismiss the appeal on the ground that Article 223 of the Labor Code, as amended, requires the posting of a cash or surety
bond. The NLRC directed petitioners to post a cash or surety bond of P17,082,448.56 with a warning that failure to do so
would cause the dismissal of the appeal. The petitioners filed a Motion for Reconsideration alleging it is not in a viable
financial condition to post a cash bond nor to pay the annual premium of P700,000.00 for a surety bond. On 6 October
1992, the NLRC dismissed petitioners’ appeal. Petitioners’ Motion for Reconsideration was also denied by the NLRC in a
resolution 3 dated 7 June 1993.

Hence, this petition assailing the two resolutions as having been issued with grave abuse of discretion. On 28 June 1993,
we temporarily enjoined the NLRC from implementing the questioned resolutions and from executing the decision of the
Labor Arbiter.

The applicable law is Article 223 of the Labor Code, as amended by Republic Act No. 6715, which
provides:jgc:chanrobles.com.ph

"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."cralaw virtua1aw library

We have given a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC 4 we ruled:jgc:chanrobles.com.ph

". . . that while Article 223 of the Labor Code, as amended by Republic Act No. 6715, requiring a cash or surety bond in
the amount equivalent to the monetary award in the judgment appealed from for the appeal to be perfected, may be
considered a jurisdictional requirement, nevertheless, adhering to the principle that substantial justice is better served by
allowing the appeal on the merits threshed out by the NLRC, the Court finds and so holds that the foregoing requirement
of the law should be given a liberal interpretation."cralaw virtua1aw library

Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations Commission 5 we
held:jgc:chanrobles.com.ph

"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. The requirement is
intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their
employees’ just and lawful claims.

Considering, however, that the current policy is not to strictly follow technical rules but rather to take into account the spirit
and intention of the Labor Code, it would be prudent for us to look into the merits of the case, especially since petitioner
disputes the allegation that private respondent was illegally dismissed."cralaw virtua1aw library

We reiterate this policy which stresses the importance of deciding cases on the basis of their substantive merit and not on
strict technical rules. In the case at bar, the judgment involved is more than P17 million and its precipitate execution can
adversely affect the existence of petitioner medical center. Likewise, the issues involved are not insignificant and they
deserve a full discourse by our quasi-judicial and judicial authorities. We are also confident that the real property bond
posted by the petitioners sufficiently protects the interests of private respondents should they finally prevail. It is not
disputed that the real property offered by petitioners is worth P102,345,650. The judgment in favor of private respondent
is only a little more than P17 million.chanroblesvirtuallawlibrary:red

IN VIEW WHEREOF, the resolutions dated October 6, 1992 and June 7, 1993 of the public respondent are set aside. The
case is remanded to the NLRC for continuation of proceedings. No costs.chanrobles.com:cralaw:nad

SO ORDERED

Regalado, Romero, Mendoza and Torres, Jr., JJ., concur.


Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. Nos. 178034 & 178117 G R. Nos. 186984-85 October 17, 2013

ANDREW JAMES MCBURNIE, Petitioner,


vs.
EULALIO GANZON, EGI-MANAGERS, INC. and E. GANZON, INC., Respondents.

RESOLUTION

REYES, J.:

For resolution are the –

(1) third motion for reconsideration1 filed by Eulalio Ganzon (Ganzon), EGI-Managers, Inc. (EGI) and E. Ganzon,
Inc. (respondents) on March 27, 2012, seeking a reconsideration of the Court’s Decision 2 dated September 18,
2009 that ordered the dismissal of their appeal to the National Labor Relations Commission (NLRC) for failure to
post additional appeal bond in the amount of ₱54,083,910.00; and

(2) motion for reconsideration3 filed by petitioner Andrew James McBurnie (McBurnie) on September 26, 2012,
assailing the Court en banc’s Resolution4 dated September 4, 2012 that (1) accepted the case from the Court’s
Third Division and (2) enjoined the implementation of the Labor Arbiter’s (LA) decision finding him to be illegally
dismissed by the respondents.

Antecedent Facts

The Decision dated September 18, 2009 provides the following antecedent facts and proceedings –

On October 4, 2002, McBurnie, an Australian national, instituted a complaint for illegal dismissal and other monetary
claims against the respondents. McBurnie claimed that on May 11, 1999, he signed a five-year employment
agreement5 with the company EGI as an Executive Vice-President who shall oversee the management of the company’s
hotels and resorts within the Philippines. He performed work for the company until sometime in November 1999, when he
figured in an accident that compelled him to go back to Australia while recuperating from his injuries. While in Australia, he
was informed by respondent Ganzon that his services were no longer needed because their intended project would no
longer push through.

The respondents opposed the complaint, contending that their agreement with McBurnie was to jointly invest in and
establish a company for the management of hotels. They did not intend to create an employer-employee relationship, and
the execution of the employment contract that was being invoked by McBurnie was solely for the purpose of allowing
McBurnie to obtain an alien work permit in the Philippines. At the time McBurnie left for Australia for his medical treatment,
he had not yet obtained a work permit.

In a Decision6 dated September 30, 2004, the LA declared McBurnie as having been illegally dismissed from employment,
and thus entitled to receive from the respondents the following amounts: (a) US$985,162.00 as salary and benefits for the
unexpired term of their employment contract, (b) ₱2,000,000.00 as moral and exemplary damages, and (c) attorney’s fees
equivalent to 10% of the total monetary award.

Feeling aggrieved, the respondents appealed the LA’s Decision to the NLRC.7 On November 5, 2004, they filed their
Memorandum of Appeal8 and Motion to Reduce Bond9, and posted an appeal bond in the amount of ₱100,000.00. The
respondents contended in their Motion to Reduce Bond, inter alia, that the monetary awards of the LA were null and
excessive, allegedly with the intention of rendering them incapable of posting the necessary appeal bond. They claimed
that an award of "more than ₱60 Million Pesos to a single foreigner who had no work permit and who left the country for
good one month after the purported commencement of his employment" was a patent nullity. 10Furthermore, they claimed
that because of their business losses that may be attributed to an economic crisis, they lacked the capacity to pay the
bond of almost ₱60 Million, or even the millions of pesos in premium required for such bond.
On March 31, 2005, the NLRC denied11 the motion to reduce bond, explaining that "in cases involving monetary award, an
employer seeking to appeal the [LA’s] decision to the Commission is unconditionally required by Art. 223, Labor Code to
post bond in the amount equivalent to the monetary award x x x."12 Thus, the NLRC required from the respondents the
posting of an additional bond in the amount of ₱54,083,910.00.

When their motion for reconsideration was denied,13 the respondents decided to elevate the matter to the Court of
Appeals (CA) via the Petition for Certiorari and Prohibition (With Extremely Urgent Prayer for the Issuance of a
Preliminary Injunction and/or Temporary Restraining Order) 14 docketed as CA-G.R. SP No. 90845.

In the meantime, in view of the respondents’ failure to post the required additional bond, the NLRC dismissed their appeal
in a Resolution15 dated March 8, 2006. The respondents’ motion for reconsideration was denied on June 30, 2006. 16 This
prompted the respondents to file with the CA the Petition for Certiorari (With Urgent Prayers for the Immediate Issuance of
a Temporary Restraining Order and a Writ of Preliminary Injunction) 17 docketed as CA-G.R. SP No. 95916, which was
later consolidated with CA-G.R. SP No. 90845.

CA-G.R. SP Nos. 90845 and 95916

On February 16, 2007, the CA issued a Resolution 18 granting the respondents’ application for a writ of preliminary
injunction. It directed the NLRC, McBurnie, and all persons acting for and under their authority to refrain from causing the
execution and enforcement of the LA’s decision in favor of McBurnie, conditioned upon the respondents’ posting of a bond
in the amount of ₱10,000,000.00. McBurnie sought reconsideration of the issuance of the writ of preliminary injunction,
but this was denied by the CA in its Resolution19 dated May 29, 2007.

McBurnie then filed with the Court a Petition for Review on Certiorari 20 docketed as G.R. Nos. 178034 and 178117,
assailing the CA Resolutions that granted the respondents’ application for the injunctive writ. On July 4, 2007, the Court
denied the petition on the ground of McBurnie’s failure to comply with the 2004 Rules on Notarial Practice and to
sufficiently show that the CA committed any reversible error. 21 A motion for reconsideration was denied with finality in a
Resolution22 dated October 8, 2007.

Unyielding, McBurnie filed a Motion for Leave (1) To File Supplemental Motion for Reconsideration and (2) To Admit the
Attached Supplemental Motion for Reconsideration,23 which was treated by the Court as a second motion for
reconsideration, a prohibited pleading under Section 2, Rule 56 of the Rules of Court. Thus, the motion for leave was
denied by the Court in a Resolution24 dated November 26, 2007. The Court’s Resolution dated July 4, 2007 then became
final and executory on November 13, 2007; accordingly, entry of judgment was made in G.R. Nos. 178034 and 178117. 25

In the meantime, the CA ruled on the merits of CA-G.R. SP No. 90845 and CA-G.R. SP No. 95916 and rendered its
Decision26 dated October 27, 2008, allowing the respondents’ motion to reduce appeal bond and directing the NLRC to
give due course to their appeal. The dispositive portion of the CA Decision reads:

WHEREFORE, in view of the foregoing, the petition for certiorari and prohibition docketed as CA GR SP No. 90845 and
the petition for certiorari docketed as CA GR SP No. 95916 are GRANTED. Petitioners’ Motion to Reduce Appeal Bond is
GRANTED. Petitioners are hereby DIRECTED to post appeal bond in the amount of ₱10,000,000.00. The NLRC is
hereby DIRECTED to give due course to petitioners’ appeal in CA GR SP No. 95916 which is ordered remanded to the
NLRC for further proceedings.

SO ORDERED.27

On the issue28 of the NLRC’s denial of the respondents’ motion to reduce appeal bond, the CA ruled that the NLRC
committed grave abuse of discretion in immediately denying the motion without fixing an appeal bond in an amount that
was reasonable, as it denied the respondents of their right to appeal from the decision of the LA. 29 The CA explained that
"(w)hile Art. 223 of the Labor Code requiring bond equivalent to the monetary award is explicit, Section 6, Rule VI of the
NLRC Rules of Procedure, as amended, recognized as exception a motion to reduce bond upon meritorious grounds and
upon posting of a bond in a reasonable amount in relation to the monetary award." 30

On the issue31 of the NLRC’s dismissal of the appeal on the ground of the respondents’ failure to post the additional
appeal bond, the CA also found grave abuse of discretion on the part of the NLRC, explaining that an appeal bond in the
amount of ₱54,083,910.00 was prohibitive and excessive. Moreover, the appellate court cited the pendency of the petition
for certiorari over the denial of the motion to reduce bond, which should have prevented the NLRC from immediately
dismissing the respondents’ appeal.32
Undeterred, McBurnie filed a motion for reconsideration. At the same time, the respondents moved that the appeal be
resolved on the merits by the CA. On March 3, 2009, the CA issued a Resolution 33 denying both motions. McBurnie then
filed with the Court the Petition for Review on Certiorari34 docketed as G.R. Nos. 186984-85.

In the meantime, the NLRC, acting on the CA’s order of remand, accepted the appeal from the LA’s decision, and in its
Decision35 dated November 17, 2009, reversed and set aside the Decision of the LA, and entered a new one dismissing
McBurnie’s complaint. It explained that based on records, McBurnie was never an employee of any of the respondents,
but a potential investor in a project that included said respondents, barring a claim of dismissal, much less, an illegal
dismissal. Granting that there was a contract of employment executed by the parties, McBurnie failed to obtain a work
permit which would have allowed him to work for any of the respondents. 36 In the absence of such permit, the employment
agreement was void and thus, could not be the source of any right or obligation.

Court Decision dated September 18, 2009

On September 18, 2009, the Third Division of this Court rendered its Decision37 which reversed the CA Decision dated
October 27, 2008 and Resolution dated March 3, 2009. The dispositive portion reads:

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP Nos. 90845 and 95916
dated October 27, 2008 granting respondents’ Motion to Reduce Appeal Bond and ordering the National Labor Relations
Commission to give due course to respondents’ appeal, and its March 3, 2009 Resolution denying petitioner’s motion for
reconsideration, are REVERSED and SET ASIDE. The March 8, 2006 and June 30, 2006 Resolutions of the National
Labor Relations Commission in NLRC NCR CA NO. 042913-05 dismissing respondents’ appeal for failure to perfect an
appeal and denying their motion for reconsideration, respectively, are REINSTATED and AFFIRMED.

SO ORDERED.38

The Court explained that the respondents’ failure to post a bond equivalent in amount to the LA’s monetary award was
fatal to the appeal.39 Although an appeal bond may be reduced upon motion by an employer, the following conditions
must first be satisfied: (1) the motion to reduce bond shall be based on meritorious grounds; and (2) a reasonable amount
in relation to the monetary award is posted by the appellant. Unless the NLRC grants the motion to reduce the cash bond
within the 10-day reglementary period to perfect an appeal from a judgment of the LA, the employer is mandated to post
the cash or surety bond securing the full amount within the said 10-day period.40 The respondents’ initial appeal bond of
₱100,000.00 was grossly inadequate compared to the LA’s monetary award.

The respondents’ first motion for reconsideration41 was denied by the Court for lack of merit via a Resolution42dated
December 14, 2009.

Meanwhile, on the basis of the Court’s Decision, McBurnie filed with the NLRC a motion for reconsideration with motion to
recall and expunge from the records the NLRC Decision dated November 17, 2009. 43 The motion was granted by the
NLRC in its Decision44 dated January 14, 2010.45

Undaunted by the denial of their first motion for reconsideration of the Decision dated September 18, 2009, the
respondents filed with the Court a Motion for Leave to Submit Attached Second Motion for Reconsideration 46 and Second
Motion for Reconsideration,47 which motion for leave was granted in a Resolution48 dated March 15, 2010. McBurnie was
allowed to submit his comment on the second motion, and the respondents, their reply to the comment. On January 25,
2012, however, the Court issued a Resolution 49 denying the second motion "for lack of merit," "considering that a second
motion for reconsideration is a prohibited pleading x x x."50

The Court’s Decision dated September 18, 2009 became final and executory on March 14, 2012. Thus, entry of
judgment51 was made in due course, as follows:

ENTRY OF JUDGMENT

This is to certify that on September 18, 2009 a decision rendered in the above-entitled cases was filed in this Office, the
dispositive part of which reads as follows:

xxxx
and that the same has, on March 14, 2012 become final and executory and is hereby recorded in the Book of Entries of
Judgments.52

The Entry of Judgment indicated that the same was made for the Court’s Decision rendered in G.R. Nos. 186984-85.

On March 27, 2012, the respondents filed a Motion for Leave to File Attached Third Motion for Reconsideration, with an
attached Motion for Reconsideration (on the Honorable Court’s 25 January 2012 Resolution) with Motion to Refer These
Cases to the Honorable Court En Banc.53 The third motion for reconsideration is founded on the following grounds:

I.

THE PREVIOUS 15 MARCH 2010 RESOLUTION OF THE HONORABLE COURT ACTUALLY GRANTED
RESPONDENTS’ "MOTION FOR LEAVE TO SUBMIT A SECOND MOTION FOR RECONSIDERATION."

HENCE, RESPONDENTS RESPECTFULLY CONTEND THAT THE SUBSEQUENT 25 JANUARY 2012 RESOLUTION
CANNOT DENY THE " SECOND MOTION FOR RECONSIDERATION " ON THE GROUND THAT IT IS A PROHIBITED
PLEADING. MOREOVER, IT IS RESPECTFULLY CONTENDED THAT THERE ARE VERY PECULIAR
CIRCUMSTANCES AND NUMEROUS IMPORTANT ISSUES IN THESE CASES THAT CLEARLY JUSTIFY GIVING
DUE COURSE TO RESPONDENTS’ "SECOND MOTION FOR RECONSIDERATION," WHICH ARE:

II.

THE 10 MILLION PESOS BOND WHICH WAS POSTED IN COMPLIANCE WITH THE OCTOBER 27, 2008 DECISION
OF THE COURT OF APPEALS IS A SUBSTANTIAL AND SPECIAL MERITORIOUS CIRCUMSTANCE TO MERIT
RECONSIDERATION OF THIS APPEAL.

III.

THE HONORABLE COURT HAS HELD IN NUMEROUS LABOR CASES THAT WITH RESPECT TO ARTICLE 223 OF
THE LABOR CODE, THE REQUIREMENTS OF THE LAW SHOULD BE GIVEN A LIBERAL INTERPRETATION,
ESPECIALLY IF THERE ARE SPECIAL MERITORIOUS CIRCUMSTANCES AND ISSUES.

IV. THE LA’S JUDGMENT WAS PATENTLY VOID SINCE IT AWARDS MORE THAN ₱60 MILLION PESOS TO A
SINGLE FOREIGNER WHO HAD NO WORK PERMIT, AND NO WORKING VISA.

V.

PETITIONER MCBURNIE DID NOT IMPLEAD THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) IN HIS
APPEAL HEREIN, MAKING THE APPEAL INEFFECTIVE AGAINST THE NLRC.

VI.

NLRC HAS DISMISSED THE COMPLAINT OF PETITIONER MCBURNIE IN ITS NOVEMBER 17, 2009 DECISION.

VII.

THE HONORABLE COURT’S 18 SEPTEMBER 2009 DECISION WAS TAINTED WITH VERY SERIOUS
IRREGULARITIES.

VIII.

GR NOS. 178034 AND 178117 HAVE BEEN INADVERTENTLY INCLUDED IN THIS CASE.

IX.

THE HONORABLE COURT DID NOT DULY RULE UPON THE OTHER VERY MERITORIOUS ARGUMENTS OF THE
RESPONDENTS WHICH ARE AS FOLLOWS:
(A) PETITIONER NEVER ATTENDED ANY OF ALL 14 HEARINGS BEFORE THE [LA] (WHEN 2 MISSED
HEARINGS MEAN DISMISSAL).

(B) PETITIONER REFERRED TO HIMSELF AS A "VICTIM" OF LEISURE EXPERTS, INC., BUT NOT OF ANY
OF THE RESPONDENTS.

(C) PETITIONER’S POSITIVE LETTER TO RESPONDENT MR. EULALIO GANZON CLEARLY SHOWS THAT
HE WAS NOT ILLEGALLY DISMISSED NOR EVEN DISMISSED BY ANY OF THE RESPONDENTS AND
PETITIONER EVEN PROMISED TO PAY HIS DEBTS FOR ADVANCES MADE BY RESPONDENTS.

(D) PETITIONER WAS NEVER EMPLOYED BY ANY OF THE RESPONDENTS. PETITIONER PRESENTED
WORK FOR CORONADO BEACH RESORT WHICH IS [NEITHER] OWNED NOR CONNECTED WITH ANY OF
THE RESPONDENTS.

(E) THE [LA] CONCLUDED THAT PETITIONER WAS DISMISSED EVEN IF THERE WAS ABSOLUTELY NO
EVIDENCE AT ALL PRESENTED THAT PETITIONER WAS DISMISSED BY THE RESPONDENTS.

(F) PETITIONER LEFT THE PHILIPPINES FOR AUSTRALIA JUST 2 MONTHS AFTER THE START OF THE
ALLEGED EMPLOYMENT AGREEMENT, AND HAS STILL NOT RETURNED TO THE PHILIPPINES AS
CONFIRMED BY THE BUREAU OF IMMIGRATION.

(G) PETITIONER COULD NOT HAVE SIGNED AND PERSONALLY APPEARED BEFORE THE NLRC
ADMINISTERING OFFICER AS INDICATED IN THE COMPLAINT SHEET SINCE HE LEFT THE COUNTRY 3
YEARS BEFORE THE COMPLAINT WAS FILED AND HE NEVER CAME BACK.54

On September 4, 2012, the Court en banc55 issued a Resolution56 accepting the case from the Third Division. It also
issued a temporary restraining order (TRO) enjoining the implementation of the LA’s Decision dated September 30, 2004.
This prompted McBurnie’s filing of a Motion for Reconsideration,57 where he invoked the fact that the Court’s Decision
dated September 18, 2009 had become final and executory, with an entry of judgment already made by the Court.

Our Ruling

In light of pertinent law and jurisprudence, and upon taking a second hard look of the parties’ arguments and the records
of the case, the Court has ascertained that a reconsideration of this Court’s Decision dated September 18, 2009 and
Resolutions dated December 14, 2009 and January 25, 2012, along with the lifting of the entry of judgment in G.R. No.
186984-85, is in order.

The Court’s acceptance of the

third motion for reconsideration

At the outset, the Court emphasizes that second and subsequent motions for reconsideration are, as a general rule,
prohibited. Section 2, Rule 52 of the Rules of Court provides that "no second motion for reconsideration of a judgment or
final resolution by the same party shall be entertained." The rule rests on the basic tenet of immutability of judgments. "At
some point, a decision becomes final and executory and, consequently, all litigations must come to an end."58

The general rule, however, against second and subsequent motions for reconsideration admits of settled exceptions. For
one, the present Internal Rules of the Supreme Court, particularly Section 3, Rule 15 thereof, provides:

Sec. 3. Second motion for reconsideration. ― The Court shall not entertain a second motion for reconsideration, and any
exception to this rule can only be granted in the higher interest of justice by the Court en banc upon a vote of at least two-
thirds of its actual membership. There is reconsideration "in the higher interest of justice" when the assailed decision is
not only legally erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and irremediable
injury or damage to the parties. A second motion for reconsideration can only be entertained before the ruling sought to
be reconsidered becomes final by operation of law or by the Court’s declaration.

x x x x (Emphasis ours)
In a line of cases, the Court has then entertained and granted second motions for reconsideration "in the higher interest of
substantial justice," as allowed under the Internal Rules when the assailed decision is "legally erroneous," "patently
unjust" and "potentially capable of causing unwarranted and irremediable injury or damage to the parties." In Tirazona v.
Philippine EDS Techno-Service, Inc. (PET, Inc.),59 we also explained that a second motion for reconsideration may be
allowed in instances of "extraordinarily persuasive reasons and only after an express leave shall have been obtained." 60 In
Apo Fruits Corporation v. Land Bank of the Philippines, 61 we allowed a second motion for reconsideration as the issue
involved therein was a matter of public interest, as it pertained to the proper application of a basic constitutionally-
guaranteed right in the government’s implementation of its agrarian reform program. In San Miguel Corporation v.
NLRC,62 the Court set aside the decisions of the LA and the NLRC that favored claimants-security guards upon the
Court’s review of San Miguel Corporation’s second motion for reconsideration. In Vir-Jen Shipping and Marine Services,
Inc. v. NLRC, et al.,63 the Court en banc reversed on a third motion for reconsideration the ruling of the Court’s Division on
therein private respondents’ claim for wages and monetary benefits.

It is also recognized that in some instances, the prudent action towards a just resolution of a case is for the Court to
suspend rules of procedure, for "the power of this Court to suspend its own rules or to except a particular case from its
operations whenever the purposes of justice require it, cannot be questioned." 64 In De Guzman v. Sandiganbayan,65 the
Court, thus, explained:

The rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice. Their strict and rigid
application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always
be avoided. Even the Rules of Court envision this liberality. This power to suspend or even disregard the rules can be so
pervasive and encompassing so as to alter even that which this Court itself has already declared to be final, as we are
now compelled to do in this case. x x x.

xxxx

The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of justice but not to bind
and chain the hand that dispenses it, for otherwise, courts will be mere slaves to or robots of technical rules, shorn of
judicial discretion. That is precisely why courts in rendering real justice have always been, as they in fact ought to be,
conscientiously guided by the norm that when on the balance, technicalities take a backseat against substantive rights,
and not the other way around. Truly then, technicalities, in the appropriate language of Justice Makalintal, "should give
way to the realities of the situation." x x x.66 (Citations omitted)

Consistent with the foregoing precepts, the Court has then reconsidered even decisions that have attained finality, finding
it more appropriate to lift entries of judgments already made in these cases. In Navarro v. Executive Secretary, 67 we
reiterated the pronouncement in De Guzman that the power to suspend or even disregard rules of procedure can be so
pervasive and compelling as to alter even that which this Court itself has already declared final. The Court then recalled in
Navarro an entry of judgment after it had determined the validity and constitutionality of Republic Act No. 9355, explaining
that:

Verily, the Court had, on several occasions, sanctioned the recall of entries of judgment in light of attendant extraordinary
circumstances. The power to suspend or even disregard rules of procedure can be so pervasive and compelling as to
alter even that which this Court itself had already declared final. In this case, the compelling concern is not only to afford
the movants-intervenors the right to be heard since they would be adversely affected by the judgment in this case despite
not being original parties thereto, but also to arrive at the correct interpretation of the provisions of the [Local Government
Code (LGC)] with respect to the creation of local government units. x x x. 68(Citations omitted)

In Munoz v. CA,69 the Court resolved to recall an entry of judgment to prevent a miscarriage of justice. This justification
was likewise applied in Tan Tiac Chiong v. Hon. Cosico,70 wherein the Court held that:

The recall of entries of judgments, albeit rare, is not a novelty. In Muñoz v. CA , where the case was elevated to this Court
and a first and second motion for reconsideration had been denied with finality , the Court, in the interest of substantial
justice, recalled the Entry of Judgment as well as the letter of transmittal of the records to the Court of Appeals. 71 (Citation
omitted)

In Barnes v. Judge Padilla,72 we ruled:

A final and executory judgment can no longer be attacked by any of the parties or be modified, directly or indirectly, even
by the highest court of the land.
However, this Court has relaxed this rule in order to serve substantial justice considering (a) matters of life, liberty, honor
or property, (b) the existence of special or compelling circumstances, (c) the merits of the case, (d) a cause not entirely
attributable to the fault or negligence of the party favored by the suspension of the rules, (e) a lack of any showing that the
review sought is merely frivolous and dilatory, and (f) the other party will not be unjustly prejudiced thereby. 73 (Citations
omitted)

As we shall explain, the instant case also qualifies as an exception to, first, the proscription against second and
subsequent motions for reconsideration, and second, the rule on immutability of judgments; a reconsideration of the
Decision dated September 18, 2009, along with the Resolutions dated December 14, 2009 and January 25, 2012, is
justified by the higher interest of substantial justice.

To begin with, the Court agrees with the respondents that the Court’s prior resolve to grant , and not just merely note, in a
Resolution dated March 15, 2010 the respondents’ motion for leave to submit their second motion for reconsideration
already warranted a resolution and discussion of the motion for reconsideration on its merits. Instead of doing this,
however, the Court issued on January 25, 2012 a Resolution74 denying the motion to reconsider for lack of merit, merely
citing that it was a "prohibited pleading under Section 2, Rule 52 in relation to Section 4, Rule 56 of the 1997 Rules of Civil
Procedure, as amended."75 In League of Cities of the Philippines (LCP) v. Commission on Elections,76 we reiterated a
ruling that when a motion for leave to file and admit a second motion for reconsideration is granted by the Court, the Court
therefore allows the filing of the second motion for reconsideration. In such a case, the second motion for reconsideration
is no longer a prohibited pleading. Similarly in this case, there was then no reason for the Court to still consider the
respondents’ second motion for reconsideration as a prohibited pleading, and deny it plainly on such ground. The Court
intends to remedy such error through this resolution.

More importantly, the Court finds it appropriate to accept the pending motion for reconsideration and resolve it on the
merits in order to rectify its prior disposition of the main issues in the petition. Upon review, the Court is constrained to rule
differently on the petitions. We have determined the grave error in affirming the NLRC’s rulings, promoting results that are
patently unjust for the respondents, as we consider the facts of the case, pertinent law, jurisprudence, and the degree of
the injury and damage to the respondents that will inevitably result from the implementation of the Court’s Decision dated
September 18, 2009.

The rule on appeal bonds

We emphasize that the crucial issue in this case concerns the sufficiency of the appeal bond that was posted by the
respondents. The present rule on the matter is Section 6, Rule VI of the 2011 NLRC Rules of Procedure, which was
substantially the same provision in effect at the time of the respondents’ appeal to the NLRC, and which reads:

RULE VI
APPEALS

Sec. 6. BOND. – In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal
by the employer may be perfected only upon the posting of a cash or surety bond. The appeal bond shall either be in cash
or surety in an amount equivalent to the monetary award, exclusive of damages and attorney’s fees.

xxxx

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 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. (Emphasis supplied)

While the CA, in this case, allowed an appeal bond in the reduced amount of ₱10,000,000.00 and then ordered the case’s
remand to the NLRC, this Court’s Decision dated September 18, 2009 provides otherwise, as it reads in part:

The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the
decision of the Labor Arbiter. The lawmakers clearly intended to make the bond a mandatory requisite for the perfection of
an appeal by the employer as inferred from 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 clear that the posting of a cash or surety bond by the
employer is the essential and exclusive means by which an employer’s appeal may be perfected. x x x.
Moreover, the filing of the bond is not only mandatory but a jurisdictional requirement as well, that must be complied with
in order to confer jurisdiction upon the NLRC. Non-compliance therewith renders the decision of the Labor Arbiter final
and executory. This requirement is intended to assure the workers that if they prevail in the case, they will receive the
money judgment in their favor upon the dismissal of the employer’s appeal. It is intended to discourage employers from
using an appeal to delay or evade their obligation to satisfy their employees’ just and lawful claims.

xxxx

Thus, it behooves the Court to give utmost regard to the legislative and administrative intent to strictly require the
employer to post a cash or surety bond securing the full amount of the monetary award within the 10[-]day reglementary
period. Nothing in the Labor Code or the NLRC Rules of Procedure authorizes the posting of a bond that is less than the
monetary award in the judgment, or would deem such insufficient posting as sufficient to perfect the appeal.

While the 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. The qualification effectively requires that unless the NLRC grants the reduction of the cash bond within the 10-
day reglementary period, the employer is still expected to post the cash or surety bond securing the full amount within the
said 10-day period. If the NLRC does eventually grant the motion for reduction after the reglementary period has elapsed,
the correct relief would be to reduce the cash or surety bond already posted by the employer within the 10-day
period.77 (Emphasis supplied; underscoring ours)

To begin with, the Court rectifies its prior pronouncement – the unqualified statement that even an appellant who seeks a
reduction of an appeal bond before the NLRC is expected to post a cash or surety bond securing the full amount of the
judgment award within the 10-day reglementary period to perfect the appeal.

The suspension of the period to


perfect the appeal upon the filing of
a motion to reduce bond

To clarify, the prevailing jurisprudence on the matter provides that the filing of a motion to reduce bond, coupled with
compliance with the two conditions emphasized in Garcia v. KJ Commercial 78 for the grant of such motion, namely, (1) a
meritorious ground, and (2) posting of a bond in a reasonable amount, shall suffice to suspend the running of the period to
perfect an appeal from the labor arbiter’s decision to the NLRC. 79 To require the full amount of the bond within the 10-day
reglementary period would only render nugatory the legal provisions which allow an appellant to seek a reduction of the
bond. Thus, we explained in Garcia:

The filing of a motion to reduce bond and compliance with the two conditions stop the running of the period to perfect an
appeal. x x x

xxxx

The NLRC has full discretion to grant or deny the motion to reduce bond, 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.

x x x 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 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.

xxxx

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, 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 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." 80(Citations omitted and
emphasis ours)

A serious error of the NLRC was its outright denial of the motion to reduce the bond, without even considering the
respondents’ arguments and totally unmindful of the rules and jurisprudence that allow the bond’s reduction. Instead of
resolving the motion to reduce the bond on its merits, the NLRC insisted on an amount that was equivalent to the
monetary award, merely explaining:

We are constrained to deny respondents’ motion for reduction. As held by the Supreme Court in a recent case, in cases
involving monetary award, an employer seeking to appeal the Labor Arbiter’s decision to the Commission is
unconditionally required by Art. 223, Labor Code to post bond in the amount equivalent to the monetary award (Calabash
Garments vs. NLRC, G.R. No. 110827, August 8, 1996). x x x 81 (Emphasis ours)

When the respondents sought to reconsider, the NLRC still refused to fully decide on the motion. It refused to at least
make a preliminary determination of the merits of the appeal, as it held:

We are constrained to dismiss respondents’ Motion for Reconsideration. Respondents’ contention that the appeal bond is
excessive and based on a decision which is a patent nullity involves the merits of the case. x x x 82

Prevailing rules and jurisprudence


allow the reduction of appeal bonds.

By such haste of the NLRC in peremptorily denying the respondents’ motion without considering the respondents’
arguments, it effectively denied the respondents of their opportunity to seek a reduction of the bond even when the same
is allowed under the rules and settled jurisprudence. It was equivalent to the NLRC’s refusal to exercise its discretion, as it
refused to determine and rule on a showing of meritorious grounds and the reasonableness of the bond tendered under
the circumstances.83 Time and again, the Court has cautioned the NLRC to give Article 223 of the Labor Code, particularly
the provisions requiring bonds in appeals involving monetary awards, a liberal interpretation in line with the desired
objective of resolving controversies on the merits.84 The NLRC’s failure to take action on the motion to reduce the bond in
the manner prescribed by law and jurisprudence then cannot be countenanced. Although an appeal by parties from
decisions that are adverse to their interests is neither a natural right nor a part of due process, it is an essential part of our
judicial system. Courts should proceed with caution so as not to deprive a party of the right to appeal, but rather, ensure
that every party has the amplest opportunity for the proper and just disposition of their cause, free from the constraints of
technicalities.85 Considering the mandate of labor tribunals, the principle equally applies to them.

Given the circumstances of the case, the Court’s affirmance in the Decision dated September 18, 2009 of the NLRC’s
strict application of the rule on appeal bonds then demands a re-examination. Again, the emerging trend in our
jurisprudence is to afford every party-litigant the amplest opportunity for the proper and just determination of his cause,
free from the constraints of technicalities.86 Section 2, Rule I of the NLRC Rules of Procedure also provides the policy that
"the 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."87

In accordance with the foregoing, although the general rule provides that an appeal in labor cases from a decision
involving a monetary award may be perfected only upon the posting of a cash or surety bond, the Court has relaxed this
requirement under certain exceptional circumstances in order to resolve controversies on their merits. These
circumstances include: (1) the fundamental consideration of substantial justice; (2) the 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.88 Guidelines that are applicable in the reduction of appeal bonds were also explained in Nicol v. Footjoy
Industrial Corporation.89 The bond requirement in appeals involving monetary awards has been and may be relaxed in
meritorious cases, including instances in which (1) there was substantial compliance with the Rules, (2) surrounding facts
and circumstances constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the requirement of an
appeal bond would serve the desired objective of resolving controversies on the merits, or (4) the appellants, at the very
least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period. 90
In Blancaflor v. NLRC,91 the Court also emphasized that while Article 22392 of the Labor Code, as amended by Republic
Act No. 6715, which requires a cash or surety bond in an amount equivalent to the monetary award in the judgment
appealed from may be considered a jurisdictional requirement for the perfection of an appeal, nevertheless, adhering to
the principle that substantial justice is better served by allowing the appeal on the merits to be threshed out by the NLRC,
the foregoing requirement of the law should be given a liberal interpretation.

As the Court, nonetheless, remains firm on the importance of appeal bonds in appeals from monetary awards of LAs, we
stress that the NLRC, pursuant to Section 6, Rule VI of the NLRC Rules of Procedure, shall only accept motions to reduce
bond that are coupled with the posting of a bond in a reasonable amount. Time and again, we have explained that the
bond requirement imposed upon appellants in labor cases is intended to ensure the satisfaction of awards that are made
in favor of appellees, in the event that their claims are eventually sustained by the courts. 93 On the part of the appellants,
its posting may also signify their good faith and willingness to recognize the final outcome of their appeal.

At the time of a motion to reduce appeal bond’s filing, the question of what constitutes "a reasonable amount of bond" that
must accompany the motion may be subject to differing interpretations of litigants. The judgment of the NLRC which has
the discretion under the law to determine such amount cannot as yet be invoked by litigants until after their motions to
reduce appeal bond are accepted.

Given these limitations, it is not uncommon for a party to unduly forfeit his opportunity to seek a reduction of the required
bond and thus, to appeal, when the NLRC eventually disagrees with the party’s assessment. These have also resulted in
the filing of numerous petitions against the NLRC, citing an alleged grave abuse of discretion on the part of the labor
tribunal for its finding on the sufficiency or insufficiency of posted appeal bonds.

It is in this light that the Court finds it necessary to set a parameter for the litigants’ and the NLRC’s guidance on the
amount of bond that shall hereafter be filed with a motion for a bond’s reduction. To ensure that the provisions of Section
6, Rule VI of the NLRC Rules of Procedure that give parties the chance to seek a reduction of the appeal bond are
effectively carried out, without however defeating the benefits of the bond requirement in favor of a winning litigant, all
motions to reduce bond that are to be filed with the NLRC shall be accompanied by the posting of a cash or surety bond
equivalent to 10% of the monetary award that is subject of the appeal, which shall provisionally be deemed the
reasonable amount of the bond in the meantime that an appellant’s motion is pending resolution by the Commission. In
conformity with the NLRC Rules, the monetary award, for the purpose of computing the necessary appeal bond, shall
exclude damages and attorney’s fees.94 Only after the posting of a bond in the required percentage shall an appellant’s
period to perfect an appeal under the NLRC Rules be deemed suspended.

The foregoing shall not be misconstrued to unduly hinder the NLRC’s exercise of its discretion, given that the percentage
of bond that is set by this guideline shall be merely provisional. The NLRC retains its authority and duty to resolve the
motion and determine the final amount of bond that shall be posted by the appellant, still in accordance with the standards
of "meritorious grounds" and "reasonable amount". Should the NLRC, after considering the motion’s merit, determine that
a greater amount or the full amount of the bond needs to be posted by the appellant, then the party shall comply
accordingly. The appellant shall be given a period of 10 days from notice of the NLRC order within which to perfect the
appeal by posting the required appeal bond.

Meritorious ground as a condition


for the reduction of the appeal bond

In all cases, the reduction of the appeal bond shall be justified by meritorious grounds and accompanied by the posting of
the required appeal bond in a reasonable amount.

The requirement on the existence of a "meritorious ground" delves on the worth of the parties’ arguments, taking into
account their respective rights and the circumstances that attend the case. The condition was emphasized in University
Plans Incorporated v. Solano,95 wherein the Court held that while the NLRC’s Revised Rules of Procedure "allows the
[NLRC] 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 a showing of meritorious grounds."96 By jurisprudence, the merit
referred to may pertain to an appellant’s lack of financial capability to pay the full amount of the bond, 97 the merits of the
main appeal such as when there is a valid claim that there was no illegal dismissal to justify the award, 98 the absence of
an employer-employee relationship,99 prescription of claims,100 and other similarly valid issues that are raised in the
appeal.101 For the purpose of determining a "meritorious ground", the NLRC is not precluded from receiving evidence, or
from making a preliminary determination of the merits of the appellant’s contentions. 102
In this case, the NLRC then should have considered the respondents’ arguments in the memorandum on appeal that was
filed with the motion to reduce the requisite appeal bond. Although a consideration of said arguments at that point would
have been merely preliminary and should not in any way bind the eventual outcome of the appeal, it was apparent that the
respondents’ defenses came with an indication of merit that deserved a full review of the decision of the LA. The CA, by
its Resolution dated February 16, 2007, even found justified the issuance of a preliminary injunction to enjoin the
immediate execution of the LA’s decision, and this Court, a temporary restraining order on September 4, 2012.

Significantly, following the CA’s remand of the case to the NLRC, the latter even rendered a Decision that contained
findings that are inconsistent with McBurnie’s claims. The NLRC reversed and set aside the decision of the LA, and
entered a new one dismissing McBurnie’s complaint. It explained that McBurnie was not an employee of the respondents;
thus, they could not have dismissed him from employment. The purported employment contract of the respondents with
the petitioner was qualified by the conditions set forth in a letter dated May 11, 1999, which reads:

May 11, 1999

MR. ANDREW MCBURNIE

Re: Employment Contract

Dear Andrew,

It is understood that this Contract is made subject to the understanding that it is effective only when the project financing
for our Baguio Hotel project pushed through.

The agreement with EGI Managers, Inc. is made now to support your need to facilitate your work permit with the
Department of Labor in view of the expiration of your contract with Pan Pacific.

Regards,

Sgd. Eulalio Ganzon (p. 203, Records)103

For the NLRC, the employment agreement could not have given rise to an employer-employee relationship by reason of
legal impossibility. The two conditions that form part of their agreement, namely, the successful completion of the project
financing for the hotel project in Baguio City and McBurnie’s acquisition of an Alien Employment Permit, remained
unsatisfied.104 The NLRC concluded that McBurnie was instead a potential investor in a project that included Ganzon, but
the said project failed to pursue due to lack of funds. Any work performed by McBurnie in relation to the project was
merely preliminary to the business venture and part of his "due diligence" study before pursuing the project, "done at his
own instance, not in furtherance of the employment contract but for his own investment purposes." 105 Lastly, the alleged
employment of the petitioner would have been void for being contrary to law, since it is undisputed that McBurnie did not
have any work permit. The NLRC declared:

Absent an employment permit, any employment relationship that McBurnie contemplated with the respondents was void
for being contrary to law. A void or inexistent contract, in turn, has no force and effect from the beginning as if it had never
been entered into. Thus, without an Alien Employment Permit, the "Employment Agreement" is void and could not be the
source of a right or obligation. In support thereof, the DOLE issued a certification that McBurnie has neither applied nor
been issued an Alien Employment Permit (p. 204, Records).106

McBurnie moved to reconsider, citing the Court’s Decision of September 18, 2009 that reversed and set aside the CA’s
Decision authorizing the remand. Although the NLRC granted the motion on the said ground via a Decision 107that set
aside the NLRC’s Decision dated November 17, 2009, the findings of the NLRC in the November 17, 2009 decision merit
consideration, especially since the findings made therein are supported by the case records.

In addition to the apparent merit of the respondents’ appeal, the Court finds the reduction of the appeal bond justified by
the substantial amount of the LA’s monetary award. Given its considerable amount, we find reason in the respondents’
claim that to require an appeal bond in such amount could only deprive them of the right to appeal, even force them out of
business and affect the livelihood of their employees. 108 In Rosewood Processing, Inc. v. NLRC,109 we emphasized:
"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 be ‘secundum rationem but also secundum
caritatem.’"110
What constitutes a reasonable
amount in the determination of the
final amount of appeal bond

As regards the requirement on the posting of a bond in a "reasonable amount," the Court holds that the final determination
thereof by the NLRC shall be based primarily on the merits of the motion and the main appeal.

Although the NLRC Rules of Procedure, particularly Section 6 of Rule VI thereof, provides that the bond to be posted shall
be "in a reasonable amount in relation to the monetary award ," the merit of the motion shall always take precedence in
the determination. Settled is the rule that procedural rules were conceived, and should thus be applied in a manner that
would only aid the attainment of justice. If a stringent application of the rules would hinder rather than serve the demands
of substantial justice, the former must yield to the latter.111

Thus, in Nicol where the appellant posted a bond of ₱10,000,000.00 upon an appeal from the LA’s award of
₱51,956,314.00, the Court, instead of ruling right away on the reasonableness of the bond’s amount solely on the basis of
the judgment award, found it appropriate to remand the case to the NLRC, which should first determine the merits of the
motion. In University Plans,112 the Court also reversed the outright dismissal of an appeal where the bond posted in a
judgment award of more than ₱30,000,000.00 was ₱30,000.00. The Court then directed the NLRC to first determine the
merit, or lack of merit, of the motion to reduce the bond, after the appellant therein claimed that it was under receivership
and thus, could not dispose of its assets within a short notice. Clearly, the rule on the posting of an appeal bond should
not be allowed to defeat the substantive rights of the parties.113

Notably, in the present case, following the CA’s rendition of its Decision which allowed a reduced appeal bond, the
respondents have posted a bond in the amount of ₱10,000,000.00. In Rosewood, the Court deemed the posting of a
surety bond of ₱50,000.00, coupled with a motion to reduce the appeal bond, as substantial compliance with the legal
requirements for an appeal from a ₱789,154.39 monetary award "considering the clear merits which appear, res ipsa
loquitor, in the appeal from the LA’s Decision, and the petitioner’s substantial compliance with rules governing
appeals."114 The foregoing jurisprudence strongly indicate that in determining the reasonable amount of appeal bonds, the
Court primarily considers the merits of the motions and appeals.

Given the circumstances in this case and the merits of the respondents’ arguments before the NLRC, the Court holds that
the respondents had posted a bond in a "reasonable amount", and had thus complied with the requirements for the
perfection of an appeal from the LA’s decision. The CA was correct in ruling that:

In the case of Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees Association, President Rodolfo Jimenez, and
members, Reynaldo Fajardo, et al. vs. NLRC, Nueva Ecija I Electric Cooperative, Inc. (NEECO I) and Patricio de la Peña
(GR No. 116066, January 24, 2000), the Supreme Court recognized that: "the NLRC, in its Resolution No. 11-01-91 dated
November 7, 1991 deleted the phrase "exclusive of moral and exemplary damages as well as attorney’s fees in the
determination of the amount of bond, and provided a safeguard against the imposition of excessive bonds by providing
that "(T)he Commission may in meritorious cases and upon motion of the appellant, reduce the amount of the bond."

In the case of Cosico, Jr. vs. NLRC, 272 SCRA 583, it was held:

"The unreasonable and excessive amount of bond would be oppressive and unjust and would have the effect of depriving
a party of his right to appeal."

xxxx

In dismissing outright the motion to reduce bond filed by petitioners, NLRC abused its discretion. It should have fixed an
appeal bond in a reasonable amount. Said dismissal deprived petitioners of their right to appeal the Labor Arbiter’s
decision.

xxxx

NLRC Rules allow reduction of appeal bond on meritorious grounds (Sec. 6, Rule VI, NLRC Rules of Procedure). This
Court finds the appeal bond in the amount of ₱54,083,910.00 prohibitive and excessive, which constitutes a meritorious
ground to allow a motion for reduction thereof.115
The foregoing declaration of the Court requiring a bond in a reasonable amount, taking into account the merits of the
motion and the appeal, is consistent with the oft-repeated principle that letter-perfect rules must yield to the broader
interest of substantial justice.116

The effect of a denial of the appeal

to the NLRC

In finding merit in the respondents’ motion for reconsideration, we also take into account the unwarranted results that will
arise from an implementation of the Court’s Decision dated September 18, 2009. We emphasize, moreover, that although
a remand and an order upon the NLRC to give due course to the appeal would have been the usual course after a finding
that the conditions for the reduction of an appeal bond were duly satisfied by the respondents, given such results, the
Court finds it necessary to modify the CA’s order of remand, and instead rule on the dismissal of the complaint against the
respondents.

Without the reversal of the Court’s Decision and the dismissal of the complaint against the respondents, McBurnie would
be allowed to claim benefits under our labor laws despite his failure to comply with a settled requirement for foreign
nationals.

Considering that McBurnie, an Australian, alleged illegal dismissal and sought to claim under our labor laws, it was
necessary for him to establish, first and foremost, that he was qualified and duly authorized to obtain employment within
our jurisdiction. A requirement for foreigners who intend to work within the country is an employment permit, as provided
under Article 40, Title II of the Labor Code which reads:

Art. 40. Employment permit for non-resident aliens. Any alien seeking admission to the Philippines for employment
purposes and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall
obtain an employment permit from the Department of Labor.

In WPP Marketing Communications, Inc. v. Galera,117 we held that a foreign national’s failure to seek an employment
permit prior to employment poses a serious problem in seeking relief from the Court. 118 Thus, although the respondent
therein appeared to have been illegally dismissed from employment, we explained:

This is Galera’s dilemma: Galera worked in the Philippines without proper work permit but now wants to claim employee’s
benefits under Philippine labor laws.

xxxx

The law and the rules are consistent in stating that the employment permit must be acquired prior to employment. The
Labor Code states: "Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign
employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the
Department of Labor." Section 4, Rule XIV, Book I of the Implementing Rules and Regulations provides:

"Employment permit required for entry. – No alien seeking employment, whether as a resident or non-resident, may enter
the Philippines without first securing an employment permit from the Ministry. If an alien enters the country under a non-
working visa and wishes to be employed thereafter, he may be allowed to be employed upon presentation of a duly
approved employment permit."

Galera cannot come to this Court with unclean hands. To grant Galera’s prayer is to sanction the violation of the
Philippine labor laws requiring aliens to secure work permits before their employment. We hold that the status quo must
prevail in the present case and we leave the parties where they are. This ruling, however, does not bar Galera from
seeking relief from other jurisdictions.119 (Citations omitted and underscoring ours)

Clearly, this circumstance on the failure of McBurnie to obtain an employment permit, by itself, necessitates the dismissal
of his labor complaint.

Furthermore, as has been previously discussed, the NLRC has ruled in its Decision dated November 17, 2009 on the
issue of illegal dismissal. It declared that McBurnie was never an employee of any of the respondents. 120 It explained:
All these facts and circumstances prove that McBurnie was never an employee of Eulalio Ganzon or the respondent
companies, but a potential investor in a project with a group including Eulalio Ganzon and Martinez but said project did
not take off because of lack of funds.

McBurnie further claims that in conformity with the provision of the employment contract pertaining to the obligation of the
respondents to provide housing, respondents assigned him Condo Unit # 812 of the Makati Cinema Square Condominium
owned by the respondents. He was also allowed to use a Hyundai car. If it were true that the contract of employment was
for working visa purposes only, why did the respondents perform their obligations to him?

There is no question that respondents assigned him Condo Unit # 812 of the MCS, but this was not free of charge. If it
were true that it is part of the compensation package as employee, then McBurnie would not be obligated to pay anything,
but clearly, he admitted in his letter that he had to pay all the expenses incurred in the apartment.

Assuming for the sake of argument that the employment contract is valid between them, record shows that McBurnie
worked from September 1, 1999 until he met an accident on the last week of October. During the period of employment,
the respondents must have paid his salaries in the sum of US$26,000.00, more or less.

However, McBurnie failed to present a single evidence that [the respondents] paid his salaries like payslip, check or cash
vouchers duly signed by him or any document showing proof of receipt of his compensation from the respondents or
activity in furtherance of the employment contract. Granting again that there was a valid contract of employment, it is
undisputed that on November 1, 1999, McBurnie left for Australia and never came back. x x x.121(Emphasis supplied)

Although the NLRC’s Decision dated November 17, 2009 was set aside in a Decision dated January 14, 2010, the Court’s
resolve to now reconsider its Decision dated September 18, 2009 and to affirm the CA’s Decision and Resolution in the
respondents’ favor effectively restores the NLRC’s basis for rendering the Decision dated November 17, 2009.

More importantly, the NLRC’s findings on the contractual relations between McBurnie and the respondents are supported
by the records.

First, before a case for illegal dismissal can prosper, an employer-employee relationship must first be
established.122 Although an employment agreement forms part of the case records, respondent Ganzon signed it with the
notation "per my note."123 The respondents have sufficiently explained that the note refers to the letter 124dated May 11,
1999 which embodied certain conditions for the employment’s effectivity. As we have previously explained, however, the
said conditions, particularly on the successful completion of the project financing for the hotel project in Baguio City and
McBurnie’s acquisition of an Alien Employment Permit, failed to materialize. Such defense of the respondents, which was
duly considered by the NLRC in its Decision dated November 17, 2009, was not sufficiently rebutted by McBurnie.

Second, McBurnie failed to present any employment permit which would have authorized him to obtain employment in the
Philippines. This circumstance negates McBurnie’s claim that he had been performing work for the respondents by virtue
of an employer-employee relationship. The absence of the employment permit instead bolsters the claim that the
supposed employment of McBurnie was merely simulated, or did not ensue due to the non-fulfillment of the conditions
that were set forth in the letter of May 11, 1999.

Third, besides the employment agreement, McBurnie failed to present other competent evidence to prove his claim of an
employer-employee relationship. Given the parties’ conflicting claims on their true intention in executing the agreement, it
was necessary to resort to the established criteria for the determination of an employer-employee relationship, namely: (1)
the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power
to control the employee’s conduct. 125 The rule of thumb remains: the onus probandi falls on the claimant to establish or
substantiate the claim by the requisite quantum of evidence. Whoever claims entitlement to the benefits provided by law
should establish his or her right thereto.126 McBurnie failed in this regard.1âwphi1 As previously observed by the NLRC,
McBurnie even failed to show through any document such as payslips or vouchers that his salaries during the time that he
allegedly worked for the respondents were paid by the company. In the absence of an employer-employee relationship
between McBurnie and the respondents, McBurnie could not successfully claim that he was dismissed, much less illegally
dismissed, by the latter. Even granting that there was such an employer-employee relationship, the records are barren of
any document showing that its termination was by the respondents’ dismissal of McBurnie.

Given these circumstances, it would be a circuitous exercise for the Court to remand the case to the NLRC, more so in
the absence of any showing that the NLRC should now rule differently on the case’s merits. In Medline Management, Inc.
v. Roslinda,127 the Court ruled that when there is enough basis on which the Court may render a proper evaluation of the
merits of the case, the Court may dispense with the time-consuming procedure of remanding a case to a labor tribunal in
order "to prevent delays in the disposition of the case," "to serve the ends of justice" and when a remand "would serve no
purpose save to further delay its disposition contrary to the spirit of fair play." 128 In Real v. Sangu Philippines, Inc.,129 we
again ruled:

With the foregoing, it is clear that the CA erred in affirming the decision of the NLRC which dismissed petitioner’s
complaint for lack of jurisdiction. In cases such as this, the Court normally remands the case to the NLRC and directs it to
properly dispose of the case on the merits. "However, when there is enough basis on which a proper evaluation of the
merits of petitioner’s case may be had, the Court may dispense with the time-consuming procedure of remand in order to
prevent further delays in the disposition of the case." "It is already an accepted rule of procedure for us to strive to settle
the entire controversy in a single proceeding, leaving no root or branch to bear the seeds of litigation. If, based on the
records, the pleadings, and other evidence, the dispute can be resolved by us, we will do so to serve the ends of justice
instead of remanding the case to the lower court for further proceedings." x x x.130 (Citations omitted)

It bears mentioning that although the Court resolves to grant the respondents’ motion for reconsideration, the other
grounds raised in the motion, especially as they pertain to insinuations on irregularities in the Court, deserve no merit for
being founded on baseless conclusions. Furthermore, the Court finds it unnecessary to discuss the other grounds that are
raised in the motion, considering the grounds that already justify the dismissal of McBurnie’s complaint.

All these considered, the Court also affirms its Resolution dated September 4, 2012; accordingly, McBurnie’s motion for
reconsideration thereof is denied.

WHEREFORE, in light of the foregoing, the Court rules as follows:

(a) The motion for reconsideration filed on September 26, 2012 by petitioner Andrew James McBurnie is DENIED;

(b) The motion for reconsideration filed on March 27, 2012 by respondents Eulalio Ganzon, EGI-Managers, Inc.
and E. Ganzon, Inc. is GRANTED.

(c) The Entry of Judgment issued in G.R. Nos. 186984-85 is LIFTED. This Court’s Decision dated September 18,
2009 and Resolutions dated December 14, 2009 and January 25, 2012 are SET ASIDE. The Court of Appeals
Decision dated October 27, 2008 and Resolution dated March 3, 2009 in CA-G.R. SP No. 90845 and CA-G.R. SP
No. 95916 are AFFIRMED WITH MODIFICATION. In lieu of a remand of the case to the National Labor Relations
Commission, the complaint for illegal dismissal filed by petitioner Andrew James McBurnie against respondents
Eulalio Ganzon, EGI-Managers, Inc. and E. Ganzon, Inc. is DISMISSED.

Furthermore, on the matter of the filing and acceptance of motions to reduce appeal bond, as provided in Section 6, Rule
VI of the 2011 NLRC Rules of Procedure, the Court hereby RESOLVES that henceforth, the following guidelines shall be
observed:

(a) The filing o a motion to reduce appeal bond shall be entertained by the NLRC subject to the following
conditions: (1) there is meritorious ground; and (2) a bond in a reasonable amount is posted;

(b) For purposes o compliance with condition no. (2), a motion shall be accompanied by the posting o a
provisional cash or surety bond equivalent to ten percent (10,) of the monetary award subject o the appeal,
exclusive o damages and attorney's fees;

(c) Compliance with the foregoing conditions shall suffice to suspend the running o the 1 0-day reglementary
period to perfect an appeal from the labor arbiter's decision to the NLRC;

(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and determine the final amount
o bond that shall be posted by the appellant, still in accordance with the standards o meritorious grounds and
reasonable amount; and

(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that exceeds the amount o
the provisional bond, the appellant shall be given a fresh period o ten 1 0) days from notice o the NLRC order
within which to perfect the appeal by posting the required appeal bond.

SO ORDERED.
BIENVENIDO L. REYES
Associate Justice