Labor Relations

MILAGROS PANUNCILLO, G.R. No.
161305
Petitioner,
Present:
QUISUMBING, Chairperson,
CARPIO,
-versus- CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
CAP PHILIPPINES, INC., Promulgated:

Respondent.
February 9, 2007
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DECISION
CARPIO MORALES, J.:
Assailed via Petition for Review[1] are the Decision dated May 16, 2003[2] and
Resolution dated November 17, 2003[3] of the Court of Appeals in CA-G.R. SP No.
74665 which declared valid the dismissal of Milagros Panuncillo (petitioner) by
CAP Philippines, Inc. (respondent).
Petitioner was hired on August 28, 1980 as Office Senior Clerk by respondent. At
the time of her questioned separation from respondent on April 23, 1999, she was
receiving a monthly salary of P16,180.60.
In order to secure the education of her son, petitioner procured an educational plan
(the plan) from respondent which she had fully paid but which she later sold to
Josefina Pernes (Josefina) for P37,000. Before the actual transfer of the plan could
be effected, however, petitioner pledged it for P50,000 to John Chua who, however,
sold it to Benito Bonghanoy. Bonghanoy in turn sold the plan to Gaudioso R. Uy
for P60,000.
Having gotten wind of the transactions subsequent to her purchase of the plan,
Josefina, by letter of February 10, 1999,[4] informed respondent that petitioner had
swindled her but that she was willing to settle the case amicably as long as petitioner
pay the amount involved and the interest. She expressed her appreciation if
[respondent] could help her in anyway.
Acting on Josefinas letter, the Integrated Internal Audit Operations (IIAO) of

respondent required petitioner to explain in writing why the plan had not been
transferred to Josefina and was instead sold to another. Complying, petitioner
proffered the following explanation:
Because of extreme need of money, I was constrained to sell my CAP plan

of my son to J. Pernes last July, 1996, in the amount of Thirty Seven
Thousand Pesos (P37,000.) The plan was not transferred right away
because of lacking requirement on the part of the buyer (birth certificate).
The birth certificate came a month later. While waiting for the birth
certificate, again because of extreme need of money, I was tempted to
pawned [sic] the plan, believing I can redeemed [sic] it later when the birth
certificate will come.
Last year, I was already pressured by J. Pernes for the transfer of the plan.
But before hand, she already knew the present situation. I was trying to
find means to redeemed [sic] the plan but to no avail. I cannot borrow
anymore from my creditors because of outstanding loans which remains
unpaid. As of the present, I am heavily debtladen and I dont know where
to run.
I cant blame the person whom I pawned the plan if he had sold it. I cant
redeemed [sic] it anymore. Everybody needs money and besides, I have
given them my papers.
I admit, I had defrauded Ms. J. Pernes, but I didnt do it

intentionally. At first, I believe I can redeem the plan hoping I can still
borrow from somebody.
With my more than 18 years stay with the company, I dont have the
intention of ruining my image as well as the companys. I think I am just a
victim of circumstances.[5] (Emphasis and underscoring supplied)
A show-cause memorandum[6] dated February 23, 1999 was thereupon sent to
petitioner, giving her 48 hours from receipt thereof to explain why she should not be
disciplinarily dealt with. Petitioner did not comply, however.
The IIAO of respondent thus conducted an investigation on the matter. By

Memorandum of April 5, 1999,[7] the IIAO recommended that, among other things,
administrative action should be taken against petitioner for violating Section 8.4 of
respondents Code of Discipline reading:
Committing or dealing any act or conniving with co-employees or

anybody to defraud the company or customer/sales associates.
In the same memorandum, the IIAO reported other matters bearing on petitioners
duties as an employee, to wit:
OTHERS:
We also received a copy of demand letter of a certain Evelia Casquejo
addressed to Ms. Panuncillo requiring the latter to pay the amount of
P54,870.00 for the supposed transfer of the lapsed plan of Subscriber
Corazon Lintag with SFA # 25-67-40-01-00392. Ms. Panuncillo received
the payment of P25,000.00 and P29,870.00 on July 17, 1997 and July 18,
1997 respectively (Exhibits L&M).
Ms. Panuncillo verbally admitted that she was the one who sold the plan
to Ms. Casquejo but with the authorization from Ms. Lintag. However, the
transfer was not effected because she had misappropriated a portion of the
money until the plan was terminated. Ms. Casquejo, however, did not file
a complaint because Ms. Panuncillo executed a Special Power of Attorney
authorizing the former to receive P68,000 of Ms. Panuncillos retirement
pay (Exhibit N).[8] (Emphasis in the original; underscoring supplied))
On April 7, 1999, another show-cause memorandum was sent to petitioner by

Renato M. Daquiz (Daquiz), First Vice President of respondent, giving her another
48 hours to explain why she should not be disciplinarily dealt with in connection
with the complaints of Josefina and Evelia Casquejo (Evelia). Complying with the
directive, petitioner, by letter of April 10, 1999, on top of reiterating her admission
of having defrauded Josefina, admitted having received from Evelia the payment for
a lapsed plan, thus:
With regards to [Evelias] case, yes its [sic] true I had received the payment
but it was accordingly given to the owner or Subscriber Ms. C. Lintag.
The plan was not transferred because it was already forfeited and we, Ms.
Lintag, [Evelia] and I already made settlement of the case.
I think I have violated Sec. 8.4 of the companys Code of Discipline. I

admit it is my wrongdoing. I was only forced to do this because of
extreme needs to pay for my debts. I am open for whatever disciplinary
action that will be sanctioned againts [sic] me. I hope it is not
termination from my job. How can I pay for obligations if that will
happen to me.
As for [Josefina], I have the greatest desire to pay for my indebtedness but
my capability at the moment is nil. (space) I have been planning to retire
early just to pay my obligations. That is why I had written to you last year
inquiring tax exemption when retiring. I have been with the company for
almost 19 years already and I never intend [sic] to smear its name as well
as mine. I was only forced by circumstances. Although it hurts to leave
CAP, I will be retiring on April 30, 1999.
x x x x[9] (Emphasis and underscoring supplied)
Respondent thereupon terminated the services of petitioner by Memorandum

dated April 20, 1999.[10]
Petitioner sought reconsideration of her dismissal, by letter of April 23,

1999 addressed to Daquiz, imploring as follows:
. . . Please consider my retirement letter I sent to you. I would like to avail

[of] the retirement benefit of the company. The proceeds of my retirement
could help me pay some of my obligations as well as the needs of my
family. My husband is jobless and I am the breadwinner of the family. If
I will be terminated, I dont know what will happen to us.
Sir, I am enclosing the affidavit of Ms. Evelia Casquejo proving that we

have already settled the case.
x x x x[11] (Underscoring supplied)
Pending resolution of petitioners motion for reconsideration, respondent received a

letter dated April 28, 1999[12] from one Gwendolyn N. Dinoro (Gwendolyn) who
informed that she had been paying her quarterly dues through petitioner but found
out that none had been remitted to respondent, on account of which she (Gwendolyn)
was being penalized with interest charges.
Acting on petitioners motion for reconsideration, Daquiz, by letter-

memorandum of May 5, 1999, denied the same in this wise:
A review of your case was made per your request, and we note that it was
not just a single case but multiple cases, that of Ms. Casquejo, Ms.
Pernes, and newly reported Ms. Dinoro. Furthermore, the cases happened
way back in July 1996 and 1997, and were just discovered recently. In
addition, the misappropriation of money/or act to defraud the company or
customer was deliberate and intentional. There were several payments
received over a period of time. While you plead for your retirement benefit
to help you pay some of your obligations, as well as the need of your
family (your husband being jobless and being the breadwinner), these
thoughts should have crossed your mind before you committed the
violations rather than now. To allow you to retire with benefits, is to
tolerate and encourage others to do the same in the future, as it will be a
precedent that will surely be invoked in similar situations in the future, as
it will be a precedent that will surely be invoked in similar situations in
the future. It is also unfair to others who do their jobs faithfully and
honestly. If we let you have your way, it will appear that we let you
scot-free and even reward you with retirement someone who
deliberately violated trust and confidence of the company and
customers.
Premises considered, the decision to terminate your services for cause

stays and the request for reconsideration is denied.
x x x x[13] (Emphasis and underscoring supplied)

Petitioner thus filed a complaint[14] for illegal dismissal, 13th month pay,
service incentive leave pay, damages and attorneys fees against respondent.
The Labor Arbiter, while finding that the dismissal was for a valid cause, found the
same too harsh. He thus ordered the reinstatement of petitioner to a position one rank
lower than her previous position, and disposed as follows:
WHEREFORE, the foregoing considered, judgement [sic] is hereby

rendered directing the respondent to pay complainants 13th Month pay and
Service Incentive Leave Pay for 1999 in proportionate amount computed
as follows:
13th Month Pay

January 1, 1999 to April 1, 1999
= 3 months
= P16,180.60/12 mos. x 3 mos. P4,045.14
Service Incentive Leave

= P16,180.60/26 days
=P622.30 per day x 5 days/12 months. 777.87
TOTAL --------------------------------P4,823.01
Plus P482.30 ten (10%) Attorneys Fees or a total aggregate amount of
PESOS: FIVE THOUSAND THREE HUNDRED FIVE & 31/100
(P5,305.31).
Respondent is likewise, directed to reinstate the complainant to a position

one rank lower without backwages.[15] (Underscoring supplied)
On appeal, the National Labor Relations Commission (NLRC), by Decision

of October 29, 2001, reversed that of the Labor Arbiter, it finding that
petitioners dismissal was illegal and accordingly ordering her reinstatement to her
former position. Thus it disposed:
WHEREFORE, the Decision in the main case dated February 18, 2000 of
the Labor Arbiter declaring the dismissal of the complainant valid, and his
Order dated June 26, 2000 declaring the Motion to Declare Respondent-
appellant in Contempt as prematurely filed and ordering the issuance of
an alias writ of execution are hereby SET ASIDE, and a new one is
rendered DECLARING the dismissal of the complainant illegal, and
ORDERING the respondent, CAP PHILIPPINES, INCORPORATED,
the following:
1. to reinstate the complainant MILAGROS B. PANUNCILLO to her former

position without loss of seniority rights and with full backwages from the date
her compensation was withheld from her on April 20, 1999 until her
actual reinstatement;
2. to pay to the same complainant P4,045.14 as 13th month pay, and

P777.89 as service incentive leave pay;
3. to pay to the same complainant moral damages of FIFTY THOUSAND

PESOS (P50,000.00), and exemplary damages of another FIFTY
THOUSAND PESOS (P50,000.00);
4. to pay attorneys fees equivalent to ten percent (10%) of the total award
exclusive of moral and exemplary damages.
Further, the complainants Motion to Declare Respondent in Contempt
dated May 3, 2000 is denied and rendered moot by virtue of this Decision.
All other claims are dismissed for lack of merit.[16] (Underscoring

supplied)
In so deciding, the NLRC held that the transaction between petitioner and
Josefina was private in character and, therefore, respondent did not suffer any
damage, hence, it was error to apply Section 8.4 of respondents Code of Discipline.
Respondent challenged the NLRC Decision before the appellate court via Petition
for Certiorari.[17] By Decision of May 16, 2003,[18] the appellate court reversed the
NLRC Decision and held that the dismissal was valid and that respondent complied
with the procedural requirements of due process before petitioners services were
terminated.
Hence, the present petition, petitioner faulting the appellate court
I
x x x IN REVIEWING THE FINDINGS OF FACT OF THE LABOR
ARBITER AND THE NATIONAL LABOR RELATIONS
COMMISSION THAT RESPONDENT CAP PHILIPPINES, INC., HAS
NOT BEEN DEFRAUDED NOR DAMAGED IN THE
TRANSACTION/S ENTERED INTO BY PETITIONER RELATING
TO HER FULLY PAID EDUCATIONAL PLAN.
II
x x x IN HOLDING THAT RESPONDENT CAP PHILIPPINES, INC. IS

THE INSURER OF PETITIONERS FULLY PAID EDUCATIONAL
PLAN UNDER THE INSURANCE CODE.
III
x x x IN HOLDING THAT PETITIONER WAS DULY AFFORDED

DUE PROCESS BEFORE DISMISSAL[,]
and maintaining that she
IV
x x x IS ENTITLED TO HER FULL BACKWAGES FROM THE

DATE HER COMPENSATION WAS WITHHELD FROM HER ON
APRIL 20, 1999 PURSUANT TO THE DECISION OF
THE NLRC REINSTATING HER TO HER PREVIOUS
POSITION WITH FULL BACKWAGES AND SETTING ASIDE THE
DECISION OF THE LABOR ARBITER REINSTATING HER TO A
POSITION NEXT LOWER IN RANK, UNTIL THE REVERSAL OF
THE NLRC DECISION BY THE HONORABLE COURT OF
APPEALS.[19] (Emphasis and underscoring supplied)
The petition is not meritorious.
Whether respondent did not suffer any damage resulting from the transactions
entered into by petitioner, particularly that with Josefina, is immaterial. As Lopez
v. National Labor Relations Commission instructs:
That the [employer] suffered no damage resulting from the acts of [the
employee] is inconsequential. In Glaxo Wellcome Philippines, Inc. v.
Nagkakaisang Empleyado ng Wellcome-DFA (NEW-DFA), we held that
deliberate disregard or disobedience of company rules could not be
countenanced, and any justification that the disobedient employee might
put forth would be deemed inconsequential. The lack of resulting damage
was unimportant, because the heart of the charge is the crooked and
anarchic attitude of the employee towards his employer. Damage
aggravates the charge but its absence does not mitigate nor negate the
employees liability. x x x[20] (Italics in the original; underscoring supplied)
The transaction with Josefina aside, there was this case of misappropriation by
petitioner of the amounts given to her by Evelia representing payment for the lapsed
plan of Corazon Lintag. While a settlement of the case between the two may have
eventually been forged, that did not obliterate the misappropriation committed by
petitioner against a client of respondent.
Additionally, there was still another complaint lodged before respondent by

Gwendolyn against petitioner for failure to remit the cash payments she had made
to her, a complaint she was apprised of but on which she was silent.
In fine, by petitioners repeated violation of Section 8.4 of respondents Code of

Discipline, she violated the trust and confidence of respondent and its
customers. To allow her to continue with her employment puts respondent under
the risk of being embroiled in unnecessary lawsuits from customers similarly
situated as Josefina, et al. Clearly, respondent exercised its management
prerogative when it dismissed petitioner.
. . . [T]ime and again, this Court has upheld a companys management

prerogatives so long as they are exercised in good faith for the
advancement of the employers interest and not for the purpose of defeating
or circumventing the rights of the employees under special laws or under
valid agreements.
Deliberate disregard or disobedience of rules by the employees cannot be

countenanced. Whatever maybe the justification behind the violations is
immaterial at this point, because the fact still remains that an infraction
of the company rules has been committed.
Under the Labor Code, the employer may terminate an employment on

the ground of serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or representative in
connection with his work. Infractions of company rules and regulations
have been declared to belong to this category and thus are valid causes
for termination of employment by the employer.
xxxx
The employer cannot be compelled to continue the employment of a

person who was found guilty of maliciously committing acts which are
detrimental to his interests. It will be highly prejudicial to the interests of
the employer to impose on him the charges that warranted his dismissal
from employment. Indeed, it will demoralize the rank and file if the
undeserving, if not undesirable, remain in the service. It may encourage
him to do even worse and will render a mockery of the rules of discipline
that employees are required to observe. This Court was more emphatic
in holding that in protecting the rights of the laborer, it cannot authorize
the oppression or self-destruction of the employer.[21] x x
x (Underscoring supplied)
Petitioner nevertheless argues that she was not afforded due process before
her dismissal as she was merely required to answer a show-cause memorandum
dated April 7, 1999 and there was no actual investigation conducted in which she
could have been heard.
Before terminating the services of an employee, the law requires two written
notices: (1) one to apprise him of the particular acts or omissions for which his
dismissal is sought; and (2) the other to inform him of his employers decision to
dismiss him. As to the requirement of a hearing, the essence of due process lies in
an opportunity to be heard, and not always and indispensably in an actual
hearing.[22]
When respondent received the letter-complaint of Josefina, petitioner was directed

to comment and explain her side thereon. She did comply, by letter of February 22,
1999 wherein she admitted that she had defrauded Ms. J. Pernes, but [that she] didnt
do it intentionally.
Respondent subsequently sent petitioner a show-cause memorandum giving her 48

hours from receipt why she should not be disciplinarily sanctioned. Despite the 48-
hour deadline, nothing was heard from her until April 10, 1999 when she complied
with the second show-cause memorandum dated April 7, 1999.
On April 20, 1999, petitioner was informed of the termination of her services to
which she filed a motion for reconsideration.
There can thus be no doubt that petitioner was given ample opportunity to
explain her side. Parenthetically, when an employee admits the acts complained of,
as in petitioners case, no formal hearing is even necessary.[23]
Finally, petitioner argues that even if the order of reinstatement of the NLRC was
reversed on appeal, it is still obligatory on the part of an employer to reinstate and
pay the wages of a dismissed employee during the period of appeal, citing Roquero
v. Philippine Airlines,[24] the third paragraph of Article 223[25] of the Labor Code,
and the last paragraph of Section 16,[26] Rule V of the then 1990 New Rules of
Procedure of the NLRC.
Petitioner adds that respondent made clever moves to frustrate [her] from enjoying
the reinstatement aspect of the decision starting from that of the Labor Arbiter
(although to a next lower rank), [to that] of the NLRC to her previous position
without loss of seniority rights until it was caught up by the decision of the
Honorable Court of Appeals reversing the decision of the NLRC and declaring the
dismissal of petitioner as based on valid grounds.
Respondent, on the other hand, maintains that Roquero and the legal provisions
cited by petitioner are not applicable as they speak of reinstatement on order of the
Labor Arbiter and not of the NLRC.
The Labor Arbiter ordered the reinstatement of petitioner to a lower position. The
third paragraph of Article 223 of the Labor Code is clear, however the employee,
who is ordered reinstated, must be accepted back to work under the same terms
and conditions prevailing prior to his dismissal or separation.
Petitioners being demoted to a position one rank lower than her original
position is certainly not in accordance with the said third paragraph provision of
Article 223. Besides, the provision contemplates a finding that the employee was
illegally dismissed or there was no just cause for her dismissal. As priorly stated,
in petitioners case, the Labor Arbiter found that there was just cause for her
dismissal, but that dismissal was too harsh, hence, his order for her reinstatement
to a lower position.
The order to reinstate is incompatible with a finding that the dismissal is for a
valid cause. Thus this Court declared in Colgate Palmolive Philippines, Inc. v.
Ople:
The order of the respondent Minister to reinstate the employees despite a

clear finding of guilt on their part is not in conformity with
law. Reinstatement is simply incompatible with a finding of
guilt. Where the totality of the evidence was sufficient to warrant the
dismissal of the employees the law warrants their dismissal without
making any distinction between a first offender and a habitual delinquent.
Under the law, respondent Minister is duly mandated to equally protect
and respect not only the labor or workers side but also the management
and/or employers side. The law, in protecting the rights of the laborer,
authorizes neither oppression nor self-destruction of the
employer. x x x As stated by Us in the case of San Miguel Brewery vs.
National Labor Union, an employer cannot legally be compelled to
continue with the employment of a person who admittedly was guilty of
misfeasance or malfeasance towards his employer, and whose
continuance in the service of the latter is patently inimical to his
interest.[27] (Emphasis and underscoring supplied)
The NLRC was thus correct when it ruled that it was erroneous for the Labor
Arbiter to order the reinstatement of petitioner, even to a position one rank lower
than that which she formerly held.[28]
Now, on petitioners argument that, following the third paragraph of Article
223 of the Labor Code, the order of the NLRC to reinstate her and to pay her wages
was immediately executory even while the case was on appeal before the higher
courts: The third paragraph of Article 223 of the Labor Code directs that the
decision of the Labor Arbiter reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned, shall immediately be executory,
even pending appeal.
In Roquero, the Labor Arbiter upheld the dismissal of Roquero, along with another
employee, albeit he found both the two and employer Philippine Airlines (PAL) at
fault. The Labor Arbiter thus ordered the payment of separation pay and attorneys
fees to the complainant. No order for reinstatement was issued by the Labor
Arbiter, precisely because the dismissal was upheld.
On appeal, the NLRC ruled in favor of Roquero and his co-complainant as it

also found PAL guilty of instigation. The NLRC thus ordered the reinstatement of
Roquero and his co-complainant to their former positions, but without backwages.
PAL appealed the NLRC decision via Petition for Review before this
Court. Roquero and his co-complainant did not. They instead filed before the Labor
Arbiter a Motion for Execution of the NLRC order for their reinstatement which
the Labor Arbiter granted.
Acting on PALs Petition for Review, this Court referred it to the Court of
Appeals pursuant to St. Martin Funeral Home v. NLRC.[29]
The appellate court reversed the NLRC decision and ordered the
reinstatement of the decision of the Labor Arbiter but only insofar as it upheld
the dismissal of Roquero.
Back to this Court on Roqueros Petition for Review, the following material
issues were raised:
xxxx
2. Can the executory nature of the decision, more so the reinstatement
aspect of a labor tribunals order be halted by a petition having been
filed in higher courts without any restraining order or preliminary
injunction having been ordered in the meantime?
3. Would the employer who refused to reinstate an employee despite a
writ duly issued be held liable to pay the salary of the subject
employee from the time that he was ordered reinstated up to the
time that the reversed decision was handed down?[30]
Resolving these issues, this Court held in Roquero:
Article 223 (3rd paragraph) of the Labor Code as amended by Section 12

of Republic Act No. 6715, and Section 2 of the NLRC Interim Rules on
Appeals under RA No. 6715, Amending the Labor Code, provide that
an order of reinstatement by the Labor Arbiter is immediately executory
even pending appeal. The rationale of the law has been explained in Aris
(Phil.) Inc. vs. NLRC:
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.
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 nations
progress and stability.
xxxx
The order of reinstatement is immediately executory. The unjustified

refusal of the employer to reinstate a dismissed employee entitles him
to payment of his salaries effective from the time the employer failed to
reinstate him despite the issuance of a writ of execution. Unless there is
a restraining order issued, it is ministerial upon the Labor Arbiter to
implement the order of reinstatement. In the case at bar, no restraining
order was granted. Thus, it was mandatory on PAL to actually reinstate
Roquero or reinstate him in the payroll. Having failed to do so, PAL must
pay Roquero the salary he is entitled to, as if he was reinstated, from the
time of the decision of the NLRC until the finality of the decision of
this Court.
We reiterate the rule that technicalities have no room in labor cases where
the Rules of Court are applied only in a suppletory manner and only to
effectuate the objectives of the Labor Code and not to defeat them.
Hence, even if the order of reinstatement of the Labor Arbiter is reversed
on appeal, it is obligatory on the part of the employer to reinstate and
pay the wages of the dismissed employee during the period of appeal
until reversal by the higher court. On the other hand, if the employee
has been reinstated during the appeal period and such reinstatement order
is reversed with finality, the employee is not required to reimburse
whatever salary he received for he is entitled to such, more so if he
actually rendered services during the period.[31] (Italics in the original,
emphasis and underscoring supplied)
In the present case, since the NLRC found petitioners dismissal illegal and
ordered her reinstatement, following the provision of the sixth paragraph of Article
223, viz:
The [National Labor Relations] Commission shall decide all cases within
twenty (20) calendar days from receipt of the answer of the appellee. The
decision of the Commission shall be final and executory after ten (10)
calendar days from receipt thereof by the parties. (Emphasis and
underscoring supplied),
the NLRC decision became final and executory after ten calendar days from receipt
of the decision by the parties for reinstatement.
In view, however, of Article 224 of the Labor Code which provides:
ART. 224. Execution of decisions, orders or awards. (a) The Secretary of

Labor and Employment or any Regional Director, the Commission or any
Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu proprio or
on motion of any interested party, issue a writ of execution on a
judgment within five (5) years from the date it becomes final and
executory, requiring a sheriff or a duly deputized officer to execute or
enforce final decisions, orders or awards of the Secretary of Labor and
Employment or regional director, the Commission, the Labor Arbiter or
med-arbiter, or voluntary arbitrators. In any case, it shall be the duty of
the responsible officer to separately furnish immediately the counsels of
record and the parties with copies of said decisions, orders or awards.
Failure to comply with the duty prescribed herein shall subject such
responsible officer to appropriate administrative sanctions.
x x x x (Emphasis and underscoring supplied),
there was still a need for the issuance of a writ of execution of the NLRC decision.
Unlike then the order for reinstatement of a Labor Arbiter which is self-
executory, that of the NLRC is not. There is still a need for the issuance of a writ of
execution. Thus this Court held in Pioneer Texturizing Corp. v. NLRC:[32]
x x x The provision of Article 223 is clear that an award [by

the Labor Arbiter] for reinstatement shall be immediately executory
even pending appeal and the posting of a bond by the employer shall not
stay the execution for reinstatement. The legislative intent is quite
obvious, i.e., to make an award of reinstatement immediately enforceable,
even pending appeal. To require the application for and issuance of a writ
of execution as prerequisites for the execution of a reinstatement award
would certainly betray and run counter to the very object and intent of
Article 223, i.e., the immediate execution of a reinstatement order. The
reason is simple. An application for a writ of execution and its issuance
could be delayed for numerous reasons. A mere continuance or
postponement of a scheduled hearing, for instance, or an inaction on the
part of the Labor Arbiter or the NLRC could easily delay the issuance of
the writ thereby setting at naught the strict mandate and noble purpose
envisioned by Article 223. In other words, if the requirements of Article
224[including the issuance of a writ of execution] were to govern, as we
so declared in Maranaw, then the executory nature of a reinstatement
order or award contemplated by Article 223 will be unduly
circumscribed and rendered ineffectual. In enacting the law, the
legislature is presumed to have ordained a valid and sensible law, one
which operates no further than may be necessary to achieve its specific
purpose. Statutes, as a rule, are to be construed in the light of the purpose
to be achieved and the evil sought to be remedied. x x x In introducing a
new rule on the reinstatement aspect of a labor decision under Republic
Act No. 6715, Congress should not be considered to be indulging in mere
semantic exercise. On appeal, however, the appellate tribunal concerned
may enjoin or suspend the reinstatement order in the exercise of its sound
discretion.[33] (Italics in the original, emphasis and underscoring supplied)
If a Labor Arbiter does not issue a writ of execution of the NLRC order for
the reinstatement of an employee even if there is no restraining order, he could
probably be merely observing judicial courtesy, which is advisable if there is a
strong probability that the issues before the higher court would be rendered moot
and moribund as a result of the continuation of the proceedings in the lower
court.[34] In such a case, it is as if a temporary restraining order was issued, the effect
of which Zamboanga City Water District v. Buhat explains:
The issuance of the temporary restraining order did not nullify the rights of
private respondents to their reinstatement and to collect their wages during
the period of the effectivity of the order but merely suspended the
implementation thereof pending the determination of the validity of the
NLRC resolutions subject of the petition. Naturally, a finding of this
Court that private respondents were not entitled to reinstatement
would mean that they had no right to collect any back wages. On the
other hand, where the Court affirmed the decision of the NLRC and
recognized the right of private respondents to reinstatement, private
respondents are entitled to the wages accruing during the effectivity of the
temporary restraining order.[35] (Emphasis and underscoring supplied)
While Zamboanga was decided prior to St. Martin Funeral and, therefore, the
NLRC decisions were at the time passed upon by this Court to the exclusion of the
appellate court, it is still applicable.
Since this Court is now affirming the challenged decision of the Court of
Appeals finding that petitioner was validly dismissed and accordingly reversing the
NLRC Decision that petitioner was illegally dismissed and should be reinstated,
petitioner is not entitled to collect any backwages from the time the NLRC decision
became final and executory up to the time the Court of Appeals reversed said
decision.
It does not appear that a writ of execution was issued for the implementation of the
NLRC order for reinstatement. Had one been issued, respondent would have been
obliged to reinstate petitioner and pay her salary until the said order of the NLRC
for her reinstatement was reversed by the Court of Appeals, and
following Roquero, petitioner would not have been obliged to reimburse respondent
for whatever salary she received in the interim.
IN SUM, while under the sixth paragraph of Article 223 of the Labor Code, the
decision of the NLRC becomes final and executory after the lapse of ten calendar
days from receipt thereof by the parties, the adverse party is not precluded from
assailing it via Petition for Certiorari under Rule 65 before the Court of Appeals and
then to this Court via a Petition for Review under Rule 45. If during the pendency of
the review no order is issued by the courts enjoining the execution of a decision of
the Labor Arbiter or NLRC which is favorable to an employee, the Labor Arbiter or
the NLRC must exercise extreme prudence and observe judicial courtesy when the
circumstances so warrant if we are to heed the injunction of the Court in Philippine
Geothermal, Inc v. NLRC:
While it is true that compassion and human consideration should guide the
disposition of cases involving termination of employment since it affects
ones source or means of livelihood, it should not be overlooked that the
benefits accorded to labor do not include compelling an employer to retain
the services of an employee who has been shown to be a gross liability to
the employer. The law in protecting the rights of the employees
authorizes neither oppression nor self-destruction of the employer. It
should be made clear that when the law tilts the scale of justice in favor of
labor, it is but a recognition of the inherent economic inequality between
labor and management. The intent is to balance the scale of justice; to put
the two parties on relatively equal positions. There may be cases where
the circumstances warrant favoring labor over the interests of
management but never should the scale be so tilted if the result is an
injustice to the employer. Justitia nemini neganda est (Justice is to be
denied to none).[36] (Italics in the original; emphasis and underscoring
supplied)
WHEREFORE, the petition is DENIED. The assailed Court of Appeals Decision

dated May 16, 2003 and Resolution dated November 17, 2003 are AFFIRMED.
SO ORDERED.
CONCHITA CARPIO MORALES

Associate Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
ANTONIO T. CARPIO DANTE O. TINGA

Associate Justice Associate Justice
PRESBITERO J. VELASCO, JR.

Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision were reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, and the Division

Chairpersons Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of
the opinion of the Court.
REYNATO S. PUNO
Chief Justice
MT. CARMEL COLLEGE, G.R. No. 173076

Petitioner, Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
- versus - NACHURA, and
REYES, JJ.
Promulgated:
JOCELYN RESUENA, EDDIE

VILLALON, SYLVIA SEDAYON
October 10, 2007
and ZONSAYDA EMNACE,
Respondents.
x-------------------------------------------------x
DECISION
CHICO-NAZARIO, J.:
In this Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court, petitioner seeks the reversal of the Decision[1] dated 2 June 2006 of the Court
of Appeals in CA-G.R. CEB-SP No. 01615 entitled, Mt. Carmel College v. National
Labor Relations Commission, Labor Arbiter Phibun D. Pura, Jocelyn Resuena, et
al. Petitioner seeks remedy from this Court for an alleged illegal execution of the
Decision[2] dated 30 October 2001 by the National Labor Relations Commission
(NLRC) in NLRC CASE No. V-000176-2000 (RAB CASE Nos. 06-06-10393-98;
06-06-10394-98; 06-06-10395-98; 06-06-10414-98) as affirmed by the Court of
Appeals in CA-G.R. SP No. 80639 in a Decision[3] dated 17 March 2004, insisting
it was not in accord with the dispositive portion thereof. Petitioner is not appealing
the judgment itself but the manner of execution of the same.
The following are the factual antecedents of the instant Petition:
Petitioner Mt. Carmel College is a private educational institution. It is administered

by the Carmelite Fathers at New Escalante, Negros Occidental. Respondents were
employees of petitioner, namely: Jocelyn Resuena (Accounting Clerk), Eddie
Villalon (Elementary Department Principal); Sylvia Sedayon (Treasurer), and
Zonsayda Emnace (Secretary to the Director).
On 21 November 1997, respondents, together with several faculty members, non-

academic personnel, and other students, participated in a protest action against
petitioner. Thereafter, petitioners Director, Rev. Fr. Modesto E. Malandac, issued a
Memorandum to each of the respondents. The Memorandum directed respondents
to explain in writing why they should not be dismissed for loss of trust and
confidence for joining the protest action against the school administration. Petitioner
maintained that respondents were occupying positions of highly confidential
nature. After a hearing conducted by petitioners Fact-Finding Committee and
submission of its Report on 25 April 1998, recommending dismissal or suspension
of respondents, petitioner issued written notices of termination to respondents on 7
May 1998. Respondents were terminated by petitioner on 15 May 1998.
Separate complaints were filed by each of the four respondents against petitioner
before Regional Arbitration Branch VI of the NLRC in Bacolod City. Respondents
charged petitioner with illegal dismissal and claimed 13th month pay, separation pay,
damages and attorneys fees. The cases were docketed as RAB Cases No. 06-06-
10393-98, 06-06-10394-98, 06-06-10395-98, and 06-06-10414-98. All four cases
were consolidated, and Labor Arbiter Ray T. Drilon thereafter issued a
Decision[4] dated 25 May 1999 affirming the validity of respondents termination by
petitioner on the ground of loss of trust and confidence. Although the Decision found
respondents to have been legally dismissed, as equitable relief, however, they were
awarded separation pay computed at one month pay for every year of service,[5] their
proportionate 13th month pay, and attorneys fees. Their claims for moral and
exemplary damages were denied. In issuing the aforesaid Decision, the Labor
Arbiter ruled:
WHEREFORE, premises considered, judgment is hereby rendered

ordering [herein petitioner] Mount Carmel College represented by Fr.
Modesto Malandac to pay [herein respondents] Jocelyn Resuena,
Zonsayda Emnace, Eddie Villalon and Sylvia Sedayon, their respective
13th month pay, separation pay and attorneys fee in the total sum of
THREE HUNDRED THIRTY-FOUR THOUSAND EIGHT HUNDRED
SEVENTY-FIVE PESOS AND 67/100 (P334,875.47) to be deposited
with this office within ten (10) days from receipt of this decision.
The complaint for moral and exemplary damages is hereby dismissed for
lack of legal basis.
All other claims are hereby dismissed for lack of merit.[6]
On 9 September 1999, Labor Arbiter Drilon issued to the parties a Notice of

Judgment/Decision of his 25 May 1999 Decision. The notice indicated that a
decision of the Labor Arbiter reinstating a dismissed or separated employee, in so
far as the reinstatement aspect is concerned, shall immediately be executory, even
pending appeal. The employee shall either be admitted back to work under the same
terms and conditions prevailing prior to his dismissal or separation or at the option
of the employee (sic) merely reinstated in the payroll.[7]
In the meantime, petitioner appealed to the NLRC Fourth Division
in Cebu City, seeking the reversal of the portion of the Labor Arbiters Decision
dated 25 May 1999 awarding separation pay to respondents. The NLRC dismissed
the appeal in its Decision dated 30 October 2001. In the same Decision dismissing
the appeal, the NLRC reversed and modified the 25 May 1999 Decision of the
Labor Arbiter, and declared the termination of respondents to be illegal. It ordered
the reinstatement of respondents, with payment of backwages or payment of
separation pay in lieu thereof. The pertinent portion of the 30 October 2001 NLRC
Decision reads:
We rule that complainants were illegally dismissed and must therefore be ordered
reinstated with payment of backwages from the time they were illegally dismissed
up to the time of their actual reinstatement.
All other claims are hereby dismissed for lack of merit.
WHEREFORE, premises considered the instant appeal is hereby

DISMISSED for lack of merit and the appealed decision is hereby
AFFIRMED with modification ordering the [herein petitioner] the
payment of the backwages of the [herein respondents] from May 15, 1998
up to May 25, 1999, further directing the reinstatement of the
[respondents] to their original positions without loss of seniority or in lieu
thereof the payment of their separation pay as computed in the appealed
decision.[8]
Petitioner filed a Motion for Reconsideration of the 30 October 2001 Decision of the
NLRC. The said Motion was denied in the 19 June 2003 Resolution of the NLRC.
The case was elevated to the Court of Appeals via a Special Civil Action
for Certiorari and Prohibition, docketed as CA-G.R. SP No. 80639 where petitioner
assailed the aforementioned NLRC Decision dated 30 October 2001 and Resolution
dated 19 June 2003, arguing that there is more than enough basis for loss of trust and
confidence as ground for dismissing respondents. It also reiterated compliance with
the twin requirements of notice and hearing. The Court of Appeals denied the
petition in a Decision promulgated on 17 March 2004, ruling thus:
Consequently, we find no grave abuse of discretion committed by the

NLRC in ruling that [herein respondents] have been illegally dismissed.
Likewise, said [NLRC] correctly held that even if such participation of
[respondents] in the protest picket is rather improper under the
circumstances or disappointing to the School Administrator who had
rightly expected them to take the side of the administration or at least
stayed neutral on the demand for ouster of Fr. Malandac and Barairo,
dismissal is definitely too harsh where a less punitive action such as
reprimand or disciplinary action would have been sufficient. Considering
the long years of faithful service of [respondents] in the School without
previous record of misconduct, as duly noted by the NLRC in its decision,
their termination on the basis of alleged loss of confidence by taking part
in an otherwise legitimate and constitutionally-protected right to free
speech and peaceful assembly, is certainly illegal and unjustified.
xxxx
Having been illegally dismissed, [respondents] are entitled to back wages

from the time of their termination until reinstatement, and if reinstatement
is no longer possible, the grant of separation pay equivalent to one (1)
month for every year of service. However, in this case since the Labor
Arbiter did not order reinstatement, the NLRC correctly excluded the
period of the appeal in the computation of back wages due to
[respondents].
Finally, on the prayer for injunctive relief sought by petitioner on the

ground that [public respondent] Labor Arbiter exceeded his jurisdiction in
issuing the writ of execution despite the fact that his decision did not order
reinstatement and that he is bereft of authority to implement the decision
of the NLRC (Fourth Division).
xxxx
Considering that there is already an entry of judgment on the Decision dated

October 30, 2001, and in view of Our disposition of this petition, we find no more
obstacle for the enforcement of the said judgment even pending appeal, in
accordance with Sections 1 and 2, Rule VIII of the NLRC Rules of Procedure, as
amended, as well as Sections 2, 4 and 6, Rule III of the NLRC Manual on Execution
of Judgment.
xxxx
WHEREFORE, premises considered, the present petition is hereby

DENIED DUE COURSE and accordingly DISMISSED for lack of merit.
The assailed Decision and Resolution are AFFIRMED.[9]
No Motion for Reconsideration of the afore-quoted Court of Appeals Decision in

CA-G.R. SP No. 80639 was filed and it became final and executory on 14 April
2004.
At about the same time as the foregoing developments in CA-G.R. SP No. 80639,
Labor Arbiter Phibun D. Pura issued an Order on 19 May 2003 opining on the self-
executory nature of a reinstatement order:
To be sure the Court has not been consistent in its interpretation of Art. 223. The
nagging issue has always been whether the reinstatement order is self-executory.
Citing the divergent views of the court beginning with Inciong v. NLRC followed
by the deviation in interpretation in Maranaw Hotel Corporation (Century Park
Sheraton Manila) v. NLRC, as reiterated and adopted in Archilles Manufacturing
Corporation v. NLRC and Purificacion Ram v. NLRC, the Court in the 1997
Pioneer case has laid down the doctrine that henceforth an Order or award for
reinstatement is self-executory, meaning that it does not require a writ of execution,
much less a motion for its issuance, as maintained by petitioner. x x x.
Successive writs of execution pertaining to the backwages and accrued salaries of

the respondents were issued by Labor Arbiter Pura on these dates: 9 June 2003,[10] 10
December 2003,[11] and 20 January 2004.[12]
The first writ of execution, issued on 9 June 2003, directed the sheriff to collect from
petitioner, the amount of P503,028.05 representing backwages from 15 May
1998 to 25 May 1999. Based on the Sheriffs Report dated 25 June 2003,
reinstatement had not been effected. There was a Notice of Garnishment issued to
the Equitable-PCI Bank Escalante Branch. Labor Arbiter Pura ordered the release of
the garnished amount of P508,168.05 with the said bank for deposit to the Cashier
of NLRC Regional Arbitration Branch VI in Bacolod City. Petitioner moved to
quash the Writ of Execution dated 9 June 2003. It was denied.
By 4 December 2003, the NLRC entered in its Book of Entries of Judgment its
Decision dated 30 October 2001. The records of the case were endorsed back to
NLRC Regional Arbitration Branch VI for the execution of its final and executory
decision, as no restraining order was issued by the Court of Appeals.
After an exchange of pleadings, respondents filed an Ex-Parte Motion for Issuance

of Writ of Execution with the Labor Arbiter considering that the Entry of Judgment
was already issued by the NLRC. On 10 December 2003, the Labor Arbiter granted
the Motion and issued the second Writ of Execution. On motion of respondents, the
Labor Arbiter ordered the release to them of the garnished amount of P503,028.05
deposited with the Cashier of NLRC Regional Arbitration Branch VI.
However, the foregoing amount was considered to be only a partial payment of the
monetary awards due the respondents and the unpaid balance thereof continued to
grow to P1,307,806.50.Respondents thus filed a motion for partial writ of execution,
which the Labor Arbiter granted by issuing the third Writ of Execution on 20 January
2004.[13] Under the foregoing writs of execution, the aggregate amount
of P1,736.592.08[14] was garnished by Bailiff/Acting Sheriff Romeo D. Pasustento,
representing respondents accrued salaries, backwages, attorneys fees and sheriffs
fees computed from the promulgation of the NLRC Decision 30 October 2001.
Respondents filed on 14 July 2004 yet another Motion to Issue a Writ of

Execution to collect backwages from 1 January 2004 to 30 June 2004. Petitioner
opposed the motion, but the Motion to Issue a Writ of Execution was granted.
On 31 January 2005, Labor Arbiter Pura issued an Order[15] adopting the
computation of the Fiscal Examiner of NLRC Regional Arbitration Branch VI and
issuing a writ of execution to enforce the NLRC Decision dated 30 October
2001. The dispositive portion of the said Order reads:
In light of the foregoing, we have no choice but to adopt the computation

of the RAB Fiscal Examiner, hereto attached and forming part of the
record of these cases and conformably thereto, we grant the Motion to
Issue Writ of Execution on backwages for the period stated in this
computation, taking into consideration the grant of differentials as there
are benefits which accrued to the [herein respondents] and which they
should have enjoyed had they been employed and/or reinstated, as the case
may be, and such other amount as may accrue until actually reinstated or
in lieu of reinstatement, to pay [respondents] separation pay to be
computed at one (1) month salary for every year of service in addition to
backwages the formula adopted by the Labor Arbiter in the Decision dated
May 25, 1999, page 7, paragraph 1.
Let therefore a Writ of Execution be, as it is hereby issued to enforce

judgment in the above entitled cases.[16]
On 8 February 2005, petitioner filed a Motion for Reconsideration of the foregoing

Order contending that the judgment of the NLRC mandated the payment of
separation pay as computed in the appealed decision. Respondents likewise filed a
Manifestation and Motion to include the month of November 2004 in the
computation. In an Order dated 10 February 2005, the Labor Arbiter denied
the petitioners Motion for Reconsideration. On 22 February 2005, he issued an Alias
Writ of Execution[17] for the collection from petitioner of the amount
of P1,131,035.00 representing respondents backwages, separation pay, and
attorneys fees. Petitioner filed a Motion to Quash the Alias Writ of Execution on 17
March 2005.[18]
On 15 April 2005, the Labor Arbiter issued an Order where it found no compelling
reason to warrant the grant of the Motion to Quash the Alias Writ of Execution. The
afore-stated Order thus reads:
WHEREFORE, for lack of merit the Motion to Quash the Alias Writ
dated March 17, 2005 is denied. [Respondents] Motion to Include
February and March 2005 in the Computation of wages is hereby
GRANTED. The entry of appearance of the collaborating counsel is duly
noted.[19]
From the said Order of the Labor Arbiter, petitioner filed with the NLRC an appeal
with an application for issuance of a writ of preliminary injunction on the execution
of judgment, docketed as NLRC Case No. V-000377-05. Petitioner assailed the 15
April 2005 Order of the Labor Arbiter averring that the latter seriously committed
errors when he ordered the payment and garnishment of backwages beyond the
period 15 May 1998 to 25 May 1999. The NLRC dismissed the petitioners appeal
in a Resolution[20] dated 15 August 2005 for lack of merit. Petitioner filed a Motion
for Reconsideration but it was denied by the NLRC in a Resolution dated 30
November 2005, disposed of as follows:
WHEREFORE, premises considered, the appeal of respondents is hereby

DISMISSED for lack of merit. The 15 April 2005 Order of Labor Arbiter
Phibun Pura is AFFIRMED.[21]
From the foregoing, petitioner filed with the Court of Appeals a Special Civil Action
for Certiorari and Prohibition, docketed as CA-G.R. CEB-SP No. 01615, praying
for the setting aside and nullification of the Resolutions dated 15 August 2005 and
30 November 2005 of the NLRC in NLRC Case No. V-000377-05. Petitioner
contended that the NLRC acted with grave abuse of discretion when it denied its
appeal and motion for reconsideration and in not ruling that there was already
satisfaction of judgment. The crux of petitioners case, as succinctly worded by the
Court of Appeals in CA-G.R. CEB-SP No. 01615:
[P]etitioner seeks to annul and set aside the resolutions dated August 15,
2005 and November 30, 2005 of the respondent NLRC in NLRC Case No.
V-000377-05 when the latter refuses to invalidate the various writs of
executions and to refund petitioner of whatever excess there might be on
the theory that the execution done by the respondent Labor Arbiter was
illegal and in fact goes beyond what is stated in the decision dated October
30, 2001 of the respondent NLRC in NLRC Case No. V-000176-2000.[22]
The Court of Appeals eventually dismissed CA-G.R. CEB-SP No. 01615, ruling as
follows:
Thus, petitioners avowal that their liability for private respondents

backwages is limited from May 15, 1998 up to May 25, 1999 is untenable
on these grounds:
First, there is no showing, in the case at bench, that petitioner exercised

its option to reinstate private respondents to their former position or to
grant them separation pay. Accordingly, backwages have to be granted to
private respondents until their reinstatement to their former position is
effected or upon petitioners payment of separation pay to private
respondents if reinstatement is no longer feasible; and
Second, the decision dated March 17, 2004 of the 17th Division of the
Court of Appeals in CA-G.R. SP No. 80639 acquiesced the propriety of
the issuance of the writs of execution by the respondent labor arbiter
on June 9, 2003, December 10, 2003 and January 30, 2004. On April 14,
2004, the said decision which sanctioned the payment of backwages even
beyond May 25, 1999, became final and executory x x x.
xxxx
In light of the foregoing disquisition, we hereby find public respondent

NLRC to have acted accordingly and without grave abuse of discretion
when it issued the questioned Resolutions dated August 15,
2005 and November 30, 2005, respectively. Grave abuse of discretion
means such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, or, in other words where the power is
exercised in an arbitrary or despotic manner by reason of passion or
personal hostility, and it must be so patent and gross as to amount to an
evasion of positive duty or to a virtual refusal to perform the duty enjoined
or to act at all in contemplation of law. It is not sufficient that a tribunal,
in the exercise of power, abused its discretion; such abuse must be grave.
WHEREFORE, in view of the foregoing, the present petition is hereby

DISMISSED and the assailed Resolutions dated August 15,
2005 and November 30, 2005, respectively, issued by the respondent
NLRC in NLRC Case No. V-000377-05 are hereby AFFIRMED.[23]
Hence, petitioner filed the instant Petition for Review on Certiorari, raising the
following issues:
I.
THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING
THE LABOR ARBITER AND THE NLRC THAT THE AWARD OF
BACKWAGES GOES BEYOND THE PERIOD FROM 15 MAY 1998
UP TO 25 MAY 1999 ON THE SUPPOSITION THAT
REINSTATEMENT IS SELF-EXECUTORY AND DOES NOT NEED
A WRIT OF EXECUTION FOR ITS ENFORCEMENT.
II.
THE HONORABLE COURT OF APPEALS ERRED IN NOT
FINIDING THAT THE CONTINUING GRANT AND AWARD OF
BACKWAGES UP TO THE PRESENT IS CONTRARY TO LAW AND
JURISPRUDENCE AS LAID DOWN BY THIS HONORABLE
SUPREME COURT.
Petitioner prays that this Court render judgment (a) annulling and setting aside the
assailed Decision on 02 June 2006 of the Court of Appeals in CA-G.R. CEB-SP No.
01615 and all its orders and issuances; (b) ordering that backwages be computed and
executed corresponding only to the period from 15 May 1998 to 25 May 1999; (c)
ordering that separation pay be computed based on the computation as originally
submitted by the Labor Arbiter, P344,875.47, which corresponds to the date of
respondents employment until 15 May 1998; (d) that no other award except for
backwages for the period 15 May 1998 to 25 May 1999 and separation pay
amounting to P344,875.47 shall be paid by petitioner; and (e) that the respondents
be ordered to refund and pay the alleged excess in the amounts garnished by virtue
of the Writs of Execution dated 9 June 2003, 10 December 2003, and 30 January
2004.
In sum, the resolution of this petition hinges on the following issues: (1)
whether reinstatement in the instant case is self-executory and does not need a writ
of execution for its enforcement; and (2) whether the continuing award of backwages
is proper.
Petitioner insists that what is at issue is the manner of execution of the NLRC
Decision dated 30 October 2001 in NLRC CASE No. V-000176-2000 (RAB CASE
Nos. 06-06-10393-98; 06-06-10394-98; 06-06-10395-98; 06-06-10414-98), as
affirmed by the Decision dated 17 March 2004 of the Court of Appeals in CA-G.R.
No. 80639.
In ruling on the consolidated complaints filed by the four respondents, Labor Arbiter
Drilon found that they were not illegally dismissed but ordered that they be awarded
13th month pay, separation pay and attorneys fees in the amount
of P334,875.47. Upon appeal to the NLRC, the NLRC reversed the findings of the
Labor Arbiter ruling that the termination of respondents was illegal and ordering the
payment of backwages of respondents from 15 May 1998 up to 25 May 1999. It
further directed the reinstatement of respondents or payment of separation pay, with
backwages. This was affirmed by the Court of Appeals.
While petitioner concedes that the case pertaining to the complaints for illegal
dismissal filed by the respondents before the Labor Arbiter had been resolved with
finality by the Court of Appeals in CA-G.R. No. 80639, no other remedy having
been taken therefrom, it however assails the correctness and validity of the execution
of the judgment therein. Petitioner avers that the Court of Appeals erred in upholding
the Labor Arbiter and the NLRC that the award of backwages goes beyond the
period 15 May 1998 to 25 May 1999 on the supposition that reinstatement is self-
executory and does not need a writ of execution for its enforcement. Petitioner
postulates that the Labor Arbiter went beyond the terms of the NLRC Decision, as
affirmed by the Court of Appeals, and erroneously used as bases inapplicable
law[24] and jurisprudence[25] in the execution of the same. Petitioner contends that the
Labor Arbiters reliance on Pioneer Texturizing Corp. v. National Labor Relations
Commission[26] is misplaced, for it applied Article 223 of the Labor Code [27] since
reinstatement was ordered at the Labor Arbiters level while in the instant case,
reinstatement was ordered upon appeal to the NLRC. Petitioner argues that the
relevant statutory and regulatory provisions herein are Article 224 of the Labor
Code,[28] and Rule III of the NLRC Manual for Execution of Judgment,[29] given that
there was no order of reinstatement at the Labor Arbiter level but only at the NLRC
level. Petitioner insists that, applying Article 224 of the Labor Code in the instant
case, any reinstatement aspect of the NLRC Decision, as affirmed by the Court of
Appeals, should have been done through the issuance of a Writ of Execution as it is
no longer self-executory. It furthermore contends that it was impossible to reinstate
respondents, whether by way of an immediate execution or by way of a self-
executory nature, since there was nothing to execute pending appeal because there
was no order for reinstatement.
Petitioner vehemently raises the argument that the award of backwages subject to
execution is limited to the period prior to the appeal and does not include the period
during the pendency of the appeal, on the contention that reinstatement during appeal
is warranted only when the Labor Arbiter rules that the dismissed employee should
be reinstated. In support of its foregoing argument, petitioner invokes Filflex
Industrial & Manufacturing Corporation v. National Labor Relations
Commission[30] where this Court ruled:
In other words, reinstatement during appeal is warranted only when the

labor arbiter (LA) himself rules that the dismissed employee should be
reinstated. In the present case, neither the dispositive portion nor the text
of the labor arbiters decision ordered the reinstatement of private
respondent. Further, the back wages granted to private respondent were
specifically limited to the period prior to the filing of the appeal with
Respondent NLRC. In fact, the LAs decision ordered her separation from
service for the parties mutual advantage and most importantly to physical
and health welfare of the complainant. Hence, it is an error and an abuse
of discretion for the NLRC to hold that the award of limited back wages,
by implication, included an order for private respondents reinstatement.
An order for reinstatement must be specifically declared and cannot be

presumed; like back wages, it is a separate and distinct relief given to an
illegally dismissed employee. There being no specific order for
reinstatement and the order being for complainants separation, there can
be no basis for the award of salaries/back wages during the pendency of
appeal.
Petitioners reliance on Filflex is misplaced and inapplicable to the case at bar.

Indeed in Filflex, this Court ruled that the award of backwages is limited to the
period prior to the filing of the appeal with the NLRC. This Court had declared in
the aforesaid case that reinstatement during appeal is warranted only when the Labor
Arbiter himself rules that the dismissed employee should be reinstated. But this was
precisely because on appeal to the NLRC, it found that there was no illegal dismissal;
thus, neither reinstatement nor backwages may be awarded. In fact, Filfex deleted
the award of backwages granted during appeal, reiterating that an award of
backwages by the NLRC during the period of appeal is totally inconsistent with its
finding of a valid dismissal. In the instant petition, the NLRC Decision dated 30
October 2001 finding the termination of respondents illegal, had the effect of
reversing Labor Arbiter Drilons Decision dated 25 May 1999.
This Court sees no cogent reason as to the relevance of a discussion on whether or
not reinstatement is self-executory. However, since petitioner raised this issue, this
Court has opted to discuss it. Verily, Article 223 of the Labor Code is not applicable
in the instant case. The said provision stipulates that the decision of the Labor
Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement
aspect is concerned, shall immediately be executory, even pending appeal.
Petitioner contends that the statutory provision applicable is Article 224 of the Labor
Code, as well as Rule III, Section 2(b) of the NLRC Manual on Execution of
Judgment, because the case was decided on appeal. Furthermore, it is a decision
which is of a final and executory nature. The provisions invoked by petitioner reads:
Art. 224. Execution of decisions, orders or awards. -- (a) The Secretary

of Labor and Employment or any Regional Director, the Commission or
any Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu
proprio or on motion of any interested party, issue a writ of execution on
a judgment within five (5) years from the date it becomes final and
executory x x x.[31]
If the execution be for the reinstatement of any person to any position,

office or employment, such writ shall be served by the sheriff upon the
losing party or upon any other person required by law to obey the same,
and such party or person may be punished for contempt if he disobeys
such decisions, order for reinstatement.[32]
The records of the case indicate that when Labor Arbiter Drilon issued its 25 May
1999 Decision, there was no order of reinstatement yet although the dispositive
portion of the 31 January 2005Order issued by Labor Arbiter Pura already provided
for reinstatement or payment of separation pay, to wit:
In light of the foregoing, we have no choice but to adopt the computation of the
RAB Fiscal Examiner, hereto attached and forming part of the record of these cases
and conformably thereto, we grant the Motion to Issue Writ of Execution on
backwages for the period stated in this computation, taking into consideration the
grant of differentials as there are benefits which accrued to the complainants and
which they should have enjoyed had they been employed and/or reinstated, as the
case may be, and such other amount as may accrue until actually reinstated or in
lieu of reinstatement, to pay complainants separation pay to be computed at one (1)
month salary for every year of service in addition to backwages the formula adopted
by the Labor Arbiter in the Decision dated May 25, 1999, page 7, paragraph 1.
Let therefore a Writ of Execution be, as it is hereby issued to enforce

judgment in the above entitled cases.[33]
Art. 223 of the Labor Code provides that reinstatement is immediately executory
even pending appeal only when the Labor Arbiter himself ordered the
reinstatement. In this case, the original Decision of Labor Arbiter Drilon did not
order reinstatement. Reinstatement in this case was actually ordered by the NLRC,
affirmed by the Court of Appeals. The order of Labor Arbiter Pura on 31 January
2005 directing reinstatement was issued after the Court of Appeals Decision
dated 17 March 2004 which affirmed the NLRCs order of reinstatement. Thus, Art.
223 finds no application in the instant case. Considering that the order for
reinstatement was first decided upon appeal to the NLRC and affirmed with finality
by the Court of Appeals in CA-G.R. SP 80369 on 17 March 2004, petitioner rightly
invoked Art. 224 of the Labor Code. As contemplated by Article 224 of the Labor
Code, the Secretary of Labor and Employment or any Regional Director, the
Commission or any Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu
proprio or on motion of any interested party, issue a writ of execution on a judgment
within five (5) years from the date it becomes final and executory. Consequently,
under Rule III of the NLRC Manual on the Execution of Judgment, it is provided
that if the execution be for the reinstatement of any person to a position, an office or
an employment, such writ shall be served by the sheriff upon the losing party or
upon any other person required by law to obey the same, and such party or person
may be punished for contempt if he disobeys such decision or order for
reinstatement.[34]
However, as we can glean from the succeeding discussion, the above findings will
not affect the award of backwages for the period beyond 25 May 1999.
Anent the second issue, petitioner contends that the 25 May 1999 Decision of Labor
Arbiter Drilon did not order the reinstatement of respondents. Petitioner posits that
since there was no finding of illegal dismissal at the Labor Arbiters level, then it
follows that there was no reinstatement aspect, and its liability for backwages is
limited to the period from 15 May 1998 up to 25 May 1999, i.e., from dismissal to
promulgation of the Labor Arbiters Decision only, as allegedly determined by the
NLRC in its Decision dated 30 October 2001. It argues that while the said NLRC
Decision awarded backwages from 15 May 1998 to 25 May 1999 only, the Writs of
Execution issued pursuant thereto ordered the payment of backwages way beyond
the period stated in the Decision[35] it is supposed to execute.
Petitioners argument is absurd. Abbott v. National Labor Relations

Commission,[36] as cited by petitioner, declared that there exists a big difference
when what is sought to be reviewed is the manner of execution of a decision and not
the decision itself. While it is true that the decision itself has become final and
executory and so can no longer be challenged, there is no question that it must be
enforced in accordance with its terms and conditions. Any deviation therefrom can
be the subject of a proper appeal.[37] In the instant case, however, the manner of
execution falls squarely within the terms of the Decision it seeks to implement.
The 30 October 2001 NLRC Decision ruled as follows:
We rule that complainants were illegally dismissed and must therefore be

ordered reinstated with payment of backwages from the time they were
illegally dismissed up to the time of their actual reinstatement.

AFFIRMED with modification ordering the respondents the payment of
the backwages of the complainants from May 15, 1998 up to May 25,
1999, further directing the reinstatement of the complainants to their
original positions without loss of seniority or in lieu thereof the payment
of their separation pay as computed in the appealed decision.[38]
When the afore-quoted NLRC Decision was appealed to the Court of Appeals in
CA-G.R. SP No. 80639, there seemed to be a contradiction between the body and
the fallo of the appellate courts Decision dated 17 March 2004. Petitioner cites the
following from the text of the Court of Appeals Decision:
However, in this case since the Labor Arbiter did not order reinstatement, the
NLRC correctly excluded the period of the appeal in the computation of back wages
due to private respondents.[39]
The dispositive portion of the same Decision, however, concludes:
WHEREFORE, premises considered, the present petition is hereby

DENIED DUE COURSE and accordingly DISMISSED for lack of merit.
The assailed Decision and Resolution are AFFIRMED.[40]
The general rule is that where there is conflict between the dispositive portion or
the fallo and the body of the decision, the fallo controls. This rule rests on the theory
that the fallo is the final order while the opinion in the body is merely a statement
ordering nothing.[41] Clearly, the award of backwages to respondents does not merely
cover the period from 15 May 1998 up to 25 May 1999alone.[42] The findings of the
NLRC, which were affirmed with finality in CA-G.R. SP No. 80639, and subject of
execution in the instant petition, pronounced:
We rule that [respondents] were illegally dismissed and must therefore be

ordered reinstated with payment of backwages from the time they were
illegally dismissed up to the time of their actual reinstatement.

AFFIRMED with modification ordering the [petitioner] payment of the
backwages of the [respondents] from May 15, 1998 up to May 25, 1999,
further directing the reinstatement of the [respondents] to their original
positions without loss of seniority or in lieu thereof the payment of their
separation pay as computed in the appealed decision.[43]
The above ruling of the NLRC in its Decision dated 30 October 2001 had the
effect of reversing and modifying the findings of the Labor Arbiter. Under Article
218(c) of the Labor Code, the Commission is empowered to correct, amend, or waive
any error, defect or irregularity whether in substance or form, in the exercise of its
appellate jurisdiction.[44] The dispositive portion of the Labor Arbiters Decision as
worded is clear and needs no further interpretation. The NLRC found respondents
to have been illegally dismissed by petitioner, and ordered reinstatement and
payment of backwages. Additionally, it stated that where reinstatement is not
possible, separation pay as computed in the appealed decision should be awarded
to respondents. Petitioner interprets the dispositive portion of the NLRC Decision to
mean that it is ordered to pay respondents backwages from 15 May 1998 to 25 May
1999 only. Petitioner seems to have missed that the aforestated NLRC Decision also
directed it to reinstate respondents, or in lieu thereof, pay separation pay. This,
petitioner failed to do. Petitioner did not exercise the option of either reinstatement
or paying the separation pay of respondents.
Backwages are to be computed from the time of illegal dismissal until reinstatement
or upon petitioners payment of separation pay to respondents if reinstatement is no
longer possible. Article 279 of the Labor Code, as amended, states:
Art. 279. Security of Tenure. x x x
In cases of regular employment the employer shall not terminate the

services of an employee except for a just cause or when authorized by this
Title. An employee who is unjustly dismissed from work shall be entitled
to reinstatement without loss of seniority rights and other privileges and
to his full backwages, inclusive of allowances, and to his other benefits or
their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
Thus, an illegally dismissed employee is entitled to two reliefs: backwages

and reinstatement. The two reliefs provided are separate and distinct. In instances
where reinstatement is no longer feasible because of strained relations between the
employee and the employer, separation pay is granted. In effect, an illegally
dismissed employee is entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages.[45]
The normal consequences of respondents illegal dismissal, then, are reinstatement
without loss of seniority rights, and payment of backwages computed from the time
compensation was withheld up to the date of actual reinstatement. Where
reinstatement is no longer viable as an option, separation pay equivalent to one (1)
month salary for every year of service should be awarded as an alternative.[46] The
payment of separation pay is in addition to payment of backwages.
Concomitantly, it is evident that respondents backwages should not be limited to the

period from 15 May 1998 to 25 May 1999. The backwages due respondents must be
computed from the time they were unjustly dismissed until their actual reinstatement
to their former position or upon petitioners payment of separation pay to them if
reinstatement is no longer feasible. Thus, until petitioner actually implements the
reinstatement aspect of the NLRC Decision dated 30 October 2001, as affirmed in
the Court of Appeals Decision dated 17 March 2004 in CA-G.R. SP No. 80639, its
obligation to respondents, insofar as accrued backwages and other benefits are
concerned, continues to accumulate.
This Court takes this occasion to reiterate that execution is the final stage of
litigation, the end of the suit. It can not and should not be frustrated except for serious
reasons demanded by justice and equity.[47] Litigation must end sometime and
somewhere. An effective and efficient administration of justice requires that, once a
judgment has become final, the winning party be not, through a mere subterfuge, be
deprived of the fruits of the verdicts. Courts must, therefore, guard against any
scheme calculated to bring about that result. Constituted as they are to put an end to
controversies, courts should frown upon any attempt to prolong them. [48]
WHEREFORE, the instant petition is dismissed. The Decision dated 2 June

2006 of the Court of Appeals in CA-G.R. CEB-SP No. 01615
is AFFIRMED. Petitioner is ORDERED to (1) reinstate respondents to their
original positions without loss of seniority rights, with payment of (a) backwages
computed from 15 May 1998, the time compensation of respondents was withheld
from them when they were unjustly terminated, up to the time of reinstatement; and
(b) accrued 13th month pay for the same period; OR in lieu of reinstatement, (2) pay
respondents (a) separation pay, in the amount equivalent to one (1) month pay for
every year of service; and (b) backwages, computed from 15 May 1998, the time
compensation of respondents was withheld from them when they were unjustly
terminated, up to the time of payment thereof; and (c) the accrued 13th month pay
for the same period. For this purpose, the records of this case are
hereby REMANDED to the Labor Arbiter for proper computation of the subject
money claims as discussed above. Costs against petitioner.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B. NACHURA

RUBEN T. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision were reached in consultation
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Decision were reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice
EN BANC
JUANITO A. GARCIA and G.R. No. 164856

ALBERTO J. DUMAGO, Present:
Petitioners,
PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
- versus - CORONA,
CARPIO MORALES,
AZCUNA,
TINGA,
CHICO-NAZARIO,
PHILIPPINE AIRLINES, VELASCO, JR.,
INC.,
NACHURA,
Respondent.
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, 2001 and January 28, 2002, affirmed the
validity of the Writ and the Notice issued by the Labor Arbiter but suspended and
referred the action to the Rehabilitation Receiver for appropriate action.
Respondent elevated the matter to the appellate court which issued the herein
challenged Decision and Resolution nullifying the NLRC Resolutions on two
grounds, essentially espousing that: (1) a subsequent finding of a valid dismissal
removes the basis for implementing the reinstatement aspect of a labor 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
[23] [24] [25] [26]
in Kimberly, Composite, Air Philippines, and Roquero, 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 thereafter motu 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
WE CONCUR:
REYNATO S. PUNO
Chief Justice
LEONARDO A. QUISUMBING CONSUELO YNARES- SANTIAGO

ANTONIO T. CARPIO MA. ALICIA AUSTRIA-MARTINEZ

RENATO C. CORONA
Associate Justice ADOLFO S. AZCUNA
Associate Justice
DANTE O. TINGA MINITA V. CHICO-NAZARIO

ANTONIO EDUARDO B. NACHURA

PRESBITERO J. VELASCO, JR. Associate Justice
Associate Justice
TERESITA J. LEONARDO-DE CASTRO ARTURO D. BRION

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I hereby certify that the
conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court.
REYNATO S. PUNO
Chief Justice
SECOND DIVISION
SESSION DELIGHTS ICE CREAM AND G.R. No. 172149
FAST FOODS,
Petitioner,
Present:
CARPIO, J., Chairperson,
- versus - BRION,
BERSAMIN,*
ABAD, and
THE HON. COURT OF PEREZ, JJ.
APPEALS (Sixth Division), HON.
NATIONAL LABOR
RELATIONS COMMISSION Promulgated:
(Second Division) and ADONIS
ARMENIO M. FLORA,
Respondents. February 8, 2010
x---------------------------------------------------------------------------------------------------------x
DECISION
BRION, J.:
We rule on the petition for review on certiorari assailing the decision[1] and
resolution[2] of the Court of Appeals[3] (CA) in CA-G.R. SP No. 89326. These CA
rulings dismissed the petition for certiorari the petitioner Session Delights Ice
Cream and Fast Foods (petitioner) filed to challenge the resolutions[4] of the Second
Division of the National Labor Relations Commission[5](NLRC) that in turn affirmed
the order[6] of the Labor Arbiter[7] granting a re-computation of the monetary awards
in favor of the private respondent Adonis Armenio M. Flora (private respondent).
The Facts
The private respondent filed against the petitioner a complaint for illegal dismissal,
entitled Adonis Armenio M. Flora, Complainant versus Session Delights Ice Cream
& Fast Foods, et. al, Private respondents, docketed as NLRC Case No. RAB-
CAR 09-0507-00.
The labor arbiter decided the complaint on February 8, 2001, finding that the
petitioner illegally dismissed the private respondent. The decision awarded the
private respondent backwages, separation pay in lieu of reinstatement, indemnity,
and attorneys fees, under a computation that the decision itself outlined in its
dispositive portion. The dispositive portion reads:
WHEREFORE, judgment is hereby rendered declaring private respondent guilty of

illegal dismissal. Accordingly, private respondent SESSION DELIGHTS is
ordered to pay complainant the following:
a) Backwages:
P170.00 x 154 days P 26,180.00
Proportional 13th month pay
P 26,180/12 2,181.65 28,361.65
b) Separation Pay:
P 170.00 x 314/12 x 1 4,448.35
c) Indemnity of P5,000.00 for failure to observe due process

d) Attorneys fees which is 10% of the total award in the amount
of P3,781.00.
SO ORDERED.[8]
On the petitioners appeal, the NLRC affirmed the labor arbiters decision in its
resolutions dated May 31, 2002 and September 30, 2002.[9] The dispositive portion
of the NLRCs resolution of May 31, 2002 states:
WHEREFORE, premises considered, the decision under review is hereby
AFFIRMED, and the appeal, DISMISSED, for lack of merit.[10]
The petitioner continued to seek relief, this time by filing a petition

for certiorari before the CA, which petition was docketed as CA-G.R. SP No.
74653.
On July 4, 2003, the CA dismissed the petition and affirmed with modification
the NLRC decision by deleting the awards for a proportionate 13 th month pay and
for indemnity.[11] The CA decision became final per Entry of Judgment dated July
29, 2003.[12] The dispositive portion of this CA decision states:
WHEREFORE, premises considered, the instant petition is hereby

DISMISSED. The decision of the National Labor Relations Commission is
AFFIRMED with modification that the award of proportional 13th month pay as
well as the award of indemnity of P 5,000.00 for failure to observe due process are
DELETED.
In January 2004, and in the course of the execution of the above final
judgment pursuant to Section 3, Rule VIII[13] of the then NLRC Rules of Procedure,
the Finance Analyst of the Labor Arbiters Office held a pre-execution conference
with the contending parties in attendance. The Finance Analyst submitted
an updated computation of the monetary awards due the private respondent in the
total amount of P235,986.00.[14] This updated computation included additional
backwages and separation pay due the private respondent computed from March 1,
2001 to September 17, 2003. The computation also included the proportionate
amount of the private respondents 13th month pay. On March 25, 2004, the labor
arbiter approved the updated computation which ran, as follows:
COMPUTATION
Total computation as per NLRC CAR

decision dated February 8, 2001 (sic) 41,591.00
1. Additional backwages: (March 1, 2001-Sept. 17, 2003)

March 1, 2001-April 30, 2002:
P178.00 x 52 days = 9,256.00
May 1, 2001-June 30, 2002:
P185.00 x 365 days = 67,525.00
July 1, 2002- Sept. 17, 2003:
P190.00 x 382 days = 72,580.00 149,361.00
Proportional 13th month pay:
P149,361.00/12 = 12,446.75
161,807.75
2. Additional separation pay:
P190.00 x 314/12 x 3 years = 14,915.00
3. Additional attorneys fee:
P176,722.75 x 10% = 17,672.25 194,395.00

TOTAL 253,986.00
The petitioner objected to the re-computation and appealed the labor arbiters
order to the NLRC. The petitioner claimed that the updated computation was
inconsistent with the dispositive portion of the labor arbiters February 8,
2001 decision, as modified by the CA in CA-G.R. SP No. 74653. The NLRC
disagreed with the petitioner and affirmed the labor arbiters decision in a resolution
dated October 25, 2004. The NLRC also denied the petitioners motion for
reconsideration in its resolution dated January 31, 2005.
The petitioner sought recourse with the CA through a petition

for certiorari on the ground that the NLRC acted with grave abuse of discretion
amounting to lack or excess of jurisdiction.
The CA Rulings
The CA partially granted the petition in its decision of December 19,

2005 (now challenged before us) by deleting the awarded proportionate 13 th month
pay. The CA ruled:
WHEREFORE, the petition is PARTIALLY GRANTED. The Labor Arbiter

is DIRECTED to compute only the following (a) private respondents backwages
from the time his salary was withheld up to July 29, 2003, the finality of the
Decision in CA-G.R. SP No. 74653; (b) private respondents separation pay from
July 31, 2000 up to July 29, 2003; and (c) attorneys fees equivalent to 10% of the
total monetary claims from (a) and (b). The total monetary award shall earn legal
interest from July 29, 2003 until fully paid. No pronouncement as to cost.
SO ORDERED.[15]
The CA explained in this ruling that employees illegally dismissed are entitled to
reinstatement, full backwages, inclusive of allowances and other benefits or their
monetary equivalent, computed from the time actual compensation was withheld
from them, up to the time of actual reinstatement. If reinstatement is no longer
feasible, the backwages shall be computed from the time of their illegal dismissal up
to the finality of the decision. The CA reasoned that a re-computation of the
monetary awards was necessary to determine the correct amount due the private
respondent from the time his salary was withheld from him until July 29, 2003 (the
date of finality of the July 4, 2003 decision in CA-G.R. SP No. 74653) since the
separation pay, which was awarded in lieu of reinstatement, had not been paid by
the petitioner. The attorneys fees likewise have to be re-computed in light of the
deletion of the proportionate 13th month pay and indemnity awards.
The petitioner timely filed a motion for reconsideration which the CA denied
in its resolution of March 30, 2006, now similarly assailed before us.
The Issue
The lone issue the petitioner raised is whether a final and executory decision (the
labor arbiters decision of February 8, 2001, as affirmed with modification by
the CA decision in CA-G.R. SP No. 74653) may be enforced beyond the terms
decreed in its dispositive portion.
In the pleadings submitted to the Court, the petitioner insists on a literal

reading and application of the labor arbiters February 8, 2001 decision, as modified
by the CA in CA-G.R. SP No. 74653. The petitioner argues that since the modified
labor arbiters February 8, 2001 decision did not provide in its dispositive portion for
a computation of the monetary award up to the finality of the judgment in the case,
the CA should have enforced the decision according to its express and literal terms.
In other words, the CA cannot now allow the execution of the labor arbiters original
decision (which the CA affirmed with finality but with modification) beyond the
express terms of its dispositive portion; thus, the amounts that accrued during the
pendency of the petitioners recourses with the NLRC and the CA cannot be read into
and implemented as part of the final and executory judgment.
The petitioner, as an alternative argument, argues that even assuming that the
body of the CA decision in CA-G.R. SP No. 74653 intended a computation of the
monetary award up to the finality of the decision, the dispositive portion remains to
be the directive that should be enforced, as it is the part of the decision that governs,
settles, and declares the rights and obligations of the parties.
The private respondent, for his part, counters that the computation of the monetary
award until the finality of the CA decision in CA-G.R. SP No. 74653 is in accord
with Article 279 of the Labor Code, as amended.
The Courts Ruling
We resolve to dismiss the petition and, accordingly, affirm the CA

decision.
We state at the outset that, as a rule, we frown upon any delay in the execution
of final and executory decisions, as the immediate enforcement of the parties rights,
confirmed by a final decision, is a major component of the ideal administration of
justice. We admit, however, that circumstances may transpire rendering delay
unavoidable. One such occasion is when the execution of the final judgment is not
in accord with what the final judgment decrees in its dispositive portion. Just as the
execution of a final judgment is a matter of right for the winning litigant who should
not be denied the fruits of his or her victory, the right of the losing party to give,
perform, pay, and deliver only what has been decreed in the final judgment should
also be respected.
That a judgment should be implemented according to the terms of its

dispositive portion is a long and well-established rule.[16] Otherwise stated, it is the
dispositive portion that categorically states the rights and obligations of the parties
to the dispute as against each other.[17] Thus, it is the dispositive portion which the
entities charged with the execution of a final judgment that must be enforced to
ensure the validity of the execution.[18]
A companion to the above rule on the execution of a final judgment is the

principle of its immutability. Save for recognized exceptions,[19] a final judgment
may no longer be altered, amended or modified, even if the alteration, amendment
or modification is meant to correct what is perceived to be an erroneous conclusion
of fact or law and regardless of what court, be it the highest Court of the land, renders
it.[20] Any attempt on the part of the responsible entities charged with the execution
of a final judgment to insert, change or add matters not clearly contemplated in the
dispositive portion violates the rule on immutability of judgments.
In the present case, with the CAs deletion of the proportionate 13th month pay
and indemnity awards in the labor arbiters February 8, 2001 decision, only the
awards of backwages, separation pay, and attorneys fees remain. These are the
awards subject to execution.
Award of backwages and separation pay
A distinct feature of the judgment under execution is that the February 8,

2001 labor arbiter decision already provided for the computation of the payable
separation pay and backwages due, and did not literally order the computation of the
monetary awards up to the time of the finality of the judgment. The private
respondent, too, did not contest the decision through an appeal. The petitioners
argument to confine the awards to what the labor arbiter stated in the dispositive part
of his decision is largely based on these established features of the judgment.
We reject the petitioners view as a narrow and misplaced interpretation of an

illegal dismissal decision, particularly of the terms of the labor arbiters decision.
While the private respondent failed to appeal the February 8, 2001 decision of
the labor arbiter, the failure, at the most, had the effect of making the awards granted
to him final so that he could no longer seek any other affirmative relief, or pray for
any award additional to what the labor arbiter had given. Other than these, the
illegal dismissal case remained open for adjudication based on the appeal made for
the higher tribunals consideration. In other words, the higher tribunals, on
appropriate recourses made, may reverse the judgment and declare that no illegal
dismissal took place, or affirm the illegal dismissal already decreed with or
without modifying the monetary consequences flowing from the dismissal.
As the case developed and is presented to us, the issue before us is not the
correctness of the awards, nor the finality of the CAs judgment, nor the petitioners
failure to appeal. The issue before us is the propriety of the computation of the
awards made, and, whether this violated the principle of immutability of final
judgments.
In concrete terms, the question is whether a re-computation in the course of

execution of the labor arbiters original computation of the awards made, pegged as
of the time the decision was rendered and confirmed with modification by a final
CA decision, is legally proper. The question is posed, given that the petitioner did
not immediately pay the awards stated in the original labor arbiters decision; it
delayed payment because it continued with the litigation until final judgment at the
CA level.
A source of misunderstanding in implementing the final decision in this case

proceeds from the way the original labor arbiter framed his decision. The decision
consists essentially of two parts.
The first is that part of the decision that cannot now be disputed because it has
been confirmed with finality. This is the finding of the illegality of the dismissal and
the awards of separation pay in lieu of reinstatement, backwages, attorneys fees, and
legal interests.
The second part is the computation of the awards made. On its face, the
computation the labor arbiter made shows that it was time-bound as can be seen from
the figures used in the computation. This part, being merely a computation of what
the first part of the decision established and declared, can, by its nature, be re-
computed. This is the part, too, that the petitioner now posits should no longer be re-
computed because the computation is already in the labor arbiters decision that the
CA had affirmed. The public and private respondents, on the other hand, posit that
a re-computation is necessary because the relief in an illegal dismissal decision goes
all the way up to reinstatement if reinstatement is to be made, or up to the finality of
the decision, if separation pay is to be given in lieu reinstatement.
That the labor arbiters decision, at the same time that it found that an illegal
dismissal had taken place, also made a computation of the award, is understandable
in light of Section 3, Rule VIII of the then NLRC Rules of Procedure which requires
that a computation be made. This Section in part states:
[T]he Labor Arbiter of origin, in cases involving monetary awards and at all
events, as far as practicable, shall embody in any such decision or order the detailed
and full amount awarded.
Clearly implied from this original computation is its currency up to the finality
of the labor arbiters decision. As we noted above, this implication is apparent from
the terms of the computation itself, and no question would have arisen had the parties
terminated the case and implemented the decision at that point.
However, the petitioner disagreed with the labor arbiters findings on all
counts i.e., on the finding of illegality as well as on all the consequent awards
made. Hence, the petitioner appealed the case to the NLRC which, in turn, affirmed
the labor arbiters decision. By law,[21] the NLRC decision is final, reviewable only
by the CA on jurisdictional grounds.
The petitioner appropriately sought to nullify the NLRC decision on

jurisdictional grounds through a timely filed Rule 65 petition for certiorari. The CA
decision, finding that NLRC exceeded its authority in affirming the payment of
13th month pay and indemnity, lapsed to finality and was subsequently returned to
the labor arbiter of origin for execution.
It was at this point that the present case arose. Focusing on the core illegal
dismissal portion of the original labor arbiters decision, the implementing labor
arbiter ordered the award re-computed; he apparently read the figures originally
ordered to be paid to be the computation due had the case been terminated and
implemented at the labor arbiters level. Thus, the labor arbiter re-computed the
award to include the separation pay and the backwages due up to the finality of the
CA decision that fully terminated the case on the merits. Unfortunately, the labor
arbiters approved computation went beyond the finality of the CA decision (July 29,
2003) and included as well the payment for awards the final CA decision had deleted
specifically, the proportionate 13th month pay and the indemnity awards. Hence, the
CA issued the decision now questioned in the present petition.
We see no error in the CA decision confirming that a re-computation is

necessary as it essentially considered the labor arbiters original decision in
accordance with its basic component parts as we discussed above. To reiterate, the
first part contains the finding of illegality and its monetary consequences; the second
part is the computation of the awards or monetary consequences of the illegal
dismissal, computed as of the time of the labor arbiters original decision.
To illustrate these points, had the case involved a pure money claim for a
specific sum (e.g. salary for a specific period) or a specific benefit (e.g. 13th month
pay for a specific year) made by a former employee, the labor arbiters computation
would admittedly have continuing currency because the sum is specific and any
variation may only be on the interests that may run from the finality of the decision
ordering the payment of the specific sum.
In contrast with a ruling on a specific pure money claim, is a claim that relates
to status (as in this case, where the claim is the legality of the termination of the
employment relationship). In this type of cases, the decision or ruling is essentially
declaratory of the status and of the rights, obligations and monetary consequences
that flow from the declared status (in this case, the payment of separation pay and
backwages and attorneys fees when illegal dismissal is found). When this type of
decision is executed, what is primarily implemented is the declaratory finding on the
status and the rights and obligations of the parties therein; the arising monetary
consequences from the declaration only follow as component of the parties rights
and obligations.
In the present case, the CA confirmed that indeed an illegal dismissal had
taken place, so that separation pay in lieu of reinstatement and backwages should be
paid. How much that separation pay would be, would ideally be stated in the final
CA decision; if not, the matter is for handling and computation by the labor arbiter
of origin as the labor official charged with the implementation of decisions before
the NLRC.[22]
As the CA correctly pointed out, the basis for the computation of separation
pay and backwages is Article 279 of the Labor Code, as amended, which reads:
x x x 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.
By jurisprudence derived from this provision, separation pay may be awarded
to an illegally dismissed employee in lieu of reinstatement.[23] Recourse to the
payment of separation pay is made when continued employment is no longer
possible, in cases where the dismissed employees position is no longer available, or
the continued relationship between the employer and the employee is no longer
viable due to the strained relations between them, or when the dismissed employee
opted not to be reinstated, or payment of separation benefits will be for the best
interest of the parties involved.[24]
This reading of Article 279, of course, does not appear to be disputed in the present
case as the petitioner admits that separation pay in lieu of reinstatement shall be paid,
computed up to the finality of the judgment finding that illegal dismissal had taken
place. What the petitioner simply disputes is the re-computation of the award when
the final CA decision did not order any re-computation while the NLRC decision
that the CA affirmed and the labor arbiter decision the NLRC in turn affirmed,
already made a computation that on the basis of immutability of judgment and the
rule on execution of the dispositive portion of the decision should not now be
disturbed.
Consistent with what we discussed above, we hold that under the terms of the
decision under execution, no essential change is made by a re-computation as this
step is a necessary consequence that flows from the nature of the illegality of
dismissal declared in that decision. A re-computation (or an original computation, if
no previous computation has been made) is a part of the law specifically, Article 279
of the Labor Code and the established jurisprudence on this provision that is read
into the decision. By the nature of an illegal dismissal case, the reliefs continue to
add on until full satisfaction, as expressed under Article 279 of the Labor Code. The
re-computation of the consequences of illegal dismissal upon execution of the
decision does not constitute an alteration or amendment of the final decision being
implemented. The illegal dismissal ruling stands; only the computation of monetary
consequences of this dismissal is affected and this is not a violation of the principle
of immutability of final judgments.
We fully appreciate the petitioners efforts in trying to clarify how the standing
jurisprudence on the payment of separation pay in lieu of reinstatement and the
accompanying payment of backwages ought to be read and reconciled. Its attempt,
however, is out of place and, rather than clarify, may only confuse the
implementation of Article 279; the core issue in this case is not the payment of
separation pay and backwages but their re-computation in light of an original labor
arbiter ruling that already contained a dated computation of the monetary
consequences of illegal dismissal.
That the amount the petitioner shall now pay has greatly increased is a
consequence that it cannot avoid as it is the risk that it ran when it continued to seek
recourses against the labor arbiters decision. Article 279 provides for the
consequences of illegal dismissal in no uncertain terms, qualified only by
jurisprudence in its interpretation of when separation pay in lieu of reinstatement is
allowed. When that happens, the finality of the illegal dismissal decision becomes
the reckoning point instead of the reinstatement that the law decrees. In allowing
separation pay, the final decision effectively declares that the employment
relationship ended so that separation pay and backwages are to be computed up to
that point. The decision also becomes a judgment for money from which another
consequence flows the payment of interest in case of delay. This was what the CA
correctly decreed when it provided for the payment of the legal interest of 12% from
the finality of the judgment, in accordance with our ruling in Eastern Shipping Lines,
Inc. v. Court of Appeals.[25]
WHEREFORE, premises considered, we hereby AFFIRM the decision of the
Court of Appeals dated December 19, 2005 and its resolution dated March 30,
2006 in CA-G.R. SP No. 89326.
For greater certainty, the petitioner is ORDERED to PAY the private

respondent:
(a) backwages computed from August 28, 2000 (the date the employer
illegally dismissed the private respondent) up to July 29, 2003, the date of finality
of the decision of the Court of Appeals in CA-G.R. SP No. 74653;
(b) separation pay computed from July 31, 2000 (the private respondents first
day of employment) up to July 29, 2003 at the rate of one month pay per year of
service;
(c) ten percent (10%) attorneys fees based on the total amount of the awards
under (a) and (b) above; and
(d) legal interest of twelve percent (12%) per annum of the total monetary
awards computed from July 29, 2003, until their full satisfaction.
The labor arbiter is hereby ORDERED to make another re-computation

according to the above directives.
Costs against the petitioner.

SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
LUCAS P. BERSAMIN ROBERTO A. ABAD

JOSE P. PEREZ
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation
ANTONIO T. CARPIO
Associate Justice
Chairperson
CERTIFICATION
Decision had been reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice
SECOND DIVISION
DANIEL P. JAVELLANA, JR., G.R. No. 181913

Petitioner,
Present:
CARPIO, J., Chairperson,
- versus - NACHURA,*
BRION,
ABAD, and
PEREZ, JJ.
ALBINO BELEN,
Respondent.
x ----------------------------------------- x
ALBINO BELEN, G.R. No. 182158

Petitioner,
- versus -
Promulgated:
DANIEL P. JAVELLANA, JR. and
JAVELLANA FARMS, INC.,
Respondents. March 5, 2010
x --------------------------------------------------------------------------------------- x
DECISION
ABAD, J.:
This case is about the proper computation of the monetary awards of an illegally
dismissed employee.
The Facts and the Case
On May 9, 2000 petitioner Albino Belen (Belen) filed a complaint[1] against

respondents Javellana Farms, Inc. and Daniel Javellana, Jr. (Javellana) for illegal
dismissal and underpayment or non-payment of salaries, overtime pay, holiday pay,
service incentive leave pay (SILP), 13th month pay, premium pay for holiday, and
rest day as well as for moral and exemplary damages and attorneys fees.[2]
Petitioner Belen alleged that respondent Javellana hired him as company

driver on January 31, 1994[3] and assigned him the tasks of picking up and delivering
live hogs, feeds, and lime stones used for cleaning the pigpens. [4] On August 19,
1999 Javellana gave him instructions to (a) pick up lime stones in Tayabas, Quezon;
(b) deliver live hogs at Barrio Quiling, Talisay, Batangas; (c) have the delivery truck
repaired; and (d) pick up a boar at Joliza Farms in Norzagaray, Bulacan.[5]
Petitioner Belen further alleged that his long and arduous day finally ended at
4:30 a.m. of the following day, August 20, 1999. But after just three hours of sleep,
respondent Javellana summoned him to the office. When he arrived at 8:20 a.m.,
Javellana had left. After being told that the latter would not be back until 4:00 p.m.,
Belen decided to go home and get some more sleep.[6]
Petitioner Belen was promptly at the office at 4:00 p.m. but respondent
Javellana suddenly blurted out that he was firing Belen from work. Deeply worried
that he might not soon get another job, Belen asked for a separation pay. When
Javellana offered him only P5,000.00, he did not accept it.[7]
Respondent Javellana claimed, on the other hand, that he hired petitioner

Belen in 1995, not as a company driver, but as family driver. [8] Belen did not do
work for his farm on a regular basis, but picked up feeds or delivered livestock only
on rare occasions when the farm driver and vehicle were unavailable.[9]
Regarding petitioner Belens dismissal from work, respondent Javellana

insisted that he did it for a reason. Belen intentionally failed to report for work on
August 20, 1999 and this warranted his dismissal.[10]
In a decision[11] dated November 25, 2002, the Labor Arbiter found petitioner
Belen to be a company driver as evidenced by the pay slips[12] that the farm issued
to him. Since his abrupt dismissal from work violated his right to due process, it was
illegal.[13] The Labor Arbiter awarded him backwages, separation pay, 13 th month
pay, SILP, holiday pay, salary differential, and attorneys fees.[14]
On appeal, the National Labor Relations Commission (NLRC) issued a
resolution[15] dated October 23, 2003, modifying the decision of the Labor
Arbiter. The NLRC was convinced that respondent Javellana hired petitioner Belen
as a family driver but required him to make certain errands that were related to the
farm business. Like the Labor Arbiter, the NLRC also found Belen to have been
illegally dismissed. But since he was but a family driver, the NLRC deleted the
award of backwages and separation pay and instead ordered Javellana to pay him 15
days salary by way of indemnity pursuant to Article 149 of the Labor Code. Belen
moved for reconsideration, but the NLRC denied his motion.[16]
Aggrieved, petitioner Belen elevated the matter to the Court of Appeals

(CA), which in its Decision[18] dated September 12, 2007, reverted back to the
[17]
decision of the Labor Arbiter. The CA held that Belen was a company driver since,
aside from driving respondent Javellana and his family, he also did jobs that were
needed in Javellanas business operations, such as hauling and delivering live hogs,
feeds, and lime stones for the pig pens.[19] The CA also said that Javellanas abrupt
dismissal of Belen for an isolated case of neglect of duty was unjustified. [20] The
appellate court, however, modified the award of backwages and separation pay, as
it found the computation to be erroneous.[21]
Both respondent Javellana and petitioner Belen moved for reconsideration of the
decision but the CA denied them both on March 3, 2008. [22] Undaunted, they both
took recourse to this Court in G.R. 181913 and G.R. 182158, respectively.
The Court consolidated the two cases in its Resolution of July 2, 2008. [23] But on
July 16, 2008, having initially examined the petition in G.R. 181913, the Court
denied due course to it for respondent Javellanas failure to sufficiently show
reversible error in the assailed decision.[24] Javellana moved for reconsideration but
the Court denied it with finality on September 22, 2008.[25]
Questions Presented
The questions presented in this case are:

1. Whether or not the Labor Arbiter correctly computed petitioner Belens
backwages and separation pay; and
2. Whether or not the monetary award in his favor should run until the finality
of the decision in his case.
The Courts Rulings
One. Petitioner Belen points out that the Labor Arbiter correctly computed
his monetary award although he appeared to have been awarded more than what was
right because of a typographical error in the statement of the period that
his backwages covered. The Labor Arbiters approved computation gave the period
as from August 20, 1999 to November 19, 2000 when the proper period was from
August 20, 1999, the date he was dismissed from work, to November 25, 2002, the
date the Labor Arbiter rendered his decision in the case.[26]
For the same reason, petitioner Belen claims that his separation pay should be
computed from January 31, 1994, when he was hired, up to November 25, 2002,
when the Labor Arbiter rendered his decision. Belen also insists that the 10%
attorneys fees awarded to him be based on the total amount arrived at, not by the
appellate court, but by the Labor Arbiter.[27]
After taking such position initially, petitioner Belen claims that the amount
awarded to him by the Labor Arbiter merely represents a portion of what he was
entitled to. The award of backwages to which he was entitled should continue to run
until the decision in his favor has become final.[28]
Respondent Javellana points out, however, that the Labor Arbiters decision
clearly shows that he intended to award backwages and separation pay only until
November 19, 2000.[29] Javellana also disagreed that the monetary award should be
reckoned until the finality of the decision in petitioner Belens favor. The Labor
Arbiter expressly limited the amount of that award since he granted Belens request
to be given separation pay instead of being reinstated.[30]
It is obvious from a reading of the Labor Arbiters decision that the date
November 19, 2000 stated in the computation was mere typographical
error. Somewhere in the body of the decision is the categorical statement that
petitioner Belen is entitled to backwages from August 20, 1999 up to the date of
this decision.[31] Since the Labor Arbiter actually rendered his decision on
November 25, 2002,[32] it would be safe to assume that he caused the computation
of the amount of backwages close to that date or on November 19, 2002. The same
could be said of the computation of petitioner Belens separation pay.
Two. This leads us to the question, does the amount that the Labor Arbiter awarded
petitioner Belen represent all that he will get when the decision in his case becomes
final or does it represent only the amount that he was entitled to at the time the Labor
Arbiter rendered his decision, leaving room for increase up to the date the decision
in the case becomes final?
Article 279 of the Labor Code, as amended by Section 34 of Republic Act

6715 instructs:
Art. 279. Security of Tenure. In cases of regular employment, the

employer shall not terminate the services of an employee except for a
just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
Clearly, the law intends the award of backwages and similar benefits to accumulate
past the date of the Labor Arbiters decision until the dismissed employee is actually
reinstated.[33] But if, as in this case, reinstatement is no longer possible, this Court
has consistently ruled that backwages shall be computed from the time of illegal
dismissal until the date the decision becomes final.[34]
As it happens, the parties filed separate petitions before this Court. The petition in
G.R. 181913, filed by respondent Javellana, questioned the CAs finding of illegality
of dismissal while the petition in G.R. 182158, filed by petitioner Belen, challenged
the amounts of money claims awarded to him. The Court denied the first with
finality in its resolution of September 22, 2008;[35] the second is the subject of the
present case. Consequently, Belen should be entitled to backwages from August 20,
1999, when he was dismissed, to September 22, 2008, when the judgment for unjust
dismissal in G.R. 181913 became final.
Separation pay, on the other hand, is equivalent to one month pay for every
year of service, a fraction of six months to be considered as one whole year.[36] Here
that would begin from January 31, 1994 when petitioner Belen began his
service. Technically the computation of his separation pay would end on the day he
was dismissed on August 20, 1999 when he supposedly ceased to render service and
his wages ended. But, since Belen was entitled to collect backwages until the
judgment for illegal dismissal in his favor became final,[37] here on September 22,
2008, the computation of his separation pay should also end on that date.
Further, since the monetary awards remained unpaid even after it became final
on September 22, 2008 because of issues raised respecting the correct computation
of such awards, it is but fair that respondent Javellana be required to pay 12%
interest per annum on those awards from September 22, 2008 until they are
paid. The 12% interest is proper because the Court treats monetary claims in labor
cases the equivalent of a forbearance of credit.[38] It matters not that the amounts of
the claims were still in question on September 22, 2008. What is decisive is that the
issue of illegal dismissal from which the order to pay monetary awards to petitioner
Belen stemmed had been long terminated.[39]
WHEREFORE, the Court GRANTS the petition, SETS ASIDE the
decision of the Court of Appeals dated September 12, 2007 and its resolution dated
March 3, 2008 in CA-G.R. SP 83354, REINSTATES the decision of the Labor
Arbiter dated November 25, 2002 in NLRC-NCR Case 30-09-04294-01 with the
modification that the awards of backwages be computed from August 20, 1999 to
September 22, 2008 and the separation pay, from January 31, 1994 to September 22,
2008; the 10% attorneys fees be based on the awards so computed; and that the
amounts due be made to bear interest of 12% per annum from September 22, 2008
until fully paid.
Let the records of the case be remanded to the National Labor Relations
Commission upon the finality of this judgment for computation of the exact amounts
due petitioner Albino Belen from respondents Javellana Farms, Inc. and Daniel
Javellana, Jr.
SO ORDERED.
ROBERTO A. ABAD
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
ANTONIO EDUARDO B. NACHURA ARTURO D. BRION
JOSE PORTUGAL PEREZ

Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Chairpersons Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the opinion
of the Courts Division.
REYNATO S. PUNO
Chief Justice
SECOND DIVISION
TIMOTEO H. SARONA, G.R. No. 185280
Petitioner,
Present:
CARPIO, J.,
- versus - Chairperson,
PEREZ,
SERENO,
REYES, and
NATIONAL LABOR RELATIONS
BERNABE, JJ. 
COMMISSION, ROYALE SECURITY
AGENCY (FORMERLY SCEPTRE
SECURITY AGENCY) and Promulgated:

CESAR S. TAN,
Respondents. January 18, 2012
x-----------------------------------------------------------------------------------------x
DECISION
REYES, J.:
This is a petition for review under Rule 45 of the Rules of Court from the May
29, 2008 Decision of the Twentieth Division of the Court of Appeals (CA) in CA-
1
G.R. SP No. 02127 entitled “Timoteo H. Sarona v. National Labor Relations

Commission, Royale Security Agency (formerly Sceptre Security Agency) and Cesar S.
Tan” (Assailed Decision), which affirmed the National Labor Relations
Commission’s (NLRC) November 30, 2005 Decision and January 31, 2006
Resolution, finding the petitioner illegally dismissed but limiting the amount of his
backwages to three (3) monthly salaries. The CA likewise affirmed the NLRC’s
finding that the petitioner’s separation pay should be computed only on the basis of
his length of service with respondent Royale Security Agency (Royale). The CA held
that absent any showing that Royale is a mere alter ego of Sceptre Security Agency
(Sceptre), Royale cannot be compelled to recognize the petitioner’s tenure with
Sceptre. The dispositive portion of the CA’s Assailed Decision states:
WHEREFORE, in view of the foregoing, the instant petition

is PARTLY GRANTED, though piercing of the corporate veil is hereby
denied for lack of merit. Accordingly, the assailed Decision and
Resolution of the NLRC respectively dated November 30, 2005 and
January 31, 2006 are hereby AFFIRMED as to the monetary awards.
SO ORDERED. 2
Factual Antecedents
On June 20, 2003, the petitioner, who was hired by Sceptre as a security guard
sometime in April 1976, was asked by Karen Therese Tan (Karen), Sceptre’s
Operation Manager, to submit a resignation letter as the same was supposedly
required for applying for a position at Royale. The petitioner was also asked to fill up
Royale’s employment application form, which was handed to him by Royale’s
General Manager, respondent Cesar Antonio Tan II (Cesar). 3
After several weeks of being in floating status, Royale’s Security Officer,
Martin Gono (Martin), assigned the petitioner at Highlight Metal Craft, Inc.
(Highlight Metal) from July 29, 2003 to August 8, 2003. Thereafter, the petitioner was
transferred and assigned to Wide Wide World Express, Inc. (WWWE, Inc.). During
his assignment at Highlight Metal, the petitioner used the patches and agency cloths of
Sceptre and it was only
when he was posted at WWWE, Inc. that he started using those of Royale. 4
On September 17, 2003, the petitioner was informed that his assignment at
WWWE, Inc. had been withdrawn because Royale had allegedly been replaced by
another security agency. The petitioner, however, shortly discovered thereafter that
Royale was never replaced as WWWE, Inc.’s security agency. When he placed a call
at WWWE, Inc., he learned that his fellow security guard was not relieved from his
post.
5
On September 21, 2003, the petitioner was once again assigned at Highlight
Metal, albeit for a short period from September 22, 2003 to September 30, 2003.
Subsequently, when the petitioner reported at Royale’s office on October 1, 2003,
Martin informed him that he would no longer be given any assignment per the
instructions of Aida Sabalones-Tan (Aida), general manager of Sceptre. This
prompted him to file a complaint for illegal dismissal on October 4, 2003.6
In his May 11, 2005 Decision, Labor Arbiter Jose Gutierrez (LA Gutierrez)
ruled in the petitioner’s favor and found him illegally dismissed. For being
unsubstantiated, LA Gutierrez denied credence to the respondents’ claim that the
termination of the petitioner’s employment relationship with Royale was on his
accord following his alleged employment in another company. That the petitioner was
no longer interested in being an employee of Royale cannot be presumed from his
request for a certificate of employment, a claim which, to begin with, he vehemently
denies. Allegation of the petitioner’s abandonment is negated by his filing of a
complaint for illegal dismissal three (3) days after he was informed that he would no
longer be given any assignments. LA Gutierrez ruled:
In short, respondent wanted to impress before us that complainant

abandoned his employment. We are not however, convinced.
There is abandonment when there is a clear proof showing that one has
no more interest to return to work. In this instant case, the record has no
proof to such effect. In a long line of decisions, the Supreme Court ruled:
“Abandonment of position is a matter of intention

expressed in clearly certain and unequivocal acts,
however, an interim employment does not mean
abandonment.” (Jardine Davis, Inc. vs. NLRC, 225 SCRA
757).
“In abandonment, there must be a concurrence of

the intention to abandon and some overt acts from which
an employee may be declared as having no more interest
to work.” (C. Alcontin & Sons, Inc. vs. NLRC, 229 SCRA
109).
“It is clear, deliberate and unjustified refusal to

severe employment and not mere absence that is required
to constitute abandonment.” x x x” (De Ysasi III vs.
NLRC, 231 SCRA 173).
Aside from lack of proof showing that complainant has

abandoned his employment, the record would show that immediate
action was taken in order to protest his dismissal from employment. He
filed a complaint [for] illegal dismissal on October 4, 2004 or three (3)
days after he was dismissed. This act, as declared by the Supreme Court
is inconsistent with abandonment, as held in the case of Pampanga Sugar
Development Co., Inc. vs. NLRC, 272 SCRA 737 where the Supreme
Court ruled:
“The immediate filing of a complaint for [i]llegal

[d]ismissal by an employee is inconsistent with
abandonment.” 7
The respondents were ordered to pay the petitioner backwages, which LA

Gutierrez computed from the day he was dismissed, or on October 1, 2003, up to the
promulgation of his Decision on May 11, 2005. In lieu of reinstatement, the
respondents were ordered to pay the petitioner separation pay equivalent to his one (1)
month salary in consideration of his tenure with Royale, which lasted for only one (1)
month and three (3) days. In this
regard, LA Gutierrez refused to pierce Royale’s corporate veil for purposes of
factoring the petitioner’s length of service with Sceptre in the computation of his
separation pay. LA Gutierrez ruled that Royale’s corporate personality, which is
separate and distinct from that of Sceptre, a sole proprietorship owned by the late
Roso Sabalones (Roso) and later, Aida, cannot be pierced absent clear and convincing
evidence that Sceptre and Royale share the same stockholders and incorporators and
that Sceptre has complete control and dominion over the finances and business affairs
of Royale. Specifically:
To support its prayer of piercing the veil of corporate entity of

respondent Royale, complainant avers that respondent Royal (sic) was
using the very same office of SCEPTRE in C. Padilla St., Cebu City. In
addition, all officers and staff of SCEPTRE are now the same officers
and staff of ROYALE, that all [the] properties of SCEPTRE are now
being owned by ROYALE and that ROYALE is now occupying the
property of SCEPTRE. We are not however, persuaded.
It should be pointed out at this juncture that SCEPTRE, is a single
proprietorship. Being so, it has no distinct and separate personality. It is
owned by the late Roso T. Sabalones. After the death of the owner, the
property is supposed to be divided by the heirs and any claim against the
sole proprietorship is a claim against Roso T. Sabalones. After his death,
the claims should be instituted against the estate of Roso T. Sabalones.
In short, the estate of the late Roso T. Sabalones should have been
impleaded as respondent of this case.
Complainant wanted to impress upon us that Sceptre was organized into

another entity now called Royale Security Agency. There is however, no
proof to this assertion. Likewise, there is no proof that Roso T.
Sabalones, organized his single proprietorship business into a
corporation, Royale Security Agency. On the contrary, the name of Roso
T. Sabalones does not appear in the Articles of Incorporation. The names
therein as incorporators are:
Bruno M. Kuizon – [P]150,000.00
Wilfredo K. Tan – 100,000.00
Karen Therese S. Tan – 100,000.00
Cesar Antonio S. Tan – 100,000.00
Gabeth Maria K. Tan – 50,000.00
Complainant claims that two (2) of the incorporators are the

granddaughters of Roso T. Sabalones. This fact even give (sic) us further
reason to conclude that respondent Royal (sic) Security Agency is not an
alter ego or conduit of SCEPTRE. It is obvious that respondent Royal
(sic) Security Agency is not owned by the owner of “SCEPTRE”.
It may be true that the place where respondent Royale hold (sic)
office is the same office formerly used by “SCEPTRE.” Likewise, it may
be true that the same officers and staff now employed by respondent
Royale Security Agency were the same officers and staff employed by
“SCEPTRE.” We find, however, that these facts are not sufficient to
justify to require respondent Royale to answer for the liability of Sceptre,
which was owned solely by the late Roso T. Sabalones. As we have
stated above, the remedy is to address the claim on the estate of Roso T.
Sabalones. 8
The respondents appealed LA Gutierrez’s May 11, 2005 Decision to the

NLRC, claiming that the finding of illegal dismissal was attended with grave abuse of
discretion. This appeal was, however, dismissed by the NLRC in its November 30,
2005 Decision, the dispositive portion of which states:
9
WHEREFORE, premises considered, the Decision of the Labor

Arbiter declaring the illegal dismissal of complainant is
hereby AFFIRMED.
However[,] We modify the monetary award by limiting the grant

of backwages to only three (3) months in view of complainant’s very
limited service which lasted only for one month and three days.
1. Backwages - [P]15,600.00
2. Separation Pay - 5,200.00
3. 13th Month Pay - 583.34
[P]21,383.34 Attorney’s Fees- 2,138.33
Total [P]23,521.67
The appeal of respondent Royal (sic) Security Agency is
hereby DISMISSED for lack of merit.
SO ORDERED. 10
The NLRC partially affirmed LA Gutierrez’s May 11, 2005 Decision. It

concurred with the latter’s finding that the petitioner was illegally dismissed and the
manner by which his separation pay was computed, but modified the monetary award
in the petitioner’s favor by reducing the amount of his backwages from P95,600.00
to P15,600.00. The NLRC determined the petitioner’s backwages as limited to three
(3) months of his last monthly salary, considering that his employment with Royale
was only for a period for one (1) month and three (3) days, thus:11
On the other hand, while complainant is entitled to backwages, We are

aware that his stint with respondent Royal (sic) lasted only for one (1)
month and three (3) days such that it is Our considered view that his
backwages should be limited to only three (3) months.
Backwages:
[P]5,200.00 x 3 months = [P]15,600.00 12

The petitioner, on the other hand, did not appeal LA Gutierrez’s May 11, 2005
Decision but opted to raise the validity of LA Gutierrez’s adverse findings with
respect to piercing Royale’s corporate personality and computation of his separation
pay in his Reply to the respondents’ Memorandum of Appeal. As the filing of an
appeal is the prescribed remedy and no aspect of the decision can be overturned by a
mere reply, the NLRC dismissed the petitioner’s efforts to reverse LA Gutierrez’s
disposition of these issues. Effectively, the petitioner had already waived his right to
question LA Gutierrez’s Decision when he failed to file an appeal within the
reglementary period. The NLRC held:
On the other hand, in complainant’s Reply to Respondent’s Appeal

Memorandum he prayed that the doctrine of piercing the veil of
corporate fiction of respondent be applied so that his services with
Sceptre since 1976 [will not] be deleted. If complainant assails this
particular finding in the Labor Arbiter’s Decision, complainant should
have filed an appeal and not seek a relief by merely filing a Reply to
Respondent’s Appeal Memorandum. 13
Consequently, the petitioner elevated the NLRC’s November 30, 2005 Decision to the
CA by way of a Petition for Certiorari under Rule 65 of the Rules of Court. On the
other hand, the respondents filed no appeal from the NLRC’s finding that the
petitioner was illegally dismissed.
The CA, in consideration of substantial justice and the jurisprudential dictum

that an appealed case is thrown open for the appellate court’s review, disagreed with
the NLRC and proceeded to review the evidence on record to determine if Royale is
Sceptre’s alter ego that would warrant the piercing of its corporate veil. According to
14
the CA, errors not assigned on appeal may be reviewed as technicalities should not
serve as bar to the full adjudication of cases. Thus:
In Cuyco v. Cuyco, which We find application in the instant case, the
Supreme Court held:
“In their Reply, petitioners alleged that their petition only

raised the sole issue of interest on the interest due, thus, by
not filing their own petition for review, respondents waived
their privilege to bring matters for the Court’s review that
[does] not deal with the sole issue raised.
Procedurally, the appellate court in deciding the case shall

consider only the assigned errors, however, it is equally
settled that the Court is clothed with ample authority to
review matters not assigned as errors in an appeal, if it
finds that their consideration is necessary to arrive at a just
disposition of the case.”
Therefore, for full adjudication of the case, We have to primarily resolve

the issue of whether the doctrine of piercing the corporate veil be justly
applied in order to determine petitioner’s length of service with private
respondents. (citations omitted)
15
Nonetheless, the CA ruled against the petitioner and found the evidence he
submitted to support his allegation that Royale and Sceptre are one and the same
juridical entity to be wanting. The CA refused to pierce Royale’s corporate mask as
one of the “probative factors that would justify the application of the doctrine of
piercing the corporate veil is stock ownership by one or common ownership of both
corporations” and the petitioner failed to present clear and convincing proof that
Royale and Sceptre are commonly owned or controlled. The relevant portions of the
CA’s Decision state:
In the instant case, We find no evidence to show that Royale
Security Agency, Inc. (hereinafter “Royale”), a corporation duly
registered with the Securities and Exchange Commission (SEC) and
Sceptre Security Agency (hereinafter “Sceptre”), a single proprietorship,
are one and the same entity.
Petitioner, who has been with Sceptre since 1976 and, as ruled by
both the Labor Arbiter and the NLRC, was illegally dismissed by Royale
on October 1, 2003, alleged that in order to circumvent labor laws,
especially to avoid payment of money claims and the consideration on
the length of service of its employees, Royale was established as an alter
ego or business conduit of Sceptre. To prove his claim, petitioner
declared that Royale is conducting business in the same office of
Sceptre, the latter being owned by the late retired Gen. Roso Sabalones,
and was managed by the latter’s daughter, Dr. Aida Sabalones-Tan; that
two of Royale’s incorporators are grandchildren [of] the late Gen. Roso
Sabalones; that all the properties of Sceptre are now owned by Royale,
and that the officers and staff of both business establishments are the
same; that the heirs of Gen. Sabalones should have applied for
dissolution of Sceptre before the SEC before forming a new corporation.
On the other hand, private respondents declared that Royale was

incorporated only on March 10, 2003 as evidenced by the Certificate of
Incorporation issued by the SEC on the same date; that Royale’s
incorporators are Bruino M. Kuizon, Wilfredo Gracia K. Tan, Karen
Therese S. Tan, Cesar Antonio S. Tan II and [Gabeth] Maria K. Tan.
Settled is the tenet that allegations in the complaint must be duly

proven by competent evidence and the burden of proof is on the party
making the allegation. Further, Section 1 of Rule 131 of the Revised
Rules of Court provides:
“SECTION 1. Burden of proof. – Burden of proof is

the duty of a party to present evidence on the facts in issue
necessary to establish his claim or defense by the amount of
evidence required by law.”
We believe that petitioner did not discharge the required burden of

proof to establish his allegations. As We see it, petitioner’s claim that
Royale is an alter ego or business conduit of Sceptre is without basis
because aside from the fact that there is no common ownership of both
Royale and Sceptre, no evidence on record would prove that Sceptre,
much less the late retired Gen. Roso Sabalones or his heirs, has control
or complete domination of Royale’s finances and business transactions.
Absence of this first element, coupled by petitioner’s failure to present
clear and convincing evidence to substantiate his allegations, would
prevent piercing of the corporate veil. Allegations must be proven by
sufficient evidence. Simply stated, he who alleges a fact has the burden
of proving it; mere allegation is not evidence. (citations omitted)
16
By way of this Petition, the petitioner would like this Court to revisit the computation
of his backwages, claiming that the same should be computed from the time he was
illegally dismissed until the finality of this decision. The petitioner would likewise
17
have this Court review and examine anew the factual allegations and the supporting
evidence to determine if the CA erred in its refusal to pierce Royale’s corporate mask
and rule that it is but a mere continuation or successor of Sceptre. According to the
petitioner, the erroneous computation of his separation pay was due to the CA’s
failure, as well as the NLRC and LA Gutierrez, to consider evidence conclusively
demonstrating that Royale and Sceptre are one and the same juridical entity. The
petitioner claims that since Royale is no more than Sceptre’s alter ego, it should
recognize and credit his length of service with Sceptre. 18
The petitioner claimed that Royale and Sceptre are not separate legal persons
for purposes of computing the amount of his separation pay and other benefits under
the Labor Code. The piercing of Royale’s corporate personality is justified by several
indicators that Royale was incorporated for the sole purpose of defeating his right to
security of tenure and circumvent payment of his benefits to which he is entitled under
the law: (i) Royale was holding office in the same property used by Sceptre as its
principal place of business; (ii) Sceptre and Royal have the same officers and
19
employees; (iii) on October 14, 1994, Roso, the sole proprietor of Sceptre, sold to
20
Aida, and her husband, Wilfredo Gracia K. Tan (Wilfredo), the property used by
21
Sceptre as its principal place of business; (iv) Wilfredo is one of the incorporators of
22
Royale; (v) on May 3, 1999, Roso ceded the license to operate Sceptre issued by the
23
Philippine National Police to Aida; (vi) on July 28, 1999, the business name “Sceptre
24
Security & Detective Agency” was registered with the Department of Trade and
Industry (DTI) under the name of Aida; (vii) Aida exercised control over the affairs
25
of Sceptre and Royale, as she was, in fact, the one who dismissed the petitioner from
employment; (viii) Karen, the daughter of Aida, was Sceptre’s Operation Manager
26
and is one of the incorporators of Royale; and (ix) Cesar Tan II, the son of Aida was
27
one of Sceptre’s officers and is one of the incorporators of Royale. 28
In their Comment, the respondents claim that the petitioner is barred from
questioning the manner by which his backwages and separation pay were computed.
Earlier, the petitioner moved for the execution of the NLRC’s November 30, 2005
Decision and the respondents paid him the full amount of the monetary award
29
thereunder shortly after the writ of execution was issued. The respondents likewise
30
maintain that Royale’s separate and distinct corporate personality should be respected
considering that the evidence presented by the petitioner fell short of establishing that
Royale is a mere alter ego of Sceptre.
The petitioner does not deny that he has received the full amount of backwages
and separation pay as provided under the NLRC’s November 30, 2005
Decision. However, he claims that this does not preclude this Court from modifying
31
a decision that is tainted with grave abuse of discretion or issued without jurisdiction.
32
ISSUES
Considering the conflicting submissions of the parties, a judicious
determination of their respective rights and obligations requires this Court to resolve
the following substantive issues:
a. Whether Royale’s corporate fiction should be pierced for the

purpose of compelling it to recognize the petitioner’s length of service
with Sceptre and for holding it liable for the benefits that have accrued to
him arising from his employment with Sceptre; and
b. Whether the petitioner’s backwages should be limited to his

salary for three (3) months.
OUR RULING
Because his receipt of the proceeds of the

award under the NLRC’s November 30,
2005 Decision is qualified and without
prejudice to the CA’s resolution of his
petition for certiorari, the petitioner is not
barred from exercising his right to elevate
the decision of the CA to this Court.
Before this Court proceeds to decide this Petition on its merits, it is imperative to
resolve the respondents’ contention that the full satisfaction of the award under the
NLRC’s November 30, 2005 Decision bars the petitioner from questioning the
validity thereof. The respondents submit that they had paid the petitioner the amount
of P21,521.67 as directed by the NLRC and this constitutes a waiver of his right to file
an appeal to this Court.
The respondents fail to convince.
The petitioner’s receipt of the monetary award adjudicated by the NLRC is not
absolute, unconditional and unqualified. The petitioner’s May 3, 2007 Motion for
Release contains a reservation, stating in his prayer that: “it is respectfully prayed that
the respondents and/or Great Domestic Insurance Co. be ordered to RELEASE/GIVE
the amount of P23,521.67 in favor of the complainant TIMOTEO H. SARONA
without prejudice to the outcome of the petition with the CA.” 33
In Leonis Navigation Co., Inc., et al. v. Villamater, et al., this Court ruled that
34
the prevailing party’s receipt of the full amount of the judgment award pursuant to a
writ of execution issued by the labor arbiter does not
close or terminate the case if such receipt is qualified as without prejudice to the
outcome of the petition for certiorari pending with the CA.
Simply put, the execution of the final and executory decision or

resolution of the NLRC shall proceed despite the pendency of a petition
for certiorari, unless it is restrained by the proper court. In the present
case, petitioners already paid Villamater’s widow, Sonia, the amount
of P3,649,800.00, representing the total and permanent disability award
plus attorney’s fees, pursuant to the Writ of Execution issued by the
Labor Arbiter. Thereafter, an Order was issued declaring the case as
"closed and terminated". However, although there was no motion for
reconsideration of this last Order, Sonia was, nonetheless, estopped from
claiming that the controversy had already reached its end with the
issuance of the Order closing and terminating the case. This is because
the Acknowledgment Receipt she signed when she received petitioners’
payment was without prejudice to the final outcome of the petition
for certiorari pending before the CA.35
The finality of the NLRC’s decision does not preclude the filing of a petition
for certiorari under Rule 65 of the Rules of Court. That the NLRC issues an entry of
judgment after the lapse of ten (10) days from the parties’ receipt of its decision will
36
only give rise to the prevailing party’s right to move for the execution thereof but will
not prevent the CA from taking cognizance of a petition for certiorari on
jurisdictional and due process considerations. In turn, the decision rendered by the
37
CA on a petition for certiorari may be appealed to this Court by way of a petition for
review on certiorariunder Rule 45 of the Rules of Court. Under Section 5, Article
VIII of the Constitution, this Court has the power to “review, revise, reverse, modify,
or affirm on appeal or certiorari as the law or the Rules of Court may provide, final
judgments and orders of lower courts in x x x all cases in which only an error or
question of law is involved.” Consistent with this constitutional mandate, Rule 45 of
the Rules of Court provides the remedy of an appeal by certiorari from decisions,
final orders or resolutions of the CA in any case, i.e., regardless of the nature of the
action or proceedings
involved, which would be but a continuation of the appellate process over the original
case. Since an appeal to this Court is not an original and independent action but a
38
continuation of the proceedings before the CA, the filing of a petition for review
under Rule 45 cannot be barred by the finality of the NLRC’s decision in the same
way that a petition for certiorari under Rule 65 with the CA cannot.
Furthermore, if the NLRC’s decision or resolution was reversed and set aside for
being issued with grave abuse of discretion by way of a petition for certiorari to the
CA or to this Court by way of an appeal from the decision of the CA, it is considered
void ab initio and, thus, had never become final and executory. 39
A Rule 45 Petition should be confined to
questions of law. Nevertheless, this Court
has the power to resolve a question of fact,
such as whether a corporation is a mere
alter ego of another entity or whether the
corporate fiction was invoked for
fraudulent or malevolent ends, if the
findings in assailed decision is not
supported by the evidence on record or
based on a misapprehension of facts.
The question of whether one corporation is merely an alter ego of another is

purely one of fact. So is the question of whether a corporation is a paper company, a
sham or subterfuge or whether the petitioner adduced the requisite quantum of
evidence warranting the piercing of the veil of the respondent’s corporate
personality.
40
As a general rule, this Court is not a trier of facts and a petition for review
on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of
law. Moreover, if factual findings of the NLRC and the LA have been affirmed by the
CA, this Court accords them the respect and finality they deserve. It is well-settled
and oft-repeated that findings of fact of administrative agencies and quasi-judicial
bodies, which have acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only respect, but finality when affirmed by the
CA. 41
Nevertheless, this Court will not hesitate to deviate from what are clearly
procedural guidelines and disturb and strike down the findings of the CA and those of
the labor tribunals if there is a showing that they are unsupported by the evidence on
record or there was a patent misappreciation of facts. Indeed, that the impugned
decision of the CA is consistent with the findings of the labor tribunals does not per
se conclusively demonstrate the correctness thereof. By way of exception to the
general rule, this Court will scrutinize the facts if only to rectify the prejudice and
injustice resulting from an incorrect assessment of the evidence presented.
A resolution of an issue that has supposedly

become final and executory as the
petitioner only raised it in his reply to the
respondents’ appeal may be revisited by
the appellate court if such is necessary for a
just disposition of the case.
As above-stated, the NLRC refused to disturb LA Gutierrez’s denial of the

petitioner’s plea to pierce Royale’s corporate veil as the petitioner did not appeal any
portion of LA Gutierrez’s May 11, 2005 Decision.
In this respect, the NLRC cannot be accused of grave abuse of discretion. Under
Section 4(c), Rule VI of the NLRC Rules, the NLRC shall limit itself to reviewing
42
and deciding only the issues that were elevated on appeal. The NLRC, while not
totally bound by technical rules of procedure, is not licensed to disregard and violate
the implementing rules it implemented. 43
Nonetheless, technicalities should not be allowed to stand in the way of equitably and
completely resolving the rights and obligations of the parties. Technical rules are not
binding in labor cases and are not to be applied strictly if the result would be
detrimental to the working man. This Court may choose not to encumber itself with
44
technicalities and limitations consequent to procedural rules if such will only serve as
a hindrance to its duty to decide cases judiciously and in a manner that would put an
end with finality to all existing conflicts between the parties.
Royale is a continuation or successor of
Sceptre.
A corporation is an artificial being created by operation of law. It possesses the right

of succession and such powers, attributes, and properties expressly authorized by law
or incident to its existence. It has a personality separate and distinct from the persons
composing it, as well as from any other legal entity to which it may be related. This is
basic.
45
Equally well-settled is the principle that the corporate mask may be removed or
the corporate veil pierced when the corporation is just an alter ego of a person or of
another corporation. For reasons of public policy and in the interest of justice, the
corporate veil will justifiably be impaled only when it becomes a shield for fraud,
illegality or inequity committed against third persons.46
Hence, any application of the doctrine of piercing the corporate veil should be
done with caution. A court should be mindful of the milieu where it is to be applied. It
must be certain that the corporate fiction was misused to such an extent that injustice,
fraud, or crime was committed against another, in disregard of rights. The wrongdoing
must be clearly and convincingly established; it cannot be presumed. Otherwise, an
injustice that was never unintended may result from an erroneous application. 47
Whether the separate personality of the corporation should be pierced hinges on

obtaining facts appropriately pleaded or proved. However, any piercing of the
corporate veil has to be done with caution, albeit the Court will not hesitate to
disregard the corporate veil when it is misused or when necessary in the interest of
justice. After all, the concept of corporate entity was not meant to promote unfair
objectives.48
The doctrine of piercing the corporate veil applies only in three (3) basic areas,
namely: 1) defeat of public convenience as when the corporate fiction is used as a
vehicle for the evasion of an existing obligation; 2) fraud cases or when the corporate
entity is used to justify a wrong, protect fraud, or defend a crime; or 3) alter ego cases,
where a corporation is merely a farce since it is a mere alter ego or business conduit of
a person, or where the
corporation is so organized and controlled and its affairs are so conducted as
to make it merely an instrumentality, agency, conduit or adjunct of another
corporation. 49
In this regard, this Court finds cogent reason to reverse the CA’s findings.
Evidence abound showing that Royale is a mere continuation or successor of Sceptre
and fraudulent objectives are behind Royale’s incorporation and the petitioner’s
subsequent employment therein. These are plainly suggested by events that the
respondents do not dispute and which the CA, the NLRC and LA Gutierrez accept as
fully substantiated but misappreciated as insufficient to warrant the use of the
equitable weapon of piercing.
As correctly pointed out by the petitioner, it was Aida who exercised control
and supervision over the affairs of both Sceptre and Royale. Contrary to the
submissions of the respondents that Roso had been the only one in sole control of
Sceptre’s finances and business affairs, Aida took over as early as 1999 when Roso
assigned his license to operate Sceptre on May 3, 1999. As further proof of Aida’s
50
acquisition of the rights as Sceptre’s sole proprietor, she caused the registration of the
business name “Sceptre Security & Detective Agency” under her name with the DTI a
few months after Roso abdicated his rights to Sceptre in her favor. As far as Royale
51
is concerned, the respondents do not deny that she has a hand in its management and
operation and possesses control and supervision of its employees, including the
petitioner. As the petitioner correctly pointed out, that Aida was the one who decided
to stop giving any assignments to the petitioner and summarily dismiss him is an
eloquent testament of the power she wields insofar as Royale’s affairs are concerned.
The presence of actual common control coupled with the misuse of the corporate form
to perpetrate oppressive or manipulative conduct or evade performance of legal
obligations is patent; Royale cannot hide behind its corporate fiction.
Aida’s control over Sceptre and Royale does not, by itself, call for a disregard
of the corporate fiction. There must be a showing that a fraudulent intent or illegal
purpose is behind the exercise of such control to warrant the piercing of the corporate
veil. However, the manner by which the petitioner was made to resign from Sceptre
52
and how he became an employee of Royale suggest the perverted use of the legal
fiction of the separate corporate personality. It is undisputed that the petitioner
tendered his resignation and that he applied at Royale at the instance of Karen and
Cesar and on the impression they created that these were necessary for his continued
employment. They orchestrated the petitioner’s resignation from Sceptre and
subsequent employment at Royale, taking advantage of their ascendancy over the
petitioner and the latter’s lack of knowledge of his rights and the consequences of his
actions. Furthermore, that the petitioner was made to resign from Sceptre and apply
with Royale only to be unceremoniously terminated shortly thereafter leads to the
ineluctable conclusion that there was intent to violate the petitioner’s rights as an
employee, particularly his right to security of tenure. The respondents’ scheme reeks
of bad faith and fraud and compassionate justice dictates that Royale and Sceptre be
merged as a single entity, compelling Royale to credit and recognize the petitioner’s
length of service with Sceptre. The respondents cannot use the legal fiction of a
separate corporate personality for ends subversive of the policy and purpose behind its
creation or which could not have been intended by law to which it owed its being.
53 54
For the piercing doctrine to apply, it is of no consequence if Sceptre is a sole

proprietorship. As ruled in Prince Transport, Inc., et al. v. Garcia, et al., it is the act
55
of hiding behind the separate and distinct personalities of juridical entities to

perpetuate fraud, commit illegal acts, evade one’s obligations that the equitable
piercing doctrine was formulated to address and prevent:
A settled formulation of the doctrine of piercing the corporate veil is that

when two business enterprises are owned, conducted and controlled by
the same parties, both law and equity will, when necessary to protect the
rights of third parties, disregard the legal fiction that these two entities
are distinct and treat them as identical or as one and the same. In the
present case, it may be true that Lubas is a single proprietorship and not
a corporation. However, petitioners’ attempt to isolate themselves from
and hide behind the supposed separate and distinct personality of Lubas
so as to evade their liabilities is precisely what the classical doctrine of
piercing the veil of corporate entity seeks to prevent and remedy. 56
Also, Sceptre and Royale have the same principal place of business. As early as
October 14, 1994, Aida and Wilfredo became the owners of the property used by
Sceptre as its principal place of business by virtue of a Deed of Absolute Sale they
executed with Roso. Royale, shortly after its incorporation, started to hold office in
57
the same property. These, the respondents failed to dispute.
The respondents do not likewise deny that Royale and Sceptre share the same
officers and employees. Karen assumed the dual role of Sceptre’s Operation Manager
and incorporator of Royale. With respect to the petitioner, even if he has already
resigned from Sceptre and has been employed by Royale, he was still using the
patches and agency cloths of Sceptre during his assignment at Highlight Metal.
Royale also claimed a right to the cash bond which the petitioner posted when
he was still with Sceptre. If Sceptre and Royale are indeed separate entities, Sceptre
should have released the petitioner’s cash bond when he resigned and Royale would
have required the petitioner to post a new cash bond in its favor.
Taking the foregoing in conjunction with Aida’s control over Sceptre’s and
Royale’s business affairs, it is patent that Royale was a mere subterfuge for Aida.
Since a sole proprietorship does not have a separate and distinct personality from that
of the owner of the enterprise, the latter is personally liable. This is what she sought to
avoid but cannot prosper.
Effectively, the petitioner cannot be deemed to have changed employers as

Royale and Sceptre are one and the same. His separation pay should, thus, be
computed from the date he was hired by Sceptre in April 1976 until the finality of this
decision. Based on this Court’s ruling in Masagana Concrete Products, et al. v.
NLRC, et al., the intervening period between the day an employee was illegally
58
dismissed and the day the decision finding him illegally dismissed becomes final and
executory shall be considered in the computation of his separation pay as a period of
“imputed” or “putative” service:
Separation pay, equivalent to one month's salary for every year of

service, is awarded as an alternative to reinstatement when the latter is
no longer an option. Separation pay is computed from the
commencement of employment up to the time of termination, including
the imputed service for which the employee is entitled to backwages,
with the salary rate prevailing at the end of the period of putative service
being the basis for computation. 59
It is well-settled, even axiomatic, that if

reinstatement is not possible, the period
covered in the computation of backwages is
from the time the employee was unlawfully
terminated until the finality of the decision
finding illegal dismissal.
With respect to the petitioner’s backwages, this Court cannot subscribe to the view
that it should be limited to an amount equivalent to three (3) months of his salary.
Backwages is a remedy affording the employee a way to recover what he has lost by
reason of the unlawful dismissal. In awarding backwages, the primordial
60
consideration is the income that should have accrued to the employee from the time
that he was dismissed up to his reinstatement and the length of service prior to his
61
dismissal is definitely inconsequential.
As early as 1996, this Court, in Bustamante, et al. v. NLRC, et al., clarified in

62
no uncertain terms that if reinstatement is no longer possible, backwages should be

computed from the time the employee was terminated until the finality of the decision,
finding the dismissal unlawful.
Therefore, in accordance with R.A. No. 6715, petitioners are entitled on

their full backwages, inclusive of allowances and other benefits or their
monetary equivalent, from the time their actual compensation was
withheld on them up to the time of their actual reinstatement.
As to reinstatement of petitioners, this Court has already ruled that

reinstatement is no longer feasible, because the company would be
adjustly prejudiced by the continued employment of petitioners who at
present are overage, a separation pay equal to one-month salary granted
to them in the Labor Arbiter's decision was in order and, therefore,
affirmed on the Court's decision of 15 March 1996. Furthermore, since
reinstatement on this case is no longer feasible, the amount of
backwages shall be computed from the time of their illegal
termination on 25 June 1990 up to the time of finality of this
decision. (emphasis supplied)
63
A further clarification was made in Javellana, Jr. v. Belen: 64
Article 279 of the Labor Code, as amended by Section 34 of

Republic Act 6715 instructs:
Art. 279. Security of Tenure. - In cases of regular

employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the
time of his actual reinstatement.
Clearly, the law intends the award of backwages and similar benefits to
accumulate past the date of the Labor Arbiter's decision until the
dismissed employee is actually reinstated. But if, as in this case,
reinstatement is no longer possible, this Court has consistently ruled that
backwages shall be computed from the time of illegal dismissal until the
date the decision becomes final. (citation omitted)
65
In case separation pay is awarded and reinstatement is no longer feasible, backwages

shall be computed from the time of illegal dismissal up to the finality of the decision
should separation pay not be paid in the meantime. It is the employee’s actual receipt
of the full amount of his separation pay that will effectively terminate the employment
of an illegally dismissed employee. Otherwise, the employer-employee relationship
66
subsists and the illegally dismissed employee is entitled to backwages, taking into
account the increases and other benefits, including the 13 th month pay, that were
received by his co-employees who are not dismissed. It is the obligation of the
67
employer to pay an illegally dismissed employee or worker the whole amount of the
salaries or wages, plus all other benefits and
bonuses and general increases, to which he would have been normally entitled had he
not been dismissed and had not stopped working. 68
In fine, this Court holds Royale liable to pay the petitioner backwages to be
computed from his dismissal on October 1, 2003 until the finality of this decision.
Nonetheless, the amount received by the petitioner from the respondents in
satisfaction of the November 30, 2005 Decision shall be deducted accordingly.
Finally, moral damages and exemplary damages at P25,000.00 each as

indemnity for the petitioner’s dismissal, which was tainted by bad faith and fraud, are
in order. Moral damages may be recovered where the dismissal of the employee was
tainted by bad faith or fraud, or where it constituted an act oppressive to labor, and
done in a manner contrary to morals, good customs or public policy while exemplary
damages are recoverable only if the dismissal was done in a wanton, oppressive, or
malevolent manner. 69
WHEREFORE, premises considered, the Petition is hereby GRANTED.

We REVERSE and SET ASIDE the CA’s May 29, 2008 Decision in C.A.-G.R. SP
No. 02127 and order the respondents to pay the petitioner the following minus the
amount of (P23,521.67) paid to the petitioner in satisfaction of the NLRC’s November
30, 2005 Decision in NLRC Case No. V-000355-05:
a) full backwages and other benefits computed from October 1, 2003 (the date
Royale illegally dismissed the petitioner) until the finality of this decision;
b) separation pay computed from April 1976 until the finality of this decision at the
rate of one month pay per year of service;
c) ten percent (10%) attorney’s fees based on the total amount of the awards
under (a) and (b) above;
d) moral damages of Twenty-Five Thousand Pesos (P25,000.00); and
5. exemplary damages of Twenty-Five Thousand Pesos (P25,000.00).
This case is REMANDED to the labor arbiter for computation of the separation pay,
backwages, and other monetary awards due the petitioner.
SO ORDERED.
BIENVENIDO L. REYES
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
JOSE PORTUGAL PEREZ MARIA LOURDES P. A. SERENO

ESTELA M. PERLAS-BERNABE
Associate Justice
ATTESTATION
before the case was assigned to the writer of the opinion of the Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's
Attestation, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Court’s
Division.
RENATO C. CORONA
Chief Justice
G.R. No.170904 November 13, 2013
BANI RURAL BANK INC. ENOC THEATER I AND II and/or RAFAEL DE GUZMAN, Petitioners,
vs.
TERESA DE GUZMAN, EDGAR C. TAN and TERESA G. TAN, Respondents.
DECISION
BRION, J.:
We pass upon the petition for review on certiorari1 under Rule 45 of the Rules of Court filed by
petitioners Bani Rural Bank, Inc., ENOC Theater I and II, and Rafael de Guzman. They assail the
decision2 dated September 1, 2005 and the resolution3 dated December 14, 2005 of the Court of
Appeals CA) in CA-G.R. SP No. 70085. The assailed CA rulings, in turn, affirmed the computation of
the backwages due respondents Teresa de Guzman and Edgar C. Tan4made by the National Labor
Relations Commission (NLRC).
The Facts
The respondents were employees of Bani Rural Bank, Inc. and ENOC Theatre I and II who filed a
complaint for illegal dismissal against the petitioners. The complaint was initially dismissed by Labor
Arbiter Roque B. de Guzman on March 15, 1994. On appeal, the National Labor Relations
Commission (NLRC) reversed Labor Arbiter De Guzman's findings, and ruled that the respondents
had been illegally dismissed. In a resolution5 dated March 17, 1995 the NLRC ordered the petitioners
to:
... [R]einstate the two complainants to their former positions, without loss o seniority rights and other
benefits and privileges, with backwages from the time o their dismissal (constructive) until their
actual reinstatement, less earnings elsewhere.6
The parties did not file any motion for reconsideration or appeal. The March 17, 1995 resolution of
the NLRC became final and executory and the computation of the awards was remanded to the
labor arbiter for execution purposes.
The first computation of he monetary award under the March ,17 1995 resolution of the NLRC
The computation of the respondents' backwages, under the terms of the March 17 1995 NLRC
resolution was remanded to Labor Arbiter Rolando D. Gambito. First, Labor Arbiter Gambito
deducted the earnings derived by the respondents either from Bani Rural Bank, Inc. or ENOC
Theatre I and II. Second, Labor Arbiter Gambito fixed the period of backwages from the respondents'
illegal dismissal until August 25 1995 or the date when the respondents allegedly manifested that
they no longer wanted to be reinstated.7
The respondents appealed Labor Arbiter Gambito's computation with the NLRC. In a
Decision8 dated July 31, 1998, the NLRC modified the terms of the March 17, 1995 resolution insofar
as it clarified the phrase less earnings elsewhere. The NLRC additionally awarded the payment of
separation pay, in lieu of reinstatement, under the following terms:
The decision of this Commission is hereby MODIFIED to the extent that: (1) the phrase earnings
elsewhere in its dispositive portion shall exclude the complainants' salaries from the Rural Bank of
Mangantarem; and (2) in lieu of reinstatement, the respondents are hereby ordered to pay the
complainants separation pay equivalent to one month salary for every year of service computed from
the start of their employment up to the date of the finality of the decision.9
The NLRC justified the award of separation pay on account of the strained relations between the
parties. In doing so, the NLRC ruled:
Insofar as the second issue is concerned, it should be noted: (1) that in his report dated November
8, 1995, the NLRC Sheriff stated that on October 5, 1995, he went to the Sub-Arbitration Branch to
serve the writ of execution upon the complainants; that they did not appear, but instead, sent a
representative named Samuel de la Cruz who informed him that they were interested, not on being
reinstated, but only in the monetary award; (2) that in a letter dated October 9, 1995, the
complainants authorized one Samuel de la Cruz to get a copy of the writ of execution; and (3) that
during the pre-execution conference, the respondents' counsel manifested that the respondents
were requiring the complainants to report for work on Monday and, in turn, the complainants' counsel
manifested that the complainants were asking to be reinstated. The proceedings already protracted
as it is-would be delayed further if this case were to be remanded to the Labor Arbiter for a hearing
to ascertain the correctness of the above-mentioned sheriff's report. Besides, if both parties were
really interested in the complainants being reinstated, as their counsels stated during the pre-
execution conference, the said reinstatement should already have been effected. Since neither party
has actually done anything to implement the complainants' reinstatement, it would appear that the
relations between them have been strained to such an extent as to make the resumption of the
employer-employee relationship unpalatable to both of them. Under the circumstances, separation
pay may be awarded in lieu of reinstatement.10
The respondents filed a motion for reconsideration on whether the award of backwages was still
included in the judgment. The NLRC dismissed the motion for having been filed out of time.
On January 29, 1999, the July 31, 1998 decision of the NLRC lapsed to finality and became
executory.
The second computation of the monetary awards under the July 31, 998 decision of the NLRC
The recomputation of the monetary awards of the respondents' backwages and separation pay,
according to the decision dated July 31, 1998 and the modified terms of the March 17, 1995
resolution of the NLRC, was referred to Labor Arbiter Gambito. In the course of the recomputation,
the petitioners filed before Labor Arbiter Gambito a Motion to Quash Writ of
Execution and Suspend Further Execution they reiterated their position that the respondents
backwages should be computed only up to August 25, 1995, citing the alleged manifestation made
by the respondents, through Samuel de la Cruz, as their basis.
In an order11 dated July 12, 2000, Labor Arbiter Gambito computed the respondents backwages only
up to August 25, 1995.
The NLRC’s Ruling
The respondents appealed the July 12, 2000 order of Labor Arbiter Gambito to the NLRC, which
reversed Labor Arbiter Gambito s order. In its decision12 dated September 28, 2001, the NLRC ruled
that the computation of the respondents backwages should be until January 29 1999 which was the
date when the July 31, 1998 decision attained finality:
WHEREFORE, the Order of Labor Arbiter Rolando D. Gambito dated July 12, 2000 is SET ASIDE.
In lieu thereof, judgment is hereby rendered by ordering respondents to p y complainants
backwages up to January 29, 1999 as above discussed.13
The NLRC emphasized that the issue relating to the computation of the respondents backwages had
been settled in its July 31, 1998 decision. In a resolution dated January 23, 2002, the NLRC denied
the motion for reconsideration filed by the petitioners.
The petitioners disagreed with the NLRC s ruling and filed a petition for certiorari with the CA, raising
the following issues:
(A) THE COMMISSION ACTED WITHOUT JURISDICTION AND WITH GRAVE . ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT REVERSED AND
SET ASIDE THE ORDER OF LABOR ARBITER ROLANDO D. GAMBITO DATED JULY 12,
2000 AND ORDERED THE COMPUTATION OF PRIVATE RESPONDENTS BACKWAGES
TO COVER THE PERIOD AFTER AUGUST 25, 1995, OR UNTIL JANUARY 29, 1999, THE
DATE OF FINALITY OF THE SECOND RESOLUTION OF THE COMMISSION.
(B) THE COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO

LACK OF JURISDICTION FOR DENYING PETITIONERS MOTION FOR RECONSIDERA
TION.14
The CA Rulings
The CA found the petition to be without merit. It held that certiorari was not the proper remedy since
no error of jurisdiction was raised or no grave abuse of discretion was committed by the NLRC. The
CA stated that:
The extraordinary remedy of certiorari is proper if the tribunal, board or officer exercising judicial or
quasi-judicial functions acted without or in grave abuse of discretion amounting to lack or excess of
jurisdiction and there is no appeal or any plain, speedy, and adequate remedy in law. When a court,
tribunal or officer has jurisdiction over the person and the subject matter of dispute, the decision on
all other questions arising in the case is an exercise of that jurisdiction. Consequently, all errors
committed in the exercise of said jurisdiction are merely errors of judgment. Under prevailing
procedural rules and jurisprudence, errors of judgment are not proper subjects of a special civil
action for certiorari.15
Thus, the CA echoed the NLRC’s conclusions:
As explained in the assailed Decision, what is controlling for purposes of the backwages is the
NLRC s Resolution dated 17 March 1995 which decreed that private respondents are entitled to
backwages from the time of their dismissal (constructive) until their actual reinstatement; and
considering that the award of reinstatement was set aside by the NLRC in its final and executory
Decision dated 3 July 1998 which ordered the payment of separation pay in lieu of reinstatement to
be computed up to the finality on 29 January 1999 of said Decision dated 3 July 1998, then the
computation of the backwages should also end on said date, which is 29 January 1999.16
Citing the case of Chronicle Securities Corp. v. NLRC,17 the CA held that backwages are granted to
an employee or worker who had been illegally dismissed from employment. If reinstatement is no
longer possible, the backwages shall be computed from the time of the illegal termination up to the
finality of the decision.
The Present Petition
The petitioners argue that the following reversible errors were committed by the CA, namely:
(1) In ruling that no grave abuse of discretion was committed by the NLRC when it issued the
September 28, 2001 decision, the January 23, 2002 resolution and the July 31, 1998
decision, which modified the final and executory resolution dated March 17, 1995 of the
NLRC computing the backwages only until the reinstatement of the respondents;
(2) When it manifestly overlooked or misappreciated relevant facts, i.e. Labor Arbiter
Gambito s computation did conform to the NLRC s March 17, 1995 resolution considering
the manifestation of Samuel that the respondents no longer wanted to be reinstated, in
response to the order of execution dated August 25, 1995; and
(3) When it declared that only errors o judgment, and not jurisdiction, were committed by the
NLRC.
In their Comment,18 the respondents contend that the computation of the backwages until January
29, 1999 was consistent with the tenor of the decision dated July 31, 1998 and the modified March
17, 1995 resolution of the NLRC.
After the petitioners filed their Reply,19 the Court resolved to give due course to the petition; in
compliance with our directive, the parties submitted their respective memoranda repeating the
arguments in the pleadings earlier filed.20
The Issue
As presented, the issue boils down to whether the respondents’ backwages had been correctly
computed under the decision dated September 28, 2001 of the NLRC, as confirmed by the CA, in
light of the circumstance that there were two final NLRC decisions affecting the computation of the
backwages.
The Court s Ruling
We find the petition unmeritorious.
Preliminary considerations
In Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth Division),21 we held that a
decision in an illegal dismissal case consists essentially of two components:
The first is that part of the decision that cannot now be disputed because it has been confirmed with
finality. This is the finding of the illegality of the dismissal and the awards of separation pay in lieu of
reinstatement, backwages.
The second part is the computation of the awards made.22
The first part of the decision stems from the March 17, 1995 NLRC resolution finding an illegal
dismissal and defining the legal consequences of this dismissal. The second part involves the
computation of the monetary award of backwages and the respondents' reinstatement. Under the
terms of the March 17, 1995 resolution, the respondents' backwages were to be computed from the
time of the illegal dismissal up to their reinstatement.
In the first computation of the backwages, Labor Arbiter Gambito confronted the following
circumstances and the Sheriffs Report dated November 8, 1995:23 first, how to interpret the phrase
less earnings elsewhere as stated in the dispositive portion of the March 17, 1995 resolution of the
NLRC; second, the effect of the alleged manifestation (dated October 9, 1995) of Samuel that the
respondents were only interested in the monetary award, not in their reinstatement; and third, the
effect of the respondents' counsel's statement during the pre-execution proceedings that the
respondents simply wanted to be reinstated.
The records indicate that the respondents denied Samuel's statement and asked for reinstatement
through their counsel. Nevertheless, Labor Arbiter Gambito relied on Samuel's statement and fixed
the computation date of the respondents' backwages to be up to and until August 25, 1995 or the
date the order of execution was issued for the NLRC's March 17, 1995 decision. As stated in his July
12, 2000 order,24 Labor Arbiter Gambito found it fair and just that in the execution of the NLRC's
decision, the computation of the respondents' backwages should "stop at that time when it was put
on record by them [respondents] that they had no desire to return to work."25
The NLRC disregarded Labor Arbiter Gambito's first computation. In the dispositive portion of its July
31, 1998 decision, the NLRC modified the final March 17, 1995 resolution. The first part of this
decision -the original ruling of illegal dismissal -was left untouched while the second part of the
decision -the monetary award and its computation -was altered to conform with the strained relations
between the parties that became manifest during the execution phase of the March 17, 1995
resolution.
The effect of the modification of the March 17, 1995 resolution of the NLRC was two-fold: £, the
reinstatement aspect of the March 1 7, 1995 resolution was expressly substituted by an order of
payment of separation pay; and two the July 31, 1998 decision of the NLRC now provided for two
monetary awards (backwages and separation pay). The July 31, 1998 decision of the NLRC became
final since neither parties appealed.
Immutability of Judgment
That there is already a final and executory March 17, 1995 resolution finding that respondents have
been illegally dismissed, and awarding backwages and reinstatement, is not disputed. That there,
too, is the existence of another final and executory July 31, 1998 decision modifying the
reinstatement aspect of the March 17, 1995 resolution, by awarding separation pay, is likewise
beyond dispute.
As a rule, "a final judgment may no longer be altered, amended or modified, even if the alteration,
amendment or modification is meant to correct what is perceived to be an erroneous conclusion of
fact or law and regardless of what court, be it the highest Court of the land, rendered it. Any attempt
on the part of the x x x entities charged with the execution of a final judgment to insert, change or
add matters not clearly contemplated in the dispositive portion violates the rule on immutability of
judgments."26 An exception to this rule is the existence of supervening events27which refer to facts
transpiring after judgment has become final and executory or to new circumstances that developed
after the judgment acquired finality, including matters that the parties were not aware of prior to or
during the trial as they were not yet in existence at that time.28
Under the circumstances of this case, the existence of the strained relations between the petitioners
and the respondents was a supervening event that justified the NLRC s modification of its final
March 17, 1995 resolution. The NLRC, in its July 31, 1998 decision, based its conclusion that
strained relations existed on the conduct of the parties during the first execution proceedings before
Labor Arbiter Gambito. The NLRC considered the delay in the respondents reinstatement and the
parties conflicting claims on whether the respondents wanted to be reinstated.29The NLRC also
observed that during the intervening period from the first computation (which was done in 1995) to
the appeal and resolution of the correctness of the first computation (subject of the NLRC s July 31,
1998 decision), neither party actually did anything to implement the respondents reinstatement. The
NLRC considered these, actions as indicative of the strained relations between the parties so that
neither of them actually wanted to implement the reinstatement decree in the March 17, 1995
resolution. The NLRC concluded that the award of reinstatement was no longer possible; thus, it
awarded separation pay, in lieu of reinstatement. Unless exceptional reasons are presented, these
above findings and conclusion can no longer be disturbed after they lapsed to finality.
Appeal of labor case under Rule 45
A review of the CA s decision in a labor case, brought to the Court via Rule 45 of the Rules of Court,
is limited to a review of errors of law imputed to the CA. In Montoya v. Transmed Manila
Corporation,30 we laid down the basic approach in reviews of Rule 45 decisions of the CA in labor
cases, as follows:
In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the
review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the
review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we
have to view the CA decision in the same context that the petition for certiorari it ruled upon was
presented to it; we have to examine the CA decision from the prism of whether it correctly
determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not
on the basis of whether the NLRC decision on the merits of the case was correct. In other words, we
have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the
NLRC decision challenged before it. This is the approach that should be basic in a Rule 45 review of
a CA ruling in a labor case. In question form, the question to ask is: Did the C correctly determine
whether the NLRC committed grave abuse of discretion in ruling on the case?
This manner of review was reiterated in Holy Child Catholic School v Hon. Patricia Sta. Tomas, etc.,
et al.,31 where the Court limited its review under Rule 45 of the CA s decision in a labor case to the
determination of whether the CA correctly resolved the presence or absence of grave abuse of
discretion in the decision of the Secretary of Labor, and not on the basis of whether the latter's
decision on the merits of the case was strictly correct.
Grave abuse of discretion, amounting to lack or excess of jurisdiction, has been defined as the
capricious and whimsical exercise of judgment amounting to or equivalent to lack of
jurisdiction.32 There is grave abuse of discretion when the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and must be so patent and so gross as
to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act
at all in contemplation of law."33
With this standard in mind, we find no reversible error committed by the CA when it found no grave
abuse of discretion in the NLRC's ruling. We find the computation of backwages and separation pay
in the September 28, 2001 decision of the NLRC consistent with the provisions of law and
jurisprudence. The computation conforms to the terms of the March 17, 1995 resolution (on illegal
dismissal and payment of backwages) and the July 31, 1998 decision (on the computation of the
backwages and the payment of separation pay).
Article 279 of the Labor Code, as amended,34 provides backwages and reinstatement as basic
awards and consequences of illegal dismissal:
Article 279. Security of Tenure. -x x x 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.
"By jurisprudence derived from this provision, separation pay may [also] be awarded to an illegally
dismissed employee in lieu of reinstatement."35 Section 4(b), Rule I of the Rules Implementing Book
VI of the Labor Code provides the following instances when the award of separation pay, in lieu of
reinstatement to an illegally dismissed employee, is proper: (a) when reinstatement is no longer
possible, in cases where the dismissed employee s position is no longer available; (b) the continued
relationship between the employer and the employee is no longer viable due to the strained relations
between them; and (c) when the dismissed employee opted not to be reinstated, or the payment of
se aration benefits would be for the best interest of the parties involved.36 In these instances,
separation pay is the alternative remedy to reinstatement in addition to the award of
backwages.37 The payment of separation pay and reinstatement are exclusive remedies. The
payment of separation pay replaces the legal consequences of reinstatement to an employee who
was illegally dismissed.38
For clarity, the bases for computing separation pay and backwages are different. Our ruling in
Macasero v. Southern Industrial Gases Philippines39 provides us with the manner these awards
should be computed:
[U]nder Article 279 of the Labor Code and as held in a catena of cases, an employee who is
dismissed without just cause and without due process is entitled to backwages and reinstatement or
payment of separation pay in lieu thereof:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The
two reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible
because of strained relations between the employee and the employer, separation pay is granted. In
effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay
if reinstatement is no longer viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation was withheld up
to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation
pay equivalent to one (1) month salary for every year of service should be awarded as an
alternative. The payment of separation pay is in addition to payment of backwages.40
The computation of separation pay is based on the length of the employee s service; and the
computation of backwages is based on the actual period when the employee was unlawfully
prevented from working.41
The basis of computation of backwages
The computation of backwages depends on the final awards adjudged as a consequence of illegal
dismissal, in that:
First, when reinstatement is ordered, the general concept under Article 279 of the Labor Code, as
amended, computes the backwages from the time of dismissal until the employee’s reinstatement.
The computation of backwages (and similar benefits considered part of the backwages) can even
continue beyond the decision of the labor arbiter or NLRC and ends only when the employee is
actually reinstated.42
Second, when separation pay is ordered in lieu of reinstatement (in the event that this aspect of the
case is disputed) or reinstatement is waived by the employee (in the event that the payment of
separation pay, in lieu, is not disputed), backwages is computed from the time of dismissal until the
finality of the decision ordering separation pay.
Third, when separation pay is ordered after the finality of the decision ordering the reinstatement by
reason of a supervening event that makes the award of reinstatement no longer possible (as in the
case), backwages is computed from the time of dismissal until the finality of the decision ordering
separation pay.
The above computation of backwages, when separation pay is ordered, has been the Court s
consistent ruling. In Session Delights Ice Cream and Fast Foods v. Court Appeals Sixth Division, we
explained that the finality of the decision becomes the reckoning point because in allowing
separation pay, the final decision effectively declares that the employment relationship ended so that
separation pay and backwages are to be computed up to that point.43
We may also view the proper computation of backwages (whether based on reinstatement or an
order of separation pay) in terms of the life of the employment relationship itself.
1âw phi 1
When reinstatement is ordered, the employment relationship continues. Once the illegally dismissed
employee is reinstated, any compensation and benefits thereafter received stem from the employee
s continued employment. In this instance, backwages are computed only up until the reinstatement
of the employee since after the reinstatement, the employee begins to receive compensation from
his resumed employment.
When there is an order of separation pay (in lieu of reinstatement or when the reinstatement aspect
is waived or subsequently ordered in light of a supervening event making the award of reinstatement
no longer possible), the employment relationship is terminated only upon the finality of the decision
ordering the separation pay. The finality of the decision cuts-off the employment relationship and
represents the final settlement of the rights and obligations of the parties against each other. Hence,
backwages no longer accumulate upon the finality of the decision ordering the payment of
separation pay since the employee is no longer entitled to any compensation from the employer by
reason of the severance of his employment.
The computation of the respondents backwages
As the records show, the contending parties did not dispute the NLRC s order of separation pay that
replaced the award of reinstatement on the ground of the supervening event arising from the newly-
discovered strained relations between the parties. The parties allowed the NLRC s July 31, 1998
decision to lapse into finality and recognized, by their active participation in the second computation
of the awards, the validity and binding effect on them of the terms of the July 31, 1998 decision.
Under these circumstances, while there was no express modification on the period for computing
backwages stated in the dispositive portion of the July 31, 1998 decision of the NLRC, it is
nevertheless clear that the award of reinstatement under the March 17, 1995 resolution (to which the
respondents backwages was initially supposed to have been computed) was substituted by an
award of separation pay. As earlier stated, the awards of reinstatement and separation pay are
exclusive remedies; the change of awards (from reinstatement to separation pay) under the NLRC s
July 31, 1998 not only modified the awards granted, but also changed the manner the respondents
backwages is to be computed. The respondents’ backwages can no longer be computed up to the
point of reinstatement as there is no longer any award of reinstatement to speak of.
We also emphasize that the payment of backwages and separation pay cannot be computed from
the time the respondents allegedly expressed their wish to be paid separation pay. In the first place,
the records show that the alleged manifestation by the respondents, through Samuel, was actually a
mere expression of interest.44 More importantly, the alleged manifestation was disregarded in the
NLRC's July 31, 1998 decision where the NLRC declared that the award of separation pay was due
to the supervening event arising from the strained relations (not a waiver of reinstatement) that
justified the modification of the NLRC's final March 17, 1995 resolution on the award of
reinstatement. Simply put, insofar as the computation of the respondents' backwages, we are guided
by the award, modified to separation pay, under the NLRC's July 31, 1998 decision.
Thus, the computation of the respondents' backwages must be from the time of the illegal dismissal
from employment until the finality of the decision ordering the payment of separation pay. It is only
when the NLRC rendered its July 31, 1998 decision ordering the payment of separation pay (which
both parties no longer questioned and which thereafter became final) that the issue of the
respondents' employment with the petitioners was decided with finality, effectively terminating it. The
respondents' backwages, therefore, must be computed from the time of their illegal dismissal until
January 29, 1999, the date of finality of the NLRC's July 31, 1998 Decision. As a final point, the CA s
ruling must be modified to include legal interest commencing from the finality of the NLRC's July 31,
1998 decision. The CA failed to consider that the NLRC's July 31, 1998 decision, once final,
becomes a judgment for money from which another consequence flows -the payment of interest in
case of delay.45 Under the circumstances, the payment of legal interest of six percent (6) upon the
finality of the judgment is proper. It is not barred by the principle of immutability of judgment as it is
compensatory interest arising from the final judgment.46
WHEREFORE, premises considered, we DENY the petition and thus effectively AFFIRM with
MODIFICATION the decision dated September 1 2005 and the resolution dated December 14, 2005
of the Court of Appeals in CA-G.R. SP No. 70085. The petitioners Bani Rural Bank, Inc., Enoc
Theatre I and II and/or Rafael de Guzman, are ORDERED to PAY respondents Teresa de Guzman,
Edgar C. Tan and Teresa G. Tan the following:
(a) Backwages computed from the date the petitioners illegally dismissed the respondents up
to January 29, 1999, the date of the finality of the decision dated July 31, 1998 of the
National Labor Relations Commission in NLRC CN. SUB-RAB-01-07- 7-0136-93 CA No. L-
001403 and NLRC CN. SUB-RAB-01-07-7-0137-93 CA No. L-001405;
(b) Separation pay computed from respondents' first day of employment up to January 29,
1999 at the rate of one (1) month pay per year of service; and
(c) Legal interest of six percent (6) per annum of the total monetary awards computed from
January 29, 1999 until their full satisfaction.
The labor arbiter is hereby ORDERED to make another recomputation according to the above
directives.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
MARIANO C. DEL CASTILLO JOSE PORTUGAL PEREZ

ESTELA M. PERLAS-BERNABE
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson s Attestation, it
is hereby certified that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s Division.
MARIA LOURDES P. A. SERENO

Chief Justice

Labor Relations

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MILAGROS PANUNCILLO, G.R. No.

CAP PHILIPPINES, INC., Promulgated:

CARPIO MORALES, J.:

Acting on Josefinas letter, the Integrated Internal Audit Operations (IIAO) of

Because of extreme need of money, I was constrained to sell my CAP plan

I admit, I had defrauded Ms. J. Pernes, but I didnt do it

The IIAO of respondent thus conducted an investigation on the matter. By

Committing or dealing any act or conniving with co-employees or

On April 7, 1999, another show-cause memorandum was sent to petitioner by

I think I have violated Sec. 8.4 of the companys Code of Discipline. I

x x x x[9] (Emphasis and underscoring supplied)

Respondent thereupon terminated the services of petitioner by Memorandum

Petitioner sought reconsideration of her dismissal, by letter of April 23,

. . . Please consider my retirement letter I sent to you. I would like to avail

Sir, I am enclosing the affidavit of Ms. Evelia Casquejo proving that we

Pending resolution of petitioners motion for reconsideration, respondent received a

Acting on petitioners motion for reconsideration, Daquiz, by letter-

Premises considered, the decision to terminate your services for cause

x x x x[13] (Emphasis and underscoring supplied)

WHEREFORE, the foregoing considered, judgement [sic] is hereby

13th Month Pay

Service Incentive Leave

Respondent is likewise, directed to reinstate the complainant to a position

On appeal, the National Labor Relations Commission (NLRC), by Decision

1. to reinstate the complainant MILAGROS B. PANUNCILLO to her former

2. to pay to the same complainant P4,045.14 as 13th month pay, and

3. to pay to the same complainant moral damages of FIFTY THOUSAND

All other claims are dismissed for lack of merit.[16] (Underscoring

Hence, the present petition, petitioner faulting the appellate court

x x x IN HOLDING THAT RESPONDENT CAP PHILIPPINES, INC. IS

x x x IN HOLDING THAT PETITIONER WAS DULY AFFORDED

and maintaining that she

x x x IS ENTITLED TO HER FULL BACKWAGES FROM THE

The petition is not meritorious.

Additionally, there was still another complaint lodged before respondent by

In fine, by petitioners repeated violation of Section 8.4 of respondents Code of

. . . [T]ime and again, this Court has upheld a companys management

Deliberate disregard or disobedience of rules by the employees cannot be

Under the Labor Code, the employer may terminate an employment on

The employer cannot be compelled to continue the employment of a

When respondent received the letter-complaint of Josefina, petitioner was directed

Respondent subsequently sent petitioner a show-cause memorandum giving her 48

The order of the respondent Minister to reinstate the employees despite a

On appeal, the NLRC ruled in favor of Roquero and his co-complainant as it

Resolving these issues, this Court held in Roquero:

Article 223 (3rd paragraph) of the Labor Code as amended by Section 12

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

The order of reinstatement is immediately executory. The unjustified

In view, however, of Article 224 of the Labor Code which provides:

ART. 224. Execution of decisions, orders or awards. (a) The Secretary of

x x x x (Emphasis and underscoring supplied),

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

WHEREFORE, the petition is DENIED. The assailed Court of Appeals Decision

CONCHITA CARPIO MORALES

ANTONIO T. CARPIO DANTE O. TINGA

PRESBITERO J. VELASCO, JR.

Pursuant to Article VIII, Section 13 of the Constitution, and the Division

MT. CARMEL COLLEGE, G.R. No. 173076

JOCELYN RESUENA, EDDIE

Petitioner Mt. Carmel College is a private educational institution. It is administered

On 21 November 1997, respondents, together with several faculty members, non-

WHEREFORE, premises considered, judgment is hereby rendered

All other claims are hereby dismissed for lack of merit.[6]

On 9 September 1999, Labor Arbiter Drilon issued to the parties a Notice of

All other claims are hereby dismissed for lack of merit.

WHEREFORE, premises considered the instant appeal is hereby

Consequently, we find no grave abuse of discretion committed by the