LABREL Case Digest

LABOR RELATIONS CASE DIGEST

PIONEER TEXTURIZING CORP. and/or JULIANO LIM, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, PIONEER TEXTURIZING WORKERS UNION and LOURDES A. DE JESUS, respondents. [G.R. No. 118651. October 16, 1997] FACTS: De Jesus is petitioners’ reviser/trimmer who based her assigned work on a paper note posted by petitioners. The posted paper is identified by its P.O. Number. De Jesus worked on P.O. No. 3853 by trimming the cloths’ ribs and thereafter submitted tickets corresponding to the work done to her supervisor. Three days later, de Jesus received a memorandum requiring her to explain why no disciplinary action should be taken against her for dishonesty and tampering of official records and documents with the intention of cheating as P.O. No. 3853 allegedly required no trimming. The memorandum also placed her under preventive suspension for thirty days. In her explanation, de Jesus maintained that she merely committed a mistake in trimming P.O. No. 3853 and admitted that she may have been negligent, but not for dishonesty or tampering. Nonetheless, she was terminated from employment. De Jesus filed a complaint for illegal dismissal against petitioners. The Labor Arbiter held petitioners guilty of illegal dismissal and were ordered to reinstate de Jesus to her previous position without loss of seniority rights and with full backwages from the time of her suspension. On appeal, the National Labor Relations Commission (NLRC) declared that the status quo between them should be maintained and affirmed the Labor Arbiter’s order of reinstatement, but without backwages. The NLRC further directed petitioner to pay de Jesus her back salaries from the date she filed her motion for execution up to the date of the promulgation of the decision. Petitioners filed their partial motion for reconsideration which the NLRC denied, hence this petition. ISSUE: Whether or not an order for reinstatement needs a writ of execution? HELD: No. The provision of Article 223 is clear that an award for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. 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. On appeal, however, the appellate tribunal concerned may enjoin or suspend the reinstatement order in the exercise of its sound discretion. Furthermore, the rule is that all doubts in the interpretation and implementation of labor laws should be resolved in favor of labor. In ruling that an order or award for reinstatement does not require a writ of execution the Court is simply adhering and giving meaning to this rule. Henceforth, we rule that an award or order for reinstatement is self-executory. After receipt of the decision or resolution ordering the employee's reinstatement, the employer has the right to choose whether to re-admit the employee to work under the same terms and conditions prevailing prior to his dismissal or to reinstate the employee in the payroll. In either instance, the employer has to inform the employee of his choice. The notification is based on practical considerations for without notice, the employee has no way of knowing if he has to report for work or not.

---ABBH---

ALEJANDRO ROQUERO, petitioner, vs. PHILIPPINE AIRLINES, INC. (PAL), respondent. [G.R. No. 152329. April 22, 2003] FACTS: Roquero, along with Rene Pabayo, were ground equipment mechanics of PAL. From the evidence on record, it appears that they were caught red-handed possessing and using shabu in a raid conducted by PAL security officers and NARCOM personnel. They received a “notice of administrative charge” for violating the PAL Code of Discipline. They were required to answer the charges and were placed under preventive suspension. In their “reply to notice of administrative charge,” they assailed their arrest and asserted that they were instigated by PAL to take the drugs. In a Memorandum, Roquero and Pabayo were dismissed by PAL. Thus, they filed a case for illegal dismissal. In the Labor Arbiter’s decision, the dismissal of Roquero and Pabayo was upheld. Nonetheless, the Labor Arbiter awarded separation pay and attorney’s fees to the complainants. On appeal, the NLRC ruled in favor of petitioners as it likewise found PAL guilty of instigation and ordered reinstatement to their former positions but without backwages. Petitioners did not appeal from the decision but filed a motion for a writ of execution of the order of reinstatement. The Labor Arbiter granted the motion but PAL refused to execute the said order on the ground that they have filed a Petition for Review. The Court of Appeals later reversed the decision of the NLRC and reinstated the decision of the Labor Arbiter. However, it denied the award of separation pay and attorney’s fees to Roquero on the ground that one who has been validly dismissed is not entitled to those benefits. Hence, this petition for review under Rule 45. ISSUE: Whether or not an employer who refused to reinstate an employee despite a writ duly issued is liable to pay the salary of the subject employee? HELD: Yes. Article 223 (3) of the Labor Code provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending appeal. 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. 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.

---ABBH---

TRIAD SECURITY & ALLIED SERVICES, INC. and ANTHONY U. QUE, petitioners, vs. SILVESTRE ORTEGA, JR., ARIEL ALVARO, RICHARD SEVILLANO, MARTIN CALLUENG, and ISAGANI CAPILA, respondents. [G.R. No. 160871 . February 06, 2006] FACTS: Respondents were formerly employed by petitioner as security guards. Accordingly, during the time that they were in the employ of petitioners, they were receiving compensation which was below the minimum wage fixed by law. They were also made to render services everyday for 12 hours but were not paid the requisite overtime pay, nightshift differential, and holiday pay. Respondents likewise lamented the fact that petitioners failed to provide them with weekly rest period, service incentive leave pay, and 13th month pay. As a result of these perceived unfairness, respondents filed a complaint before the Department of Labor. Upon learning of the complaint, respondents’ services were terminated without the benefit of notice and hearing. The Labor Arbiter rendered judgment ordering the petitioners to reinstate the respondents to their former jobs as security guards, and to pay respondents backwages and to such further backwages as they accrue until reinstatement order is complied with by the petitioners. Further, petitioners are ordered to pay separation pay in the event reinstatement is no longer feasible. As petitioners failed to seasonably file an appeal with the NLRC, the decision of the labor arbiter became final and executory prompting respondents to file a motion for the issuance of writ of execution which was thereafter issued. Pursuant to such writ, petitioner’s funds were garnished and were eventually ordered released to respondents pursuant to the labor arbiter’s order. Subsequently, the Computation and Examination Unit of the NLRC came up with a computation of monetary award where it appears that petitioners were liable to respondents for the amount of P2,097,152.26 representing the latter’s backwages and separation pay. A 2nd alias writ of execution was issued by the labor arbiter for the satisfaction of the amount representing the unpaid accrued backwages including attorney’s fees, plus execution fee. Petitioners filed before the Court of Appeals a petition for certiorari with prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction. The Court of Appeals ruled that backwages payable to respondents should be computed from the date of their termination from their jobs until actual reinstatement as provided in Article 223 of the Labor Code. As petitioners failed to observe said pertinent provision of the law, the labor arbiter could not be charged with having committed a grave abuse of discretion when he issued the assailed order. Petitioners’ motion for reconsideration was denied. Hence, this petition. ISSUE: Whether or not the employer is liable for the accrued backwages despite payment of separation pay to the dismissed employees? HELD: Yes. An illegally dismissed employee is entitled to two reliefs, namely: backwages and reinstatement. These are separate and distinct from each other. However, separation pay is granted where reinstatement is no longer feasible because of strained relations between the employee and the employer. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable and backwages. Backwages and separation pay are, therefore, distinct reliefs granted to one who was illegally dismissed from employment. The award of one does not preclude that of the other. In this case, the labor arbiter ordered the reinstatement of respondents and the payment of their backwages until their actual reinstatement and in case reinstatement is no longer viable, the payment of separation pay. It bears emphasizing that the law mandates the prompt reinstatement of the dismissed or separated employee. This, the petitioners failed to heed. It should be pointed out that an order of reinstatement by the labor arbiter is not the same as actual reinstatement of a dismissed or separated employee. Thus, until the employer continuously fails to actually implement the reinstatement aspect of the decision of the labor arbiter, their obligation to

---ABBH---

respondents, insofar as accrued backwages and other benefits are concerned, continues to accumulate. It is only when the illegally dismissed employee receives the separation pay that it could be claimed with certainty that the employer-employee relationship has formally ceased thereby precluding the possibility of reinstatement. In the meantime, the illegally dismissed employee’s entitlement to backwages, 13 th month pay, and other benefits subsists. Until the payment of separation pay is carried out, the employer should not be allowed to remain unpunished for the delay, if not outright refusal, to immediately execute the reinstatement aspect of the labor arbiter’s decision. The records of this case are bereft of any indication that respondents were actually reinstated to their previous jobs or to the company payroll. As the law clearly requires petitioners to pay respondents’ backwages until actual reinstatement, petitioners are still liable to respondents for accrued backwages and other benefits.

---ABBH---

AIR PHILIPPINES CORPORATION, petitioner, vs. ENRICO E. ZAMORA, respondent. [G.R. No. 148247 . August 07, 2006] FACTS: Zamora was employed with Air Philippines Corporation as a B-737 Flight Deck Crew. He applied for promotion to the position of airplane captain and underwent the requisite training program. After completing training, he inquired about his promotion but APC did not act on it; instead, it continued to give him assignments as flight deck crew. Thus, Zamora filed a Complaint with the Labor Arbiter arguing that the act of withholding his promotion rendered his continued employment with it oppressive and unjust. He therefore asked that APC be held liable for constructive dismissal. APC denied that it dismissed complainant. It pointed out that, when the complaint was filed, complainant was still employed with it. It was complainant who stopped reporting for work, not because he was forced to resign, but because he had joined a rival airline, Grand Air. In its decision, the Labor Arbiter ruled in favor of Zamora and rendered APC liable for constructive dismissal and ordered respondent to reinstate complainant to his position as B-737 Captain without loss of seniority right immediately upon receipt thereof and pay complainant his full backwages. Zamora immediately filed a Motion for Execution of the order of reinstatement. The Labor Arbiter granted the motion and issued a writ of execution directing APC to reinstate complainant to his former position. On appeal, the NLRC held that no dismissal, constructive or otherwise, took place for it was Zamora himself who voluntarily terminated his employment by not reporting for work and by joining a competitor Grand Air. However, upon Motion for Reconsideration filed by Zamora, the NLRC modified its earlier Resolution by ordering APC to pay Zamora his unpaid salaries and allowances. Hence, this petition. ISSUE: Whether or not the NLRC committed grave abuse of discretion in granting Zamora unpaid salaries while declaring him guilty of abandonment of employment? HELD: No. The premise of the award of unpaid salary to respondent is that prior to the reversal by the NLRC of the decision of the Labor Arbiter, the order of reinstatement embodied therein was already the subject of an alias writ of execution even pending appeal. Although petitioner did not comply with this writ of execution, its intransigence made it liable nonetheless to the salaries of respondent pending appeal. In Roquero v. Philippine Airlines, Inc., the Court ruled 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. Pursuant to the 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.

---ABBH---

MILAGROS PANUNCILLO, petitioner, vs. CAP PHILIPPINES, INC., respondent. [G.R. No. 161305 . February 09, 2007] FACTS: Petitioner was hired as Office Senior Clerk by CAP Philippines. In order to secure the education of her son, petitioner procured an educational plan from respondent which she had fully paid but which she later sold to Josefina Pernes. Before the actual transfer of the plan could be effected, however, petitioner pledged it to John Chua who, however, sold it to Benito Bonghanoy. Bonghanoy in turn sold the plan to Gaudioso R. Uy. Having gotten wind of the transactions subsequent to her purchase of the plan, Josefina informed respondent that petitioner had “swindled” her but that she was willing to settle the case amicably as long as petitioner pays the amount involved and the interest. The Integrated Internal Audit Operations (IIAO) of respondent thus conducted an investigation on the matter. The IIAO recommended that administrative action should be taken against petitioner for violating Section 8.4 of respondent’s Code of Discipline reading. A show-cause memorandum was sent to petitioner giving her 48 hours to explain why she should not be disciplinarily dealt with. Complying with the directive, petitioner admitted having defrauded Josefina. Respondent thereupon terminated the services of petitioner. Petitioner thus filed a complaint for illegal dismissal, 13th month pay, service incentive leave pay, damages and attorney’s 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 directed the respondent to pay complainant’s 13th Month pay and Service Incentive Leave Pay. On appeal, the National Labor Relations Commission (NLRC) reversed that of the Labor Arbiter, it finding that petitioner’s dismissal was illegal and accordingly ordering her reinstatement to her former position. The Court of Appeals reversed the NLRC Decision and held that the dismissal was valid and that respondent complied with the procedural requirements of due process before petitioner’s services were terminated. Hence, the present petition. ISSUE: Whether or not petitioner is entitled to her full backwages from the time the NLRC decision became final and executory up to the time the Court of Appeals reversed said decision? HELD: No. Since the NLRC found petitioner’s dismissal illegal and ordered her reinstatement, following the provision of the sixth paragraph of Article 223, 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, there was still a need for the issuance of a writ of execution of the NLRC decision. Unlike 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. 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.

---ABBH---

MARILOU S. GENUINO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, CITIBANK, N.A., WILLIAM FERGUSON, and AZIZ RAJKOTWALA, respondents. [G.R. No. 142732-33 . December 04, 2007] FACTS: Genuino was employed by Citibank as Treasury Sales Division Head with the rank of Assistant Vice-President. On August 23, 1993, Citibank sent Genuino a letter charging her with “knowledge and/or involvement” in transactions “which were irregular or even fraudulent.” In the same letter, Genuino was informed she was under preventive suspension. Subsequently, Citibank informed Genuino of the result of their investigation where it found that Genuino used “facilities of Genuino’s family corporation, namely, Global Pacific, personally and actively participated in the diversion of bank clients’ funds to products of other companies that yielded interests higher than what Citibank products offered, and that Genuino realized substantial financial gains, all in violation of existing company policy and the Corporation Code, which carries a penal sanction.” Genuino’s employment was terminated by Citibank on grounds of (1) serious misconduct, (2) willful breach of the trust reposed upon her by the bank, and (3) commission of a crime against the bank. Genuino filed before the Labor Arbiter a Complaint against Citibank for illegal suspension and illegal dismissal. The Labor Arbiter rendered a Decision finding the dismissal of Genuino to be without just cause and in violation of her right to due process, and ordered Citibank to reinstate Genuino immediately with backwages. On appeal, the NLRC reversed the Labor Arbiter’s decision and declared the dismissal of Genuino to be valid and legal on the ground of serious misconduct and breach of trust and confidence and consequently dismissed the complaint a quo; but ordered the respondent bank to pay the salaries due to the complainant from the date it reinstated complainant in the payroll up to and until the date of its decision. The CA promulgated its decision, denying due course to and dismissing both petitions. Both parties filed motions for reconsideration and the appellate court modified its decision ordering Citibank to pay Genuino five thousand pesos (P5,000.00) as indemnity for non-observance of due process. ISSUE: Whether or not Citibank is liable to pay the salaries due to Genuino pursuant to the decisions of the Labor Arbiter and the NLRC? HELD: No. Anent the directive of the NLRC in its Decision ordering Citibank “to pay the salaries due to the complainant from the date it reinstated complainant in the payroll (computed at P60,000.00 a month, as found by the Labor Arbiter) up to and until the date of this decision,” the Court hereby cancels said award in view of its finding that the dismissal of Genuino is for a legal and valid ground. Ordinarily, the employer is required to reinstate the employee during the pendency of the appeal pursuant to Art. 223, paragraph 3 of the Labor Code, which states 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. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein.” If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries s/he received while 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 the NLRC Decision.

---ABBH---

EDMUNDO Y. TORRES, JR. and MANUEL C. CASTELLANO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, FOURTH DIVISION, and SAN MIGUEL CORPORATION, respondents. [G.R. No. 172584 . November 28, 2008] FACTS: Petitioners were among the many employees of private respondent SMC who retired from employment pursuant to private respondent’s Retirement Plan. Believing that they were constructively forced to retire from employment and that their separation from employment was illegal petitioners filed a complaint for illegal dismissal against SMC. The Labor Arbiter rendered a Decision dismissing all the claims of the petitioners against the respondent SMC for lack of merit. On appeal, the NLRC, on August 21, 1992, handed down a Decision reversing in part that of the Labor Arbiter and ordered SMC to immediately reinstate petitioners and to pay their back salaries. Private respondent SMC appealed through a petition for certiorari to the Supreme Court which rendered a Decision affirming in toto that of the NLRC. The Decision of the Supreme Court became final and executory and as a consequence, private respondent SMC partially complied with the Decision by paying the monetary awards in favor of the petitioners representing their back salaries for three (3) years after deducting the sums that they received, respectively, from SMC as Retirement Pay Petitioners, in an effort to cause the amendment of the NLRC Decision, filed a Motion for Computation and Satisfaction of Back Salaries, praying for the issuance of an Order directing the private respondent SMC to pay them the sums of P9,218,205.00 and P5,268,455.50 respectively, representing purportedly their back salaries and other benefits from September 9, 1992 up to November 1999 invoking the Supreme Court ruling in Pioner Texturizing Corporation v. NLRC, granting full back wages to illegally dismissed employees. Surprisingly, the Executive Labor issued an Order granting the petitioners’ Motion for Computation of Back Salaries. Petitioners filed another Motion to direct private respondent SMC to comply strictly with the NLRC Decision relative to their reinstatement which the Executive Labor Arbiter granted. Private respondent SMC timely appealed from both Orders to the NLRC which promulgated a Decision declaring that complainants are not entitled to backwages. The Court of Appeals upheld the decision of the NLRC. Hence, this instant petition. ISSUE: Whether or not petitioners are entitled to back salaries from September 9, 1992 until they are effectively reinstated to their previous employment? HELD: No. In its assailed decision, the Court of Appeals ruled that at the time petitioners were dismissed in 1984, R.A. No. 6715, which amended Art. 223 of the Labor Code, had not yet been enacted. Further, the Court’s ruling in Maranaw Hotel Resort Corp. v. NLRC, holding that in the absence of an order for the issuance of a writ of execution on the reinstatement aspect, the employer is under no legal obligation to admit its illegally dismissed employee back to work, was declared by the appellate court as still controlling. In Inciong v. NLRC, the Court declared that in the absence of a provision giving it retroactive effect, the amendment introduced in the aforequoted provision cannot be applied to the decision of the labor arbiter rendered three (3) months before R.A. No. 6715 had become a law. It was under this jurisprudential setting that the August 21, 1992 decision of the NLRC ordering the reinstatement of petitioners was promulgated. In the line of cases following Inciong, the Court consistently held that immediate reinstatement is mandated and is not stayed by the fact that the employer has appealed or posted a cash or surety bond pending appeal. However, in the Maranaw case, the Court declared that although the reinstatement aspect of the labor arbiter’s decision is immediately executory, it does not follow that it is self-executory. There must be a writ of execution which may be issued motu proprio or on motion of an interested party. It is clear from the foregoing that at the time the August 21, 1992 NLRC decision was promulgated, the rule commonly adhered to was for a writ of execution to be issued, either motu proprio

---ABBH---

or on motion of an interested party, before the employer may be compelled to admit the employee back to work or to reinstate him in the payroll, on pain of being liable for the employee’s salaries. However, at the time the Court’s Decision in San Miguel Corporation v. NLRC was promulgated on July 23, 1998, the Pioneer case was already the prevailing rule on the matter and should have been read into the case. Thus, upon its receipt of our July 23, 1998 Decision affirming the NLRC decision, SMC should have immediately opted either to re-admit petitioners or merely reinstate them in the payroll. Be that as it may, the retirement age of 60 years already attained by petitioners as early as 1989 for Edmundo Torres, Jr. and 1990 for Manuel Castellano had set in motion the provisions of SMC’s Retirement Plan which is a valid management prerogative. Ultimately, therefore, the Court of Appeals was correct in ruling that the reinstatement of petitioners is no longer feasible. SMC should accordingly take formal steps, in accordance with its Retirement Plan, to effect petitioners’ retirement. Even so, petitioners should not be compelled to return the salaries and benefits already received by them on account of the order for reinstatement adjudged by the NLRC and affirmed by the Court. In Air Philippines Corporation v. Zamora, we held that if an employee was reinstated during the appeal period but such reinstatement was reversed with finality, the employee is not required to reimburse whatever salary he received from the employer. Justice and equity require that we apply the same doctrine to this case.

---ABBH---

JUANITO A. GARCIA and ALBERTO J. DUMAGO, petitioners, vs. PHILIPPINE AIRLINES, INC., respondent. [G.R. No. 164856 . January 20, 2009] FACTS: An administrative charge was filed by PAL against its employees (Garcia and Dumago) after they were caught in the act of sniffing shabu in the PAL Technical Center’s Toolroom Section. They were dismissed, after due notice, for transgressing the PAL Code of Discipline, prompting them to file a complaint for illegal dismissal which was resolved by the Labor Arbiter in their favor, thus ordering PAL to immediately comply with the reinstatement aspect of the decision. Prior to the promulgation of the Labor Arbiter’s decision, the SEC placed PAL under an Interim Rehabilitation Receiver, who was subsequently replaced by a Permanent Rehabilitation Receiver on June 7, 1999. On appeal, the NLRC reversed said decision and dismissed petitioner’s complaint for lack of merit. Subsequently, the Labor Arbiter issued a Writ of Execution respecting the reinstatement aspect of his decision. Respondent filed an Urgent Petition for Injunction with the NLRC which affirmed the validity of the writ issued by the Labor Arbiter but suspended and referred the action to the Rehabilitation Receiver for appropriate action. The Court of Appeals nullified the NLRC Resolution on two grounds, essentially espousing that: (1) a subsequent finding of a valid dismissal removes the basis for implementing the reinstatement aspect of labor arbiter’s decision 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. Hence, this petition. ISSUE: Whether or not petitioners may collect their wages during the period between the Labor Arbiter’s order of reinstatement pending appeal and the NLRC decision overturning that of the Labor Arbiter, now that respondent has exited from rehabilitation proceedings? HELD: No. After the labor arbiter’s decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer. The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be due to the employer’s unjustified act or omission. If the delay is due to the employer’s unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiter’s decision. 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. 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. This injunction or suspension of claims by legislative fiat partakes of the nature of a restraining order that constitutes a legal justification for respondent’s noncompliance with the reinstatement order. Respondent’s failure to exercise the alternative options of actual reinstatement and payroll reinstatement was thus justified. Such being the case, respondent’s obligation to pay the salaries pending appeal, as the normal effect of the non-exercise of the options, did not attach. While reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even the life of the dismissed employee and his family, it does not contemplate the period when the employer-corporation itself is similarly in a judicially monitored state of being resuscitated in order to survive. Respondent was, during the period material to the case, effectively deprived of the alternative

---ABBH---

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

---ABBH---

LUNESA O. LANSANGAN and ROCITA CENDANA, petitioners, vs. AMKOR TECHNOLOGY PHILIPPINES, INC., respondent. [G.R. No. 177026 . January 30, 2009] FACTS: An anonymous e-mail was sent to Amkor Technology alleging malfeasance on the part of Lansangan and Cendana for “stealing company time.” Petitioners admitted their wrongdoing and were terminated for “extremely serious offenses” prompting them to file a complaint for illegal dismissal which the Labor Arbiter dismissed. The Arbiter, however, ordered the reinstatement of petitioners to their former positions without backwages “as a measure of equitable and compassionate relief” owing mainly to petitioners’ prior unblemished employment records, show of remorse, harshness of the penalty and defective attendance monitoring system of respondent. On appeal, the NLRC deleted the reinstatement aspect of the Arbiter’s decision. Petitioners’ motion for reconsideration of the NLRC Resolution having been denied, they filed a petition for certiorari before the Court of Appeals which, while affirming the finding that petitioners were guilty of misconduct and the like, ordered respondent to “pay petitioners their corresponding backwages without qualification and deduction for the period covering October 20, 2004 (date of the Arbiter’s decision) up to June 30, 2005 (date of the NLRC Decision),” citing Article 223 of the Labor Code and Roquero v. Philippine Airlines. ISSUE: Whether or not petitioners are entitled to full backwages? HELD: No. Roquero, as well as Article 223 of the Labor Code on which the appellate court also relied, finds no application in the present case. Article 223 concerns itself with an interim relief, granted to a dismissed or separated employee while the case for illegal dismissal is pending appeal, as what happened in Roquero. It does not apply where there is no finding of illegal dismissal, as in the present case. The Arbiter found petitioners’ dismissal to be valid. Such finding had, as stated earlier, become final, petitioners not having appealed it. Following Article 279, petitioners are not entitled to full backwages as their dismissal was not found to be illegal. Agabon v. NLRC so states –– payment of backwages and other benefits is justified only if the employee was unjustly dismissed. WHEREFORE, the petition is DENIED.

---ABBH---

WENPHIL CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ROBERTO MALLARE, respondents. [G.R. No. 80587 . February 08, 1989] FACTS: Private respondent had an altercation with a co-employee, as a result of which they were suspended on the following morning and in the afternoon of the same day a memorandum was issued advising private respondent of his dismissal from the service in accordance with their Personnel Manual. A notice of dismissal was served to that effect. Thus private respondent filed a complaint against petitioner for unfair labor practice, illegal suspension and illegal dismissal which was dismissed by the Labor Arbiter for lack of merit. On appeal, the NLRC set aside the decision of the Labor Arbiter and ordered the reinstatement of private respondent to his former position with backwages without qualification and deduction. Hence, this petition. ISSUE: Whether or not an employee who was dismissed from work for a just cause but without due process is entitled to reinstatement and backwages? HELD: No. The Court holds that the policy of ordering the reinstatement to the service of an employee without loss of seniority and the payment of his wages during the period of his separation until his actual reinstatement but not exceeding three (3) years without qualification or deduction, when it appears he was not afforded due process, although his dismissal was found to be for just and authorized cause in an appropriate proceeding in the Ministry of Labor and Employment, should be re-examined. It will be highly prejudicial to the interests of the employer to impose on him the services of an employee who has been shown to be guilty of the charges that warranted his dismissal from employment. Indeed, it will demoralize the rank and file if the undeserving, if not undesirable, remains in the service. Thus in the present case, where the private respondent, who appears to be of violent temper, caused trouble during office hours and even defied his superiors as they tried to pacify him, should not be rewarded with re-employment and back wages. It may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe. Under the circumstances the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former employer.

---ABBH---

RUBEN SERRANO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ISETANN DEPARTMENT STORE, respondents. [G.R. No. 117040 . January 27, 2000] FACTS: Serrano was the head of the Security Checkers Section of Isetann Department Store. Isetann, as a cost-cutting measure, decided to phase out its entire security section and engaged the services of an independent security agency. For that reason, Serrano filed an illegal dismissal complaint against Isetann which was decided by the Labor Arbiter in his favor and ordered Isetann to immediately reinstate Serrano with full backwages. On appeal, the NLRC reversed the decision of the Labor Arbiter and ordered Serrano to be given separation pay, unpaid salary, and proportionate 13th month pay. Hence, this petition. ISSUE: Whether or not Serrano was illegally dismissed? HELD: No. The management of a company cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operation. To it belongs the ultimate determination of whether services should be performed by its personnel or contracted to outside agencies. While there should be mutual consultation, eventually deference is to be paid to what management decides. Consequently, absent proof that management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer. In the case at bar, we have only the bare assertion of petitioner that, in abolishing the security section, private respondents real purpose was to avoid payment to the security checkers of the wage increases provided in the collective bargaining agreement approved in 1990. Such an assertion is not a sufficient basis for concluding that the termination of petitioners employment was not a bona fide decision of management to obtain reasonable return from its investment, which is a right guaranteed to employers under the Constitution. Indeed, that the phase-out of the security section constituted a "legitimate business decision" is a factual finding of an administrative agency which must be accorded respect and even finality by this Court since nothing can be found in the record which fairly detracts from such finding. Accordingly, we hold that the termination of petitioners services was for an authorized cause, i.e., redundancy. Hence, pursuant to Art. 283 of the Labor Code, petitioner should be given separation pay at the rate of one month pay for every year of service.

---ABBH---

JENNY M. AGABON and VIRGILIO C. AGABON, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, RIVIERA HOME IMPROVEMENTS, INC. and VICENTE ANGELES, respondents. [G.R. No. 158693 . November 17, 2004] FACTS: Petitioners were employees of Riviera Home Improvements Inc. as gypsum board and cornice installers, when they were dismissed for abandonment of work. So they filed a case for illegal dismissal which was decided by the Labor Arbiter in their favor. On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their work, and were not entitled to backwages and separation pay. The Court of Appeals, in turn, ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment but ordered the payment of money claims. Hence, this petition for review. ISSUE: Whether or not petitioners were illegally dismissed? HELD: No. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employees last known address. Thus, it should be held liable for non-compliance with the procedural requirements of due process. It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment, which, if the requirements of due process were complied with, would undoubtedly result in a valid dismissal. Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta v. National Labor Relations Commission. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of dismiss now, pay later, which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. The violation of the petitioners’ right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules.

---ABBH---

JAKA FOOD PROCESSING CORPORATION, petitioner, vs. DARWIN PACOT, ROBERT PAROHINOG, DAVID BISNAR, MARLON, DOMINGO, RHOEL LESCANO and JONATHAN CAGABCAB, respondents. [G.R. No. 151378 . March 28, 2005] FACTS: Respondents were hired by petitioner JAKA Foods Processing Corporation until the latter terminated their employment because the corporation was in dire financial straits. It is not disputed, however, that the termination was effected without JAKA complying with the requirement under Article 283 of the Labor Code regarding the service of a written notice upon the employees and the Department of Labor and Employment at least one (1) month before the intended date of termination. Respondents filed complaints for illegal dismissal against JAKA. The Labor Arbiter rendered a decision declaring the termination illegal and ordering JAKA to reinstate respondents with full backwages, and separation pay if reinstatement is not possible. On appeal, the NLRC affirmed in toto that of the Labor Arbiter. Acting on a motion for reconsideration filed by Jaka, the NLRC came out with another decision, this time modifying its earlier decision by reversing and setting aside the awards of backwages. The Court of Appeals, applying the doctrine laid down by the Court in Serrano vs. NLRC, reversed and set aside the NLRC’s decision. Hence, this petition. ISSUE: Whether or not respondents are entitled to full backwages and separation pay when their termination was effected without complying with the notice rule? HELD: No. A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of, some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the employee himself initiated the dismissal process. On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the employer’s exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program. Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employers exercise of his management prerogative. It is established that there was ground for respondents’ dismissal, i.e., retrenchment, which is one of the authorized causes enumerated under Article 283 of the Labor Code. Likewise, it is established that JAKA failed to comply with the notice requirement under the same Article. Considering the factual circumstances in the instant case and the above ratiocination, we, therefore, deem it proper to fix the indemnity at P50,000.00. Likewise, the Court of Appeals have been in error when it ordered JAKA to pay respondents separation pay equivalent to one (1) month salary for every year of service. In Reahs Corporation vs. NLRC, the rule, therefore, is that in all cases of business closure or cessation of operation or undertaking of the employer, the affected employee is entitled to separation pay. This is consistent with the state policy of treating labor as a primary social economic force, affording full protection to its rights as well as its welfare. The exception is when the closure of business or cessation of operations is due to serious business losses or financial reverses; duly proved, in which case, the right of affected employees to separation pay is lost for obvious reasons.

---ABBH---

INDUSTRIAL TIMBER CORPORATION, INDUSTRIAL PLYWOOD GROUP CORPORATION, TOMAS TANGSOC, JR., LORENZO TANGSOC and TOMAS TAN, petitioners, vs. VIRGILIO ABABON, et.al., respondents. [G.R. No. 164518 . March 30, 2006] FACTS: Industrial Timber Corporation (ITC) ceased its operations due to circumstances beyond its control with an advice for all the workers to collect the benefits due them under the law and CBA. Coincidentally, Industrial Plywood Group Corporation (IPGC) took over the plywood plant on the same day the ITC ceased operation of the plant. This prompted Virgilio Ababon, et al. to file a complaint against ITC and IPGC for illegal dismissal, unfair labor practice and damages. They alleged that the cessation of ITCs operation was intended to bust the union and that both corporations are one and the same entity being controlled by one owner. The Labor Arbiter rendered a decision which refused to pierce the veil of corporate fiction for lack of evidence to prove that it was used to perpetuate fraud or illegal act; upheld the validity of the closure; and ordered ITC to pay separation pay of month for every year of service. On appeal, the NLRC set aside the decision of the Labor Arbiter and ordered the reinstatement of the employees to their former positions, and the payment of full back wages. However, the NLRC granted the Petition for Relief filed by petitioners and set aside all its prior decision and resolutions. The Court of Appeals rendered a decision setting aside the decision of the NLRC. The Supreme Court rendered a decision reversing that of the Court of Appeals and affirmed with modifications the Decision of the NLRC reinstating the decision of the Labor Arbiter, and ordered ITC to pay separation pay equivalent to one month pay or at least one-half month pay for every year of service, whichever is higher, and P50,000.00 as nominal damages to each employee. Hence, this motion for reconsideration. ISSUE: Whether or not ITC should be made to pay P50,000 as nominal damages to each employee? HELD: No. While the Supreme Court ruled in this case that the sanction should be stiffer in a dismissal based on authorized cause where the employer failed to comply with the notice requirement than a dismissal based on just cause with the same procedural infirmity, however, in instances where the execution of a decision becomes impossible, unjust, or too burdensome, modification of the decision becomes necessary in order to harmonize the disposition with the prevailing circumstances. In the determination of the amount of nominal damages which is addressed to the sound discretion of the court, several factors are taken into account: (1) the authorized cause invoked, whether it was a retrenchment or a closure or cessation of operation of the establishment due to serious business losses or financial reverses or otherwise; (2) the number of employees to be awarded; (3) the capacity of the employers to satisfy the awards, taken into account their prevailing financial status as borne by the records; (4) the employers grant of other termination benefits in favor of the employees; and (5) whether there was a bona fide attempt to comply with the notice requirements as opposed to giving no notice at all. In the case at bar, there was valid authorized cause considering the closure or cessation of ITCs business which was done in good faith and due to circumstances beyond ITCs control. Moreover, ITC had ceased to generate any income since its closure. Several months prior to the closure, ITC experienced diminished income due to high production costs, erratic supply of raw materials, depressed prices, and poor market conditions for its wood products. It appears that ITC had given its employees all benefits in accord with the CBA upon their termination. Thus, considering the circumstances obtaining in the case at bar, we deem it wise and just to reduce the amount of nominal damages to be awarded for each employee to P10,000.00 each instead of P50,000.00 each.

---ABBH---