ALEJANDRO ROQUERO, petitioner , vs . PHILIPPINE AIRLINES, INC., respondent .

Roquero, along with Rene Pabayo, were ground equipment mechanics of respondent Philippine Airlines, Inc. (PAL for brevity). From the evidence on record, it appears that Roquero and Pabayo were caught red-handed possessing and using Methampethamine Hydrochloride or shabu in a raid conducted by PAL security officers and NARCOM personnel.

The two alleged that they did not voluntarily indulge in the said act but were instigated by a certain Jojie Alipato who was introduced to them by Joseph Ocul, Manager of the Airport Maintenance Division of PAL. Pabayo alleged that Alipato often bragged about the drugs he could smuggle inside the company premises and invited other employees to take the prohibited drugs. Alipato was unsuccessful, until one day, he was able to persuade Pabayo to join him in taking the drugs. They met Roquero along the way and he agreed to join them. Inside the company premises, they locked the door and Alipato lost no time in preparing the drugs to be used. When they started the procedure of taking the drugs, armed men entered the room, arrested Roquero and Pabayo and seized the drugs and the paraphernalia used. Roquero and Pabayo were subjected to a physical examination where the results showed that they were positive of drugs. They were also brought to the security office of PAL where they executed written confessions without the benefit of counsel.

On March 30, 1994, Roquero and Pabayo 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. Roquero and Pabayo, in their “reply to notice of administrative charge,” assailed their arrest and asserted that they were instigated by PAL to take the drugs. They argued that Alipato was not really a trainee of PAL but was placed in the premises to instigate the commission of the crime. They based their argument on the fact that Alipato was not arrested. Moreover, Alipato has no record of employment with PAL. In a Memorandum dated July 14, 1994, Roquero and Pabayo were dismissed by PAL. Thus, they filed a case for illegal dismissal.

In the Labor Arbiter’s decision, the dismissal of Roquero and Pabayo was upheld. The Labor Arbiter found both parties at fault – PAL for applying means to entice the complainants into committing the infraction and the complainants for giving in to the temptation and eventually indulging in the prohibited activity. Nonetheless, the Labor Arbiter awarded separation pay and attorney’s fees to the complainants.

While the case was on appeal with the National Labor Relations Commission (NLRC), the complainants were acquitted by the Regional Trial Court (RTC) Branch 114, Pasay City, in the criminal case which charged them with “conspiracy for possession and use of a regulated drug in violation of Section 16, Article III of Republic Act 6425,” on the ground of instigation. The NLRC ruled in favor of complainants as it likewise found PAL guilty of instigation. It ordered reinstatement to their former positions but without backwages.  Complainants did not appeal from the decision but filed a motion for a writ of execution of the order of reinstatement.  The Labor Arbiter granted the motion but PAL refused to execute the said order on the ground that they have filed a Petition for Review before this Court. In accordance with the case of St. Martin Funeral Home vs. NLRC and Bienvenido Aricayos,  PAL’s petition was referred to the Court of Appeals.

During the pendency of the case with the Court of Appeals, PAL and Pabayo filed a Motion to Withdraw/Dismiss the case with respect to Pabayo, after they voluntarily entered into a compromise agreement. The motion was granted in a Resolution promulgated by the Former Thirteenth Division of the Court of Appeals on January 29, 2002.

The Court of Appeals later reversed the decision of the NLRC and reinstated the decision of the Labor Arbiter insofar as it upheld the dismissal of Roquero.   However, it denied the award of separation pay and attorney’s fees to Roquero on the ground that one who has been validly dismissed is not entitled to those benefits. The motion for reconsideration by Roquero was denied. In this Petition for Review on Certiorari under Rule 45, he raises the following issues:

1.       Whether or not the instigated employee shall be solely responsible for an action arising from the instigation perpetrated by the employer;

2.       Can the executory nature of the decision, more so the reinstatement aspect of a labor tribunal’s order be halted by a petition having been filed in higher courts without any restraining order or preliminary injunction having been ordered in the meantime?

3.       Would the employer who refused to reinstate an employee despite a writ duly issued be held liable to pay the salary of the subject employee from the time that he was ordered reinstated up to the time that the reversed decision was handed down?

There is no question that petitioner Roquero is guilty of serious misconduct for possessing and using shabu. He violated Chapter 2, Article VII, section 4 of the PAL Code of Discipline which states:

“Any employee who, while on company premises or on duty, takes or is under the influence of prohibited or controlled drugs, or hallucinogenic substances or narcotics shall be dismissed.”

Serious misconduct is defined as “the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.” For serious misconduct to warrant the dismissal of an employee, it (1) must be serious; (2) must relate to the performance of the employee’s duty; and (3) must show that the employee has become unfit to continue working for the employer.

It is of public knowledge that drugs can damage the mental faculties of the user. Roquero was tasked with the repair and maintenance of PAL’s airplanes.  He cannot discharge that duty if he is a drug user.  His failure to do his job can mean great loss of lives and properties.  Hence, even if he was instigated to take drugs he has no right to be reinstated to his position.  He took the drugs fully knowing that he was on duty and more so that it is prohibited by company rules.  Instigation is only a defense against criminal liability.  It cannot be used as a shield against dismissal from employment especially when the position involves the safety of human lives. Petitioner cannot complain he was denied procedural due process. PAL complied with the twin-notice requirement before dismissing the petitioner. The twin-notice rule requires (1) the notice which apprises the employee of the particular acts or omissions for which his dismissal is being sought along with the opportunity for the employee to air his side, and (2) the subsequent notice of the employer’s decision to dismiss him. Both were given by respondent PAL.

II

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:

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.

IN VIEW WHEREOF, the dismissal of petitioner Roquero is AFFIRMED, but respondent PAL is ordered to pay the wages to which Roquero is entitled from the time the reinstatement order was issued until the finality of this decision.

MARILOU S. GENUINO VS. NLRC

This petition for Review on Certiorari under Rule 45 seeks to set aside the September 30, 1999 Decision and March 31, 2000 Resolution of the Court of Appeals (CA) in the consolidated cases docketed as CA-G.R. SP Nos. 51532 and 51533.  The appellate court dismissed the parties’ petitions involving the National Labor Relations Commission’s (NLRC’s) Decision and Resolution, which held that Marilou S. Genuino was validly dismissed by Citibank, N.A. (Citibank). The NLRC likewise ordered the payment of salaries from the time that Genuino was reinstated in the payroll to the date of the NLRC decision.  Upon reconsideration, however, the CA modified its decision and held that Citibank failed to observe due process in CA-G.R. SP No. 51532; hence, Citibank should indemnify Genuino in the amount of PhP 5,000.  Both parties are now before this Court assailing portions of the CA’s rulings.  In G.R. Nos. 142732-33, Genuino assails the CA’s finding that her dismissal was valid.  In G.R. Nos. 142753-54, Citibank questions the CA’s finding that Citibank violated Genuino’s right to procedural due process and that Genuino has a right to salaries. 

Citibank is an American banking corporation duly licensed to do business in the Philippines.  William Ferguson was the Manila Country Corporate Officer and Business Head of the Global Finance Bank of Citibank while Aziz Rajkotwala was the International Business Manager for the Global Consumer Bank of Citibank. Genuino was employed by Citibank sometime in January 1992 as Treasury Sales Division Head with the rank of Assistant Vice-President.  She received a monthly compensation of PhP 60,487.96, exclusive of benefits and privileges. 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. Genuino wrote Citibank on September 13, 1993 and asked the bank the following:

a.                   Confront our client with the factual and legal basis of your charges, and afford her an opportunity to explain;

b.                  Substantiate your charge of fraudulent transactions against our client; or if the same cannot be substantiated;

c.                   Correct/repair/compensate the damage you have caused our client. 

On September 13, 1993, Citibank, through Victorino P. Vargas, its Country Senior Human Resources Officer, sent a letter to Genuino, the relevant portions of which read:

 As you are well aware, the bank served you a letter dated August 23, 1993 advising you that ongoing investigations show that you are involved and/or know of irregular transactions which are at the very least in conflict with the bank’s interest, and, may even be fraudulent in nature.

                  These transactions are those involving Global Pacific and/or Citibank and the following bank clients, among others:

 1.                              Norma T. de Jesus2.                              Carmen Intengan/Romeo Neri3.                              Mario Mamon4.                              Vienna Ochoa/IETI5.                              William Samara6.                              Roberto Estandarte7.                              Rita Browner8.                              Ma. Redencion Sumpaico9.                              Cesar Bautista10.                          Teddy Keng11.                          NDC-Guthrie12.                          Olivia Sy 

In view of the foregoing, you are hereby directed to explain in writing three (3) days from your receipt hereof why your employment should not be terminated in view of your involvement in these irregular transactions.  You are also directed to appear in an administrative investigation of the matter which is set on Tuesday, Sept. 21, 1993 at 2:00 P.M. at the HR Conference Room, 6th Floor, Citibank Center.  You may bring your counsel if you so desire. Genuino’s counsel replied through a letter dated September 17, 1993, demanding for a bill of particulars regarding the charges against Genuino.  Citibank’s counsel replied on September 20, 1993, as follows:

1.2. [T]he bank has no intention of converting the administrative investigation of this case to a full blown trial.  What it is prepared to do is give your client, as required by law and Supreme Court decisions, an opportunity to explain her side on the issue of whether she violated the conflict of interest rule—either in writing (which could be in the form of a letter-reply to the September 13, 1993 letter to Citibank, N.A.) or

in person, in the administrative investigation which is set for tomorrow afternoon vis-à-vis the bank clients/parties mentioned in the letter of Citibank, N.A.

 2.2.  You will certainly not deny that we have already fully discussed with you what is meant by

the conflict with the bank’s interest vis-à-vis the bank clients/parties named in the September 13, 1993 letter of Citibank to Ms. Genuino.  As we have repeatedly explained to you, what the bank meant by it is that your client and Mr. Dante Santos, using the facilities of their family corporations (Torrance and Global) appear to have participated in the diversion of bank clients’ funds from Citibank to, and investment thereof in, other companies and that they made money in the process, in violation of the conflict of law rule.  It is her side of this issue that Citibank, N.A. is waiting to receive/hear from Ms. Genuino.

 Genuino did not appear in the administrative investigation held on September 21, 1993.  Her lawyers wrote a letter to Citibank’s counsel asking “what bank clients’ funds were diverted from the bank and invested in other companies, the specific amounts involved, the manner by which and the date when such diversions were purportedly affected.”  In reply, Citibank’s counsel noted Genuino’s failure to appear in the investigation and gave Genuino up to September 23, 1993 to submit her written explanation.  Genuino did not submit her written explanation. On September 27, 1993, Citibank informed Genuino of the result of their investigation.  It found that Genuino with Santos used “facilities of Genuino’s family corporation, namely, Global Pacific, personally and actively participated in the diversion of bank clients’ funds to products of other companies that yielded interests higher than what Citibank products offered, and that Genuino and Santos realized substantial financial gains, all in violation of existing company policy and the Corporation Code, which for your information, carries a penal sanction.” 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.

On October 15, 1993, Genuino filed before the Labor Arbiter a Complaint against Citibank docketed as NLRC Case No. 00-10-06450-93 for illegal suspension and illegal dismissal with damages and prayer for temporary restraining order and/or writ of preliminary injunction.  The Labor Arbiter rendered a Decision on May 2, 1994, the dispositive portion of which reads:

WHEREFORE, finding the dismissal of the complainant Marilou S. Genuino to be without just cause and in violation of her right to due process, respondent CITIBANK, N.A., and any and all persons acting on its behalf or by or under their authority are hereby ordered to reinstate complainant immediately to her former position as Treasury Sales Division Head or its equivalent without loss of seniority rights and other benefits, with backwages from August 23, 1993 up to April 30, 1994 in the amount of P493,800.00 (P60,000 x 8.23 mos.) subject to adjustment until reinstated actually or in the payroll. Respondents are likewise ordered to pay complainant the amount of 1.5 Million Pesos and P500,000.00 by way of moral and exemplary damages plus 10% of the total monetary award as attorney’s fees.

Both parties appealed to the NLRC. The NLRC, in its September 3, 1994 Decision in NLRC-NCR Case No. 00-10-06450-93 (CA No. 006947-94), reversed the Labor Arbiter’s decision with the following modification:

WHEREFORE, Judgment is hereby rendered (1) SETTING ASIDE the appealed decision of the Labor Arbiter; (2) DECLARING the dismissal of the complainant valid and legal on the ground of serious misconduct and breach of trust and confidence and consequently DISMISSING the complaint a quo; but (3) ORDERING the respondent bank to pay the salaries due to the complainant from the date it reinstated complainant in the payroll (computed at P60,000.00 a month, as found by the Labor Arbiter) up to and until the date of this decision. The parties’ motions for reconsideration were denied by the NLRC in a resolution dated October 28, 1994.

The Ruling of the Court of Appeals

On December 6, 1994, Genuino filed a petition for certiorari docketed as G.R. No. 118023 with this Court.  Citibank’s petition for certiorari, on the other hand, was docketed as G.R. No. 118667.  In the January 27, 1999 Resolution, we referred these petitions to the CA pursuant to our ruling in St. Martin Funeral Home v. NLRC. Genuino’s petition before the CA was docketed as CA-G.R. SP No. 51532 while Citibank’s petition was docketed as CA-G.R. SP No. 51533.  Genuino prayed for the reversal of the NLRC’s decision insofar as it declared her dismissal valid and legal.  Meanwhile, Citibank questioned the NLRC’s order to pay Genuino’s salaries from the date of reinstatement until the date of the NLRC’s decision. The CA promulgated its decision on September 30, 1999, denying due course to and dismissing both petitions.  Both parties filed motions for reconsideration and on March 31, 2000, the appellate court modified its decision and held:

 WHEREFORE, save for the MODIFICATION ordering Citibank, N.A. to pay Ms. Marilou S.

Genuino five thousand pesos (P5,000.00) as indemnity for non-observance of due process in CA-G.R. SP No. 51532, this Court’s 30 September 1999 decision is REITERATED and AFFIRMED in all other respects. Hence, we have this petition.

ISSUE: WHETHER OR NOT THE DISMISSAL OF GENUINO IS FOR A JUST CAUSE AND IN ACCORDANCE WITH DUE PROCESS

RULING: In G.R. Nos. 142732-33, Genuino contends that Citibank failed to observe procedural due process in terminating her employment.  This failure is allegedly an indication that there were no valid grounds in dismissing her.  In G.R. Nos. 142753-54, Citibank questions the ruling that Genuino has a right to reinstatement under Article 223 of the Labor Code.  Citibank contends that the Labor Arbiter’s finding is not supported by evidence; thus, the decision is void.  Since a void decision cannot give rise to any rights, Citibank opines that there can be no right to payroll reinstatement. The dismissal was for just cause but lacked due process. We affirm that Genuino was dismissed for just cause but without the observance of due process.

In a string of cases, we have repeatedly said that the requirement of twin notices must be met.  In the recent case of King of Kings Transport, Inc. v. Mamac, we explained:

To clarify, the following should be considered in terminating the services of employees: (1) The first written notice to be served on the employees should contain the specific causes or

grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period.  “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense.  This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint.  Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees.  A general description of the charge will not suffice.  Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees.

            (2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management.  During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement.

            (3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment.

 The Labor Arbiter found that Citibank failed to adequately notify Genuino of the charges against her.  On the contrary, the NLRC held that “the function of a ‘notice to explain’ is only to state the basic facts of the employer’s charges, which x x x the letters of September 13 and 17, 1993 in question have fully served.”

We agree with the CA that the dismissal was valid and legal, and with its modification of the NLRC ruling that PhP 5,000 is due Genuino for failure of Citibank to observe due process. The Implementing Rules and Regulations of the Labor Code provide that any employer seeking to dismiss a worker shall furnish the latter a written notice stating the particular acts or omissions constituting the grounds for dismissal.  The purpose of this notice is to sufficiently apprise the employee of the acts complained of and enable him/her to prepare his/her defense. 

In this case, the letters dated August 23, September 13 and 20, 1993 sent by Citibank did not identify the particular acts or omissions allegedly committed by Genuino.  The August 23, 1993 letter charged Genuino with having “some knowledge and/or involvement” in some transactions “which have the appearance of being irregular at the least and may

even be fraudulent.”  The September 13, 1993 letter, on the other hand, mentioned “irregular transactions” involving Global Pacific and/or Citibank and 12 bank clients.  Lastly, the September 20, 1993 letter stated that Genuino and “Mr. Dante Santos, using the facilities of their family corporations (Torrance and Global) appear to have participated in the diversion of bank clients’ funds from Citibank to, and investment thereof in, other companies and that they made money in the process, in violation of the conflict of law rule [sic].”  The extent of Genuino’s alleged knowledge and participation in the diversion of bank’s clients’ funds, manner of diversion, and amounts involved; the acts attributed to Genuino that conflicted with the bank’s interests; and the circumstances surrounding the alleged irregular transactions, were not specified in the notices/letters. 

While the bank gave Genuino an opportunity to deny the truth of the allegations in writing and participate in the administrative investigation, the fact remains that the charges were too general to enable Genuino to intelligently and adequately prepare her defense. The two-notice requirement of the Labor Code is an essential part of due process.  The first notice informing the employee of the charges should neither be pro-forma nor vague.  It should set out clearly what the employee is being held liable for.  The employee should be afforded ample opportunity to be heard and not mere opportunity.  As explained in King of Kings Transport, Inc., ample opportunity to be heard is especially accorded the employees sought to be dismissed after they are specifically informed of the charges in order to give them an opportunity to refute such accusations leveled against them.  Since the notice of charges given to Genuino is inadequate, the dismissal could not be in accordance with due process.

 While we hold that Citibank failed to observe procedural due process, we nevertheless find Genuino’s dismissal justified. Citibank maintains that Genuino was aware of the bank’s Corporate Policy Manual specifically Chapter 3 on “Principles and Policies” with regard to avoiding conflicts of interest.  She had even submitted a Conflict of Interest Survey to Citibank.  In that survey, she denied any knowledge of engaging in transactions in conflict with Citibank’s interests.  Citibank, for its part, submitted evidence showing 99% ownership of Global stocks by Genuino and Santos.  In July 1993, Citibank discovered that Genuino and Santos were instrumental in the withdrawal by bank depositors of PhP 120 million of investments in Citibank.  This amount was subsequently invested in another foreign bank, Internationale Nederlanden Bank, N.V., under the control of Global and Torrance, another corporation controlled by Genuino and Santos.   Citibank also filed two criminal complaints against Genuino and Santos for violations of the conflict of interest rule provided in Sec. 31 in relation to Sec. 144 of the Corporation Code. We note also that during the proceedings before the Labor Arbiter, Citibank presented the following affidavits, with supporting documentary evidence against Genuino:   

1) Vic Lim, an officer of Citibank who investigated the anomalies of Genuino and Santos, concluded that Genuino and Santos realized substantial financial gains out of the transfer of monies as supported by the following documents: 

 1)                  [S]ome of the Term Investment Applications (TIA), Applications for Money Transfer, all filled

up in the handwriting of Ms. Marilou Genuino.  These documents cover/show the transfer of the monies of the Citibank clients from their money placements/deposits with Citibank, N.A. to Global and/or Torrance.

 2)                  [S]ome of the checks that were drawn by Global and Torrance against their Citibank

accounts in favor of the other companies by which Global and Torrance transferred the monies of the bank clients to the other companies.

3)                  [S]ome of the checks drawn by the other companies in favor of Global or Torrance by which the other companies remitted back to Global and/or Torrance the monies of the bank clients concerned.

 4)                  [S]ome of the checks drawn by Global and Torrance against their Citibank accounts in favor

of Mr. Dante Santos and Ms. Marilou Genuino, covering the shares of the latter in the spreads or margins Global and Torrance had derived from the investments of the monies of the Citibank clients in the other companies.

 5)                  [S]ome of the checks drawn by Torrance and Global in favor of Citibank clients by which

Global and Torrance remitted back to said bank clients their principal investments (or portions thereof) and the rates of interests realized from their investment placed with the other companies less the spreads made by Global and/or Torrance, Mr. Dante L. Santos and Ms. Marilou Genuino. 

In Lim’s Reply-Affidavit with attached supporting documents, he stated that out of the competing money placement activities, Genuino and Santos derived financial gains amounting to PhP 2,027,098.08 and PhP 2,134,863.80, respectively.   

2)       Marilyn Bautista, a Treasury Sales Specialist in the Treasury Department of the Global Consumer Bank of Citibank and whose superiors were Genuino and Santos, stated that: 

Based on documents that have subsequently come to my knowledge, I realized that the two (Genuino and Dante L. Santos), with the active cooperation of Redencion Sumpaico (the Accountant of Global) had … brokered for their own benefits and/or of Global the sale of the financial products of Citibank called “Mortgage Backed Securities” or MBS and in the process made money at the expense of the (Citibank) investors and the bank. 

3)       Patrick Cheng attested to other transactions from which Genuino, Santos, and Global brokered the Mortgage Backed Securities (MBS), namely: ICC/Nemesio and Olivia Sy transaction, San Miguel Corporation/ICC, CIPI/Asiatrust, FAPE, PERAA and Union Bank, and NDC-Guthrie transactions. 

In her defense, Genuino asserts that Citibank has no evidence of any wrongful act or omission imputable to her.  According to her, she did not try to conceal from the bank her participation in Global and she even disclosed the information when Global designated Citibank as its depositary.  She avers there was no conflict of interest because Global was not engaged in Citibank’s accepting deposits and granting loans, nor in money placement activities that compete with Citibank’s activities; and neither does Citibank invest in the outlets used by Global.  She claims that the controversy between Santos and Global had already been amicably resolved in a Compromise Agreement between the two parties. Genuino further asserts that the letter of termination did not indicate what existing company policy had been violated, and what acts constituted serious misconduct or willful breach of the trust reposed by the bank.  She claims that Lim’s testimony that the checks issued by Global in her name were profits was malicious, hearsay, and lacked factual basis.  She also posits that as to the withdrawals of clients, she could not possibly dictate on the depositors.  She pointed out that the depositors even sent Citibank a letter dated August 25, 1993 informing the bank that the withdrawals were made upon their express instructions.  Genuino avers the bank’s loss of confidence should have to be proven by substantial evidence, setting out the facts upon which loss of confidence in the employee may be made to rest. Contrary to the Labor Arbiter’s finding, the NLRC found the following facts supported by the records:

a)                  Respondent bank has a conflict of interest rule, embodied in Chapter 3 of its Corporate Policy Manual, prohibiting the officers of the bank from engaging in business activities, situations or circumstances that are in conflict with the interest of the bank.

 b)                  Complainant was familiar with said conflict of interest rule of the bank and of her duty to

disclose to the bank in writing any personal circumstances which conflicts or appears to be in conflict with Citibank’s interest.

 c)                  Complainant is a substantial stockholder of Global Pacific, but she did not disclose fact to

the bank. d)                  Global Pacific is engaged in money placement business like Citibank, N.A.; that in carrying

out its said money placement business, it used funds belonging to Citibank clients which were withdrawn from Citibank with participation of complainant and Dante L. Santos.  In one transaction of this nature, P120,000,000.00 belonging to Citibank clients was withdrawn from Citibank, N.A. and placed in another foreign bank, under the control of Global Pacific.  Said big investment money was returned to Citibank, N.A. only when Citibank, N.A. filed an injunction suit.

 e)                  Global Pacific also engaged in the brokering of the ABS or MBS, another financial product of

Citibank.  It was the duty of complainant Genuino and Dante L. Santos to sell said product on behalf of Citibank, N.A. and for Citibank N.A.’s benefit.  In the brokering of the ABS or MBS, Global Pacific made substantial profits which otherwise would have gone to Citibank, N.A. if only they brokered the ABS or MBS for and on behalf of Citibank, N.A.   

Art. 282(c) of the Labor Code provides that an employer may terminate an employment for fraud or willful breach by the employee of the trust reposed in him/her by his/her employer or duly authorized representative.  In order to constitute as just cause for dismissal, loss of confidence should relate to acts inimical to the interests of the employer.  Also, the act complained of should have arisen from the performance of the employee’s duties.  For loss of trust and confidence to be a valid ground for an employee’s dismissal, it must be substantial and not arbitrary, and must be founded on clearly established facts sufficient to warrant the employee’s separation from work.  We also held that:

Loss of confidence is a valid ground for dismissing an employee and proof beyond reasonable doubt of the employee’s misconduct is not required.  It is sufficient if there is some basis for such loss of confidence or if the employer has

reasonable ground to believe or to entertain the moral conviction that the employee concerned is responsible for the misconduct and that the nature of his participation therein rendered him unworthy of the trust and confidence demanded by his position.

As Assistant Vice-President of Citibank’s Treasury Department, Genuino was tasked to solicit investments, and peso and dollar deposits for, and keep them in Citibank; and to sell and/or push for the sale of Citibank’s financial products, such as the MBS, for the account and benefit of Citibank.  She held a position of trust and confidence.  There is no way she could deny any knowledge of the bank’s policies nor her understanding of these policies as reflected in the survey done by the bank.  She could not likewise feign ignorance of the businesses of Citibank, and of Global and Torrance.  Assuming that Citibank did not engage in the same securities dealt with by Global and Torrance; nevertheless, it is to the interests of Citibank to retain its clients and continue investing in Citibank.  Curiously, Genuino did not even dissuade the depositors from withdrawing their monies from Citibank, and was even instrumental in the transfers of monies from Citibank to a competing bank through Global and Torrance, the corporations under Genuino’s control. All the pieces of evidence compel us to conclude that Genuino did not have her employer’s interest.  The letter of the bank’s clients which attested that the withdrawals from Citibank were made upon their instructions is of no import.  It did not explain why they preferred to invest in Global and Torrance, nor did it mention that Genuino tried to dissuade them from withdrawing their deposits.  Genuino herself admitted her relationship with some of the depositors in her affidavit, to wit:

6.                  Contrary to the allegations of Mr. Lim in par. 6.1 up to 8.1 concerning the alleged scheme employed in the questioned transactions, insinuating an “in” and “out” movement of funds of the seven (7) depositors, the truth is that after said “depositors” instructed/authorized us to effect the withdrawal of their respective monies from Citibank to attain the common goal of higher yields utilizing Global as the vehicle for bulk purchases of securities or papers not dealt with/offered by Citibank, said pooled investment remained with Global, and were managed through Global for over a year until the controversy arose; 

 10.              The seven (7) “depositors” mentioned in Mr. Lim’s Affidavits are the long-time friends

of affiant Genuino who had formed a loosely constituted investment group for purposes of realizing higher yields derivable from pooled investments, and as the advisor of the group she had in effect chosen Citibank as the initial repository of their respective monies prior to the implementation of plans for pooled investments under Global.  Hence, she had known and dealt with said “depositors” before they became substantial depositors of Citibank.  She did not come across them because of Citibank. (Emphasis supplied.) 

All told, Citibank had valid grounds to dismiss Genuino on ground of loss of confidence. In view of Citibank’s failure to observe due process, however, nominal damages are in order but the amount is hereby raised to PhP 30,000 pursuant to Agabon v. NLRC.  The NLRC’s order for payroll reinstatement is set aside. In Agabon, we explained: The violation of the petitioners’ right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages.  The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances.  Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00.  We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees.  At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules. Thus, the award of PhP 5,000 to Genuino as indemnity for non-observance of due process under the CA’s March 31, 2000 Resolution in CA-G.R. SP No. 51532 is increased to PhP 30,000. Anent the directive of the NLRC in its September 3, 1994 Decision ordering Citibank “to pay the salaries due to the complainant from the date it reinstated complainant in the payroll (computed at P60,000.00 a month, as found by the Labor Arbiter) up to and until the date of this decision,” the Court hereby cancels said award in view of its finding that the dismissal of Genuino is for a legal and valid ground.

Ordinarily, the employer is required to reinstate the employee during the pendency of the appeal pursuant to Art. 223, paragraph 3 of the Labor Code, which states:

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

If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries s/he received while 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. 

WHEREFORE, the petitions of Genuino in G.R. Nos. 142732-33 are DENIED for lack of merit.  The petitions of Citibank in G.R. Nos. 142753-54 are GRANTED.  The September 30, 1999 Decision and March 31, 2000 Resolution in CA-G.R. SP Nos. 51532 and 51533 are AFFIRMED with MODIFICATION that Genuino is entitled to PhP 30,000 as indemnity for non-observance of due process.  Item (3) in the dispositive portion of the September 3, 1994 Decision of the NLRC in NLRC-NCR Case No. 00-10-06450-93 (CA No. 006947-94) is DELETED and SET ASIDE, and said NLRC decision is MODIFIED as follows:

WHEREFORE, Judgment is hereby rendered (1) SETTING ASIDE the appealed decision of the Labor Arbiter; (2) DECLARING the dismissal of the complainant valid and legal on the ground of serious misconduct and breach of trust and confidence and consequently DISMISSING the complaint a quo; but (3) ORDERING the respondent bank to pay the complainant nominal damages in the amount of    PhP 30,000.

DUMAGO VS PAL

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

The case stemmed from the administrative charge filed by PAL against its employees-herein petitioners 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 Center’s Toolroom Section on July 24, 1995. After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL Code of Discipline, prompting them to file a complaint for illegal dismissal and damages which was, by Decision of January 11, 1999, 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 Arbiter’s decision, the Securities and Exchange Commission (SEC) placed PAL (hereafter referred to as respondent), which was suffering from severe financial losses, under an Interim Rehabilitation Receiver, who was subsequently replaced by a Permanent Rehabilitation Receiver on June 7, 1999. From the Labor Arbiter’s decision, respondent appealed to the NLRC which, by Resolution of January 31, 2000, reversed said decision and dismissed petitioners’ complaint for lack of merit. Petitioners’ Motion for Reconsideration was denied by Resolution of April 28, 2000 and Entry of Judgment was issued on July 13, 2000. 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 arbiter’s decision (the first ground), and (2) the impossibility to comply with the reinstatement order due to corporate rehabilitation provides a reasonable justification for the failure to exercise the options under Article 223 of the Labor Code (the second ground). By Decision of August 29, 2007, this Court PARTIALLY GRANTED the present petition and effectively reinstated the NLRC Resolutions insofar as it suspended the proceedings, viz:

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

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. 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 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.

Amplification of the First Ground

The appellate court counted on as its first ground the view that a subsequent finding of a valid dismissal removes the basis for implementing the reinstatement aspect of a labor arbiter’s decision. On this score, the Court’s attention is drawn to seemingly divergent decisions concerning reinstatement pending appeal or, particularly, the option of payroll reinstatement.  On the one hand is the jurisprudential trend as expounded in a line of cases including Air Philippines Corp. v. Zamora, while on the other is the recent case of Genuino v. National Labor Relations Commission.  At the core of the seeming divergence is the application of paragraph 3 of Article 223 of the Labor Code 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. (Emphasis in the original; italics and underscoring supplied)   

In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages pending appeal upon reinstatement, which is immediately executory.  Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to comply therewith.            The opposite view is articulated in Genuino which states:

                    If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries 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. (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, 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. 

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.

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

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.

The social justice principles of labor law outweigh or render inapplicable the civil law doctrine of unjust enrichment espoused by      Justice Presbitero Velasco, Jr. in his Separate Opinion. The constitutional and statutory precepts portray the otherwise “unjust” situation as a condition affording full protection to labor.  Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the “refund doctrine” easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a dismissed employee.  The employee, to make both ends meet, would necessarily have to use up the salaries received during the pendency  of the appeal, only to end up having to refund the sum in case of a final unfavorable decision.  It is mirage of a stop-gap leading the employee to a risky cliff of insolvency.   Advisably, the sum is better left unspent.  It becomes more logical and practical for the employee to refuse payroll reinstatement and simply find work elsewhere in the interim, if any is available.  Notably, the option of payroll reinstatement belongs to the employer, even if the employee is able and raring to return to work.  Prior to Genuino, it is unthinkable for one to refuse payroll reinstatement.  In the face of the grim possibilities, the rise of concerned employees declining payroll reinstatement is on the horizon. Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also institutes a scheme unduly favorable to management.  Under such scheme, the salaries dispensed pendente lite merely serve as a bond posted in installment by the employer.  For in the event of a reversal of the Labor Arbiter’s decision ordering reinstatement, the employer gets back the same amount without having to spend ordinarily for bond premiums.  This circumvents, if not directly contradicts, the proscription that the “posting of a bond [even a cash bond] by the employer shall not stay the execution for reinstatement.”  In playing down the stray posture in Genuino requiring the dismissed employee on payroll reinstatement to refund the salaries in case a final decision upholds the validity of the dismissal, the Court realigns the proper course of the prevailing doctrine on reinstatement pending appeal vis-à-vis the effect of a reversal on appeal.  Respondent insists that with the reversal of the Labor Arbiter’s Decision, there is no more basis to enforce the reinstatement aspect of the said decision.  In his Separate Opinion, Justice Presbitero Velasco, Jr. supports this argument and finds the prevailing doctrine in Air Philippines and allied cases inapplicable because, unlike the present case, the writ of execution therein was secured prior to the reversal of the Labor Arbiter’s decision. The proposition is tenuous.  First, the matter is treated as a mere race against time.  The discussion stopped there without considering the cause of the delay.  Second, it requires the issuance of a writ of execution despite the immediately executory nature of the reinstatement aspect of the decision.  In Pioneer Texturing Corp. v. NLRC, which was cited in Panuncillo v. CAP Philippines, Inc., 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  (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.  It settles the view that the Labor Arbiter's order of reinstatement is immediately executory and the employer has to either re-admit them to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the alternative, employer must pay the employee’s salaries. Amplification of the Second Ground The remaining issue, nonetheless, is resolved in the negative on the strength of the second ground relied upon by the appellate court in the assailed issuances.  The Court sustains the appellate court’s finding that the peculiar predicament of a corporate rehabilitation rendered it impossible for respondent to exercise its option under the circumstances.       The spirit of the rule on reinstatement pending appeal animates the proceedings once the Labor Arbiter issues the decision containing an order of reinstatement.  The immediacy of its execution needs no further elaboration.  Reinstatement pending appeal necessitates its immediate execution during the pendency of the appeal, if the law is to serve its noble purpose.  At the same time, any attempt on the part of the employer to evade or delay its execution, as observed in Panuncillo and as what actually transpired in Kimberly, Composite, Air Philippines, and Roquero, should not be countenanced.             After the labor arbiter’s decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer.  The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be due to the employer’s unjustified act or omission.  If the delay is due to the employer’s unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiter’s decision. In Genuino, there was no showing that the employer refused to reinstate the employee, who was the Treasury Sales Division Head, during the short span of four months or from the promulgation on May 2, 1994 of the Labor Arbiter’s Decision up to the promulgation on September 3, 1994 of the NLRC Decision.  Notably, the former NLRC Rules of Procedure did not lay down a mechanism to promptly effectuate the self-executory order of reinstatement, making it difficult to establish that the employer actually refused to comply.  In a situation like that in International Container Terminal Services, Inc. v. NLRC where it was alleged that the employer was willing to comply with the order and that the employee opted not to pursue the execution of the order, the Court upheld the self-executory nature of the reinstatement order and ruled that the salary automatically accrued from notice of the Labor Arbiter's order of reinstatement until its ultimate reversal by the NLRC.  It was later discovered that the employee indeed moved for the issuance of a writ but was not acted upon by the Labor Arbiter.  In that scenario where the delay was caused by the Labor Arbiter, it was ruled that the inaction of the Labor Arbiter who failed to act upon the employee’s motion for the issuance of 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.  The new NLRC Rules of Procedure, which took effect on January 7, 2006, now require the employer to submit a report of compliance within 10 calendar days from receipt of the Labor Arbiter’s decision, disobedience to which clearly denotes a refusal to reinstate.  The employee need not file a motion for the issuance of the writ of execution since the Labor Arbiter shall thereafter motu proprio issue the writ.  With the new rules in place, there is hardly any difficulty in determining the employer’s intransigence in immediately complying with the order.  In the case at bar, petitioners exerted efforts to execute the Labor Arbiter’s order of reinstatement until they were able to secure a writ of execution, albeit issued on October 5, 2000 after the reversal by the NLRC of the Labor Arbiter’s decision.  Technically, there was still actual delay which brings to the question of whether the delay was due to respondent’s unjustified act or omission.  It is apparent that there was inaction on the part of respondent to reinstate them, but whether such omission was justified depends on the onset of the exigency of corporate rehabilitation. It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any court, tribunal or board against the corporation shall ipso jure be suspended.  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 non-compliance with the reinstatement order.  Respondent’s failure to exercise the alternative options of actual reinstatement and payroll reinstatement was thus justified.  Such being the case, respondent’s obligation to pay the salaries pending appeal, as the normal effect of the non-exercise of the options, did not attach. While reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even the life of the dismissed employee and his family, it does not contemplate the period when the employer-corporation itself is similarly in a judicially monitored state of being resuscitated in order to survive. 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 employee’s salaries upon the employer’s failure to exercise the alternative options under Article 223 of the Labor Code is not a hard and fast rule, considering the inherent constraints of corporate rehabilitation. 

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

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

Private respondent Lourdes A. de Jesus is petitioners’ reviser/trimmer since 1980.  As reviser/trimmer, de Jesus based her assigned work on a paper note posted by petitioners.  The posted paper which contains the corresponding price for the work to be accomplished by a worker is identified by its P.O. Number.  On August 15, 1992, de Jesus worked on P.O. No. 3853 by trimming the cloths’ ribs.  She thereafter submitted tickets corresponding to the work done to her supervisor.  Three days later, de Jesus received from petitioners’ personnel manager a memorandum requiring her to explain why no disciplinary action should be taken against her for dishonesty and tampering of official records and documents with the intention of cheating as P.O. No. 3853 allegedly required no trimming.  The memorandum also placed her under preventive suspension for thirty days starting from August 19, 1992.  In her handwritten explanation, de Jesus maintained that she merely committed a mistake in trimming P.O. No. 3853 as it has the same style and design as P.O. No. 3824 which has an attached price list for trimming the ribs and admitted that she may have been negligent in presuming that the same work was to be done with P.O. No. 3853, but not for dishonesty or tampering Petitioners’ personnel department, nonetheless, terminated her from employment and sent her a notice of termination dated September 18, 1992.

On September 22, 1992, de Jesus filed a complaint for illegal dismissal against petitioners.  The Labor Arbiter who heard the case noted that de Jesus was amply accorded procedural due process in her termination from service.  Nevertheless, after observing that de Jesus made some further trimming on P.O. No. 3853 and that her dismissal was not justified, the Labor Arbiter held petitioners guilty of illegal dismissal.  Petitioners were accordingly ordered to reinstate de Jesus to her previous position without loss of seniority rights and with full backwages from the time of her suspension on August 19, 1992.  Dissatisfied with the Labor Arbiter’s decision, petitioners appealed to the public respondent National Labor Relations Commission (NLRC).  In its July 21, 1994 decision, the NLRC ruled that de Jesus was negligent in presuming that the ribs of P.O. No. 3853 should likewise be trimmed for having the same style and design as P.O. No. 3824, thus petitioners cannot be entirely faulted for dismissing de Jesus.  The NLRC declared that the status quo between them should be maintained and affirmed the Labor 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 on September 21, 1993 up to the date of the promulgation of [the] decision.” Petitioners filed their partial motion for reconsideration which the NLRC denied, hence this petition anchored substantially on the alleged NLRC’s error in holding that de Jesus is entitled to reinstatement and back salaries.  On March 6, 1996, petitioners filed its supplement to the petition amplifying further their arguments.  In a resolution dated February 20, 1995, the Court required respondents to comment thereon.  Private respondent de Jesus and the Office of the Solicitor General, in behalf of public respondent NLRC, subsequently filed their comments.  Thereafter, petitioners filed two rejoinders [should be replies] to respondents’ respective comments.  Respondents in due time filed their rejoinders.

These are two interrelated and crucial issues, namely:  (1) whether or not de Jesus was illegally dismissed, and (2) whether or not an order for reinstatement needs a writ of execution.

Petitioners insist that the NLRC gravely abused its discretion in holding that de Jesus is entitled to reinstatement to her previous position for she was not illegally dismissed in the first place.  In support thereof, petitioners quote portions of the NLRC decision which stated that “respondent [petitioners herein] cannot be entirely faulted for dismissing the complaint”and that there was “no illegal dismissal to speak of in the case at bar”. Petitioners further add that de Jesus breached the trust reposed in her, hence her dismissal from service is proper on the basis of loss of confidence, citing as authority the cases of Ocean Terminal Services, Inc. v. NLRC, 197 SCRA 491; Coca-Cola Bottlers Phil., Inc. v. NLRC, 172 SCRA 751, and Piedad v. Lanao del Norte Electric Cooperative, 154 SCRA 500. The arguments lack merit.

The entire paragraph which comprises the gist of the NLRC’s decision from where petitioners derived and isolated the aforequoted portions of the NLRC’s observation reads in full as follows:

“We cannot fully subscribe to the complainant’s claim that she trimmed the ribs of PO3853 in the light of the sworn statement of her supervisor Rebecca Madarcos (Rollo, p. 64) that no trimming was necessary because the ribs were already of the proper length.  The complainant herself admitted in her sinumpaang salaysay (Rollo, p. 45) that “Aking napansin na hindi pantay-pantay ang lapad ng mga ribs PO3853 - mas maigsi ang nagupit ko sa mga ribs ng PO3853 kaysa sa mga ribs ng mga nakaraang PO’s.  The complaint being an experienced reviser/trimmer for almost twelve (12) years should have called the attention of her supervisor regarding her observation of PO3853.  It should be noted that complainant was trying to claim as production output 447 pieces of trimmed ribs of PO3853 which respondents insists that complainant did not do any.  She was therefore negligent in presuming that the ribs of PO3853 should likewise be trimmed for having the same style and design as PO3824.  Complainant cannot pass on the blame to her supervisor whom she claimed checked the said tickets prior to the submission to the Accounting Department.  As explained by respondent, what the supervisor does is merely not the submission of tickets and do some checking before forwarding the same to the

Accounting Department.  It was never disputed that it is the Accounting Department who does the detailed checking and computation of the tickets as has been the company policy and practice.  Based on the foregoing and considering that respondent cannot be entirely faulted for dismissing complainant as the complainant herself was also negligent in the performance of her job, We hereby rule that status quo between them should be maintained as a matter of course.  We thus affirm the decision of Labor Arbiter reinstating the complainant but without backwages.  The award of backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal.  (Indophil Acrylic Mfg. Corporation vs. NLRC , G.R. No. 96488 September 27, 1993)  There being no illegal dismissal to speak in the case at bar, the award for backwages should necessarily be deleted.”

We note that the NLRC’s decision is quite categorical in finding that de Jesus was merely negligent in the performance of her duty.  Such negligence, the Labor Arbiter delineated, was brought about by the petitioners’ plain improvidence.  Thus:

“After careful assessment of the allegations and documents available on record, we are convinced that the penalty of dismissal was not justified.

“At the outset, it is remarkable that respondents did not deny nor dispute that P.O. 3853 has the same style and design as P.O. 3824; that P.O. 3824 was made as guide for the work done on P.O. 3853; and, most importantly, that the notation correction on P.O. 3824 was made only after the error was discovered by respondents’ Accounting Department.

“Be sure that as it may, the factual issue in this case is whether or not complaint trimmed the ribs of P.O. 3853?

“Respondents maintained that she did not because the record in Accounting Department allegedly indicates that no trimming is to be done on P.O. 3853.  Basically, this allegation is unsubstantiated.

“It must be emphasized that in termination cases the burdent of proof rests upon the employer.

“In the instant case, respondents’ mere allegation that P.O. 3853 need not be trimmed does not satisfy the proof required to warrant complainant’s dismissal.

“Now, granting that the Accounting record is correct, we still believe that complainant did some further trimming on P.O. 3853 based on the following grounds:

“First, Supervisor Rebecca Madarcos who ought to know the work to be performed because she was in-charged of assigning jobs, reported no anomally when the tickets were submitted to her.

“Incidentally, supervisor Madarcos testimony is suspect because if she could recall what she ordered the complainant to do seven (7) months ago (to revise the collars and plackets of shirts) there was no reason for her not to detect the alleged tampering at the time complainant submitted her tickets, after all, that was part of her job, if not her main job.

“Secondly, she did not exceed her quota, otherwise she could have simply asked for more.

“That her output was remarkably big granting misinterpreted it is true, is well explained in that the parts she had trimmed were lesser compared to those which she had cut before.

“In this connection, respondents misinterpreted the handwritten explanation of the complainant dated 20 August 1992, because the letter never admits that she never trimmed P.O. 3853, on the contrary the following sentence,

‘Sa katunayan nakapagbawas naman talaga ako na di ko inaasahang inalis na pala ang presyo ng Sec. 9 P.O. 3853 na ito is crystal clear that she did trim the ribs on P.O. 3853.”

Gleaned either from the Labor Arbiter’s observations or from the NLRC’s assessment, it distinctly appears that petitioners’ accusation of dishonesty and tampering of official records and documents with intention of cheating against de Jesus was not substantiated by clear and convincing evidence. Petitioners simply failed, both before the Labor Arbiter and the NLRC, to discharge the burdent of proof and to validly justify de Jesus’ dismissal from service.  The law, in this light, directs the employers, such as herein petitioners, not to terminate the services of an employee except for a just or authorized cause under the Labor Code. Lack of a just cause in the dismissal from service of an employee, as in this case, renders the dismissal illegal, despite the employer’s observance of procedural due process. And while the NLRC stated that “there was no illegal dismissal to speak of in the case at bar” and that petitioners cannot be entirely faulted therefor, said statements are inordinate pronouncements which did not remove the assailed dismissal from the realm of illegality.  Neither can these pronouncements preclude us from holding otherwise.

We also find the imposition of the extreme penalty of dismissal against de Jesus as certainly harsh and grossly disproportionate to the negligence committed, especially where said employee holds a faithful and an untarnished twelve-

year service record.  While an employer has the inherent right to discipline its employees, we have always held that this right must always be exercised humanely, and the penalty it must impose should be commensurate to the offense involved and to the degree of its infraction. The employer should bear in mind that, in the exercise of such right, what is at stake is not only the employee’s position but her livelihood as well.

Equally unmeritorious is petitioners’ assertion that the dismissal is justified on the basis of loss of confidence.  While loss of confidence, as correctly argued by petitioners, is one of the valid grounds for termination of employment, the same, however, cannot be used as a pretext to vindicate each and every instance of unwarranted dismissal.  To be a valid ground, it must shown that the employee concerned is responsible for the misconduct or infraction and that the nature of his participation therein rendered him absolutely unworthy of the trust and confidence demanded by his position. In this cae, petitioners were unsuccessful in establishing their accusations of dishonesty and tampering of records with intention of cheating.  Indeed, even if petitioners’ allegations against de Jesus were true, they just the same failed to prove that her position needs the continued and unceasing trust of her employee’s functions. Surely, de Jesus who occupies the position of a reviser/trimmer does not require the petitioners’ perpetual and full confidence.  In this regard, petitioners’ reliance on the cases of Ocean Terminal Services, Inc. v. NLRC; Coca-Cola Bottlers Phil., Inc. v. NLRC; and Piedad v. Lanao del Norte Electric Cooperative, which when perused involve positions that require the employers’ full trust and confidence, is wholly misplaced.  In Ocean Terminal Services, for instance, the dismissed employee was designated as expediter and canvasser whose responsibility is mainly to make emergency procurements of tools and equipments and was entrusted with the necessary cash for buying them.  The case of Coca-Cola Bottlers, on the other hand, involves a sales agent whose job exposes him to the everyday financial transactions involving the employer’s goods and funds, while that of Piedad concerns a bill collector who essentially handles the employer’s cash collections.  Undoubtedly, the position of a reviser/trimmer could not be equated with that of a canvasser, sales agent, or a bill collector.  Besides, the involved employees in the three aforementioned cases were clearly proven guilty of infractions unlike private respondent in the case at bar.  Thus, petitioners dependence on these cited cases is inaccurate, to say the least.  More, whether or not de Jesus meets the day’s quota of work she, just the same, is paid the daily minimum wage.

Corollary to our determination that de Jesus was illegally dismissed is her imperative entitlement to reinstatement and backwages as mandated by law. Whence, we move to the second issue, i.e., whether or not an order for reinstatement needs a writ of execution. Petitioners’ theory is that an order for reinstatement is not self-executory.  They stress that there must be a writ of execution which may be issued by the NLRC or by the Labor Arbiter motu proprio or on motion of an interested party.  They further maintain that even if a writ of execution was issued, a timely appeal coupled by the posting of appropriate supersedeas bond, which they did in this case, effectively forestalled and stayed execution of the reinstatement order of the Labor Arbiter.  As supporting authority, petitioners emphatically cite and bank on the case of Maranaw Hotel Resort Corporation (Century Park Sheraton Manila) v. NLRC, 238 SCRA 190.

Private respondent de Jesus, for her part, maintains that petitioners should have reinstated her immediately after the decision of the Labor Arbiter ordering her reinstatement was promulgated since the law mandates that an order for reinstatement is immediately executory.  An appeal, she says, could not stay the execution of a reinstatement order for she could either be admitted back to work or merely reinstated in the payroll without need of a writ of execution.   De Jesus argues that a writ of execution is necessary only for the enforcement of decisions, orders, or awards which have acquired finality.  In effect, de Jesus is urging the Court to re-examine the ruling laid down in Maranaw.

Article 223 of the Labor Code, as amended by R.A. No. 6715 which took effect on March 21, 1989, pertinently provides:

“ART. 223.  Appeal. --Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders.  Such appeal maybe entertained only on any of the following grounds:

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

We initially interpreted the aforequoted provision in Inciong v. NLRC. The Court made this brief comment:

“The decision of the Labor Arbiter in this case was rendered on December 18, 1988, or three (3) months before Article 223 of the Labor Code was amended by Republic Act 6715 (which became law on March 21, 1989), providing that a decision of the Labor Arbiter ordering the reinstatement of a dismissed or separated employee shall be immediately executory insofar as the reinstatement aspect is concerned, and the posting of an appeal

bond by the employer shall not stay such execution.  Since this new law contains no provision giving it retroactive effect (Art. 4, Civil Code), the amendment may not be applied to this case.”

which the Court adopted and applied in Callanta v. NLRC. In Zamboanga City Water District v. Buat, the Court construed Article 223 to mean exactly what it says.  We said:

“Under the said provision of law, the decision of the Labor Arbiter reinstating a dismissed or separated employee insofar as the reinstatement aspect is concerned, shall be immediately executory, even pending appeal.  The employer shall reinstate the employee concerned either by:  (a) actually admitting him back to work under the same terms and conditions prevailing prior to his dismissal or separation; or (b) at the option of the employer, merely reinstating him in the payroll.  Immediate reinstatement is mandated and is not stayed by the fact that the employer has appealed, or has posted a cash or surety bond pending appeal.”

We expressed a similar view a year earlier in Medina v. Consolidated Broadcasting System (CBS) – DZWX and laid down the rule that an employer who fails to comply with an order of reinstatement makes him liable for the employee’s salaries.  Thus:

“Petitioners construe the above paragraph to mean that the refusal of the employer to reinstate an employee as directed in an executory order of reinstatement would make it liable to pay the latter’s salaries.  This interpretation is correct.  Under Article 223 of the Labor Code, as amended, an employer has two options in order for him to comply with an order of reinstatement, which is immediately executory, even pending appeal.  Firstly, he can admit the dismissed employee back to work under the same terms and conditions prevailing prior to his dismissal or separation or to a substantially equivalent position if the former position is already filled up as we have ruled in Union of Supervisors (RB) NATU vs. Sec. of Labor, 128 SCRA 442 [1984]; and Pedroso vs. Castro, 141 SCRA 252 [1986].  Secondly, he can reinstate the employee merely in the payroll.  Failing to exercise any of the above options, the employer can be compelled under pain of contempt, to pay instead the salary of the employee.  This interpretation is more in consonance with the constitutional protection to labor (Section 3, Art. XIII, 1987 Constitution).  The right of a person to his labor is deemed to be property within the meaning of the constitutional guaranty that no one shall be deprived of life, liberty, and property without due process of law.  Therefore, he should be protected against any arbitrary and unjust deprivation of his job (Bondoc vs. People’s Bank and Trust Co., Inc., 103 SCRA 599 [1981]).  The employee should not be left without any remedy in case the employer unreasonably delays reinstatement.  Therefore, we hold that the unjustified refusal of the employer to reinstate an illegally dismissed employee entitles the employee to payment of his salaries x x x.”

The Court, however, deviated from this construction in the case of Maranaw.  Reinterpreting the import of Article 223 in Maranaw, the Court declared that the reinstatement aspect of the Labor Arbiter’s decision needs a writ of execution as it is not self-executory, a declaration the Court recently reiterated and adopted in Archilles Manufacturing Corp. v. NLRC.

We note that prior to the enactment of R.A. No. 6715, Article 223 of the Labor Code contains no provision dealing with the reinstatement of an illegally dismissed employee.  The amendment introduced by R.A. No. 6715 is an innovation and a far departure from the old law indicating therby the legislature’s unequivocal intent to insert a new rule that will govern the reinstatement aspect of a decision or resolution in any given labor dispute.  In fact, the law as now worded employs the phrase “shall immediately be executory” without qualification emphasizing the need for prompt compliance.  As a rule, “shall” in a statute commonly denotes an imperative obligation and is inconsistent with the idea of discretion and that the presumption is that the word “shall”, when used in a statute, is mandatory. An appeal or posting of bond, by plain mandate of the law, could not even forestall nor stay the executory nature of an order of reinstatement.  The law, moreover, is unambiguous and clear.  Thus, it must be applied according to its plain and obvious meaning, according to its express terms.  In Globe-Mackay Cable and Radio Corporation v. NLRC, we held that:

“Under the principles of statutory construction, if a statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation.  This plain-meaning rule or verba legis derived from the maxim index animi sermo est (speech is the index of intention) rests on the valid presumption that the words employed by the legislature in a statute correctly express its intent by the use of such words as are found in the statute.  Verba legis non est recedendum, or from the words of a statute there should be no departure.”

And in conformity with the executory nature of the reinstatement order, Rule V, Section 16 (3) of the New Rules of Procedure of the NLRC strictly requires the Labor Arbiter to direct the employer to immediately reinstate the dismissed employee.  Thus:

“In case the decision includes an order of reinstatement, the Labor Arbiter shall direct the employer to immediately reinstate the dismissed or separated employee even pending appeal.  The order of reinstatement shall indicate that the

employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll.”

In declaring that reinstatement order is not self-executory and needs a writ of execution, the Court, in Maranaw, adverted to the rule provided under Article 224.  We said:

“It must be stressed, however, that although the reinstatement aspect of the decision is immediately executory, it does not follow that it is self-executory.  There must be a writ of execution which may be issued motu proprio or on motion of an interested party.  Article 224 of the Labor Code provides:

‘ART. 224.  Execution of decisions, orders or awards. –(a) The Secretary of Labor and Employment or any Regional Director, the Commission or any Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu propio or on motion of any interested party, issue a writ of execution on a judgment within five (5) years from the date it becomes final and executory …’ (emphasis supplied)

“The second paragraph of Section 1, Rule VIII of the New Rules of Procedure of the NLRC also provides:

‘The Labor Arbiter, POEA Administrator, or the Regional Director, or his duly authorized hearing officer of origin shall, motu propio or on motion of any interested party, issue a writ of execution on a judgment within five (5) years from the date it becomes final and executory …. No motion for execution shall be entertained nor a writ be issued unless the Labor Arbiter is in possession of the records of the case which shall include an entry of judgment.’ (emphasis supplied)

“In the absence them of an order for the issuance of a writ of execution on the reinstatement aspect of the decision of the Labor Arbiter, the petitioner was under no legal obligation to admit back to work the private respondent under the terms and conditions prevailing prior to her dismissal or, at the petitioner’s option, to merely reinstate her in the payroll.  An option is a right of election to exercise a privilege, and the option in Article 223 of the Labor Code is exclusively granted to the employer.  The event that gives rise for its exercise is not the reinstatement decree of a Labor Arbiter, but the writ for its execution commanding the employer to reinstate the employee, while the final act which compels the employer to exercise the option is the service upon it of the writ of execution when, instead of admitting the employee back to his work, the employer chooses to reinstate the employee in the payroll only.  If the employer does not exercise this option, it must forthwith admit the employee back to work, otherwise it may be punished for contempt.”

A closer examination, however, shows that the necessity for a writ of execution under Article 224 applies only to final and executory decisions which are not within the coverage of Article 223.  For comparison, we quote the material portions of the subject articles:

“ART. 223.  Appeal. x x x

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

“ART. 224.  Execution of decisions, orders, or awards. --(a)  The Secretary of Labor and Employment or any Regional Director, the Commission or any Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu propio or on motion of any interested party, issue a writ of execution on a judgment within five (5) years from the date it becomes final and executory, requiring a sheriff or a duly deputized officer to execute or enforce final decicions, orders or awards of the Secretary of Labor and Employment or regional director, the Commission, the arbiter or med-arbiter, or voluntary arbitrators.  In any case, it shall be the duty of the responsible officer to separately furnish immediately the counsels of record and the parties with copies of said decisions, orders or awards.  Failure to comply with the duty prescribed herein shall subject such responsible officer to appropriate administrative sanctions."

Article 224 states that the need for a writ of execution  applies only within five (5) years from the date a decision, an order or awards becomes final and executory.  It cannot relate to an award or order of reinstatement still to be appealed or pending appeal which Article 223 contemplates. The provision of Article 223 is clear that an award for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement.  The legislative content is quite obvious, i.e., to make an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of

execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i. e., the immediate execution of a reinstatement order.  The reason is simple.  An application for a writ of execution and its issuance could be delayed for numerous reasons.  A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223.  In other words, if the requirements of Article 224 were to govern, as we so declared in Maranaw, then the executory nature of a reinstatement order or award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual.  In enacting the law, the legislature is presumed to have ordaineda valid and sensible law, one which operates no further than may be necessary to achieve its specific purpose.  Statutes, as a rule, are to be construed in the light of the purpose to be achieved and the evil sought to be remedied. And where statues are fairly susceptible of two or more construction, that construction should be adopted which will most tend to give effect to the manifest intent of the law maker and promote the object for which the statute was enacted, and a construction should be rejected which would tend to render abortive other provisions of the statute and to defeat the object which the legislator sought to attain by its enactment. In introducing a new rule on the reinstatement aspect of a labor decision under R.A. No. 6715, Congress should not be considered to be indulging in mere semantic exercise. On appeal, however, the appellate tribunal concerned may enjoin or suspend the reinstatement order in the exercise of its sound discretion.

Furthermore, the rule is that all doubts in the interpretation and implementation of labor laws should be resolved in favor of labor.  In ruling that an order or award for reinstatement does not require a writ of execution the Court is simply adhering and giving meaning to this rule. Henceforth, we rule that an award or order for reinstatement is self-executory.  After receipt of the decision or resolution ordering the employee's reinstatement, the employer has the right to choose whether to re-admit the employee to work under the same terms and conditions prevailing prior to his dismissal or to reinstate the employee in the payroll.  In either instance, the employer has to inform the employee of his choice.  The notification is based on practical considerations for without notice, the employee has no way of knowing if he has to report for work or not.

WHEREFORE, the petition is DENIED and the decision of the Labor Arbiter is hereby REINSTATED. Costs against petitioner.

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

The question presented in this petition for certiorari under Rule 65 is whether or not in perfecting an appeal to the National Labor Relations Commission (NLRC) a property bond is excluded by the two forms of appeal bond cash or surety as enumerated in Article 223 of the Labor Code. The facts show that on 14 December 1987 Republic Act No. 6640 took effect which mandated a ten (P10.00) peso increase on the prevailing daily minimum wage of P54.00. In applying said law, the petitioners granted salary increases to their employees based on the following computation, to wit:

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

2.To rank-and-file employees (individual complainants who are union members), P209.17 per month."

There was a difference of P95.00 in the salaries of the two classes of employees. Private respondents who are rank and file employees demanded payment of the difference. Before the parties could settle their dispute, Republic Act No. 6727 took effect on 1 July 1989 which again increased the daily minimum wage in the private sector (whether agricultural or non-agricultural) by P25.00. In compliance, petitioners paid their employees using the following computation, to wit:

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

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

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

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

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

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

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

(Sgd) FRANKLIN M. DRILON

Secretary"

Petitioners challenged the validity of said Policy Instruction and refused to pay the salaries of the private respondents for Saturdays and Sundays. Consequently, a complaint was filed by the private respondents, represented by the Federation of Free Workers (FFW), claiming salary differentials under Republic Act Nos. 6640 and 6727, correction of the wage distortion and the payment of salaries for Saturdays and Sundays under Policy Instruction No. 54. Labor Arbiter Nieves de Castro sustained the private respondents except for their claim of wage distortion. The dispositive portion of the decision reads:

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

(1)Their Salary Differentials, to wit:

1.1 Under RA 6640 - P1,743,582.50 1.2 Under RA 6727 - P3,559,613.06 1.3 Policy Instruction 54 - P 11,779,328.00

Total P17,082,448.56

(2) Exemplary Damages of P2,000.00 each.

SO ORDERED.

Within the reglementary period for appeal, the petitioners filed their Notice and Memorandum of Appeal with a Real Estate Bond consisting of land and various improvements therein worth P102,345,650. The private respondents moved to dismiss the appeal on the ground that Article 223 of the Labor Code, as amended, requires the posting of a cash or surety bond. The NLRC directed petitioners to post a cash or surety bond of P17,082,448.56 with a warning that failure to do so would cause the dismissal of the appeal. The petitioners filed a Motion for Reconsideration alleging it is not in a viable financial condition to post a cash bond nor to pay the annual premium of P700,000.00 for a surety bond. On 6 October 1992, the NLRC dismissed petitioners' appeal. Petitioners' Motion for Reconsideration was also denied by the NLRC in a resolution dated 7 June 1993. Hence, this petition assailing the two resolutions as having been issued with grave abuse of discretion. On 28 June 1993, we temporarily enjoined the NLRC from implementing the questioned resolutions and from executing the decision of the Labor Arbiter. The applicable law is Article 223 of the Labor Code, as amended by Republic Act No. 6715, which provides:

"In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from."

We have given a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC, we ruled:

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

Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations Commission, we held:

"The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected "only upon the posting of a cash or surety bond." The word "only" makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer's appeal may be perfected. The requirement is intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees' just and lawful claims. Considering, however, that the current policy is not to strictly follow technical rules but rather to take into account the spirit and intention of the Labor Code, it would be prudent for us to look into the merits of the case, especially since petitioner disputes the allegation that private respondent was illegally dismissed."

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

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

OSCAR G. SAPITAN; ANDRES M. LADISLA; NICANIO E. PURA; MARCILINO G. HAMTO; EFREN B. BELEN; OSCAR O. DOMALAON; DELFIN D. PURA, SR.; ROGERIO G. OLIQUINO; LARY E. ESCARILLA; ABELARDO D. MANGAMPO; RUBEN E. EREPOL; EDUARDO ESCUREL; FELIMINO BREMEN; RUBEN ESCOLORA; ARMANDO LLADONES; ARMANDO ALAMER; ROMAN FIGUERAS; GOMER CANO; RONALDO DECANO; NOEL H. HAPIN; DANIEL EBUENGA; JESUS VELARDE; DANILO ACUÑA; ALEX MIRANDILLA; ALFREDO BONAGUA; SUSANTE PANTUA; ZACARIAS BURAC; RODERICK AJEDO; ALFREDO ALBERGA; ELIJIO NICOL; DAMIAN JANABAN, JR.; EDWARDO AGUILAR; ROLANDO E. EPINO; PATERNO T. SINCERO; LAZARO E. RAPSING; ALEX F. ESPERA; ALEX F. EVORA; JESUS E. FRANDO; EDGAR L. BITANCUR; ARNEL M. IBAÑEZ; EMERSON E. MILAÑES; WILFREDO G. BAROGA; REDENTRO B. LELIS; EMILIO E. ESCANDOR; ROMEO E. ERMINO; SALVACION M. HASTA; EDISON B. BELEN; BENJAMIN O. PURA; ROMEO O. DOMALAON; EDMUNDO R. LANON;   REYNALDO NUGALES; ROBERTO BRIN; RUSTICO LAGONOY; SERAFIN DONGAOL; EDUARDO GOTIS; DOMINGO SEVERINO;   JOSE MANGAMPO; ROLANDO GREBIALDE; EDDIE GINETE; RENE GEDAYAO; SALVADOR R. GENETIA; WILFREDO BORINGOT; JOUE BALDERAMA; ROMEO ORTIOLA; MANUEL FREJAS; ROBERTO PARANIAL; EDMUNDO ESPINEDA; ROMEO MANLANGIT; and JOHN CO,

VS. JB LINE BICOL EXPRESS, INC./LAO HUAN LING/JOSE BARITUA

This is a petition for review under Rule 45 of the Rules of Court assailing the decision of the Court of Appeals (CA) dated August 14, 2003 in CA-G.R. SP No. 75535 entitled JB Line Bicol Express, Inc., Jose Baritua/Lao Huan Ling v. National Labor Relations Commission, et al. The facts follow.

Petitioners filed a case against respondent JB Line Bicol Express, Inc. (JB Line) in the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) in Legazpi City, Albay for illegal dismissal, underpayment of salaries/wages, overtime pay, premium pay for the holiday and rest day, night shift differential, 13 th month pay, separation pay and damages. In their complaint, they claimed that:

The respondent [JB Line] is a bus company operator plying the Bicol-Manila route. The [petitioners] are all employees of respondent [JB Line]. Most of [them] are drivers, conductors and mechanics while the rest are regular employees who assist in the conduct of the business of transportation of [respondent JB Line]. All the drivers and conductors who ply the Bicol-Manila route would render their services at night until morning when they reach the place of destination.

Most of the [petitioners] have been with the company for at least ten years. In fact[,] some of them have been with the company for more than twenty years. Most of them are members of the ABC [l]abor [u]nion and there is an existing [c]ollective [b]argaining [a]greement between the company and the said labor union. All of them were underpaid and most of them, particularly those who travel the Bicol-Manila-Bicol route were not given overtime and night differential pay. Sometime beginning the year 2000, the company started constructively dismissing [petitioners]. This was done by not allowing [them] to perform their duties and function or simply by not admitting them to their work by stating that they should just return some other time. What the company would do is to inform the concerned employees that they should not [report to work] on that date and to return to another date as the bus they were supposed to drive is [not] serviceable. [Petitioners] would just be informed to return to a latter date but when they returned, another excuse will greet them for them not to perform their regular function. These same acts of the respondent [JB Line] hold true to all [petitioners].

 Tired of being treated in the same manner and for failure on the part of [JB Line] to give them their work despite no cessation of operations and for non-payment of their salaries, wage adjustments and other benefits, [petitioners were] left with no recourse except to file the instant case to force respondent [JB Line] to reinstate them in their jobs and [pay] their benefits. Respondent JB Line, represented by its owners, Lao Huan Ling and Jose Baritua, repudiated the allegations claiming that petitioners were not dismissed constructively from their jobs. Respondent JB Line claimed:

[Petitioners] are still regular employees of respondent [JB Line]. No record will show that letter of suspension were sent to them. Their claim for alleged... constructive dismissal is baseless considering the absence of any documentary evidence relative thereto and their failure to present testimonial evidence to prove that respondent [JB Line] violated the essential elements for constructive dismissal. Their failure to work regularly was due to economic crises that necessitated the reduction of trips for drivers and conductors and shortened workdays for office personnel and maintenance crew. The measures taken by respondent [JB Line] to prevent losses and possible closure of the business [were] management prerogative and were not resorted to as a ploy to constructively dismissed [petitioners].

 On the contrary, [petitioners] can resume duties anytime depending on the availability of buses and passengers...

As to [petitioners] Joue Balderama, Jesus Velarde, Edison Belen, Wilfredo Loscano, Marcelino Hamto, Romeo Ermino, Eduardo Escurel, Benjamin Pura, Noel Hapin and Albert Binaday, respondent [JB Line] asserts that these [petitioners] were separated and dismissed for just and valid causes...[A]s to [petitioner] Salvador Genetia, respondent [JB Line] contends that he suffered a stroke five (5) years ago and has already availed of his disability benefits...while [petitioner] Emilio Escandor has been legally terminated for cause. Although the labor arbiter (LA) found that some of JB Line's employees were validly dismissed from their jobs, he nonetheless ruled that JB Line was liable for constructive dismissal. In a decision dated August 24, 2001, he ruled:

 ...[I]t can be deduced that because of the reduced number of trips and shortened workdays,

[petitioners] would naturally suffer diminution in pay. One does not need to stretch his imagination to arrive at a conclusion that because at present, only two (2) buses are dispatched daily, almost all of the [petitioners] lost their jobs. With only two (2) buses presently dispatched, continuation of [petitioners'] employment with respondent [JB Line] is rendered impossible. There is constructive dismissal when [petitioners suffer] diminution in pay and/or continued employment is rendered impossible.

The normal consequences of constructive dismissal are reinstatement and payment of backwages. However, in this case ... the 1999 Collective Bargaining Agreement, signed by both parties, provide only for payment of separation pay to every employee whose service is terminated due to reduction in work force because of lack of work or financial difficulty, in an amount equivalent to twenty four (24) days for every year of service, computed based [on petitioners'] latest daily wage...

 As to [petitioners] Joue Balderama, Jesus Velarde, Edison Belen, Wilfredo Lascano, Marcelino

Hamto, Romeo Ermino, Eduardo Escurel, Benjamin Pura, Noel Hapin...this Arbitration Branch believes and so holds that they were validly dismissed. Respondent [JB Line] presented substantial evidence which clearly support its contention that these [petitioners] either committed dishonesty, grave misconduct or went AWOL and subsequently abandoned their jobs...

 ...[T]he complaint and claim of [petitioner] Larry Escarilla should also be denied because of

prescription...[H]e filed his complaint after the lapse of more than five (5) years from the date of his dismissal. Under the [Labor Code]...“all money claims arising from the employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time that the cause of action accrued, otherwise they shall be forever barred.”  

As to [petitioners] Salvador Genetia and Emilio Escandor, this Branch finds for [them]. Again, respondent [JB Line] miserably failed to substantiate its allegations that Salvador Genetia suffered stroke five (5) years ago, while [petitioner] Emilio Escandor had been terminated for cause...

 Anent [petitioners'] claim for underpayment of wages, non-payment of 13 th month pay and of night

shift differential pay, this Arbitration Branch finds for [petitioners], there being no contrary evidence presented to controvert said claims...

[Petitioners]...Oscar O, Domalaon, Abelardo D. Mangampo, Armando Lladones, Alfredo Bonagua, Sosante Pantua, Eligio Nicol, Edgar L. Bitancur, Emilio S. Escandor, Salvacion M. Hasta, Romeo O. Domalaon, Rustico Lagonoy, Serafin Dongaol, Rolando Gribialde, Eddie Ginete, Salvador R. Genetia [and] Manuel Frejas should[,] however, be excluded in the award of night shift differential pay... 

 WHEREFORE, premises considered, judgment is hereby rendered declaring [petitioners] to have

been constructively dismissed by respondent [JB Line] and consequently, ordering the latter to pay complainants the total amount of NINE MILLION NINETY SEVEN THOUSAND SIX HUNDRED TWENTY FOUR PESOS (P9,097,624.00) representing [petitioners'] separation pay, wage differential, 13th month and night shift differential. All other claims and charge[s] are DISMISSED finding no factual and legal basis therefore. SO ORDERED.       

Respondent JB Line appealed the arbiter’s decision (accompanied by a P200,000 supersedeas bond) to the NLRC. Finding that the bond posted was not equivalent to the monetary judgment, the NLRC ordered respondent JB Line to post an additional bond, otherwise, its appeal would be dismissed for non-perfection. The latter failed, hence, the NLRC denied its appeal, saying:

 

To date...respondent [JB Line] failed to post an additional bond in the amount of P8,897,624.00 in blatant disregard of our Order.             ..[I]ndeed, for respondent [JB Line's] failure to comply with the mandatory requirements of a valid appeal, the decision of the Labor Arbiter dated August 24, 2001 has already attained finality.

Respondent JB Line elevated the case to the CA via Rule 65 of the Rules of Court. In a resolution, however, the CA dismissed the petition for failure to attach a secretary's certificate or board resolution authorizing Lao Huan Ling to sign the verification and certification of non-forum shopping for and on behalf of respondent JB Line. The co-owner, Jose Baritua, also did not execute a special power of attorney authorizing him (Lao Huan Ling) to sign the verification and certification.

On MR, however, the CA reinstated respondent JB Line’s petition. Subsequently, in its assailed decision of August 14, 2003, the CA set aside the LA and NLRC's decision and exonerated respondent JB Line from any liability. It held:

..[I]t is clear that the law does not award separation pay to employees when the closure is due to serious business losses. [Respondent JB Line] [has] the burden to prove that such losses actually exist.

 In the case at bar, [respondent JB Line] convincingly discharged such burden. From the evidence

presented by [it] consisting of financial statements audited by an independent auditor, it has been satisfactorily established that [respondent JB Line] indeed suffered serious business losses for the three preceding years to its closure. Hence, it is not legally obligated to grant separation pay to [petitioners].

 WHEREFORE, premises considered, the instant petition is hereby GRANTED. The assailed

[o]rders issued by the NLRC as well as the decision of the Labor Arbiter...are SET ASIDE. SO ORDERED.

Petitioners moved for the reconsideration of the decision but it was denied. Thus, this appeal. In their bid to reverse the CA decision, petitioners argue that the CA erred in (1) giving due course to respondent JB Line's petition despite the absence of a secretary's certificate or board resolution or special power of attorney authorizing Lao Huan Ling to sign the verification and the certification of non-forum shopping; (2) allowing the petition despite the fact that the LA’s decision had already become final after respondent JB Line failed to post the required bond and (3) holding that they were not entitled to separation pay since respondent JB Line had ceased operations due to serious financial losses. We find the petition meritorious. 

LACK OF PROOF OF AUTHORITY TO SIGN THE VERIFICATION AND CERTIFICATION OF NON-FORUM SHOPPING

On the first issue, the appellate court should not have given due course to respondent JB Line's petition due to the improper verification and certification. Over time, we have emphasized the importance of complying with the procedural requirements of the Rules of Court. In Hyung Hyung Park v. Eng Won Choi, we said:

 Verification is not an empty ritual or a meaningless formality. Its import must never be sacrificed in the name of mere expedience or sheer caprice. For what is at stake is the matter of verity attested by the sanctity of an oath to secure an assurance that the allegations in the pleading have been made in good faith, or are true and correct and not merely speculative.

 This Court has strictly been enforcing the requirement of verification and certification and enunciating that the obedience to the requirements of procedural rules is needed if fair results are to be expected therefrom. Utter disregard of the rules cannot just be rationalized by harking on the policy of liberal construction. While the requirement is not jurisdictional in nature, it does not make it less a rule. In Fuentebella and Rolling Hills Memorial Park, Inc. v. Castro, we likewise declared that a certification without the proper authorization is defective and constitutes a valid cause for dismissal of the petition. We explained:

 The reason for this is that the principal party has actual knowledge whether a petition has previously been filed involving the same case or substantially the same issues. If, for any reason, the principal party cannot sign the petition, the one signing on his behalf must have been duly authorized. This requirement is intended to apply to both natural and juridical persons as Supreme Court Circular No. 28-91 and Section 5, Rule 7 of the Rules of Court do not make a distinction between natural and juridical persons. Where the petitioner is a corporation, the certification against forum shopping should be signed by its duly authorized director or representative...[I]f the real

party-in-interest is a corporate body, an officer of the corporation can sign the certification against forum shopping as long as he is authorized by a resolution of its board of directors.

A certification without the proper authorization is defective and constitutes a valid cause for the dismissal of the petition. This holds true in the present case...the Administrative Manager of petitioner corporation, who signed the verification and certificate of non-forum shopping, initially failed to submit a secretary's certificate or a board resolution confirming her authority to sign on behalf of co-petitioner. Although respondent JB Line claims that it   substantially complied with the requirement, albeit belatedly (when it submitted a secretary's certificate to the CA), said certificate, however, was neither dated nor its signatory Lao Huan Ling authorized to sign the verification and the certification of non-forum shopping to be filed in the CA. The records disclose that Lao Huan Ling’s authority was to represent respondent JB Line only before the LA and in the NLRC. While, as a rule, factual (and evidentiary) issues are beyond the province of our judicial review under Rule 45, a discrepancy between the findings of the CA and those of the LA and NLRC (as in this case) excludes it from the purview of said rule.

EFFECT OF FAILURE TO POST BOND WHERE THE JUDGMENT INVOLVES MONETARY AWARD

On the second assigned error, the records show that respondent JB Line clearly failed to post the bond required by the NLRC. Article 223 of the Labor Code provides:

 ARTICLE 223. Appeal. - Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders...

In case of judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from.

The perfection of an appeal in a manner and within the period prescribed by law is not only mandatory but also jurisdictional. For respondent JB Line's failure to comply with the rules on appeal, the LA's decision became final and executory. Nothing more can therefore be done to change the decision. Respondent JB Line had lost the privilege of seeking relief from the appellate court.   

 In one case, we held:

 The intention of the lawmakers to make the bond an indispensable requisite for the perfection of

an appeal by the employer, is clearly limned in the provision that an appeal by the employer may be perfected “only upon the posting of a cash or surety bond.” The word “only” makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond by the employer may be the exclusive means by which an employer's appeal maybe perfected.      

In some cases, the requirement to post a supersedeas bond for the perfection of an appeal was relaxed but this was justified by substantial compliance. In this case, however, no similar reason existed to excuse respondent JB Line from complying with the requirement. The bond posted by respondent JB Line was not even close to half of the amount required by the NLRC. 

CLOSURE OF BUSINESS DUE TO SERIOUS FINANCIAL LOSSES

We likewise hold that the CA erred in ruling that petitioners were no longer entitled to separation pay on the ground alone that respondent JB Line had ceased to operate due to serious losses. The crucial point to consider is when petitioners' employment was put on hold until the filing of the case with the LA. At that time, respondent JB Line admitted that it was financially distressed but it never claimed it was closing down. In fact, in the proceedings before the LA and in the NLRC, it argued that it could not be liable for constructive dismissal since “petitioners (were) still (its) regular employees” and could resume performing their duties depending on the availability of buses and passengers.

Assuming such closure indeed took place, respondent JB Line was still not off the hook. Under the law, in case of closure of business due to serious financial losses, it is imperative for the employer to send a notice of closure to the employees and to the Department of Labor and Employment (DOLE). Article 283 of the Labor Code, as amended, provides:

 

ARTICLE 283: Closure of establishment and reduction of personnel.  - The employer may also terminate the employment of any employee due to installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. xxx 

 The records are devoid of proof that respondent JB Line ever furnished the DOLE or petitioners with such notice.

Moreover, even if we were to grant that respondent JB Line was on the brink of closing down at that time, the reduction of petitioners' workload and/or the “floating” of their employment was still not warranted. Petitioners' plight had persisted for months which only meant that they were already constructively dismissed. In International Hardware, Inc. v. NLRC, we declared that an employee is constructively dismissed when his working days are substantially cut for more than six months due to the employer's financial losses. Lastly, the LA found that “because of the reduced number of trips and shortened workdays, petitioners naturally suffer(ed) diminution in pay.” We agree with him that “there (was) constructive dismissal (because of the) diminution in pay and/or (the) continued employment (was) rendered impossible...”    

WHEREFORE, the assailed decision of the Court of Appeals in CA-G.R. SP No. 75535 dated August 14, 2003 is hereby SET ASIDE. Accordingly, the decision of the labor arbiter dated August 24, 2001 is REINSTATED.

STOLT-NIELSEN MARINE SERVICES, INC. (now STOLT-NIELSEN TRANSPORTATION GROUP, INC.), VS. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ARIEL C. SANTOS, RICARDO O. ATIENZA and RAMON ALPINO

In 1978, herein private respondent Ramon Alpino was employed as motorman by petitioner Stolt Nielsen Marine Services, Inc., a corporation based in Connecticut, U.S.A., for the latter’s vessel “M/T Stolt Sincerity.” Respondent’s employment with petitioner, albeit not continuous, lasted until 1984 when he was repatriated to the Philippines after being diagnosed with Cardiac Enlargement, Pulmonary Hypertension and Acute Psychotic Reaction and declared unfit for sea duty. In early 1985, respondent filed a complaint before the Philippine Overseas and Employment Agency (POEA), docketed as POEA Case No. (M) 85-01-039, for recovery of sickness and disability benefits and claim for personal belongings and underpayment of wages against petitioner. Petitioner offered to amicably settle the money claims of respondent, which offer was accepted by respondent’s sister and attorney-in-fact Anita Alpino by virtue of a Special Power of Attorney (SPA). Thus, on March 21, 1985, respondent, through his sister and attorney-in-fact, executed a “Receipt and Release” whereby he acknowledged receipt of the sum of P130,000.00 representing disability benefits, medical and hospitalization expenses, and damages. On the basis of said “Receipt and Release,” POEA dismissed Case No. (M) 85-01-039.

In December 1987, another complaint against petitioner was lodged by respondent before the POEA for the same causes of action (recovery of sickness and disability benefits and claim for personal belongings and underpayment of wages). The case, docketed as POEA Case No. (M) 87-12-997, was dismissed by the POEA on ground of res judicata.  On March 14, 1989, respondent filed another complaint against petitioner, this time with the Regional Trial Court (RTC) at Quezon City, docketed as Civil Case No. Q-89-2009, for the Annulment of the Receipt and Release. In his complaint, respondent alleged that he was mentally incapacitated to execute the SPA in favor of his sister Anita Alpino. In an Order dated July 16, 1993, the RTC dismissed Civil Case No. Q-89-2009 for insufficiency of evidence. Therefrom, respondent went to the Court of Appeals which affirmed[3] the RTC’s judgment of dismissal. In time, respondent moved for a reconsideration but his motion was denied by the appellate court. Undaunted, on July 26, 1994, respondent filed a case against petitioner with the POEA for recovery of sickness and disability benefits, allegedly arising from his sickness while under the latter’s employ. The case was docketed as POEA Case No. (M) 94-07-2223. By reason of the passage of Republic Act 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995,[5] POEA Case No. (M) 94-07-2223 was transferred to the NCR-Arbitration Branch of the NLRC and assigned to herein public respondent, Labor Arbiter Ariel Santos. On May 6, 1997, Labor Arbiter Santos rendered a decision declaring “invalid and ineffectual” the SPA executed by respondent in favor of his sister Anita and the subsequent Receipt and Release signed by the latter in behalf of her brother. In resolving the case, Labor Arbiter Santos ratiocinated as follows:

The principal issue to be resolved is whether or not the special power of attorney executed by [respondent] in favor of [his] sister and the subsequent Receipt and Release are valid documents to forestall any claim by [respondent]. After a careful and judicious study of the respective pleadings and pieces of evidence submitted by both parties, undersigned finds that the documents adverted and relied upon by [petitioner] to negate [respondent’s] claim are shot with loopholes that would render it voidable and unenforceable. First, it is to be noted that [petitioner] did not controvert the merit of [respondent’s] claim for sickness and disability benefits but relied mainly on the invalid Receipt and Release signed by [respondent’s] sister as the basis for dismissing [respondent’s] claim. A cursory look at the documents Receipt and Release and the Special Power of Attorney marked as Annex “1” and Annex “2,” respectively, would readily indicate that they were prepared with haste and haphazardly to render it valid and lawful. Both documents were prepared on the same day. In fact, the Receipt and Release was not even executed under oath so that its due execution is put under a cloud of doubt. Secondly, even gratia argumenti that the documents adverted to are valid and were entered into voluntarily, the consideration thereof is oppressive, unreasonable and unconscionable. It is a public policy that where the consideration in a public document is disproportionately unconscionable to the claims of [respondent] who was declared to be mentally unfit, the State should step in to protect the rights of the aggrieved party and declare the same document to be invalid and without force and effect. Thirdly, the consideration of P130,000.00 paid by [petitioner] to [respondent’s] attorney-in-fact corresponds only to [respondent’s] claim for lost luggages and should not extinguish [respondent’s] right to claim for sickness and disability benefits as recognized under insurance health cover before any seaman can board any foreign vessel.

The dispositive portion of Labor Arbiter Santos’ decision states:

WHEREFORE, finding the subject documents Annex “1” and Annex “2” of [petitioner’s] Answer to be invalid and ineffectual, [petitioner] is hereby directed to pay [respondent’s] claim for sickness and disability benefits. The Research and Information Unit is hereby ordered to make the proper computation which will become part and parcel of this decision. SO ORDERED. 

In compliance with the above directive, herein other public respondent Ricardo Atienza, Acting Chief of Research and Information Unit of NLRC, made a computation of respondent Alpino’s claim for sickness and disability benefits as follows:

Sickness benefit for October 1979(Payment for sickness & operation)       =          US$11,427.32 Injury and sickness for Sept. 1980(Payment for last finger cut)                   =                   5,568.42 Sickness benefit for March 1985(Payment for sickness of Acute Psychotic Reaction)                    =                      28,810.60  

TOTAL AWARD                   =          US$45,806.34

On  July 25, 1997, or seven  days  after  its receipt of the aforementioned  Labor  Arbiter’s  decision,  petitioner  filed  with the respondent  NLRC  its  Appeal  with  Attached  Urgent  Motion to Reduce or be Exempted from Filing Appeal Bond. Petitioner argued therein that the money claims of respondent Alpino were already barred by prescription;  that said claims should have been dismissed by the Labor Arbiter on ground of res judicata;  and that the validity of the Receipt and Release and the Special Power of Attorney had already been passed upon by the RTC of Quezon City in Civil Case No. Q-89-2009 and affirmed by the Court of Appeals. In a Resolution dated August 29, 1997, respondent NLRC affirmed the Labor Arbiter’s decision and denied petitioner’s Urgent Motion to Reduce or be Exempted from Filing an Appeal Bond on account of petitioner’s  failure to post cash or surety bond within the reglementary period. In so ruling, the NLRC reasoned:

The URGENT MOTION TO REDUCE OR BE EXEMPTED FROM FILING APPEAL BOND is denied. Sections 6 and 7, Rule VI of the New Rules of Procedure of the NLRC provides: 

“SECTION 6. BOND. – In case the decision of a Labor Arbiter, POEA Administrator and Regional Director or his duly authorized hearing officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award xxx.” “SECTION 7. NO EXTENSION OF PERIOD. – No motion or request for the extension of the period within which to perfect an appeal shall be allowed.”

 The aforequoted provisions are very clear, that all the requirements for the perfection of an appeal must be made and complied with within the reglementary period to appeal, that is: the filing of the appeal and the posting of a cash or surety bond must be made within the period of ten (10) days. The filing of a Motion to Reduce Bond will not suspend the running of the ten (10) days period. If at all, the movant should have secured the approval of the Commission for the reduction of bond within the same period allowed by law. Considering that the movant failed to comply with the requirements for perfecting an appeal, said motion is therefore denied.

The NLRC then decreed:

WHEREFORE, the URGENT MOTION TO REDUCE OR BE EXEMPTED FROM FILING APPEAL BOND is DENIED for non-perfection of the appeal. Accordingly, the decision dated May 6, 1997 is AFFIRMED in toto.  

Its motion for reconsideration having been denied by the NLRC in its decision dated October 28, 1997petitioner went to this Court via a petition for certiorari  which this Court referred to the Court of Appeals pursuant to its September 16, 1998 decision in St. Martin Funeral Home vs. National Labor Relations Commission. As stated at the threshold hereof, the appellate court, in its decision of March 29, 2000, affirmed the judgment of the NLRC, thus:  

The law is clear. An appeal, per article 223 of the Labor Code, shall be perfected only upon posting of a cash or surety bond in cases involving monetary award. On perfection of appeal, it is well entrenched in this jurisdiction that perfection of an appeal within the period and in the manner prescribed by law is jurisdictional and non-compliance with such requirement is fatal and has the effect of rendering the judgment final and executory. 

In implementing article 223, respondent NLRC however laid down the rule allowing reduction of the amount of bond which it can approve in meritorious cases. There is a caveat however that the filing of the motion to reduce bond does not stop the running of the period to perfect appeal. The plain import of article 223 of the Labor Code and the amended section 6, Rule VI of the New Rules of Procedure is that the reduction of the bond should be approved within the ten (10) day appeal period and the appellant should exert its utmost diligence to obtain the approval of respondent NLRC before the lapse of the period or else there is a big risk that the appeal will be dismissed for non-perfection of the appeal due to the absence of the appeal bond. This is evident form the last sentence of Section 6, Rule VI that “the filing xxx of the motion to reduce bond shall not stop the running of the period to perfect appeal.” Thus the present rule is unequivocal that the filing of the motion does not toll the running of the period of appeal and the logical implication and inevitable result is the dismissal of the appeal if the reduction is denied. xxx. Thus respondent NLRC correctly affirmed the decision of Arbiter Santos since the appeal was not perfected due to lack of an appeal bond.

There being no capricious, arbitrary or whimsical exercise judgment on the part of respondent NLRC, this petition perforce must fall.

 With its motion for reconsideration having been denied by the appellate court in its Resolution of March 2, 2001,  petitioner is now with us on the following grounds: 

I. IN DISMISSING PETITIONER’S PETITION FOR CERTIORARI, IN EFFECT, AFFIRMING PUBLIC RESPONDENT NLRC, THE HONORABLE COURT OF APPEALS, IN EFFECT, SANCTIONED THE DECISION DATED MAY 6, 1997 OF PUBLIC RESPONDENT LABOR ARBITER WHICH ON ITS FACE WAS MANIFESTLY RENDERED IN EXCESS OF HIS JURISDICTION IN THAT –

A.                 AS SHOWN IN THE UNILATERAL COMPUTATION OF     PUBLIC RESPONDENT ATIENZA WHICH FORMED PART OF PUBLIC RESPONDENT LABOR ARBITER’S DECISION DATED MAY 6, 1997, THE QUESTIONED AWARD IN THE AMOUNT OF US$45,806.34 ALLEGEDLY REPRESENTING DISABILITY AND SICKNESS BENEFITS FOR OCTOBER 1979, SEPTEMBER 1980, AND MARCH 1985 IS CLEARLY BARRED BY PRESCRIPTION AS PRIVATE RESPONDEN’S COMPLAINT WAS FILED ONLY ON JULY 26, 2994;

 B.                 THE ALLEGED MONEY CLAIM IS ALREADY BARRED BY RES JUDICATA,

NOT ONCE, BUT TWICE, AS THE SAME HAD ALREADY BEEN RULED UPON BY THE POEA, THE QUASI-JUDICIAL BODY WHICH THEN HAD THE JURISDICTION OVER SAID CLAIM IN ITS ORDERS, TO WIT –

 i.                     ORDER DATED APRIL 17, 1985 IN POEA CASE NO. (M) 85-

01-039 DISMISSING THE CASE WITH PREJUDICE IN VIEW OF THE AMICABLE SETTLEMENT ENTERED INTO BY THE PARTIES; AND

ii.                   ORDER DATED MAY 28, 1988 IN POEA CASE NO. (M) 87-12-997 DISMISSING THE CASE ON THE GROUND OF RES JUDICATA.

 C.                 PUBLIC RESPONDENT LABOR ARBITER EXCEEDED HIS JURISDICTION

WHEN HE DECLARED AS ‘INVALID AND INEFFECTUAL’ THE RECEIPT AND

RELEASE AND THE SPECIAL POWER OF ATTORNEY THE VALIDITY OF WHICH HAD ALREADY BEEN PASSED UPON BY:

 i.                     THE POEA, NOT ONCE BUT TWICE, IN POEA CASE NO.

(M) 85-01-039 AND SUBSEQUENTLY IN POEA CASE NO. (M) 87-12-997;

ii.                   THE REGIONAL TRIAL COURT, BRANCH 104 OF QUEZON CITY IN ITS ORDER DATED SEPTEMBER 6, 1991 IN CIVIL CASE NO. Q-89-2009 DISMISSING PRIVATE RESPONDENT’S COMPLAINT FOR INSUFFICIENCY OF EVIDENCE; AND

 iii.                  THE HONORABLE COURT OF APPEALS ITSELF IN ITS

DECISION DATED JULY 16, 1993 IN CA-G.R. CV NO. 35954 AFFIRMING WITH FINALITY THE AFOREMENTIONED ORDER OF THE REGIONAL TRIAL COURT, BRNACH 104 OF QUEZON CITY.

II. THE HONORABLE COURT OF APPEALS AND PUBLIC RESPONDENT NLRC GROSSLY ERRED AND GRAVELY ABUSED THEIR DISCRETION WHEN THEY STUBBORNLY IGNORED THE CURRENT POLICY OF THIS HONORABLE COURT CALLING FOR LIBERAL INTERPREATTION OF ARTICLE 223 OF THE LABOR CODE WITH RESPECT TO THE POSTING OF AN APPEAL BOND AS A CONDITION FOR PERFECTING AN APPEAL AND HOLDING THAT A MOTION TO REDUCE BOND BASED ON MANIFESTLY MERITORIOUS GROUNDS IS A SUBSTANTIAL COMPLIANCE THEREOF. III. THE HONORABLE COURT OF APPEALS GROSSLY ERRED AND GRAVELY ABUSED ITS DISCRETION WHEN IT WITTINGLY AND STUBBORNLY REFUSED TO CONSIDER THE SUBSTANTIAL MERITS OF PETITIONER’S CASE WHICH IMPERATIVELY CALL FOR THE LIBERAL APPLICATION OF ARTICLE 223 OF THE LABOR CODE AS THE VERY FACTUAL BASIS AND GROUNS OF PETITIONER’S PETITION ARE THEMSELVES RECOGNIZED BY THE HONORABLE COURT OF APPEALS IN ITS DECISION OF MARCH 29, 2001. IV. TH HONORABLE COURT OF APPEALS MISERABLY ABDICATED ITS JUDICIAL POWER OF REVIEW OVER PUBLIC RESPONDENTS AND FAILED TO EXERCISE CANDOR IN THE DISPOSITION OF PETITIONER’S PETITION.

The petition lacks merit.

Time and again, it has been held that the right to appeal is not a natural right or a part of due process, but merely a statutory privilege and may be exercised only in the manner and in accordance with the provisions of the law. The party who seeks to avail of the same must comply with the requirements of the rules, failing in which the right to appeal is lost.

Article 223 of the Labor Code sets forth the rules on appeal from the Labor Arbiter’s monetary award, thus:

 Article 223. Appeal.— Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. xxx. 

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (Emphasis ours)

Rule VI of the New Rules of Procedure of the NLRC implements the aforequoted Article. The pertinent provisions of Rule VI which were in effect when petitioner filed its appeal on July 25, 1997, provides, inter alia,  as follows:

Section 1. Periods of Appeal. - Decisions, awards or orders of the Labor Arbiter and the POEA Administrator shall be final and executory unless appealed to the Commission by any or both parties

within ten (10) calendar days from receipt of such decisions, awards or orders of the Labor Arbiter or of the Administrator, and in case of a decision of the Regional Director or his duly authorized Hearing Officer within five (5) calendar days from receipt of such decisions, awards or orders. If the 10th or 5th day, as the case may be, falls on a Saturday, Sunday or a holiday, the last day to perfect the appeal shall be the next working day. (As amended on November 7, 1991)

 Section 3. Requisites for Perfection of Appeal. - (a) The appeal shall be filed within the reglementary period as provided in Section 1 of this Rule; shall be under oath with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided on Section 5 of this Rule; shall be accompanied by a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a statement of the date when the appellant received the appealed decision, order or award and proof of service on the other party of such appeal. 

A mere notice of appeal without complying with the other requisites aforestated shall not stop the running of the period for perfecting an appeal.

 Section 6. Bond. - In case the decision of a Labor Arbiter, POEA Administrator and Regional Director or his duly authorized hearing officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award, exclusive of moral and exemplary damages and attorney's fees.

 The employer as well as counsel shall submit a joint declaration under oath attesting that the surety bond posted is genuine and that it shall be in effect until final disposition of the case. The Commission may, in meritorious cases and upon Motion of the Appellant, reduce the amount of the bond. The filing, however, of the motion to reduce bond shall not stop the running of the period to perfect appeal. (As amended on November 5, 1996)

 Section 7. No Extension of Period. - No motion or request for extension of the period within which to perfect an appeal shall be allowed.[Emphasis ours] 

Evident it is from the foregoing that an appeal from rulings of the Labor Arbiter to the NLRC must be perfected within ten (10) calendar days from receipt thereof, otherwise the same shall become final and executory. In a judgment involving a monetary award, the appeal shall be perfected only upon (1) proof of payment of the required appeal fee and (2) posting of a cash or surety bond issued by a reputable bonding company and (3) filing of a memorandum of appeal. A mere notice of appeal without complying with the other requisites mentioned shall not stop the running of the period for perfection of appeal.

Here, petitioner received the decision of the Labor Arbiter on July 18, 1997. From July 18, 1997, petitioner has a limited period of ten (10) days to perfect its appeal. Petitioner filed its memorandum of appeal on July 25, 1997. However, in lieu of the required cash or surety bond, petitioner filed a motion to reduce or be exempted from filing an appeal bond. The NLRC denied the motion and consequently dismissed the appeal for non-perfection. Petitioner now insists that its Motion to Reduce Bond constitutes a substantial compliance of the requirement for perfecting an appeal under Article 223 of the Labor Code and the NLRC Rules of Procedure.

We disagree. The requirement of a cash or surety bond for the perfection of an appeal from the Labor Arbiter’s monetary award is not only mandatory but jurisdictional as well, and non-compliance therewith is fatal and has the effect of rendering the award final and executory.[18] The reason therefor is explained by the Court in this language:

… [T]he obvious and logical purpose of an appeal bond is to insure, during the period of appeal, against any occurrence that would defeat or diminish recovery under the judgment if subsequently affirmed; it also validates and justifies, at least prima facie, an interpretation that would limit the amount of the bond to the aggregate of the sums awarded other than in the concept of moral and exemplary damages.

 

The mandatory filing of a bond for the perfection of an appeal is evident from the aforequoted provision of Article 223 of the Labor Code which explicitly states that the appeal may be perfected only upon the posting of cash or surety bond. The word “only” makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond to be the exclusive means by which an employer’s appeal may be perfected. This requirement is intended to dissuade employers from using the appeal to delay, or even evade, their obligation to satisfy their employee’s just and lawful claims. Further, the implementing rules of respondent NLRC are unequivocal in saying that “the filing of the motion to reduce bond shall not stop the running of the period to perfect appeal.” Thus, petitioner should have seasonably filed the appeal bond within the ten-day reglementary period following its receipt of the decision of Labor Arbiter Ariel Santos in order to forestall the

finality of said decision. Since petitioner failed to post an appeal bond within the reglementary period, no appeal was perfected from the decision of Labor Arbiter Santos, for which reason, the decision sought to be appealed to the NLRC had become final and executory and therefore immutable. 

It is true that the requirement of posting a bond on appeals involving monetary awards has been given a liberal interpretation in certain cases. However, relaxation of this rule can only be done where there was substantial compliance of the NLRC Rules of Procedure or where the party involved, at the very least, demonstrated willingness to abide by the rules by posting a partial bond. Petitioner did not post a full or partial appeal bond within the prescribed period. Petitioner could have even paid a moderate and reasonable sum as premium for such bond as the law does not require outright payment but merely the posting of a bond to ensure that the award will be eventually paid should the appeal be dismissed, but still, petitioner failed to do so. Hence, we find no cogent reason to apply the same liberal interpretation in this case.

While, admittedly, Section 6, Rule VI of the NLRC Rules of Procedure  allows  the  reduction  of  the  appeal bond upon motion of  the  appellant,   the  exercise  of  the  authority  is  not a matter of  right on the part of the movant but lies within the sound discretion of the NLRC upon showing of meritorious grounds.[23] Nevertheless, even granting arguendo that petitioner has meritorious grounds to reduce the appeal bond, the result would have been the same since it failed to post cash or surety bond within the prescribed period. As payment of the appeal bond is an indispensable and jurisdictional requisite and not a mere technicality of law or procedure, we find the challenged decision of the Court of Appeals in accordance with law.

WHEREFORE, the petition is DENIED and the assailed decision of the Court of Appeals in  CA-G.R. No. 51046  AFFIRMED. Costs against petitioner. SO ORDERED.

ST. MARTIN FUNERAL HOME vs. NATIONAL LABOR RELATIONS COMMISSION and BIENVENIDO ARICAYOS

The present petition for certiorari stemmed from a complaint for illegal dismissal filed by herein private respondent before the National Labor Relations Commission (NLRC), Regional Arbitration Branch No. III, in San Fernando, Pampanga. Private respondent alleges that he started working as Operations Manager of petitioner St. Martin Funeral Home on February 6, 1995. However, there was no contract of employment executed between him and petitioner nor was his name included in the semi-monthly payroll. On January 22, 1996, he was dismissed from his employment for allegedly misappropriating P38,000.00 which was intended for payment by petitioner of its value added tax (VAT) to the Bureau of Internal Revenue (BIR).

Petitioner on the other hand claims that private respondent was not its employee but only the uncle of Amelita Malabed, the owner of petitioner St. Martin's Funeral Home. Sometime in 1995, private respondent, who was formerly working as an overseas contract worker, asked for financial assistance from the mother of Amelita. Since then, as an indication of gratitude, private respondent voluntarily helped the mother of Amelita in overseeing the business.

In January 1996, the mother of Amelita passed away, so the latter then took over the management of the business. She then discovered that there were arrears in the payment of taxes and other government fees, although the records purported to show that the same were already paid. Amelita then made some changes in the business operation and private respondent and his wife were no longer allowed to participate in the management thereof. As a consequence, the latter filed a complaint charging that petitioner had illegally terminated his employment. Based on the position papers of the parties, the labor arbiter rendered a decision in favor of petitioner on October 25, 1996 declaring that no employer-employee relationship existed between the parties and, therefore, his office had no jurisdiction over the case.

Not satisfied with the said decision, private respondent appealed to the NLRC contending that the labor arbiter erred (1) in not giving credence to the evidence submitted by him; (2) in holding that he worked as a "volunteer" and not as an employee of St. Martin Funeral Home from February 6, 1995 to January 23, 1996, or a period of about one year; and (3) in ruling that there was no employer-employee relationship between him and petitioner.

On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and remanding the case to the labor arbiter for immediate appropriate proceedings. Petitioner then filed a motion for reconsideration which was denied by the NLRC in its resolution dated August 18, 1997 for lack of merit, hence the present petition alleging that the NLRC committed grave abuse of discretion. Before proceeding further into the merits of the case at bar, the Court feels that it is now exigent and opportune to reexamine the functional validity and systemic practicability of the mode of judicial review it has long adopted and still follows with respect to decisions of the NLRC. The increasing number of labor disputes that find their way to this Court and the legislative changes introduced over the years into the provisions of Presidential Decree (P.D.) No. 442 (The Labor Code of the Philippines and Batas Pambansa Blg. (B.P. No.) 129 (The Judiciary Reorganization Act of 1980) now stridently call for and warrant a reassessment of that procedural aspect.

We prefatorily delve into the legal history of the NLRC. It was first established in the Department of Labor by P.D. No. 21 on October 14, 1972, and its decisions were expressly declared to be appealable to the Secretary of Labor and, ultimately, to the President of the Philippines. On May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines, the same to take effect six months after its promulgation. Created and regulated therein is the present NLRC which was attached to the Department of Labor and Employment for program and policy coordination only. Initially, Article 302 (now, Article 223) thereof also granted an aggrieved party the remedy of appeal from the decision of the NLRC to the Secretary of Labor, but P.D. No. 1391 subsequently amended said provision and abolished such appeals. No appellate review has since then been provided for.

Thus, to repeat, under the present state of the law, there is no provision for appeals from the decision of the NLRC. 10 The present Section 223, as last amended by Section 12 of R.A. No. 6715, instead merely provides that the Commission shall decide all cases within twenty days from receipt of the answer of the appellee, and that such decision shall be final and executory after ten calendar days from receipt thereof by the parties. When the issue was raised in an early case on the argument that this Court has no jurisdiction to review the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal provision for appellate review thereof, the Court nevertheless rejected that thesis. It held that there is an underlying power of the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by statute; that the purpose of judicial review is to keep the administrative agency within its jurisdiction and protect the substantial rights of the parties; and that it is that part of the checks and balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications.

Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of the aggrieved party is to timely file a motion for reconsideration as a precondition for any further or subsequent remedy, and then seasonably avail of the special civil action of certiorari under Rule 65, for which said Rule has now fixed the reglementary period of sixty days from notice of the decision. Curiously, although the 10-day period for finality of the decision of the NLRC may already have lapsed as contemplated in Section 223 of the Labor Code, it has been held that this Court may still take

cognizance of the petition for certiorari on jurisdictional and due process considerations if filed within the reglementary period under Rule 65.

Turning now to the matter of judicial review of NLRC decisions, B.P. No. 129 originally provided as follows:

Sec. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards, or commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Intermediate Appellate Court shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings.

These provisions shall not apply to decisions and interlocutory orders issued under the Labor Code of the Philippines and by the Central Board of Assessment Appeals. 15

Subsequently, and as it presently reads, this provision was amended by R.A. No. 7902 effective March 18, 1995, to wit:

Sec. 9. Jurisdiction. — The Court of Appeals shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Social Security Commission, the Employees Compensation Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. Trials or hearings in the Court of Appeals must be continuous and must be completed within, three (3) months, unless extended by the Chief Justice.

It will readily be observed that, aside from the change in the name of the lower appellate court, 16 the following amendments of the original provisions of Section 9 of B.P. No. 129 were effected by R.A. No. 7902, viz.:

1. The last paragraph which excluded its application to the Labor Code of the Philippines and the Central Board of Assessment Appeals was deleted and replaced by a new paragraph granting the Court of Appeals limited powers to conduct trials and hearings in cases within its jurisdiction.

2. The reference to the Labor Code in that last paragraph was transposed to paragraph (3) of the section, such that the original exclusionary clause therein now provides "except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442,

as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948." (Emphasis supplied).

3. Contrarily, however, specifically added to and included among the quasi-judicial agencies over which the Court of Appeals shall have exclusive appellate jurisdiction are the Securities and Exchange Commission, the Social Security Commission, the Employees Compensation Commission and the Civil Service Commission.

This, then, brings us to a somewhat perplexing impassè, both in point of purpose and terminology. As earlier explained, our mode of judicial review over decisions of the NLRC has for some time now been understood to be by a petition for certiorari under Rule 65 of the Rules of Court. This is, of course, a special original action limited to the resolution of jurisdictional issues, that is, lack or excess of jurisdiction and, in almost all cases that have been brought to us, grave abuse of discretion amounting to lack of jurisdiction.

It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now grants exclusive appellate jurisdiction to the Court of Appeals over all final adjudications of the Regional Trial Courts and the quasi-judicial agencies generally or specifically referred to therein except, among others, "those falling within the appellate jurisdiction of the Supreme Court in accordance with . . . the Labor Code of the Philippines under Presidential Decree No. 442, as amended, . . . ." This would necessarily contradict what has been ruled and said all along that appeal does not lie from decisions of the NLRC. 17 Yet, under such excepting clause literally construed, the appeal from the NLRC cannot be brought to the Court of Appeals, but to this Court by necessary implication.

The same exceptive clause further confuses the situation by declaring that the Court of Appeals has no appellate jurisdiction over decisions falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of B.P. No. 129, and those specified cases in Section 17 of the Judiciary Act of 1948. These cases can, of course, be properly excluded from the exclusive appellate jurisdiction of the Court of Appeals. However, because of the aforementioned amendment by transposition, also supposedly excluded are cases falling within the appellate jurisdiction of the Supreme Court in accordance with the Labor Code. This is illogical and impracticable, and Congress could not have intended that procedural gaffe, since there are no cases in the Labor Code the decisions, resolutions, orders or awards wherein are within the appellate jurisdiction of the Supreme Court or of any other court for that matter.

A review of the legislative records on the antecedents of R.A. No. 7902 persuades us that there may have been an oversight in the course of the deliberations on the said Act or an imprecision in the terminology used therein. In fine, Congress did intend to provide for judicial review of the adjudications of the NLRC in labor cases by the Supreme Court, but there was an inaccuracy in the term used for the intended mode of review. This conclusion which we have reluctantly but prudently arrived at has been drawn from the considerations extant in the records of Congress, more particularly on Senate Bill No. 1495 and the Reference Committee Report on S. No. 1495/H. No. 10452. 18

In sponsoring Senate Bill No. 1495, Senator Raul S. Roco delivered his sponsorship speech 19 from which we reproduce the following excerpts:

The Judiciary Reorganization Act, Mr. President, Batas Pambansa Blg. 129, reorganized the Court of Appeals and at the same time expanded its jurisdiction and powers. Among others, its appellate jurisdiction was expanded to cover not only final judgment of Regional Trial Courts, but also all final judgment(s), decisions, resolutions, orders or awards of quasi-judicial agencies, instrumentalities, boards and commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of BP Blg. 129 and of subparagraph 1 of the third paragraph and subparagraph 4 of Section 17 of the Judiciary Act of 1948.

Mr. President, the purpose of the law is to ease the workload of the Supreme Court by the transfer of some of its burden of review of factual issues to the Court of Appeals. However, whatever benefits that can be derived from the expansion of the appellate jurisdiction of the Court of Appeals was cut short by the last paragraph of Section 9 of Batas Pambansa Blg. 129 which excludes from its coverage the "decisions and interlocutory orders issued under the Labor Code of the Philippines and by the Central Board of Assessment Appeals.

Among the highest number of cases that are brought up to the Supreme Court are labor cases. Hence, Senate Bill No. 1495 seeks to eliminate the exceptions enumerated in Section 9 and, additionally, extends the coverage of appellate review of the Court of Appeals in the decision(s) of the Securities and

Exchange Commission, the Social Security Commission, and the Employees Compensation Commission to reduce the number of cases elevated to the Supreme Court. (Emphases and corrections ours)

Senate Bill No. 1495 authored by our distinguished Colleague from Laguna provides the ideal situation of drastically reducing the workload of the Supreme Court without depriving the litigants of the privilege of review by an appellate tribunal.

In closing, allow me to quote the observations of former Chief Justice Teehankee in 1986 in the Annual Report of the Supreme Court:

. . . Amendatory legislation is suggested so as to relieve the Supreme Court of the burden of reviewing these cases which present no important issues involved beyond the particular fact and the parties involved, so that the Supreme Court may wholly devote its time to cases of public interest in the discharge of its mandated task as the guardian of the Constitution and the guarantor of the people's basic rights and additional task expressly vested on it now "to determine whether or not there has been a grave abuse of discretion amounting to lack of jurisdiction on the part of any branch or instrumentality of the Government.

We used to have 500,000 cases pending all over the land, Mr. President. It has been cut down to 300,000 cases some five years ago. I understand we are now back to 400,000 cases. Unless we distribute the work of the appellate courts, we shall continue to mount and add to the number of cases pending.

In view of the foregoing, Mr. President, and by virtue of all the reasons we have submitted, the Committee on Justice and Human Rights requests the support and collegial approval of our Chamber.

Surprisingly, however, in a subsequent session, the following Committee Amendment was introduced by the said sponsor and the following proceedings transpired:

Senator Roco. On page 2, line 5, after the line "Supreme Court in accordance with the Constitution," add the phrase "THE LABOR CODE OF THE PHILIPPINES UNDER P.D. 442, AS AMENDED." So that it becomes clear, Mr. President, that issues arising from the Labor Code will still be appealable to the Supreme Court.

The President. Is there any objection? (Silence) Hearing none, the amendment is approved.

Senator Roco. On the same page, we move that lines 25 to 30 be deleted. This was also discussed with our Colleagues in the House of Representatives and as we understand it, as approved in the House, this was also deleted, Mr. President.

The President. Is there any objection? (Silence) Hearing none, the amendment is approved.

Senator Roco. There are no further Committee amendments, Mr. President.

Senator Romulo. Mr. President, I move that we close the period of Committee amendments.

The President. Is there any objection? (Silence) Hearing none, the amendment is approved. (Emphasis supplied).

Thereafter, since there were no individual amendments, Senate Bill No. 1495 was passed on second reading and being a certified bill, its unanimous approval on third reading followed. The Conference Committee Report on Senate Bill No. 1495 and House Bill No. 10452, having theretofore been approved by the House of Representatives, the same was likewise approved by the Senate on February 20, 1995, inclusive of the dubious formulation on appeals to the Supreme Court earlier discussed. The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the Supreme Court were eliminated, the legislative intendment was that the special civil action of certiorari was and still is the proper vehicle for judicial review of decisions of the NLRC. The use of the word "appeal" in relation thereto and in the instances we have noted could have been a lapsus plumae because appeals by certiorari and the original action for certiorari are both modes of judicial review addressed to the appellate courts. The important distinction between them, however, and with which the Court is particularly concerned here is that the special civil action of certiorari is within the

concurrent original jurisdiction of this Court and the Court of Appeals; whereas to indulge in the assumption that appeals by certiorari to the Supreme Court are allowed would not subserve, but would subvert, the intention of Congress as expressed in the sponsorship speech on Senate Bill No. 1495.

Incidentally, it was noted by the sponsor therein that some quarters were of the opinion that recourse from the NLRC to the Court of Appeals as an initial step in the process of judicial review would be circuitous and would prolong the proceedings. On the contrary, as he commendably and realistically emphasized, that procedure would be advantageous to the aggrieved party on this reasoning:

On the other hand, Mr. President, to allow these cases to be appealed to the Court of Appeals would give litigants the advantage to have all the evidence on record be reexamined and reweighed after which the findings of facts and conclusions of said bodies are correspondingly affirmed, modified or reversed.

Under such guarantee, the Supreme Court can then apply strictly the axiom that factual findings of the Court of Appeals are final and may not be reversed on appeal to the Supreme Court. A perusal of the records will reveal appeals which are factual in nature and may, therefore, be dismissed outright by minute resolutions.

While we do not wish to intrude into the Congressional sphere on the matter of the wisdom of a law, on this score we add the further observations that there is a growing number of labor cases being elevated to this Court which, not being a trier of fact, has at times been constrained to remand the case to the NLRC for resolution of unclear or ambiguous factual findings; that the Court of Appeals is procedurally equipped for that purpose, aside from the increased number of its component divisions; and that there is undeniably an imperative need for expeditious action on labor cases as a major aspect of constitutional protection to labor.

Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65. Consequently, all such petitions should hence forth be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief desired.

Apropos to this directive that resort to the higher courts should be made in accordance with their hierarchical order, this pronouncement in Santiago vs. Vasquez, et al. should be taken into account:

One final observation. We discern in the proceedings in this case a propensity on the part of petitioner, and, for that matter, the same may be said of a number of litigants who initiate recourses before us, to disregard the hierarchy of courts in our judicial system by seeking relief directly from this Court despite the fact that the same is available in the lower courts in the exercise of their original or concurrent jurisdiction, or is even mandated by law to be sought therein. This practice must be stopped, not only because of the imposition upon the precious time of this Court but also because of the inevitable and resultant delay, intended or otherwise, in the adjudication of the case which often has to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues since this Court is not a trier of facts. We, therefore, reiterate the judicial policy that this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise of our primary jurisdiction.

WHEREFORE, under the foregoing premises, the instant petition for certiorari is hereby REMANDED, and all pertinent records thereof ordered to be FORWARDED, to the Court of Appeals for appropriate action and disposition consistent with the views and ruling herein set forth, without pronouncement as to costs.

SO ORDERED.

CORAZON PERIQUET, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION and THE PHIL. NATIONAL CONSTRUCTION CORPORATION (Formerly Construction Development Corp. of the Phils.), respondents.  

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

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

In its decision, the public respondent held that the motion for execution was time-barred, having been filed beyond the five-year period prescribed by both the Rules of Court and the Labor Code. It also rejected the petitioner's claim that she had not been reinstated on time and ruled as valid the two quitclaims she had signed waiving her right to reinstatement and acknowledging settlement in full of her back wages and other benefits. The petitioner contends that this decision is tainted with grave abuse of discretion and asks for its reversal. We shall affirm instead.

Sec. 6, Rule 39 of the Revised Rules of Court, provides:

SEC. 6. Execution by motion or by independent action. — A judgment may be executed on motion within five (5) years from the date of its entry or from the date it becomes final and executory. After the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action.

A similar provision is found in Art. 224 of the Labor Code, as amended by RA 6715, viz.

ART. 224. Execution of decision, orders, awards. — (a) The Secretary of Labor and Employment or any Regional Director, the Commission or any Labor Arbiter or Med-Arbiter, or the Voluntary Arbitrator may, motu propio, or on motion of any interested party, issue a writ of execution on a judgment within five (5) years from the date it becomes final and executory, requiring a sheriff or a duly deputized officer to execute or enforce a final decision, order or award. ...

The petitioner argues that the above rules are not absolute and cites the exception snowed in Lancita v. Magbanua, 6

where the Court held:

Where judgments are for money only and wholly unpaid, and execution has been previously withheld in the interest of the judgment debtor, which is in financial difficulties, the court has no discretion to deny motions for leave to issue execution more than five years after the judgments are entered. (Application of Molnar, Belinsky, et al. v. Long Is. Amusement Corp., I N.Y.S, 2d 866)

In computing the time limited for suing out of an execution, although there is authority to the contrary, the general rule is that there should not be included the time when execution is stayed, either by agreement of the parties for a definite time, by injunction, by the taking of an appeal or writ of error so as to operate as a supersedeas, by the death of a party, or otherwise. Any interruption or delay occasioned by the debtor will extend the time within which the writ may be issued without scire facias.

There has been no indication that respondents herein had ever slept on their rights to have the judgment executed by mere motions, within the reglementary period. The statute of limitation has not been devised against those who wish to

act but cannot do so, for causes beyond their central. Periquet insists it was the private respondent that delayed and prevented the execution of the judgment in her favor, but that is not the way we see it. The record shows it was she who dilly-dallied.

The original decision called for her reinstatement within ten days from receipt thereof following its affirmance by the NLRC on August 29, 1980, but there is no evidence that she demanded her reinstatement or that she complained when her demand was rejected. What appears is that she entered into a compromise agreement with CDCP where she waived her right to reinstatement and received from the CDCP the sum of P14,000.00 representing her back wages from the date of her dismissal to the date of the agreement. Dismissing the compromise agreement, the petitioner now claims she was actually reinstated only on March 16, 1987, and so should be granted back pay for the period beginning November 28, 1978, date of her dismissal, until the date of her reinstatement. She conveniently omits to mention several significant developments that transpired during and after this period that seriously cast doubt on her candor and bona fides.

After accepting the sum of P14,000.00 from the private respondent and waiving her right to reinstatement in the compromise agreement, the petitioner secured employment as kitchen dispatcher at the Tito Rey Restaurant, where she worked from October 1982 to March 1987. According to the certification issued by that business, she received a monthly compensation of P1,904.00, which was higher than her salary in the CDCP. For reasons not disclosed by the record, she applied for re-employment with the CDCP and was on March 16,1987, given the position of xerox machine operator with a basic salary of P1,030.00 plus P461.33 in allowances, for a total of P1,491.33 monthly.

On June 27, 1988; she wrote the new management of the CDCP and asked that the rights granted her by the decision dated August 29, 1980, be recognized because the waiver she had signed was invalid. On September 19, 1988, the Corporate Legal Counsel of the private respondent (now Philippine National Construction Corporation) recommended the payment to the petitioner of the sum of P9,544.00, representing the balance of her back pay for three years at P654. 00 per month (minus the P14,000.00 earlier paid). On November 10, 1988, the petitioner accepted this additional amount and signed another Quitclaim and Release reading as follows:

KNOW ALL MEN BY THESE PRESENTS:

THAT, I CORAZON PERIQUET, of legal age, married and resident of No. 87 Annapolis St., Quezon City, hereby acknowledged receipt of the sum of PESOS: NINE THOUSAND FIVE HUNDRED FORTY FOUR PESOS ONLY (P9,544.00) Philippine currency, representing the unpaid balance of the back wages due me under the judgment award in NLRC Case No. AB-2-864-79 entitled "Corazon Periquet vs. PNCC- TOLLWAYS" and I further manifest that this payment is in full satisfaction of all my claims/demands in the aforesaid case. Likewise, I hereby manifest that I had voluntarily waived reinstatement to my former position as TOLL TELLER and in lieu thereof, I sought and am satisfied with my present position as XEROX MACHINE OPERATOR in the Central Office.

Finally, I hereby certify that delay in my reinstatement, after finality of the Decision dated 10 May 1979 was due to my own fault and that PNCC is not liable thereto.

I hereby RELEASE AND DISCHARGE the said corporation and its officers from money and all claims by way of unpaid wages, separation pay, differential pay, company, statutory and other benefits or otherwise as may be due me in connection with the above-entitled case. I hereby state further that I have no more claims or right of action of whatever nature, whether past, present, future or contingent against said corporation and its officers, relative to NLRC Case No. AB-2-864-79.

IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of November 1988 at Mandaluyong, Metro Manila. (Emphasis supplied.) 12

The petitioner was apparently satisfied with the settlement, for in the memorandum she sent the PNCC Corporate Legal Counsel on November 24, 1988, 13 she said in part:

Sir, this is indeed my chance to express my gratitude to you and all others who have helped me and my family enjoy the fruits of my years of stay with PNCC by way of granting an additional amount of P9,544.00 among others ...

As per your recommendation contained therein in said memo, I am now occupying the position of xerox machine operator and is (sic) presently receiving a monthly salary of P2,014.00.

Reacting to her inquiry about her entitlement to longevity pay, yearly company increases and other statutory benefits, the private respondent adjusted her monthly salary from P2,014.00 to P3,588.00 monthly. Then the lull. Then the bombshell. On March 11, 1989, she filed the motion for execution that is now the subject of this petition.

It is difficult to understand the attitude of the petitioner, who has blown hot and cold, as if she does not know her own mind. First she signed a waiver and then she rejected it; then she signed another waiver which she also rejected, again on the ground that she had been deceived. In her first waiver, she acknowledged full settlement of the judgment in her favor, and then in the second waiver, after accepting additional payment, she again acknowledged fun settlement of the same judgment. But now she is singing a different tune.

In her petition she is now disowning both acknowledgments and claiming that the earlier payments both of which she had accepted as sufficient, are insufficient. They were valid before but they are not valid now. She also claimed she was harassed and cheated by the past management of the CDCP and sought the help of the new management of the PNCC under its "dynamic leadership." But now she is denouncing the new management-for also tricking her into signing the second quitclaim.

Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. As in this case.

The question may be asked: Why did the petitioner sign the compromise agreement of September 16, 1980, and waive all her rights under the judgment in consideration of the cash settlement she received? It must be remembered that on that date the decision could still have been elevated on certiorari before this Court and there was still the possibility of its reversal. The petitioner obviously decided that a bird in hand was worth two on the wing and so opted for the compromise agreement. The amount she was then waiving, it is worth noting, had not yet come up to the exorbitant sum of P205,207.42 that she was later to demand after the lapse of eight years. The back pay due the petitioner need not detain us. We have held in countless cases that this should be limited to three years from the date of the illegal dismissal, during which period (but not beyond) the dismissed employee is deemed unemployed without the necessity of proof. 14 Hence, the petitioner's contention that she should be paid from 1978 to 1987 must be rejected, and even without regard to the fact (that would otherwise have been counted against her) that she was actually employed during most of that period. Finally, the petitioner's invocation of Article 223 of the Labor Code to question the failure of the private respondent to file a supersedeas bond is not well-taken. As the Solicitor General correctly points out, the bond is required only when there is an appeal from the decision with a monetary award, not an order enforcing the decision, as in the case at bar.

As officers of the court, counsel are under obligation to advise their clients against making untenable and inconsistent claims like the ones raised in this petition that have only needlessly taken up the valuable time of this Court, the Solicitor General, the Government Corporate Counsel, and the respondents. Lawyers are not merely hired employees who must unquestioningly do the bidding of the client, however unreasonable this may be when tested by their own expert appreciation of the pertinent facts and the applicable law and jurisprudence. Counsel must counsel.

WHEREFORE, the petition is DENIED, with costs against the petitioner. So ordered.

RONALDO B. CASIMIRO, ELISA M. LAT, JOSE L. LALAP, CELESTIN S, LACHICA, REYNALDO S. MALLILLIN, LEONILA G. ROJO, JULIE H. SEBASTIAN, EDITHA M. SOLOMON, EMILIANO T. TAMBAOAN III, FERNANDO G. TROZADO, Petitioners, vs.STERN REAL ESTATE INC. REMBRANDT HOTEL and/or GRACE KRISTIN MEEHAN

This is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, assailing the Decision1 of the Court of Appeals (CA) in CA-G.R. SP. No. 64536, as well as the Resolution2 dated February 16, 2004 denying the motion for reconsideration thereof.

Respondent Stern Real Estate & Development Corporation is a corporation duly organized and existing under Philippine laws, engaged in the business of purchasing, selling and operating buildings and other real properties for profit. One such property it owns is the Hotel Rembrandt located at No. 26 Tomas Morato Avenue, corner Scout Bayoran Street, Quezon City, with Grace Kristine Meehan as General Manager, and Eric Singson as its Director.3 The hotel has been fully operational since 1996. On May 6, 1999, Meehan issued the following Memorandum4 announcing a Special Separation Program (SSP) for all interested employees:

1. Due to the hotel’s dire financial status, the hotel has decided to implement/offer a one-time non-recurring special separation program (SSP) that all employees can avail of for the limited period of 10th May to 24th May 1999 only. Management, however, shall have the sole option to approve/disapprove the application of any employee.

2. If the number of employees who apply for the Special Separation Program do not meet the minimum number required by the company, management will be constrained to involuntary terminate the services of employees due to financial losses. Those employees who would be terminated after this program would only receive the legal benefits mandated by law.

A. Guidelines

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

- Pioneer employees will be given a special consideration.

2. Separation Pay - The hotel will pay affected employees in accordance with the following benefit schedule per year of service (computed as 12 months) on a pro-rata basis tax exempt.

a. Basic: One-half (1/2) month basic salary for [every] year of service or one (1) month salary, whichever is higher.

b. Additional: (1) One year of service or less ….. P1,000.00

(2) Two years of service ………... P3,000.00

(3) Three years of service ………. P6,000.00

(4) Four years of service …………P10,000.00

3. Other Entitlements

a. Vacation Leaves. Employees with earned vacation leaves whose applications for separation are accepted under this program, shall be allowed to go on terminal leave to use up their leave credits. While they are on leave, they shall be entitled to correspondingly share in the Service Charges. For employees whose applications for separation are accepted but whose services are needed up to their last day of employment, their earned leaves shall be commuted/paid in cash.

b. Thirteenth (13th) Month Pay. All employees approved to avail of the SSP will be entitled to a pro-rata payment of the 13th month pay (i.e., from 1st January – 31st May 1999)

4. The basis of computation of the separation pay is the monthly basic salary as of Wednesday, 26th May.

5. The release of the special separation package will be around 2 weeks from the submission of the necessary clearances.

6. All applications accepted under this Program shall be effective 31st May 1999.

7. An employee who avails of the Special Separation Program is not entitled to any other benefits by reason of his separation. The employee waives the right to any other benefits normally associated with his/her employment at Hotel Rembrandt.

8. Employees with physical limitations due to recurring illness or advanced age and who can no longer perform their jobs effectively shall be given priority [u]pon the certification of a physician designated by the hotel, if the concerned employee’s physical infirmities/limitations that [sic] may adversely affect the employee’s job performance.

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

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

a. The ability of the company to fund this one time, non-recurring special separation program.

b. The company’s explicit approval of each application on a case-to-case basis.

11. This special separation program is a one-time, non-recurring program. It should not set any precedent nor be invoked in the future.5

On May 24, 1999, the hotel management accepted 49 applications for its SSP. On May 28, 1999, management filed an Establishment Termination Report6 before the Department of Labor and Employment. Said report covered 29 employees whose termination was to take effect on June 28, 1999. "Financial losses" was the main reason cited, and the other being "company reorganization/downsizing." From June 15 to 21, 1999, letters were sent to the employees concerned informing them that they were considered dismissed from employment one month after receipt of such notice.7

Petitioners were among the retrenched employees.8 They later filed a complaint for "illegal dismissal in the guise of retrenchment and underpayment/non-payment of overtime pay, premium compensation for holiday and rest day" with prayer for moral and exemplary damages and attorney’s fees before the National Labor Relations Commission (NLRC). The complaint was docketed as NLRC NCR Case No. 00-08-08351-99. According to the complainants, while the hotel management claimed that they were retrenched due to "serious financial losses," it failed to satisfy the requirements of the Labor Code in terminating their employment: no notice was given to the Department of Labor of such intended retrenchment and no evidence was submitted to prove that the hotel had been suffering financial losses. Moreover, respondents had not only advertised their need for personnel vacated by complainants;9 they had already started hiring replacements. The complainants were convinced that their retrenchment was only a ploy to ease them out of their respective jobs.

On March 6, 2000, Labor Arbiter Donato G. Quinto, Jr. ruled in favor of the retrenched employees. According to the Labor Arbiter, a thorough examination of the financial statements submitted by respondents would readily show that the expenses in 1998 were bloated as compared to the previous year, clearly made to justify the retrenchment of the complainants.11 Moreover, the hotel had advertised job vacancies for extra banquet waiters and waitresses, and likewise failed to rebut the charge that the "last in, first out rule" was not observed in dismissing the employees. The Labor Arbiter also declared that while the complainants executed quitclaims and accepted their separation pay, they were not estopped from challenging the validity of their dismissal. The dispositive portion of the decision reads:

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

The other claims including damages are hereby dismissed for lack of merit. In compliance with the Labor Arbiter’s directive, the Examination and Computation Unit of the NLRC issued a computation of complainants’ entitlement, awarding in their favor a total of P1,988,908.91. Respondents appealed the decision to the NLRC, arguing that the Labor Arbiter committed grave abuse of discretion in disregarding the audited financial statements, and choosing to believe the erroneous computation of the complainants without even checking the veracity of their allegations. Aside from the audited financial statements for 1997 and 1998, and the Audit Report of Banaria, Banaria and Company, dated April 14, 1999, respondents also attached receipts and vouchers to show that the hotel had really incurred losses.

Complainants, for their part, filed their Comments with Motion to Dismiss Appeal,[18] alleging that respondents did not furnish them with a copy of the Memorandum of Appeal and the Motion to Reduce Supersedeas Bond, which violated their right to due process. They also pointed out that the cash deposit of P50,000.00 made by respondents was a "measly amount," and as such, it was as if no appeal bond was paid and no appeal had been perfected. In its Decision dated January 15, 2001, the NLRC reversed the ruling of the Labor Arbiter and dismissed the complaints for lack of merit. It held that through the duly-audited financial statements submitted to it, the respondent hotel was able to show that it suffered losses in 1996, 1997 and 1998 amounting to P19,272,539.37, P18,512,683.00 and P13,669,695.00, respectively. The NLRC further ruled that the Labor Arbiter erred in disregarding these statements and giving full credence to complainants’ contention that the hotel’s expenses were bloated. It pointed out that respondents presented receipts on appeal to show that the repair and maintenance, light and water expenses, and telephone and communication expenses were not fabricated. Citing The New Valley Times Press v. National Labor Relations Commission,20 it averred that evidence presented on appeal may be considered by it, and pointed out that the complainants did not rebut the evidence despite due notice.

The NLRC further ruled that, contrary to the allegation of the complainants, the first-in-last-out policy was observed by respondents, since evidence of the complainants’ efficiency and performance for the past years were presented to show that this criteria was considered. The labor tribunal pointed out that this evidence was not rebutted by the complainants. It further ruled that complainants failed to show that they were forced to sign quitclaims when they received their respective separation pay. Citing Veloso v. Department of Labor and Employment,21 it declared that "dire necessity" is not an acceptable reason to set aside quitclaims otherwise valid. Aggrieved, the retrenched employees filed before the CA a Petition for Certiorari under Rule 65 of the Revised Rules of Court. On July 20, 2001, the CA issued a Resolution 22

directing petitioners to amend their petition by dropping seven23 of them who failed to sign the verification and certification of non-forum shopping. On October 19, 2001, petitioners Reantaso, Elisa Lat, Lalap, Lachica, Mallillin, Rojo, Sebastian, Solomon, Tambaoan III, Trozado, and Edwin Lat filed their Amended Petition.24 Petitioner Cabardo filed her Amended Petition on November 7, 2001.25

On July 31, 2003, the CA affirmed the ruling of the NLRC and dismissed the petition for lack of merit.26 On the issue of the filing of the cash bond, it ruled that respondents’ action constituted substantial compliance with the rules. It stated that the Labor Arbiter’s decision did not specify the exact amount of the monetary award due the petitioners, prompting respondents to file a P50,000.00 cash bond and motion for the reduction of the supersedeas bond. Once the computation of the monetary award was received on July 14, 2000, they immediately sought thecancellation of the cash bond, and moved that it be substituted with a surety bond equivalent to the monetary award. The CA further ruled that petitioners failed to show that respondents were in bad faith or that they intended to delay payment. It observed that when the Labor Arbiter issued the writ of execution, respondents instructed petitioners to immediately report to the hotel on July 26, 2000. The appellate court also disagreed with petitioners’ contention that they were deprived of due process when additional documents were submitted before the NLRC. Under the New Rules of Procedure of the NLRC, the submission of new evidence is not prohibited, not being prejudicial to the other party who could still submit counter-evidence.Citing NDC-Guthrie Plantations, Inc. v. National Labor Relations Commission,27 the CA declared that respondents were able to comply with all the requirements for a valid retrenchment under Article 283 of theLabor Code. Aggrieved, petitioners now come to this Court, assailing the ruling of the CA on the following grounds:

5.1. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT RULED THAT THE APPEAL OF THE RESPONDENTS WITH THE NATIONAL LABOR RELATIONS COMMISSION WAS PERFECTED DESPITE THE FACT THAT THE APPEAL OR SURETY BOND OF P1,988,908.91 WAS POSTED SEVENTY (70) DAYS LATE FROM RECEIPT OF THE DECISION OF THE LABOR ARBITER.

5.2. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT RULED THAT THE PETITIONERS WERE NOT PREJUDICED WHEN THE NLRC ADMITTED THE APPEAL MEMORANDUM AS WELL AS THE ADDITIONAL EVIDENCE OF THE RESPONDENTS EVEN WITHOUT FURNISHING FIRST THE PETITIONERS COPIES THEREOF MORE SPECIFICALLY THE APPEAL MEMORANDUM.

5.3. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT RULED THAT THERE WAS A VALID RETRENCHMENT TO WARRANT THE DISMISSAL OF THE PETITIONERS.

5.4. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT RULED THAT THE PETITIONERS EXECUTED A VALID QUITCLAIM.

5.5. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT ADMITTED AND ENTERTAINED THE COMMENT OF THE RESPONDENTS DESPITE ITS ORDER THAT CONSIDERED SAID RESPONDENTS TO HAVE WAIVED THE RIGHT TO FILE THEIR COMMENT AND SAID ORDER WAS NOT RECONSIDERED AND SET ASIDE THUS LEGALLY STILL IN FULL FORCE AND EFFECT.28

Petitioners insist that a decision in labor cases involving a monetary award may be perfected only upon the posting of a cash or surety bond, as mandated by Republic Act No. 6715, as well as Section 6, Rule VI of the New Rules of Procedure of the NLRC. They aver that the reason behind the rule is to give the workers an assurance that they will be paid in the event that they win the case. They claim that there was no reason why respondents could not afford to deposit the sum of P1,988.908.01. While the late filing of the supersedeas bond has been relaxed in a number of cases, there is no cogent reason to apply a liberal interpretation in the instant case. The word "only" in the provision, according to petitioners, makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond as the exclusive means by which an employer’s appeal may be perfected. They insist that the appeal bond of P50,000.00 is shockingly low and grossly inadequate, as it constitutes only 2.5% of the monetary award.

Petitioners also aver that, contrary to respondents’ claim in the appellate court, they (respondents) were furnished a copy of the Labor Arbiter’s decision, as well as the computation of the monetary award. In fact, it was respondents who did not provide them a copy of their Memorandum of Appeal, contrary to Rule IV, Section 3 of the New Rules of Procedure of the NLRC. On this score alone, the appeal before the NLRC should have been dismissed. Petitioners aver that they were prevented from filing the appropriate pleadings on account of such intentional act. They insist that additional evidence on appeal cannot be filed on personal whims and caprices, and that "there are rules to be observed in order that the rights of the other party will not be prejudiced and trampled upon." They conclude that petitioners’ intentional failure to furnish them a copy of such appeal memorandum deprived them of their right to be heard - ultimately, their right to due process.

On the merits of the case, petitioners stress that respondents were not motivated by honest intentions in effecting their dismissal. They remind the Court that while the law recognizes the employer’s right to protect its interest, such right should be exercised in a manner which does not infringe on the employees’ constitutional right to security of tenure. They insist that respondents presented "sanitized financial statements" to justify the legality of their retrenchment. They reiterate that they were not furnished copies of said statements, hence, their failure to submit evidence to controvert the same. Under the circumstances, respondents should have presented respondent hotel’s income tax returns for the preceding years since audited financial statements are not entirely reliable and can be easily fabricated.

On the appellate court’s finding that the quitclaims they executed were valid, petitioners insist that they were forced to do so since their employer was determined to carry out their dismissal. Since most of them were their respective families’ sole breadwinners,

there was no other recourse but for them to sign such waivers out of dire necessity. Respondents, for their part, allege that no new matter or issue was raised in the instant petition, a mere rehash of petitioners’ arguments before the appellate court, and that such arguments had already been passed upon by the appellate court. The issues involved in this case are procedural and substantial in nature. On the procedural aspect, petitioners question the filing of the cash bond, which, according to them, was a measly amount as compared to the award of the Labor Arbiter. They likewise question the fact that the CA considered the evidence submitted by respondents on appeal before the NLRC, and they contend that this is a violation of their right to due process. On the other hand, the main and substantial issue to be resolved by the Court is whether petitioners were validly retrenched, and, corollarily, whether respondents presented adequate proof of financial losses, and whether the quitclaims executed by petitioners are valid and binding.

At the outset, the Court stresses that the substantial issues for resolution are factual in nature, and generally, factual findings of the NLRC are accorded respect. However, there is compelling reason to deviate from this salutary principle where, as in this case, such findings of facts of the NLRC are in conflict with that of the Labor Arbiter. Accordingly, this Court must of necessity review the records to determine which findings should be preferred as more conformable to the evidentiary facts. A careful perusal of the records show that respondents filed their Memorandum of Appeal on May 17, 2000 before the NLRC, together with the P50,000.00 cash bond. They also filed a Motion for Reduction of Supersedeas Bond. Thereafter, respondents’ new counsel filed a Manifestation with Motion to Substitute (Cash Bond with Supersedeas Bond), alleging that a copy of the monetary award had not been attached to the copy of the Labor Arbiter’s decision which was furnished them. The NLRC approved the substitution in a Resolution30 dated December 28, 2000. In light of the fact that in his decision, the Labor Arbiter directed the Examination and Computation Unit of the NLRC to compute the backwages of the retrenched employees, it would not have been possible for respondents to obtain a copy of such computation. As such, the initial filing of the P50,000.00 cash bond was justified under the circumstances.

The second paragraph of Article 223 of the Labor Code states that when a judgment involving monetary award is appealed by the employer, the appeal may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment. This is to assure the workers that if they finally prevail in the case, the monetary award will be given to them upon dismissal of the employer’s appeal, and is meant to discourage employers from using the appeal to delay or evade payment of their obligations to the employees. However, as provided for in Section 6, Rule VI of the New Rules of Procedure of the NLRC, such amount of the bond may be reduced in meritorious cases, upon motion of the appellant. The exercise of this authority is not a matter of right on the part of the movant but lies within the sound discretion of the NLRC upon showing of meritorious grounds. Indeed, an unreasonable and excessive amount of bond would be oppressive and unjust, and would have the effect of depriving a party of his right to appeal.33

The Court likewise holds that the NLRC did not err in admitting the receipts and other evidence attached to the Memorandum of Appeal of respondents. In Tanjuan v. Philippine Postal Savings Bank, Inc.,34 where this Court was confronted with the similar question, i.e., whether proof of business losses may be admitted on appeal before the NLRC, we declared that the NLRC is not precluded from receiving evidence on appeal because technical rules of procedure are not binding in labor cases, which rule applies to both employer and employee.35 Moreover, the fact that evidence was not presented before the Labor Arbiter will not justify its outright rejection, particularly since such evidence is absolutely necessary to resolve the issue of whether retrenched employees were validly terminated.36 No less than the Labor Code directs labor officials to use all reasonable means to ascertain the facts speedily and objectively, with little regard to technicalities or formalities, while Section 10, Rule VII of the New Rules of Procedure of the NLRC provides that technical rules are not binding. Indeed, the application of technical rules of procedure may be relaxed in labor cases to serve the demand of substantial justice. Contrary to petitioners’ claim, they were not denied due process. The essence of due process in administrative proceedings is simply an opportunity to explain one’s side or an opportunity to present evidence in support of one’s defense. In this case, petitioners submitted their respective pleadings to controvert the allegations of respondents.

Article 283 of the Labor Code of the Philippines authorizes retrenchment as one of the valid causes to dismiss employees as a measure to avoid or minimize business losses.42 Retrenchment is the "termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery, or of automation."43 Simply put, it is a reduction in manpower, a measure utilized by an employer to minimize losses incurred in the operation of its business. It is a management prerogative consistently recognized and affirmed by this Court.44 In Danzas Intercontinental, Inc. v. Daguman, 45 we enumerated the requirements for a valid retrenchment which the employer must prove by clear and convincing evidence:

x x x (1) that retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) that the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (3) that the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher; (4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure; and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

In this case, respondents presented audited financial statements and receipts to prove that the hotel had been incurring business losses. As found by the appellate court:

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

The private respondents in the instant case presented balance sheets for the years 1997, 1998 and 1999 as audited by independent auditors, which showed that respondent Stern experienced net losses for several years, as follows:

1996 = P19,272,539.77

1997 = P18,512,683.11

1998 = P13,669, 095.80

1999 = P14,626,684.36

Hence, for a period of four (4) years, respondent Stern accumulated losses amounting to around P66,000,000.00, with no sign of abating in the future. The petitioners failed to back up their allegation that the expenses presented in the financial statements were bloated. Nor did the petitioners explain why independent public accountants Clemente Uson & Co. and Banaria, Banaria and Company would knowingly allow false figures to be included in the balance sheets. Consequently, we are more inclined to affirm the finding of the public respondent that the expenses presented by the private respondents were not fabricated. Contrary to the allegation of petitioners, income tax returns are self-serving documents because they are generally filled up by the taxpayer himself, and are still to be examined by the Bureau of Internal Revenue for their correctness. The Court notes that petitioners failed to dispute the validity of the financial statements and receipts submitted by respondents, or that any false entries were made therein. They also failed to prove, much less impute, any ill motive on the part of the independent auditors who prepared the financial statements which respondents submitted.

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

While quitclaims executed by employees are commonly frowned upon as being contrary to public policy and are ineffective to bar claims for the full measure of their legal rights, there are, however, legitimate waivers

that represent a voluntary and reasonable settlement of laborers’ claims which should be so respected by the Court as the law between the parties. Where the person making the waiver has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as being a valid and binding undertaking. "Dire necessity" is not an acceptable ground for annulling the release, when it is not shown that the employee has been forced to execute it (emphasis supplied).51

Verily, it is neither the function of the law nor its intent to supplant the prerogative of management in running its business, such as, to compel the latter to operate at a continuing loss simply because it has to maintain its workers in employment. Such an act would be tantamount to the taking of property without due process of law.

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

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

This is a petition for review under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Decision of the Court of Appeals promulgated on 12 December 2003 as well as its Resolution[2] promulgated on 2 April 2004 denying petitioners' motion for reconsideration. This case originated from a labor complaint filed before the National Labor Relations Commission (NLRC) in which herein respondents contended that petitioner Linton Commercial Company, Inc. (Linton) had committed illegal reduction of work when it imposed a reduction of work hours thereby affecting its employees.

Linton is a domestic corporation engaged in the business of importation, wholesale, retail and fabrication of steel and its by-products. Petitioner Desiree Ong is Linton's vice president. On 17 December 1997, Linton issued a memorandum

addressed to its employees informing them of the company's decision to suspend its operations from 18 December 1997 to 5 January 1998 due to the currency crisis that affected its business operations. Linton submitted an establishment termination report to the Department of Labor and Employment (DOLE) regarding the temporary closure of the establishment covering the said period. The company's operation was to resume on 6 January 1998. On 7 January 1997,

Linton issued another memorandum informing them that effective 12 January 1998, it would implement a new compressed workweek of three (3) days on a rotation basis. In other words, each worker would be working on a rotation basis for three working days only instead for six days a week. On the same day, Linton submitted an establishment termination report

concerning the rotation of its workers. Linton proceeded with the implementation of the new policy without waiting for its approval by DOLE. Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal reduction of workdays with the Arbitration Branch of the NLRC on 17 July 1998.

On the other hand, the workers pointed out that Linton implemented the reduction of work hours without observing Article 283 of the Labor Code, which required submission of notice thereof to DOLE one month prior to the implementation of reduction of personnel, since Linton filed only the establishment termination report enacting the compressed workweek on the very date of its implementation. Petitioners, on the other hand, contended that the devaluation of the peso created a negative impact in international trade and affected their business because a majority of their raw materials were imported. They claimed that their business suffered a net loss of P3,569,706.57 primarily due to currency devaluation and the slump in the market. Consequently, Linton decided to reduce the working days of its employees to three (3) days on a rotation basis as a cost-cutting measure. Further, petitioners alleged that the compressed workweek was actually implemented on 12 January 1998 and not on 7 January 1998, and that Article 283 was not applicable to the instant case.[11]

Pending decision of the Labor Arbiter, twenty-one (21) of the workers signed individual release and quitclaim documents stating that they had voluntarily tendered their resignation as employees of Linton and that they had been fully paid of all monetary compensation due them. On 28 January 2000, the Labor Arbiter rendered a Decision[13] finding petitioners guilty of illegal reduction of work hours and directing them to pay each of the workers their three (3) days/week's worth of work compensation from 12 January 1998 to 13 July 1998.

Petitioners appealed to the National Labor Relations Commission (NLRC). In a Resolution[14] promulgated on 29 June 2001, the NLRC reversed the decision of the Labor Arbiter. The NLRC held that an employer has the prerogative to control all aspects of employment in its business organization, including the supervision of workers, work regulation, lay-off of workers, dismissal and recall of workers. The NLRC took judicial notice of the Asian currency crisis in 1997 and 1998 thus finding Linton's decision to implement a compressed workweek as a valid exercise of management prerogative. Moreover, the NLRC ruled that Article 283 of the Labor Code, which requires an employer to submit a written notice to DOLE one (1) month prior to the closure or reduction of personnel, is not applicable to the instant case because no closure was undertaken and no reduction of employees was implemented by Linton. Lastly, the NLRC took note that there were twenty-one (21) complainants-workers[15] who had already resigned and executed individual waivers and quitclaims. Consequently, the NRLC considered them as dropped from the list of complainants. The workers' motion for reconsideration was denied in a Resolution[16] dated 24 September 2001. The workers then filed before the Court of

Appeals[17] a petition for certiorari under Rule 65 of the Rules of Civil Procedure assailing the decision[18] of the NLRC and its resolution[19] that denied their Motion for Reconsideration. In the petition, the workers claimed that the NLRC erred in finding that the one (1) month notice requirement under Article 283 of the Labor Code did not apply to the instant case; that Linton did not exceed the limits of its business prerogatives; and that Linton was able to establish a factual basis on record to justify the reduction of work days.

In its Comment, Linton highlighted the fact that the caption, the body as well as the verification of the petition submitted by complainants-workers indicated solely "Alex Hellera, et al." as petitioners. Linton argued that the petition was defective and did not necessarily include the other workers in the proceedings before the NLRC. Linton also mentioned that 21 out of the 68 complainants-workers executed individual resignation letters and individual waivers and quitclaims.[21]  With these waivers and quitclaims, Linton raised in issue whether the petition still included the signatories of said documents.  Moreover, Linton pointed out that the caption of the petition did not include the NLRC as party respondent, which made for another jurisdictional defect. The rest of its arguments were merely a reiteration of its arguments before the NLRC.

In reversing the NLRC, the Court of Appeals, in its Decision[22] dated 12 December 2003 ruled that the failure to indicate all the names of petitioners in the caption of the petition was not violative of  the Rules of Court because the records of the case showed that there were sixty-eight (68) original complainants who filed the complaint before the Arbitration Branch of the NLRC. The appellate court likewise considered the quitclaims and release documents as "ready documents" which did not change the fact that the 21 workers were impelled to sign the same. The appellate court gave no credence to the said quitclaims, considering the economic disadvantage that would be suffered by the employees. The appellate court also noted that the records did not show that the 21 workers desisted from pursuing the petition and that the waivers and quitclaims would not bar the 21 complainants from continuing the action.[23]

On the failure to include the NLRC as party respondent, the appellate court treated the NLRC as a nominal party which ought to be joined as party to the petition simply because the technical rules require its presence on record. The inclusion of the NLRC in the body of the petition was deemed by the appellate court as substantial compliance with the rules.

On the main issues, the Court of Appeals ruled that the employees were constructively dismissed because the short period of time between the submission of the establishment termination report informing DOLE of its intention to observe a compressed workweek and the actual implementation thereat was a manifestation of Linton's intention to eventually retrench the employees.  It found that Linton had failed to observe the substantive and procedural requirements of a valid dismissal or retrenchment to avoid or minimize business losses since it had failed to present adequate, credible and persuasive evidence that it was indeed suffering, or would imminently suffer, from drastic business losses. Linton's financial statements for 1997-1998 showed no indication of financial losses, and the alleged loss of P3,645,422.00 in 1997 was considered insubstantial considering its total asset of P1,065,948,601.00.Hence, the appellate court considered Linton's losses as de minimis. Lastly, the appellate court found Linton to have failed to adopt a more sensible means of cutting the costs of its operations in less drastic measures not grossly unfavorable to labor. Hence, Linton failed to establish enough factual basis to justify the necessity of a reduced workweek.[25]

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

In filing the instant petition for review, petitioners allege that the Court of Appeals erred when it considered the petition as having been filed by all sixty (68) workers, in disregard of the fact that only "Alex Hellera, et al." was indicated as petitioner in the caption, body and verification of the petition and twenty-one (21) of the workers executed waivers and quitclaims.  Petitioners further argue that the Court of Appeals erred in annulling the release and quitclaim documents signed by 21 employees because no such relief was prayed for in the petition. The validity of the release and quitclaim was also not raised as an issue before the labor arbiter nor the NLRC. Neither was it raised in the very petition filed before the Court of Appeals.  Petitioners conclude that the Court of Appeals, therefore, had invalidated the waivers and quitclaims motu proprio.

Petitioners also allege that the Court of Appeals erred when it held that the reduction of workdays is equivalent to constructive dismissal. They posit that there was no reduction of salary but instead only a reduction of working days from six to three days per week. Petitioners add that the reduction of workdays, while not expressly covered by any of the provisions of the Labor Code, is analogous to the situation contemplated in Article 286[28] of the Labor Code because the company implemented the reduction of workdays to address its financial losses. Lastly, they note that since there was no retrenchment, the one-month notice requirement under Article 283 of the Labor Code is not applicable.

First, we resolve the procedural issues of the case. Rule 7, Section 1 of the Rules of Court states that the names of the parties shall be indicated in the title of the original complaint or petition.  However, the rules itself endorses its liberal construction if it promotes the objective of securing a just, speedy and inexpensive disposition of the action or proceeding.[29]  Pleadings shall be construed liberally so as to render substantial justice to the parties and to determine speedily and inexpensively the actual merits of the controversy with the least regard to technicalities.[30]

In Vlason Enterprises Corporation v. Court of Appeals[31] the Court pronounced that, while the general rule requires the inclusion of the names of all the parties in the title of a complaint, the non-inclusion of one or some of them is not fatal to the cause of action of a plaintiff, provided there is a statement in the body of the petition indicating that a defendant was made a party to such action. If in Vlason the Court found that the absence of defendant's name in the caption would not cause the dismissal of the action, more so in this case where only the names of some of petitioners were not reflected. This is consistent with the general rule that mere failure to include the name of a party in the title of a complaint is not fatal by itself.[32]

Petitioners likewise challenge the absence of the names of the other workers in the body and verification of the petition.  The workers' petition shows that the petition stipulated as parties-petitioners "Alex A. Hellera, et al." as employees of Linton, meaning that there were more than one petitioner who were all workers of Linton. The petition also attached the resolution[33] of the NLRC where the names of the workers clearly appear. As documents attached to a complaint form part thereof,[34] the petition, therefore has sufficiently indicated that the rest of the workers were parties to the petition. With respect to the absence of the workers' signatures in the verification, the verification requirement is deemed substantially complied with when some of the parties who undoubtedly have sufficient knowledge and belief to swear to the truth of the allegations in the petition had signed the same. Such verification is deemed  a sufficient assurance that the matters alleged in the petition have been made in good faith or are true and correct, and not merely speculative.[35] The verification in the instant petition states that Hellera, the affiant, is the president of the union of "which complainants are all members and officers."[36]  As the matter at hand is a labor dispute between Linton and its employees, the union president undoubtedly has sufficient knowledge to swear to the truth of the allegations in the petition. Hellera's verification sufficiently meets the purpose of the requirements set by the rules. Moreover, the Court has ruled that the absence of a verification is not jurisdictional, but only a formal defect.[37] Indeed, the Court has ruled in the past that a pleading required by the Rules of Court to be verified may be given due course even without a verification if the circumstances warrant the suspension of the rules in the interest of justice.[38]

We turn to the propriety of the Court of Appeals' ruling on the invalidity of the waivers and quitclaims executed by the 21 workers. It must be remembered that the petition filed before the Court of Appeals was a petition for certiorari under Rule 65 in which, as a rule, only jurisdictional questions may be raised, including matters of grave abuse of discretion which are equivalent to lack of jurisdiction.[39]  The issue on the validity or invalidity of the waivers and quitclaims was not raised as an issue in the petition. Neither was it raised in the NLRC. There is no point of reference from which one can determine whether or not the NLRC committed grave abuse of discretion in its finding on the validity and binding effect of the waivers and quitclaims since this matter was never raised in issue in the first place.

In addition, petitioners never had the opportunity to support or reinforce the validity of the waivers and quitclaims because the authenticity and binding effect thereof were never challenged. In the interest of fair play, justice and due process, the documents should not have been unilaterally evaluated by the Court of Appeals. Thus, the corresponding modification of its Decision should be ordained. After resolving the technical aspects of this case, we now proceed to the merits thereof.  The main issue in this labor dispute is whether or not there was an illegal reduction of work when Linton implemented a compressed workweek by reducing from six to three the number of working days with the employees working on a rotation basis. In Philippine Graphic Arts, Inc. v. NLRC,[40] the Court upheld for the validity of the reduction of working hours, taking into consideration the following: the arrangement was temporary, it was a more humane solution instead of a retrenchment of personnel, there was notice and consultations with the workers and supervisors, a consensus were reached on how to deal with deteriorating economic conditions and it was sufficiently proven that the company was suffering from losses.

The Bureau of Working Conditions of the DOLE, moreover, released a bulletin[41] providing for in determining when an employer can validly reduce the regular number of working days. The said bulletin states that a reduction of the number of regular working days is valid where the arrangement is resorted to by the employer to prevent serious losses due to causes beyond his control, such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials. Although the bulletin stands more as a set of directory guidelines than a binding set of implementing rules, it has one main consideration, consistent with the ruling in Philippine Graphic Arts Inc., in determining the validity of reduction of working hours--that the company was suffering from losses. Petitioners attempt to justify their action by alleging that the company was suffering from financial losses owing to the Asian currency crisis. Was petitioners' claim of financial losses supported by evidence? The lower courts did not give credence to the income statement submitted by Linton because the same was not audited by an independent auditor.[42] The NLRC, on the other hand, took judicial notice of the Asian currency crisis which resulted in the devaluation of the peso and a slump in market demand.[43] The Court of Appeals for its part held that Linton failed to present adequate, credible and persuasive evidence to show that it was in dire straits and indeed suffering, or would imminently suffer, from drastic business losses. It did not find the reduction of work hours justifiable, considering that the alleged loss of P3,645,422.00 in 1997 is insubstantial compared to Linton's total asset of P1,065,948,601.76.[44]

A close examination of petitioners' financial reports for 1997-1998 shows that, while the company suffered a loss of P3,645,422.00 in 1997, it retained a considerable amount of earnings[45] and operating income.[46] Clearly then, while Linton suffered from losses for that year, there remained enough earnings to sufficiently sustain its operations.  In business, sustained operations in the black is the ideal but being in the red is a cruel reality. However, a year of financial losses would not warrant the immolation of the welfare of the employees, which in this case was done through a reduced workweek that resulted in an unsettling diminution of the periodic pay for a protracted period. Permitting reduction of work and pay at the slightest indication of losses would be contrary to the State's policy to afford protection to labor and provide full employment. Certainly, management has the prerogative to come up with measures to ensure profitability or loss minimization. However, such privilege is not absolute. Management prerogative must be exercised in good faith and with due regard to the rights of labor.[48]

As previously stated, financial losses must be shown before a company can validly opt to reduce the work hours of its employees.  However, to date, no definite guidelines have yet been set to determine whether the alleged losses are sufficient to justify the reduction of work hours.  If the standards set in determining the justifiability of financial losses under Article 283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were to be considered, petitioners would end up failing to meet the standards.  On the one hand, Article 286 applies only when there is a bona fide suspension of the employer's operation of a business or undertaking for a period not exceeding six (6) months.[49]  Records show that Linton continued its business operations during the effectivity of the compressed workweek, which spanned more than the maximum period. On the other hand, for retrenchment to be justified, any claim of actual or potential business losses must satisfy the following standards: (1) the losses incurred are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence.[50]  Linton failed to comply with these standards.

All taken into account, the compressed workweek arrangement was unjustified and illegal. Thus, petitioners committed illegal reduction of work hours. In assessing the monetary award in favor of respondents, the Court has taken the following factors into account:

(1) The compressed workweek arrangement was lifted after six (6) months, or on 13 July 1998.[51] Thus, Linton resumed its regular operations and discontinued the emergency measure;

(2) The claims of the workers, as reflected in their pleadings, were narrowed to petitioners' illegal reduction of their work hours and the non-payment of their compensation for three (3) days a week from 12 January 1998 to 13 July 1998. They did not assert any other claims;

(3) As found by the NLRC, 21 of the workers are no longer entitled to any monetary award since they had already executed their respective waivers and quitclaims. We give weight to the finding and exclude the 21 workers as recipients of the award to be granted in this case. Consequently, only the following workers are entitled to the award, with the amounts respectively due them stated opposite their names:

1. Alex A. Hellera - P16,368.302. Francisco Racasa - 16,458.003. Dante Escarlan - 15,912.004. Donato Sasa - 15,580.505. Rodolfo Olinar - 15,912.006. Daniel Custodio - 15,912.007. Arturo Pollo - 16,660.808. B. Pilapil - 16,075.809. Donato Bonete - 15,600.0010. Isagani Yap - 15,678.0011. Cesar Ragonon - 16,068.0012. Benedicto Bagan - 15,775.5013. Rexte Solanoy - 15,678.0014. Felipe Cagoco, Jr. - 15,990.0015. Jose Narce - 16,348.8016. Quirino C. Ada - 15,990.0017. Salfaram Elmer - 16,302.0018. Romeo Balais - 16,302.0019. Claudio S. Morales - 15,947.1020. Elpidio E. Vergabinia - 15,561.0021. Conrado Cagoco - 15,990.0022. Roy Boragoy - 15,892.50

23. Reynaldo Santos - 16,200.6024. Lino Valencia - 15,678.0025. Roy Durano - 15,678.0026. Leo Valencia - 15,678.0027. Jayoma A. - 15,561.0028. Ramon Olinar III - 15,678.0029. Saturnino C. Ebaya - 15,919.8030. Nicanor L. de Castro - 16,614.0031. Eduardo Gonzales - 15,678.0032. Isagani Gonzales - 16,469.7033. Thomas Andrab, Jr. - 15,912.0034. Minieto Durano - 16,660.8035. Ernesto Vallente - 15,997.8036. Nestor M. Bonete - 15,705.3037. Jose Salonoy - 16,458.0038. Alberto Lagman - 16,660.8039. Rolando Torres - 15,678.0040. Rolindo Cualquiera - 16,068.0041. Armando Lima - 16,426.8042. Alfredo Selapio - 16,060.2043. Martin V. Villacampa - 15,939.3044. Carlito Pable - 16,263.0045. Dante Escarlan - 15,912.0046. M. Durano - 16,614.0047. Ramon Roso - 16,302.00[52]

(4) The Labor Arbiter's decision in favor of respondents was reversed by the NLRC. Considering that there is no provision for appeal from the decision of the NLRC,[53] petitioners should not be deemed at fault in not paying the award as ordered by the Labor Arbiter. Petitioners' liability only gained a measure of certainty only when the Court of Appeals reversed the NLRC decision. In the interest of justice, the 6% legal interest on the award should commence only from the date of promulgation of the Court of Appeals' Decision on 12 December 2003.

WHEREFORE, the Petition is GRANTED IN PART. The decision of the Court of Appeals reinstating the decision of the Labor Arbiter is AFFIRMED with MODIFICATION to the effect that the 21 workers who executed waivers and quitclaims are no longer entitled to back payments. Petitioners are ORDERED TO PAY respondents, except the aforementioned 21 workers, the monetary award as computed,[54] pursuant to the decision of the Labor Arbiter[55] with interest at the rate of 6% per annum from 12 December 2003, the date of promulgation of the Court of Appeals' decision, until the finality of this decision, and thereafter at the rate of 12% per annum until full payment.