MILAGROS PANUNCILLO, G.R. No.

161305
Petitioner,
Present:

QUISUMBING, Chairperson,
CARPIO,
-versus- CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

CAP PHILIPPINES, INC., Promulgated:

Respondent.
February 9, 2007

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DECISION

CARPIO MORALES, J.:

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

Acting on Josefinas letter, the Integrated Internal Audit Operations (IIAO) of respondent required petitioner to explain in writing why the plan had not been
transferred to Josefina and was instead sold to another. Complying, petitioner proffered the following explanation:

Because of extreme need of money, I was constrained to sell my CAP plan of my son to J. Pernes last July, 1996, in the amount of Thirty Seven Thousand Pesos
(P37,000.) The plan was not transferred right away because of lacking requirement on the part of the buyer (birth certificate). The birth certificate came a month later.
While waiting for the birth certificate, again because of extreme need of money, I was tempted to pawned [sic] the plan, believing I can redeemed [sic] it later when
the birth certificate will come.

Last year, I was already pressured by J. Pernes for the transfer of the plan. But before hand, she already knew the present situation. I was trying to find means to
redeemed [sic] the plan but to no avail. I cannot borrow anymore from my creditors because of outstanding loans which remains unpaid. As of the present, I am
heavily debtladen and I dont know where to run.

I cant blame the person whom I pawned the plan if he had sold it. I cant redeemed [sic] it anymore. Everybody needs money and besides, I have given them my
papers.

I admit, I had defrauded Ms. J. Pernes, but I didnt do it intentionally. At first, I believe I can redeem the plan hoping I can still borrow from somebody.
With my more than 18 years stay with the company, I dont have the intention of ruining my image as well as the companys. I think I am just a victim of
circumstances.[5] (Emphasis and underscoring supplied)

A show-cause memorandum[6] dated February 23, 1999 was thereupon sent to petitioner, giving her 48 hours from receipt thereof to explain why she should not be
disciplinarily dealt with. Petitioner did not comply, however.

The IIAO of respondent thus conducted an investigation on the matter. By Memorandum of April 5, 1999,[7] the IIAO recommended that, among other things,
administrative action should be taken against petitioner for violating Section 8.4 of respondents Code of Discipline reading:

Committing or dealing any act or conniving with co-employees or anybody to defraud the company or customer/sales associates.

In the same memorandum, the IIAO reported other matters bearing on petitioners duties as an employee, to wit:

OTHERS:
We also received a copy of demand letter of a certain Evelia Casquejo addressed to Ms. Panuncillo requiring the latter to pay the amount of P54,870.00 for the
supposed transfer of the lapsed plan of Subscriber Corazon Lintag with SFA # 25-67-40-01-00392. Ms. Panuncillo received the payment of P25,000.00 and
P29,870.00 on July 17, 1997 and July 18, 1997 respectively (Exhibits L&M).

Ms. Panuncillo verbally admitted that she was the one who sold the plan to Ms. Casquejo but with the authorization from Ms. Lintag. However, the transfer was not
effected because she had misappropriated a portion of the money until the plan was terminated. Ms. Casquejo, however, did not file a complaint because Ms.
Panuncillo executed a Special Power of Attorney authorizing the former to receive P68,000 of Ms. Panuncillos retirement pay (Exhibit N).[8] (Emphasis in the
original; underscoring supplied))

On April 7, 1999, another show-cause memorandum was sent to petitioner by Renato M. Daquiz (Daquiz), First Vice President of respondent, giving her another 48
hours to explain why she should not be disciplinarily dealt with in connection with the complaints of Josefina and Evelia Casquejo (Evelia). Complying with the
directive, petitioner, by letter of April 10, 1999, on top of reiterating her admission of having defrauded Josefina, admitted having received from Evelia the payment
for a lapsed plan, thus:
With regards to [Evelias] case, yes its [sic] true I had received the payment but it was accordingly given to the owner or Subscriber Ms. C. Lintag. The plan was not
transferred because it was already forfeited and we, Ms. Lintag, [Evelia] and I already made settlement of the case.

I think I have violated Sec. 8.4 of the companys Code of Discipline. I admit it is my wrongdoing. I was only forced to do this because of extreme needs to pay for
my debts. I am open for whatever disciplinary action that will be sanctioned againts [sic] me. I hope it is not termination from my job. How can I pay for
obligations if that will happen to me.

As for [Josefina], I have the greatest desire to pay for my indebtedness but my capability at the moment is nil. (space) I have been planning to retire early just to pay
my obligations. That is why I had written to you last year inquiring tax exemption when retiring. I have been with the company for almost 19 years already and I never
intend [sic] to smear its name as well as mine. I was only forced by circumstances. Although it hurts to leave CAP, I will be retiring on April 30, 1999.

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

Respondent thereupon terminated the services of petitioner by Memorandum dated April 20, 1999.[10]

Petitioner sought reconsideration of her dismissal, by letter of April 23, 1999 addressed to Daquiz, imploring as follows:

. . . Please consider my retirement letter I sent to you. I would like to avail [of] the retirement benefit of the company. The proceeds of my retirement could help me
pay some of my obligationsas well as the needs of my family. My husband is jobless and I am the breadwinner of the family. If I will be terminated, I dont know what
will happen to us.

Sir, I am enclosing the affidavit of Ms. Evelia Casquejo proving that we have already settled the case.

x x x x[11] (Underscoring supplied)

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

Acting on petitioners motion for reconsideration, Daquiz, by letter-memorandum of May 5, 1999, denied the same in this wise:

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

Premises considered, the decision to terminate your services for cause stays and the request for reconsideration is denied.

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

Petitioner thus filed a complaint[14] for illegal dismissal, 13th month pay, service incentive leave pay, damages and attorneys fees against respondent.

The Labor Arbiter, while finding that the dismissal was for a valid cause, found the same too harsh. He thus ordered the reinstatement of petitioner to a position one
rank lowerthan her previous position, and disposed as follows:

WHEREFORE, the foregoing considered, judgement [sic] is hereby rendered directing the respondent to pay complainants 13th Month pay and Service Incentive
Leave Pay for 1999 in proportionate amount computed as follows:

13th Month Pay

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

Service Incentive Leave

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

Respondent is likewise, directed to reinstate the complainant to a position one rank lower without backwages.[15] (Underscoring supplied)

On appeal, the National Labor Relations Commission (NLRC), by Decision of October 29, 2001, reversed that of the Labor Arbiter, it finding that
petitioners dismissal wasillegal and accordingly ordering her reinstatement to her former position. Thus it disposed:

WHEREFORE, the Decision in the main case dated February 18, 2000 of the Labor Arbiter declaring the dismissal of the complainant valid, and his Order dated June
26, 2000 declaring the Motion to Declare Respondent-appellant in Contempt as prematurely filed and ordering the issuance of an alias writ of execution are hereby
SET ASIDE, and a new one is rendered DECLARING the dismissal of the complainant illegal, and ORDERING the respondent, CAP PHILIPPINES,
INCORPORATED, the following:

1. to reinstate the complainant MILAGROS B. PANUNCILLO to her former position without loss of seniority rights and with full backwages from the date her
compensation was withheld from her on April 20, 1999 until her actual reinstatement;
2. to pay to the same complainant P4,045.14 as 13th month pay, and P777.89 as service incentive leave pay;

3. to pay to the same complainant moral damages of FIFTY THOUSAND PESOS (P50,000.00), and exemplary damages of another FIFTY THOUSAND PESOS
(P50,000.00);

4. to pay attorneys fees equivalent to ten percent (10%) of the total award exclusive of moral and exemplary damages.
Further, the complainants Motion to Declare Respondent in Contempt dated May 3, 2000 is denied and rendered moot by virtue of this Decision.

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

In so deciding, the NLRC held that the transaction between petitioner and Josefina was private in character and, therefore, respondent did not suffer any damage,
hence, it was error to apply Section 8.4 of respondents Code of Discipline.

Respondent challenged the NLRC Decision before the appellate court via Petition for Certiorari. [17] By Decision of May 16, 2003,[18] the appellate court reversed the
NLRC Decision and held that the dismissal was valid and that respondent complied with the procedural requirements of due process before petitioners services were
terminated.

Hence, the present petition, petitioner faulting the appellate court

x x x IN REVIEWING THE FINDINGS OF FACT OF THE LABOR ARBITER AND THE NATIONAL LABOR RELATIONS COMMISSION THAT
RESPONDENT CAP PHILIPPINES, INC., HAS NOT BEEN DEFRAUDED NOR DAMAGED IN THE TRANSACTION/S ENTERED INTO BY PETITIONER
RELATING TO HER FULLY PAID EDUCATIONAL PLAN.

II

x x x IN HOLDING THAT RESPONDENT CAP PHILIPPINES, INC. IS THE INSURER OF PETITIONERS FULLY PAID EDUCATIONAL PLAN UNDER THE
INSURANCE CODE.

III

x x x IN HOLDING THAT PETITIONER WAS DULY AFFORDED DUE PROCESS BEFORE DISMISSAL[,]

and maintaining that she

IV

x x x IS ENTITLED TO HER FULL BACKWAGES FROM THE DATE HER COMPENSATION WAS WITHHELD FROM HER ON APRIL 20,
1999 PURSUANT TO THE DECISION OF THE NLRC REINSTATING HER TO HER PREVIOUS POSITION WITH FULL BACKWAGES AND SETTING
ASIDE THE DECISION OF THE LABOR ARBITER REINSTATING HER TO A POSITION NEXT LOWER IN RANK, UNTIL THE REVERSAL OF THE
NLRC DECISION BY THE HONORABLE COURT OF APPEALS.[19] (Emphasis and underscoring supplied)

The petition is not meritorious.

Whether respondent did not suffer any damage resulting from the transactions entered into by petitioner, particularly that with Josefina, is immaterial. As Lopez v.
National Labor Relations Commission instructs:

That the [employer] suffered no damage resulting from the acts of [the employee] is inconsequential. In Glaxo Wellcome Philippines, Inc. v. Nagkakaisang
Empleyado ng Wellcome-DFA (NEW-DFA), we held that deliberate disregard or disobedience of company rules could not be countenanced, and any justification that
the disobedient employee might put forth would be deemed inconsequential. The lack of resulting damage was unimportant, because the heart of the charge is the
crooked and anarchic attitude of the employee towards his employer. Damage aggravates the charge but its absence does not mitigate nor negate the employees
liability. x x x[20] (Italics in the original; underscoring supplied)

The transaction with Josefina aside, there was this case of misappropriation by petitioner of the amounts given to her by Evelia representing payment for the lapsed
plan of Corazon Lintag. While a settlement of the case between the two may have eventually been forged, that did not obliterate the misappropriation committed by
petitioner against a client of respondent.

Additionally, there was still another complaint lodged before respondent by Gwendolyn against petitioner for failure to remit the cash payments she had made to her, a
complaint she was apprised of but on which she was silent.

In fine, by petitioners repeated violation of Section 8.4 of respondents Code of Discipline, she violated the trust and confidence of respondent and its customers. To
allow her to continue with her employment puts respondent under the risk of being embroiled in unnecessary lawsuits from customers similarly situated as Josefina, et
al. Clearly, respondent exercised its management prerogative when it dismissed petitioner.

. . . [T]ime and again, this Court has upheld a companys management prerogatives so long as they are exercised in good faith for the advancement of the employers
interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements.

Deliberate disregard or disobedience of rules by the employees cannot be countenanced. Whatever maybe the justification behind the violations is immaterial at this
point, because the fact still remains that an infraction of the company rules has been committed.

Under the Labor Code, the employer may terminate an employment on the ground of serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work. Infractions of company rules and regulations have been declared to belong to this category and thus are
valid causes for termination of employment by the employer.
xxxx

The employer cannot be compelled to continue the employment of a person who was found guilty of maliciously committing acts which are detrimental to his
interests. It will be highly prejudicial to the interests of the employer to impose on him the charges that warranted his dis missal from employment. Indeed, it will
demoralize the rank and file if the undeserving, if not undesirable, remain in the service. It may encourage him to do even worse and will render a mockery of the rules
of discipline that employees are required to observe. This Court was more emphatic in holding that in protecting the rights of the laborer, it cannot authorize the
oppression or self-destruction of the employer. [21] x x x (Underscoring supplied)

Petitioner nevertheless argues that she was not afforded due process before her dismissal as she was merely required to answer a show-cause memorandum dated
April 7, 1999 and there was no actual investigation conducted in which she could have been heard.
Before terminating the services of an employee, the law requires two written notices: (1) one to apprise him of the particular acts or omissions for which his dismissal
is sought; and (2) the other to inform him of his employers decision to dismiss him. As to the requirement of a hearing, the essence of due process lies in an
opportunity to be heard, and not always and indispensably in an actual hearing. [22]

When respondent received the letter-complaint of Josefina, petitioner was directed to comment and explain her side thereon. She did comply, by letter of February 22,
1999wherein she admitted that she had defrauded Ms. J. Pernes, but [that she] didnt do it intentionally.

Respondent subsequently sent petitioner a show-cause memorandum giving her 48 hours from receipt why she should not be disciplinarily sanctioned. Despite the 48-
hour deadline, nothing was heard from her until April 10, 1999 when she complied with the second show-cause memorandum dated April 7, 1999.

On April 20, 1999, petitioner was informed of the termination of her services to which she filed a motion for reconsideration.

There can thus be no doubt that petitioner was given ample opportunity to explain her side. Parenthetically, when an employee admits the acts complained of, as in
petitioners case, no formal hearing is even necessary. [23]

Finally, petitioner argues that even if the order of reinstatement of the NLRC was reversed on appeal, it is still obligatory on the part of an employer to reinstate and
pay the wages of a dismissed employee during the period of appeal, citing Roquero v. Philippine Airlines,[24] the third paragraph of Article 223 [25] of the Labor Code,
and the last paragraph of Section 16,[26] Rule V of the then 1990 New Rules of Procedure of the NLRC.

Petitioner adds that respondent made clever moves to frustrate [her] from enjoying the reinstatement aspect of the decision starting from that of the Labor Arbiter
(although to a next lower rank), [to that] of the NLRC to her previous position without loss of seniority rights until it was caught up by the decision of the Honorable
Court of Appeals reversing the decision of the NLRC and declaring the dismissal of petitioner as based on valid grounds.

Respondent, on the other hand, maintains that Roquero and the legal provisions cited by petitioner are not applicable as they speak of reinstatement on order of the
Labor Arbiterand not of the NLRC.

The Labor Arbiter ordered the reinstatement of petitioner to a lower position. The third paragraph of Article 223 of the Labor Code is clear, however the employee,
who is ordered reinstated, must be accepted back to work under the same terms and conditions prevailing prior to his dismissal or separation.

Petitioners being demoted to a position one rank lower than her original position is certainly not in accordance with the said third paragraph provision of Article
223.Besides, the provision contemplates a finding that the employee was illegally dismissed or there was no just cause for her dismissal. As priorly stated, in
petitioners case, the Labor Arbiter found that there was just cause for her dismissal, but that dismissal was too harsh, hence, his order for her reinstatement to a lower
position.

The order to reinstate is incompatible with a finding that the dismissal is for a valid cause. Thus this Court declared in Colgate Palmolive Philippines, Inc. v. Ople:

The order of the respondent Minister to reinstate the employees despite a clear finding of guilt on their part is not in conformity with law. Reinstatement is simply
incompatible with a finding of guilt. Where the totality of the evidence was sufficient to warrant the dismissal of the employees the law warrants their dismissal
without making any distinction between a first offender and a habitual delinquent. Under the law, respondent Minister is duly mandated to equally protect and respect
not only the labor or workers side but also the management and/or employers side. The law, in protecting the rights of the laborer, authorizes neither oppression nor
self-destruction of the employer. x x x As stated by Us in the case of San Miguel Brewery vs. National Labor Union, an employer cannot legally be compelled to
continue with the employment of a person who admittedly was guilty of misfeasance or malfeasance towards his employer, and whose continuance in the service of
the latter is patently inimical to his interest.[27] (Emphasis and underscoring supplied)

The NLRC was thus correct when it ruled that it was erroneous for the Labor Arbiter to order the reinstatement of petitioner, even to a position one rank lower than
that which she formerly held.[28]

Now, on petitioners argument that, following the third paragraph of Article 223 of the Labor Code, the order of the NLRC to reinstate her and to pay her wages was
immediately executory even while the case was on appeal before the higher courts: The third paragraph of Article 223 of the Labor Code directs that the decision of
the LaborArbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal.

In Roquero, the Labor Arbiter upheld the dismissal of Roquero, along with another employee, albeit he found both the two and employer Philippine Airlines (PAL) at
fault. The Labor Arbiter thus ordered the payment of separation pay and attorneys fees to the complainant. No order for reinstatement was issued by the Labor
Arbiter, precisely because the dismissal was upheld.

On appeal, the NLRC ruled in favor of Roquero and his co-complainant as it also found PAL guilty of instigation. The NLRC thus ordered the reinstatement of
Roquero and his co-complainant to their former positions, but without backwages.

PAL appealed the NLRC decision via Petition for Review before this Court. Roquero and his co-complainant did not. They instead filed before the Labor Arbiter a
Motion for Execution of the NLRC order for their reinstatement which the Labor Arbiter granted.

Acting on PALs Petition for Review, this Court referred it to the Court of Appeals pursuant to St. Martin Funeral Home v. NLRC.[29]

The appellate court reversed the NLRC decision and ordered the reinstatement of the decision of the Labor Arbiter but only insofar as it upheld the dismissal of
Roquero.

Back to this Court on Roqueros Petition for Review, the following material issues were raised:
xxxx
2. Can the executory nature of the decision, more so the reinstatement aspect of a labor tribunals order be halted by a petition having been filed in higher courts
without any restraining order or preliminary injunction having been ordered in the meantime?
3. Would the employer who refused to reinstate an employee despite a writ duly issued be held liable to pay the salary of the subject employee from the time that he
was ordered reinstated up to the time that the reversed decision was handed down?[30]

Resolving these issues, this Court held in Roquero:

Article 223 (3rd paragraph) of the Labor Code as amended by Section 12 of Republic Act No. 6715, and Section 2 of the NLRC Interim Rules on Appeals under RA
No. 6715, Amending the Labor Code, provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending appeal. The rationale of
the law has been explained in Aris (Phil.) Inc. vs. NLRC:

In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a dismissed or separated employee, the law itself has
laid down a compassionate policy which, once more, vivifies and enhances the provisions of the 1987 Constitution on labor and the working man.

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

xxxx

The order of reinstatement is immediately executory. The unjustified refusal of the employer to reinstate a dismissed employee entitles him to payment of his salaries
effective from the time the employer failed to reinstate him despite the issuance of a writ of execution. Unless there is a restraining order issued, it is ministerial
upon the Labor Arbiter to implement the order of reinstatement. In the case at bar, no restraining order was granted. Thus, it was mandatory on PAL to actually
reinstate Roquero or reinstate him in the payroll. Having failed to do so, PAL must pay Roquero the salary he is entitled to, as if he was reinstated, from the time of
the decision of the NLRC until the finality of the decision of this Court.

We reiterate the rule that technicalities have no room in labor cases where the Rules of Court are applied only in a suppletory manner and only to effectuate the
objectives of the Labor Code and not to defeat them. Hence, even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part
of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if
the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse
whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. [31] (Italics in the original, emphasis and underscoring
supplied)

In the present case, since the NLRC found petitioners dismissal illegal and ordered her reinstatement, following the provision of the sixth paragraph of Article
223, viz:

The [National Labor Relations] Commission shall decide all cases within twenty (20) calendar days from receipt of the answer of the appellee. The decision of
the Commission shall be final and executory after ten (10) calendar days from receipt thereof by the parties. (Emphasis and underscoring supplied),

the NLRC decision became final and executory after ten calendar days from receipt of the decision by the parties for reinstatement.

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

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

x x x x (Emphasis and underscoring supplied),

there was still a need for the issuance of a writ of execution of the NLRC decision.
Unlike then the order for reinstatement of a Labor Arbiter which is self-executory, that of the NLRC is not. There is still a need for the issuance of a writ of
execution. Thus this Court held in Pioneer Texturizing Corp. v. NLRC:[32]

x x x The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be immediately executory even pending appeal and the
posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement
immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement
award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a reinstatement order. The reason is simple.
An application for a writ of execution and its issuance could be delayed for numerous reasons. A mere continuance or postponement of a scheduled hearing, for
instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble
purpose envisioned by Article 223. In other words, if the requirements of Article 224 [including the issuance of a writ of execution] were to govern, as we so
declared in Maranaw, then the executory nature of a reinstatement order or award contemplated by Article 223 will be unduly circumscribed and rendered
ineffectual. In enacting the law, the legislature is presumed to have ordained a valid and sensible law, one which operates no further than may be necessary to achieve
its specific purpose. Statutes, as a rule, are to be construed in the light of the purpose to be achieved and the evil sought to be remedied. x x x In introducing a new rule
on the reinstatement aspect of a labor decision under Republic Act No. 6715, Congress should not be considered to be indulging in mere semantic exercise. On appeal,
however, the appellate tribunal concerned may enjoin or suspend the reinstatement order in the exercise of its sound discretion.[33] (Italics in the original, emphasis and
underscoring supplied)

If a Labor Arbiter does not issue a writ of execution of the NLRC order for the reinstatement of an employee even if there is no restraining order, he could probably be
merely observing judicial courtesy, which is advisable if there is a strong probability that the issues before the higher court would be rendered moot and moribund as a
result of the continuation of the proceedings in the lower court. [34] In such a case, it is as if a temporary restraining order was issued, the effect of which Zamboanga
City Water District v. Buhat explains:

The issuance of the temporary restraining order did not nullify the rights of private respondents to their reinstatement and to collect their wages during the period of
the effectivity of the order but merely suspended the implementation thereof pending the determination of the validity of the NLRC resolutions subject of the
petition. Naturally, a finding of this Court that private respondents were not entitled to reinstatement would mean that they had no right to collect any back
wages. On the other hand, where the Court affirmed the decision of the NLRC and recognized the right of private respondents to reinstatement, private respondents
are entitled to the wages accruing during the effectivity of the temporary restraining order.[35] (Emphasis and underscoring supplied)

While Zamboanga was decided prior to St. Martin Funeral and, therefore, the NLRC decisions were at the time passed upon by this Court to the exclusion of the
appellate court, it is still applicable.

Since this Court is now affirming the challenged decision of the Court of Appeals finding that petitioner was validly dismissed and accordingly reversing the NLRC
Decision that petitioner was illegally dismissed and should be reinstated, petitioner is not entitled to collect any backwages from the time the NLRC decision became
final and executory up to the time the Court of Appeals reversed said decision.

It does not appear that a writ of execution was issued for the implementation of the NLRC order for reinstatement. Had one been issued, respondent would have been
obliged to reinstate petitioner and pay her salary until the said order of the NLRC for her reinstatement was reversed by the Court of Appeals, and
following Roquero, petitioner would not have been obliged to reimburse respondent for whatever salary she received in the interim.

IN SUM, while under the sixth paragraph of Article 223 of the Labor Code, the decision of the NLRC becomes final and executory after the lapse of ten calendar days
from receipt thereof by the parties, the adverse party is not precluded from assailing it via Petition for Certiorari under Rule 65 before the Court of Appeals and then to
this Court via a Petition for Review under Rule 45. If during the pendency of the review no order is issued by the courts enjoining the execution of a decision of the
Labor Arbiter or NLRC which is favorable to an employee, the Labor Arbiter or the NLRC must exercise extreme prudence and observe judicial courtesy when the
circumstances so warrant if we are to heed the injunction of the Court in Philippine Geothermal, Inc v. NLRC:

While it is true that compassion and human consideration should guide the disposition of cases involving termination of employment since it affects ones source or
means of livelihood, it should not be overlooked that the benefits accorded to labor do not include compelling an employer to retain the services of an employee who
has been shown to be a gross liability to the employer. The law in protecting the rights of the employees authorizes neither oppression nor self-destruction of
the employer. It should be made clear that when the law tilts the scale of justice in favor of labor, it is but a recognition of the inherent economic inequality between
labor and management. The intent is to balance the scale of justice; to put the two parties on relatively equal positions. There may be cases where the circumstances
warrant favoring labor over the interests of management but never should the scale be so tilted if the result is an injustice to the employer. Justitia nemini
neganda est (Justice is to be denied to none).[36] (Italics in the original; emphasis and underscoring supplied)

WHEREFORE, the petition is DENIED. The assailed Court of Appeals Decision dated May 16, 2003 and Resolution dated November 17, 2003 are AFFIRMED.

SO ORDERED.

THIRD DIVISION

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

Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

JOCELYN RESUENA, EDDIE VILLALON, SYLVIA SEDAYON and ZONSAYDA Promulgated:

EMNACE,
Respondents.
October 10, 2007
x-------------------------------------------------x

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

The following are the factual antecedents of the instant Petition:

Petitioner Mt. Carmel College is a private educational institution. It is administered by the Carmelite Fathers at New Escalante, Negros Occidental. Respondents
were employees of petitioner, namely: Jocelyn Resuena (Accounting Clerk), Eddie Villalon (Elementary Department Principal); Sylvia Sedayon (Treasurer), and
Zonsayda Emnace (Secretary to the Director).

On 21 November 1997, respondents, together with several faculty members, non-academic personnel, and other students, participated in a protest action against
petitioner. Thereafter, petitioners Director, Rev. Fr. Modesto E. Malandac, issued a Memorandum to each of the respondents. The Memorandum directed
respondents to explain in writing why they should not be dismissed for loss of trust and confidence for joining the protest action against the school
administration. Petitioner maintained that respondents were occupying positions of highly confidential nature. After a hearing conducted by petitioners Fact-
Finding Committee and submission of its Report on 25 April 1998, recommending dismissal or suspension of respondents, petitioner issued written notices of
termination to respondents on 7 May 1998. Respondents were terminated by petitioner on 15 May 1998.

Separate complaints were filed by each of the four respondents against petitioner before Regional Arbitration Branch VI of the NLRC in Bacolod City. Respondents
charged petitioner with illegal dismissal and claimed 13th month pay, separation pay, damages and attorneys fees. The cases were docketed as RAB Cases No. 06-06-
10393-98, 06-06-10394-98, 06-06-10395-98, and 06-06-10414-98. All four cases were consolidated, and Labor Arbiter Ray T. Drilon thereafter issued a
Decision[4] dated 25 May 1999 affirming the validity of respondents termination by petitioner on the ground of loss of trust and confidence. Although the Decision
found respondents to have been legally dismissed, as equitable relief, however, they were awarded separation pay computed at one month pay for every year of
service,[5] their proportionate 13th month pay, and attorneys fees. Their claims for moral and exemplary damages were denied. In issuing the aforesaid Decision, the
Labor Arbiter ruled:

WHEREFORE, premises considered, judgment is hereby rendered ordering [herein petitioner] Mount Carmel College represented by Fr. Modesto Malandac to pay
[herein respondents] Jocelyn Resuena, Zonsayda Emnace, Eddie Villalon and Sylvia Sedayon, their respective 13 th month pay, separation pay and attorneys fee in
the total sum of THREE HUNDRED THIRTY-FOUR THOUSAND EIGHT HUNDRED SEVENTY-FIVE PESOS AND 67/100 (P334,875.47) to be deposited with this office
within ten (10) days from receipt of this decision.

The complaint for moral and exemplary damages is hereby dismissed for lack of legal basis.

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

On 9 September 1999, Labor Arbiter Drilon issued to the parties a Notice of Judgment/Decision of his 25 May 1999 Decision. The notice indicated that a decision of
the Labor Arbiter reinstating a dismissed or separated employee, in so far as the reinstatement aspect is concerned, shall immediately be executory, even pending
appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or at the option of
the employee (sic) merely reinstated in the payroll. [7]
In the meantime, petitioner appealed to the NLRC Fourth Division in Cebu City, seeking the reversal of the portion of the Labor Arbiters Decision dated 25 May
1999 awarding separation pay to respondents. The NLRC dismissed the appeal in its Decision dated 30 October 2001. In the same Decision dismissing the appeal,
the NLRC reversed and modified the 25 May 1999 Decision of the Labor Arbiter, and declared the termination of respondents to be illegal. It ordered the
reinstatement of respondents, with payment of backwages or payment of separation pay in lieu thereof. The pertinent portion of the 30 October 2001 NLRC
Decision reads:

We rule that complainants were illegally dismissed and must therefore be ordered reinstated with payment of backwages from the time they were illegally
dismissed up to the time of their actual reinstatement.

All other claims are hereby dismissed for lack of merit.

WHEREFORE, premises considered the instant appeal is hereby DISMISSED for lack of merit and the appealed decision is hereby AFFIRMED with modification
ordering the [herein petitioner] the payment of the backwages of the [herein respondents] from May 15, 1998 up to May 25, 1999, further directing the
reinstatement of the [respondents] to their original positions without loss of seniority or in lieu thereof the payment of their separation pay as computed in the
appealed decision.[8]

Petitioner filed a Motion for Reconsideration of the 30 October 2001 Decision of the NLRC. The said Motion was denied in the 19 June 2003 Resolution of the NLRC.

The case was elevated to the Court of Appeals via a Special Civil Action for Certiorari and Prohibition, docketed as CA-G.R. SP No. 80639 where petitioner assailed
the aforementioned NLRC Decision dated 30 October 2001 and Resolution dated 19 June 2003, arguing that there is more than enough basis for loss of trust and
confidence as ground for dismissing respondents. It also reiterated compliance with the twin requirements of notice and hearing. The Court of Appeals denied the
petition in a Decision promulgated on 17 March 2004, ruling thus:

Consequently, we find no grave abuse of discretion committed by the NLRC in ruling that [herein respondents] have been illegally dismissed. Likewise, said [NLRC]
correctly held that even if such participation of [respondents] in the protest picket is rather improper under the circumstances or disappointing to the School
Administrator who had rightly expected them to take the side of the administration or at least stayed neutral on the demand for ouster of Fr. Malandac and Barairo,
dismissal is definitely too harsh where a less punitive action such as reprimand or disciplinary action would have been sufficient. Considering the long years of
faithful service of [respondents] in the School without previous record of misconduct, as duly noted by the NLRC in its decision, their termination on the basis of
alleged loss of confidence by taking part in an otherwise legitimate and constitutionally-protected right to free speech and peaceful assembly, is certainly illegal and
unjustified.

xxxx

Having been illegally dismissed, [respondents] are entitled to back wages from the time of their termination until reinstatement, and if reinstatement is no longer
possible, the grant of separation pay equivalent to one (1) month for every year of service. However, in this case since the Labor Arbiter did not order
reinstatement, the NLRC correctly excluded the period of the appeal in the computation of back wages due to [respondents].

Finally, on the prayer for injunctive relief sought by petitioner on the ground that [public respondent] Labor Arbiter exceeded his jurisdiction in issuing the writ of
execution despite the fact that his decision did not order reinstatement and that he is bereft of authority to implement the decision of the NLRC (Fourth Division).

xxxx

Considering that there is already an entry of judgment on the Decision dated October 30, 2001, and in view of Our disposition of this petition, we find no more
obstacle for the enforcement of the said judgment even pending appeal, in accordance with Sections 1 and 2, Rule VIII of the NLRC Rules of Procedure, as amended,
as well as Sections 2, 4 and 6, Rule III of the NLRC Manual on Execution of Judgment.

xxxx
WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and accordingly DISMISSED for lack of merit. The assailed Decision and
Resolution are AFFIRMED.[9]

No Motion for Reconsideration of the afore-quoted Court of Appeals Decision in CA-G.R. SP No. 80639 was filed and it became final and executory on 14 April 2004.

At about the same time as the foregoing developments in CA-G.R. SP No. 80639, Labor Arbiter Phibun D. Pura issued an Order on 19 May 2003 opining on the self-
executory nature of a reinstatement order:

To be sure the Court has not been consistent in its interpretation of Art. 223. The nagging issue has always been whether the reinstatement order is self-executory.
Citing the divergent views of the court beginning with Inciong v. NLRC followed by the deviation in interpretation in Maranaw Hotel Corporation (Century Park
Sheraton Manila) v. NLRC, as reiterated and adopted in Archilles Manufacturing Corporation v. NLRC and Purificacion Ram v. NLRC, the Court in the 1997 Pioneer
case has laid down the doctrine that henceforth an Order or award for reinstatement is self-executory, meaning that it does not require a writ of execution, much
less a motion for its issuance, as maintained by petitioner. x x x.

Successive writs of execution pertaining to the backwages and accrued salaries of the respondents were issued by Labor Arbiter Pura on these dates: 9 June
2003,[10] 10 December 2003,[11] and 20 January 2004.[12]

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

After an exchange of pleadings, respondents filed an Ex-Parte Motion for Issuance of Writ of Execution with the Labor Arbiter considering that the Entry of
Judgment was already issued by the NLRC. On 10 December 2003, the Labor Arbiter granted the Motion and issued the second Writ of Execution. On motion of
respondents, the Labor Arbiter ordered the release to them of the garnished amount of P503,028.05 deposited with the Cashier of NLRC Regional Arbitration
Branch VI.

However, the foregoing amount was considered to be only a partial payment of the monetary awards due the respondents and the unpaid balance thereof
continued to grow to P1,307,806.50. Respondents thus filed a motion for partial writ of execution, which the Labor Arbiter granted by issuing the third Writ of
Execution on 20 January 2004.[13]Under the foregoing writs of execution, the aggregate amount of P1,736.592.08[14] was garnished by Bailiff/Acting Sheriff Romeo D.
Pasustento, representing respondents accrued salaries, backwages, attorneys fees and sheriffs fees computed from the promulgation of the NLRC Decision 30
October 2001.

Respondents filed on 14 July 2004 yet another Motion to Issue a Writ of Execution to collect backwages from 1 January 2004 to 30 June 2004. Petitioner opposed
the motion, but the Motion to Issue a Writ of Execution was granted.
On 31 January 2005, Labor Arbiter Pura issued an Order[15] adopting the computation of the Fiscal Examiner of NLRC Regional Arbitration Branch VI and issuing a
writ of execution to enforce the NLRC Decision dated 30 October 2001. The dispositive portion of the said Order reads:

In light of the foregoing, we have no choice but to adopt the computation of the RAB Fiscal Examiner, hereto attached and forming part of the record of these cases
and conformably thereto, we grant the Motion to Issue Writ of Execution on backwages for the period stated in this computation, taking into consideration the
grant of differentials as there are benefits which accrued to the [herein respondents] and which they should have enjoyed had they been employed and/or
reinstated, as the case may be, and such other amount as may accrue until actually reinstated or in lieu of reinstatement, to pay [respondents] separation pay to be
computed at one (1) month salary for every year of service in addition to backwages the formula adopted by the Labor Arbiter in the Decision dated May 25, 1999,
page 7, paragraph 1.

Let therefore a Writ of Execution be, as it is hereby issued to enforce judgment in the above entitled cases. [16]

On 8 February 2005, petitioner filed a Motion for Reconsideration of the foregoing Order contending that the judgment of the NLRC mandated the payment of
separation pay as computed in the appealed decision. Respondents likewise filed a Manifestation and Motion to include the month of November 2004 in the
computation. In an Order dated 10 February 2005, the Labor Arbiter denied the petitioners Motion for Reconsideration. On 22 February 2005, he issued an Alias
Writ of Execution[17] for the collection from petitioner of the amount of P1,131,035.00 representing respondents backwages, separation pay, and attorneys
fees. Petitioner filed a Motion to Quash the Alias Writ of Execution on 17 March 2005.[18]
On 15 April 2005, the Labor Arbiter issued an Order where it found no compelling reason to warrant the grant of the Motion to Quash the Alias Writ of
Execution. The afore-stated Order thus reads:

WHEREFORE, for lack of merit the Motion to Quash the Alias Writ dated March 17, 2005 is denied. [Respondents] Motion to Include February and March 2005 in
the Computation of wages is hereby GRANTED. The entry of appearance of the collaborating counsel is duly noted. [19]

From the said Order of the Labor Arbiter, petitioner filed with the NLRC an appeal with an application for issuance of a writ of preliminary injunction on the
execution of judgment, docketed as NLRC Case No. V-000377-05. Petitioner assailed the 15 April 2005 Order of the Labor Arbiter averring that the latter seriously
committed errors when he ordered the payment and garnishment of backwages beyond the period 15 May 1998 to 25 May 1999. The NLRC dismissed the
petitioners appeal in a Resolution[20] dated 15 August 2005 for lack of merit. Petitioner filed a Motion for Reconsideration but it was denied by the NLRC in a
Resolution dated 30 November 2005, disposed of as follows:

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

The Court of Appeals eventually dismissed CA-G.R. CEB-SP No. 01615, ruling as follows:

Thus, petitioners avowal that their liability for private respondents backwages is limited from May 15, 1998 up to May 25, 1999 is untenable on these grounds:

First, there is no showing, in the case at bench, that petitioner exercised its option to reinstate private respondents to their former position or to grant them
separation pay. Accordingly, backwages have to be granted to private respondents until their reinstatement to their former position is effected or upon petitioners
payment of separation pay to private respondents if reinstatement is no longer feasible; and

Second, the decision dated March 17, 2004 of the 17th Division of the Court of Appeals in CA-G.R. SP No. 80639 acquiesced the propriety of the issuance of the writs
of execution by the respondent labor arbiter on June 9, 2003, December 10, 2003 and January 30, 2004. On April 14, 2004, the said decision which sanctioned the
payment of backwages even beyond May 25, 1999, became final and executory x x x.

xxxx

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

WHEREFORE, in view of the foregoing, the present petition is hereby DISMISSED and the assailed Resolutions dated August 15, 2005 and November 30, 2005,
respectively, issued by the respondent NLRC in NLRC Case No. V-000377-05 are hereby AFFIRMED.[23]

Hence, petitioner filed the instant Petition for Review on Certiorari, raising the following issues:

I.
THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE LABOR ARBITER AND THE NLRC THAT THE AWARD OF BACKWAGES GOES BEYOND THE PERIOD
FROM 15 MAY 1998 UP TO 25 MAY 1999 ON THE SUPPOSITION THAT REINSTATEMENT IS SELF-EXECUTORY AND DOES NOT NEED A WRIT OF EXECUTION FOR ITS
ENFORCEMENT.

II.
THE HONORABLE COURT OF APPEALS ERRED IN NOT FINIDING THAT THE CONTINUING GRANT AND AWARD OF BACKWAGES UP TO THE PRESENT IS CONTRARY TO
LAW AND JURISPRUDENCE AS LAID DOWN BY THIS HONORABLE SUPREME COURT.

Petitioner prays that this Court render judgment (a) annulling and setting aside the assailed Decision on 02 June 2006 of the Court of Appeals in CA-G.R. CEB-SP No.
01615 and all its orders and issuances; (b) ordering that backwages be computed and executed corresponding only to the period from 15 May 1998 to 25 May 1999;
(c) ordering that separation pay be computed based on the computation as originally submitted by the Labor Arbiter, P344,875.47, which corresponds to the date of
respondents employment until 15 May 1998; (d) that no other award except for backwages for the period 15 May 1998 to 25 May 1999 and separation pay
amounting to P344,875.47 shall be paid by petitioner; and (e) that the respondents be ordered to refund and pay the alleged excess in the amounts garnished by
virtue of the Writs of Execution dated 9 June 2003, 10 December 2003, and 30 January 2004.

In sum, the resolution of this petition hinges on the following issues: (1) whether reinstatement in the instant case is self-executory and does not need a writ of
execution for its enforcement; and (2) whether the continuing award of backwages is proper.

Petitioner insists that what is at issue is the manner of execution of the NLRC Decision dated 30 October 2001 in NLRC CASE No. V-000176-2000 (RAB CASE Nos. 06-
06-10393-98; 06-06-10394-98; 06-06-10395-98; 06-06-10414-98), as affirmed by the Decision dated 17 March 2004 of the Court of Appeals in CA-G.R. No. 80639.

In ruling on the consolidated complaints filed by the four respondents, Labor Arbiter Drilon found that they were not illegally dismissed but ordered that they be
awarded 13thmonth pay, separation pay and attorneys fees in the amount of P334,875.47. Upon appeal to the NLRC, the NLRC reversed the findings of the Labor
Arbiter ruling that the termination of respondents was illegal and ordering the payment of backwages of respondents from 15 May 1998 up to 25 May 1999. It
further directed the reinstatement of respondents or payment of separation pay, with backwages. This was affirmed by the Court of Appeals.
While petitioner concedes that the case pertaining to the complaints for illegal dismissal filed by the respondents before the Labor Arbiter had been resolved with
finality by the Court of Appeals in CA-G.R. No. 80639, no other remedy having been taken therefrom, it however assails the correctness and validity of the execution
of the judgment therein. Petitioner avers that the Court of Appeals erred in upholding the Labor Arbiter and the NLRC that the award of backwages goes beyond the
period 15 May 1998 to 25 May 1999on the supposition that reinstatement is self-executory and does not need a writ of execution for its enforcement. Petitioner
postulates that the Labor Arbiter went beyond the terms of the NLRC Decision, as affirmed by the Court of Appeals, and erroneously used as bases inapplicable
law[24] and jurisprudence[25] in the execution of the same. Petitioner contends that the Labor Arbiters reliance on Pioneer Texturizing Corp. v. National Labor
Relations Commission[26] is misplaced, for it applied Article 223 of the Labor Code [27] since reinstatement was ordered at the Labor Arbiters level while in the instant
case, reinstatement was ordered upon appeal to the NLRC. Petitioner argues that the relevant statutory and regulatory provisions herein are Article 224 of the
Labor Code,[28] and Rule III of the NLRC Manual for Execution of Judgment,[29] given that there was no order of reinstatement at the Labor Arbiter level but only at
the NLRC level. Petitioner insists that, applying Article 224 of the Labor Code in the instant case, any reinstatement aspect of the NLRC Decision, as affirmed by the
Court of Appeals, should have been done through the issuance of a Writ of Execution as it is no longer self-executory. It furthermore contends that it was impossible
to reinstate respondents, whether by way of an immediate execution or by way of a self-executory nature, since there was nothing to execute pending appeal
because there was no order for reinstatement.

Petitioner vehemently raises the argument that the award of backwages subject to execution is limited to the period prior to the appeal and does not include the
period during the pendency of the appeal, on the contention that reinstatement during appeal is warranted only when the Labor Arbiter rules that the dismissed
employee should be reinstated. In support of its foregoing argument, petitioner invokes Filflex Industrial & Manufacturing Corporation v. National Labor Relations
Commission[30] where this Court ruled:

In other words, reinstatement during appeal is warranted only when the labor arbiter (LA) himself rules that the dismissed employee should be reinstated. In the
present case, neither the dispositive portion nor the text of the labor arbiters decision ordered the reinstatement of private respondent. Further, the back wages
granted to private respondent were specifically limited to the period prior to the filing of the appeal with Respondent NLRC. In fact, the LAs decision ordered her
separation from service for the parties mutual advantage and most importantly to physical and health welfare of the complainant. Hence, it is an error and an abuse
of discretion for the NLRC to hold that the award of limited back wages, by implication, included an order for private respondents reinstatement.

An order for reinstatement must be specifically declared and cannot be presumed; like back wages, it is a separate and distinct relief given to an illegally dismissed
employee. There being no specific order for reinstatement and the order being for complainants separation, there can be no basis for the award of salaries/back
wages during the pendency of appeal.

Petitioners reliance on Filflex is misplaced and inapplicable to the case at bar. Indeed in Filflex, this Court ruled that the award of backwages is limited to the period
prior to the filing of the appeal with the NLRC. This Court had declared in the aforesaid case that reinstatement during appeal is warranted only when the Labor
Arbiter himself rules that the dismissed employee should be reinstated. But this was precisely because on appeal to the NLRC, it found that there was no illegal
dismissal; thus, neither reinstatement nor backwages may be awarded. In fact, Filfex deleted the award of backwages granted during appeal, reiterating that an
award of backwages by the NLRC during the period of appeal is totally inconsistent with its finding of a valid dismissal. In the instant petition, the NLRC Decision
dated 30 October 2001 finding the termination of respondents illegal, had the effect of reversing Labor Arbiter Drilons Decision dated 25 May 1999.
This Court sees no cogent reason as to the relevance of a discussion on whether or not reinstatement is self-executory. However, since petitioner raised this issue,
this Court has opted to discuss it. Verily, Article 223 of the Labor Code is not applicable in the instant case. The said provision stipulates that the decision of the
Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending
appeal.

Petitioner contends that the statutory provision applicable is Article 224 of the Labor Code, as well as Rule III, Section 2(b) of the NLRC Manual on Execution of
Judgment, because the case was decided on appeal. Furthermore, it is a decision which is of a final and executory nature. The provisions invoked by petitioner
reads:

Art. 224. Execution of decisions, orders or awards. -- (a) The Secretary of Labor and Employment or any Regional Director, the Commission or any Labor Arbiter, or
med-arbiter or voluntary arbitrator may, motu proprio or on motion of any interested party, issue a writ of execution on a judgment within five (5) years from the
date it becomes final and executory x x x.[31]

If the execution be for the reinstatement of any person to any position, office or employment, such writ shall be served by the sheriff upon the losing party or upon
any other person required by law to obey the same, and such party or person may be punished for contempt if he disobeys such decisions, order for
reinstatement.[32]

The records of the case indicate that when Labor Arbiter Drilon issued its 25 May 1999 Decision, there was no order of reinstatement yet although the dispositive
portion of the 31 January 2005 Order issued by Labor Arbiter Pura already provided for reinstatement or payment of separation pay, to wit:

In light of the foregoing, we have no choice but to adopt the computation of the RAB Fiscal Examiner, hereto attached and forming part of the record of these cases
and conformably thereto, we grant the Motion to Issue Writ of Execution on backwages for the period stated in this computation, taking into consideration the
grant of differentials as there are benefits which accrued to the complainants and which they should have enjoyed had they been employed and/or reinstated, as
the case may be, and such other amount as may accrue until actually reinstated or in lieu of reinstatement, to pay complainants separation pay to be computed at
one (1) month salary for every year of service in addition to backwages the formula adopted by the Labor Arbiter in the Decision dated May 25, 1999, page 7,
paragraph 1.

Let therefore a Writ of Execution be, as it is hereby issued to enforce judgment in the above entitled cases. [33]

Art. 223 of the Labor Code provides that reinstatement is immediately executory even pending appeal only when the Labor Arbiter himself ordered the
reinstatement. In this case, the original Decision of Labor Arbiter Drilon did not order reinstatement. Reinstatement in this case was actually ordered by the NLRC,
affirmed by the Court of Appeals. The order of Labor Arbiter Pura on 31 January 2005 directing reinstatement was issued after the Court of Appeals Decision
dated 17 March 2004 which affirmed the NLRCs order of reinstatement. Thus, Art. 223 finds no application in the instant case. Considering that the order for
reinstatement was first decided upon appeal to the NLRC and affirmed with finality by the Court of Appeals in CA-G.R. SP 80369 on 17 March 2004, petitioner rightly
invoked Art. 224 of the Labor Code. As contemplated by Article 224 of the Labor Code, the Secretary of Labor and Employment or any Regional Director, the
Commission or any Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu proprio or on motion of any interested party, issue a writ of execution on a
judgment within five (5) years from the date it becomes final and executory. Consequently, under Rule III of the NLRC Manual on the Execution of Judgment, it is
provided that if the execution be for the reinstatement of any person to a position, an office or an employment, such writ shall be served by the sheriff upon the
losing party or upon any other person required by law to obey the same, and such party or person may be punished for contempt if he disobeys such decision or
order for reinstatement.[34]

However, as we can glean from the succeeding discussion, the above findings will not affect the award of backwages for the period beyond 25 May 1999.

Anent the second issue, petitioner contends that the 25 May 1999 Decision of Labor Arbiter Drilon did not order the reinstatement of respondents. Petitioner posits
that since there was no finding of illegal dismissal at the Labor Arbiters level, then it follows that there was no reinstatement aspect, and its liability for backwages is
limited to the period from 15 May 1998 up to 25 May 1999, i.e., from dismissal to promulgation of the Labor Arbiters Decision only, as allegedly determined by the
NLRC in its Decision dated 30 October 2001. It argues that while the said NLRC Decision awarded backwages from 15 May 1998 to 25 May 1999 only, the Writs of
Execution issued pursuant thereto ordered the payment of backwages way beyond the period stated in the Decision [35] it is supposed to execute.

Petitioners argument is absurd. Abbott v. National Labor Relations Commission,[36] as cited by petitioner, declared that there exists a big difference when what is
sought to be reviewed is the manner of execution of a decision and not the decision itself. While it is true that the decision itself has become final and executory
and so can no longer be challenged, there is no question that it must be enforced in accordance with its terms and conditions. Any deviation therefrom can be the
subject of a proper appeal.[37] In the instant case, however, the manner of execution falls squarely within the terms of the Decision it seeks to implement.

The 30 October 2001 NLRC Decision ruled as follows:

We rule that complainants were illegally dismissed and must therefore be ordered reinstated with payment of backwages from the time they were illegally
dismissed up to the time of their actual reinstatement.

All other claims are hereby dismissed for lack of merit.

WHEREFORE, premises considered the instant appeal is hereby DISMISSED for lack of merit and the appealed decision is hereby AFFIRMED with modification
ordering the respondents the payment of the backwages of the complainants from May 15, 1998 up to May 25, 1999, further directing the reinstatement of the
complainants to their original positions without loss of seniority or in lieu thereof the payment of their separation pay as computed in the appealed decision. [38]

When the afore-quoted NLRC Decision was appealed to the Court of Appeals in CA-G.R. SP No. 80639, there seemed to be a contradiction between the body and
the fallo of the appellate courts Decision dated 17 March 2004. Petitioner cites the following from the text of the Court of Appeals Decision:

However, in this case since the Labor Arbiter did not order reinstatement, the NLRC correctly excluded the period of the appeal in the computation of back wages
due to private respondents.[39]

The dispositive portion of the same Decision, however, concludes:

WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and accordingly DISMISSED for lack of merit. The assailed Decision and
Resolution are AFFIRMED.[40]

The general rule is that where there is conflict between the dispositive portion or the fallo and the body of the decision, the fallo controls. This rule rests on the
theory that the fallo is the final order while the opinion in the body is merely a statement ordering nothing.[41] Clearly, the award of backwages to respondents does
not merely cover the period from 15 May 1998 up to 25 May 1999 alone.[42] The findings of the NLRC, which were affirmed with finality in CA-G.R. SP No. 80639, and
subject of execution in the instant petition, pronounced:

We rule that [respondents] were illegally dismissed and must therefore be ordered reinstated with payment of backwages from the time they were illegally
dismissed up to the time of their actual reinstatement.

All other claims are hereby dismissed for lack of merit.

WHEREFORE, premises considered the instant appeal is hereby DISMISSED for lack of merit and the appealed decision is hereby AFFIRMED with modification
ordering the [petitioner]payment of the backwages of the [respondents] from May 15, 1998 up to May 25, 1999, further directing the reinstatement of the
[respondents] to their original positions without loss of seniority or in lieu thereof the payment of their separation pay as computed in the appealed decision.[43]

The above ruling of the NLRC in its Decision dated 30 October 2001 had the effect of reversing and modifying the findings of the Labor Arbiter. Under Article 218(c)
of the Labor Code, the Commission is empowered to correct, amend, or waive any error, defect or irregularity whether in substance or form, in the exercise of its
appellate jurisdiction.[44] The dispositive portion of the Labor Arbiters Decision as worded is clear and needs no further interpretation. The NLRC found respondents
to have been illegally dismissed by petitioner, and ordered reinstatement and payment of backwages. Additionally, it stated that where reinstatement is not
possible, separation pay as computed in the appealed decision should be awarded to respondents. Petitioner interprets the dispositive portion of the NLRC Decision
to mean that it is ordered to pay respondents backwages from 15 May 1998 to 25 May 1999 only. Petitioner seems to have missed that the aforestated NLRC
Decision also directed it to reinstate respondents, or in lieu thereof, pay separation pay. This, petitioner failed to do. Petitioner did not exercise the option of either
reinstatement or paying the separation pay of respondents.

Backwages are to be computed from the time of illegal dismissal until reinstatement or upon petitioners payment of separation pay to respondents if reinstatement
is no longer possible. Article 279 of the Labor Code, as amended, states:

Art. 279. Security of Tenure. x x x

In cases of regular employment the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee
who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual
reinstatement.

Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided are separate and distinct. In instances where
reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed
employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages. [45]
The normal consequences of respondents illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of backwages computed from the
time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1)
month salary for every year of service should be awarded as an alternative. [46] The payment of separation pay is in addition to payment of backwages.
Concomitantly, it is evident that respondents backwages should not be limited to the period from 15 May 1998 to 25 May 1999. The backwages due respondents
must be computed from the time they were unjustly dismissed until their actual reinstatement to their former position or upon petitioners payment of separation
pay to them if reinstatement is no longer feasible. Thus, until petitioner actually implements the reinstatement aspect of the NLRC Decision dated 30 October 2001,
as affirmed in the Court of Appeals Decision dated 17 March 2004 in CA-G.R. SP No. 80639, its obligation to respondents, insofar as accrued backwages and other
benefits are concerned, continues to accumulate.

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

WHEREFORE, the instant petition is dismissed. The Decision dated 2 June 2006 of the Court of Appeals in CA-G.R. CEB-SP No. 01615 is AFFIRMED. Petitioner
is ORDERED to (1) reinstate respondents to their original positions without loss of seniority rights, with payment of (a) backwages computed from 15 May 1998, the
time compensation of respondents was withheld from them when they were unjustly terminated, up to the time of reinstatement; and (b) accrued 13th month pay
for the same period; OR in lieu of reinstatement, (2) pay respondents (a) separation pay, in the amount equivalent to one (1) month pay for every year of service;
and (b) backwages, computed from 15 May 1998, the time compensation of respondents was withheld from them when they were unjustly terminated, up to
the time of payment thereof; and (c) the accrued 13th month pay for the same period. For this purpose, the records of this case are hereby REMANDED to the
Labor Arbiter for proper computation of the subject money claims as discussed above. Costs against petitioner.

SO ORDERED.

G.R. No. 164856 August 29, 2007

JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners,

vs.
PHILIPPINE AIRLINES, INC., Respondent.

DECISION

QUISUMBING, J.:

This petition for review assails both the Decision1 dated December 5, 2003 and the Resolution2 dated April 16, 2004 of the Court of Appeals in CA-G.R.
SP No. 69540, which had annulled the Resolutions3 dated November 26, 2001 and January 28, 2002 of the National Labor Relations Commission
(NLRC) in NLRC Injunction Case No. 0001038-01, and also denied the motion for reconsideration, respectively.

The antecedent facts of the case are as follows:

Petitioners Alberto J. Dumago and Juanito A. Garcia were employed by respondent Philippine Airlines, Inc. (PAL) as Aircraft Furnishers Master "C" and
Aircraft Inspector, respectively. They were assigned in the PAL Technical Center.

On July 24, 1995, a combined team of the PAL Security and National Bureau of Investigation (NBI) Narcotics Operatives raided the Toolroom Section
Plant Equipment Maintenance Division (PEMD) of the PAL Technical Center. They found petitioners, with four others, near the said section at that
time. When the PAL Security searched the section, they found shabu paraphernalia inside the company-issued locker of Ronaldo Broas who was also
within the vicinity. The six employees were later brought to the NBI for booking and proper investigation.

On July 26, 1995, a Notice of Administrative Charge4 was served on petitioners. They were allegedly "caught in the act of sniffing shabu inside the
Toolroom Section," then placed under preventive suspension and required to submit their written explanation within ten days from receipt of the notice.

Petitioners vehemently denied the allegations and challenged PAL to show proof that they were indeed "caught in the act of sniffing shabu." Dumago
claimed that he was in the Toolroom Section to request for an allen wrench to fix the needles of the sewing and zigzagger machines. Garcia averred he
was in the Toolroom Section to inquire where he could take the Tracksters tire for vulcanizing.

On October 9, 1995, petitioners were dismissed for violation of Chapter II, Section 6, Article 46 (Violation of Law/Government Regulations) and
Chapter II, Section 6, Article 48 (Prohibited Drugs) of the PAL Code of Discipline.5 Both simultaneously filed a case for illegal dismissal and damages.

In the meantime, the Securities and Exchange Commission (SEC) placed PAL under an Interim Rehabilitation Receiver due to severe financial losses.

On January 11, 1999, the Labor Arbiter rendered a decision6 in petitioners favor:

WHEREFORE, conformably with the foregoing, judgment is hereby rendered finding the respondents guilty of illegal suspension and illegal dismissal
and ordering them to reinstate complainants to their former position without loss of seniority rights and other privileges. Respondents are hereby further
ordered to pay jointly and severally unto the complainants the following:

Alberto J. Dumago - P409,500.00 backwages as of 1/10/99

34,125.00 for 13th month pay

Juanito A. Garcia - P1,290,744.00 backwages as of 1/10/99

107,562.00 for 13th month pay

The amounts of P100,000.00 and P50,000.00 to each complainant as and by way of moral and exemplary damages; and

The sum equivalent to ten percent (10%) of the total award as and for attorneys fees.

Respondents are directed to immediately comply with the reinstatement aspect of this Decision. However, in the event that reinstatement is no longer
feasible, respondent[s] are hereby ordered, in lieu thereof, to pay unto the complainants their separation pay computed at one month for [e]very year of
service.

SO ORDERED.7

Meanwhile, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation Receiver.

On appeal, the NLRC reversed the Labor Arbiters decision and dismissed the case for lack of merit.8Reconsideration having been denied, an Entry of
Judgment9 was issued on July 13, 2000.

On October 5, 2000, the Labor Arbiter issued a Writ of Execution10 commanding the sheriff to proceed:

xxxx

1. To the Office of respondent PAL Building I, Legaspi St., Legaspi Village, Makati City or to any of its Offices in the Philippines and cause
reinstatement of complainants to their former position and to cause the collection of the amount of []549,309.60 from respondent PAL
representing the backwages of said complainants on the reinstatement aspect;

2. In case you cannot collect from respondent PAL for any reason, you shall levy on the office equipment and other movables and garnish
its deposits with any bank in the Philippines, subject to the limitation that equivalent amount of such levied movables and/or the amount
garnished in your own judgment, shall be equivalent to []549,309.60. If still insufficient, levy against immovable properties of PAL not
otherwise exempt from execution.

x x x x11

Although PAL filed an Urgent Motion to Quash Writ of Execution, the Labor Arbiter issued a Notice of Garnishment12 addressed to the
President/Manager of the Allied Bank Head Office in Makati City for the amount of 549,309.60.

PAL moved to lift the Notice of Garnishment while petitioners moved for the release of the garnished amount. PAL opposed petitioners motion. It also
filed an Urgent Petition for Injunction which the NLRC resolved as follows:

WHEREFORE, premises considered, the Petition is partially GRANTED. Accordingly, the Writ of Execution dated October 5, 2000 and related [N]otice
of Garnishment [dated October 25, 2000] are DECLARED valid. However, the instant action is SUSPENDED and REFERRED to the Receiver of
Petitioner PAL for appropriate action.

SO ORDERED.13

PAL appealed to the Court of Appeals on the grounds that: (1) by declaring the writ of execution and the notice of garnishment valid, the NLRC gave
petitioners undue advantage and preference over PALs other creditors and hampered the task of the Permanent Rehabilitation Receiver; and (2) there
was no longer any legal or factual basis to reinstate petitioners as a result of the reversal by the NLRC of the Labor Arbiters decision.

The appellate court ruled that the Labor Arbiter issued the writ of execution and the notice of garnishment without jurisdiction. Hence, the NLRC erred
in upholding its validity. Since PAL was under receivership, it could not have possibly reinstated petitioners due to retrenchment and cash-flow
constraints. The appellate court declared that a stay of execution may be warranted by the fact that PAL was under rehabilitation receivership. The
dispositive portion of the 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 is
hereby ANNULLED and SET ASIDE for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Consequently,
the Writ of Execution and the Notice of Garnishment issued by the Labor Arbiter are hereby likewise ANNULLED and SET ASIDE.

SO ORDERED.14

Hence, the instant petition raising a single issue as follows:

WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE PETITIONERS ARE ENTITLED TO THEIR ACCRUED
WAGES DURING THE PENDENCY OF PALS APPEAL.15

Simply put, however, there are really two issues for our consideration: (1) Are petitioners entitled to their wages during the pendency of PALs appeal to
the NLRC? and (2) In the light of new developments concerning PALs rehabilitation, are petitioners entitled to execution of the Labor Arbiters order of
reinstatement even if PAL is under receivership?

We shall first resolve the issue of whether the execution of the Labor Arbiters order is legally possible even if PAL is under receivership.

We note that during the pendency of this case, PAL was placed by the SEC first, under an Interim Rehabilitation Receiver and finally, under a
Permanent Rehabilitation Receiver. The pertinent law on this matter, Section 5(d) of Presidential Decree (P.D.) No. 902-A, as amended, provides that:

SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and
other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to
hear and decide cases involving:

xxxx

d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where the corporation,
partnership or association possesses property to cover all of its debts but foresees the impossibility of meeting them when they respectively fall due or
in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the [management of a
rehabilitation receiver or] Management Committee created pursuant to this Decree.

The same P.D., in Section 6(c) provides that:

SECTION 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following powers:

xxxx

c) To appoint one or more receivers of the property, real or personal, which is the subject of the action pending before the Commission in accordance
with the pertinent provisions of the Rules of Court in such other cases whenever necessary in order to preserve the rights of the parties-litigants and/or
protect the interest of the investing public and creditors:Provided, finally, That upon appointment of a management committee, rehabilitation receiver,
board or body, pursuant to this Decree, all actions for claims against corporations, partnerships or associations under management or receivership
pending before any court, tribunal, board or body shall be suspended accordingly.

xxxx

Worth stressing, upon appointment by the SEC of a rehabilitation receiver, all actions for claims against the corporation pending before any court,
tribunal or board shall ipso jure be suspended. The purpose of the automatic stay of all pending actions for claims is to enable the rehabilitation
receiver to effectively exercise its/his powers free from any judicial or extra-judicial interference that might unduly hinder or prevent the rescue of the
corporation.16

More importantly, the suspension of all actions for claims against the corporation embraces all phases of the suit, be it before the trial court or any
tribunal or before this Court.17 No other action may be taken, including the rendition of judgment during the state of suspension. It must be stressed that
what are automatically stayed or suspended are the proceedings of a suit and not just the payment of claims during the execution stage after the case
had become final and executory.18

Furthermore, the actions that are suspended cover all claims against the corporation whether for damages founded on a breach of contract of carriage,
labor cases, collection suits or any other claims of a pecuniary nature.19 No exception in favor of labor claims is mentioned in the law.201avvphi1

This Courts adherence to the above-stated rule has been resolute and steadfast as evidenced by its oft-repeated application in a plethora of cases
involving PAL, the most recent of which is Philippine Airlines, Inc. v. Zamora.21

Since petitioners claim against PAL is a money claim for their wages during the pendency of PALs appeal to the NLRC, the same should have been
suspended pending the rehabilitation proceedings. The Labor Arbiter, the NLRC, as well as the Court of Appeals should have abstained from resolving
petitioners case for illegal dismissal and should instead have directed them to lodge their claim before PALs receiver.22

However, to still require petitioners at this time to re-file their labor claim against PAL under the peculiar circumstances of the case that their
dismissal was eventually held valid with only the matter of reinstatement pending appeal being the issue this Court deems it legally expedient to
suspend the proceedings in this case.

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

SO ORDERED.
 SESSION DELIGHTS ICE CREAM AND FAST FOODS, G.R. No. 172149
Petitioner,

Present:
- versus - CARPIO, J., Chairperson,
BRION,
BERSAMIN,*
THE HON. COURT OF APPEALS (Sixth Division), HON. ABAD, and
NATIONAL LABOR RELATIONS COMMISSION (Second PEREZ, JJ.
Division) and ADONIS ARMENIO M. FLORA,
Respondents. Promulgated:

February 8, 2010

We rule on the petition for review on certiorari assailing the decision[1] and resolution[2] of the Court of Appeals[3] (CA) in CA-G.R. SP No. 89326. These CA rulings
dismissed the petition for certiorari the petitioner Session Delights Ice Cream and Fast Foods (petitioner) filed to challenge the resolutions[4] of the Second Division of
the National Labor Relations Commission[5] (NLRC) that in turn affirmed the order[6] of the Labor Arbiter[7] granting a re-computation of the monetary awards in favor
of the private respondent Adonis Armenio M. Flora (private respondent).

The Facts

The private respondent filed against the petitioner a complaint for illegal dismissal, entitled Adonis Armenio M. Flora, Complainant versus Session Delights Ice
Cream & Fast Foods, et. al, Private respondents, docketed as NLRC Case No. RAB-CAR 09-0507-00.

The labor arbiter decided the complaint on February 8, 2001, finding that the petitioner illegally dismissed the private respondent. The decision awarded the private
respondent backwages, separation pay in lieu of reinstatement, indemnity, and attorneys fees, under a computation that the decision itself outlined in its dispositive
portion. The dispositive portion reads:

WHEREFORE, judgment is hereby rendered declaring private respondent guilty of illegal dismissal. Accordingly, private respondent SESSION DELIGHTS is
ordered to pay complainant the following:

a) Backwages:
P170.00 x 154 days P 26,180.00
Proportional 13th month pay
P 26,180/12 2,181.65 28,361.65

b) Separation Pay:
P 170.00 x 314/12 x 1 4,448.35

c) Indemnity of P5,000.00 for failure to observe due process

d) Attorneys fees which is 10% of the total award in the amount of P3,781.00.

SO ORDERED.[8]

On the petitioners appeal, the NLRC affirmed the labor arbiters decision in its resolutions dated May 31, 2002 and September 30, 2002.[9] The dispositive portion of
the NLRCs resolution of May 31, 2002 states:
WHEREFORE, premises considered, the decision under review is hereby AFFIRMED, and the appeal, DISMISSED, for lack of merit. [10]

The petitioner continued to seek relief, this time by filing a petition for certiorari before the CA, which petition was docketed as CA-G.R. SP No. 74653.

On July 4, 2003, the CA dismissed the petition and affirmed with modification the NLRC decision by deleting the awards for a proportionate 13th month pay and for
indemnity.[11] The CA decision became final per Entry of Judgment dated July 29, 2003.[12] The dispositive portion of this CA decision states:

WHEREFORE, premises considered, the instant petition is hereby DISMISSED. The decision of the National Labor Relations Commission is AFFIRMED with
modification that the award of proportional 13th month pay as well as the award of indemnity of P 5,000.00 for failure to observe due process are DELETED.

In January 2004, and in the course of the execution of the above final judgment pursuant to Section 3, Rule VIII[13] of the then NLRC Rules of Procedure, the Finance
Analyst of the Labor Arbiters Office held a pre-execution conference with the contending parties in attendance. The Finance Analyst submitted
an updated computation of the monetary awards due the private respondent in the total amount of P235,986.00.[14] This updated computation included additional
backwages and separation pay due the private respondent computed from March 1, 2001 to September 17, 2003. The computation also included the proportionate
amount of the private respondents 13th month pay. On March 25, 2004, the labor arbiter approved the updated computation which ran, as follows:
COMPUTATION

Total computation as per NLRC CAR

decision dated February 8, 2001 (sic) 41,591.00

1. Additional backwages: (March 1, 2001-Sept. 17, 2003)

March 1, 2001-April 30, 2002:
P178.00 x 52 days = 9,256.00
May 1, 2001-June 30, 2002:
P185.00 x 365 days = 67,525.00
July 1, 2002- Sept. 17, 2003:
P190.00 x 382 days = 72,580.00 149,361.00
Proportional 13th month pay:
P149,361.00/12 = 12,446.75
161,807.75
2. Additional separation pay:
P190.00 x 314/12 x 3 years = 14,915.00
3. Additional attorneys fee:
P176,722.75 x 10% = 17,672.25 194,395.00
TOTAL 253,986.00

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

The petitioner sought recourse with the CA through a petition for certiorari on the ground that the NLRC acted with grave abuse of discretion amounting to lack or
excess of jurisdiction.

The CA Rulings

The CA partially granted the petition in its decision of December 19, 2005 (now challenged before us) by deleting the awarded proportionate 13th month pay. The CA
ruled:

WHEREFORE, the petition is PARTIALLY GRANTED. The Labor Arbiter is DIRECTED to compute only the following (a) private respondents backwages from
the time his salary was withheld up to July 29, 2003, the finality of the Decision in CA-G.R. SP No. 74653; (b) private respondents separation pay from July 31, 2000
up to July 29, 2003; and (c) attorneys fees equivalent to 10% of the total monetary claims from (a) and (b). The total monetary award shall earn legal interest
from July 29, 2003 until fully paid. No pronouncement as to cost.

SO ORDERED.[15]

The CA explained in this ruling that employees illegally dismissed are entitled to reinstatement, full backwages, inclusive of allowances and other benefits or their
monetary equivalent, computed from the time actual compensation was withheld from them, up to the time of actual reinstatement. If reinstatement is no longer
feasible, the backwages shall be computed from the time of their illegal dismissal up to the finality of the decision. The CA reasoned that a re-computation of the
monetary awards was necessary to determine the correct amount due the private respondent from the time his salary was withheld from him until July 29, 2003 (the
date of finality of the July 4, 2003 decision in CA-G.R. SP No. 74653) since the separation pay, which was awarded in lieu of reinstatement, had not been paid by the
petitioner. The attorneys fees likewise have to be re-computed in light of the deletion of the proportionate 13th month pay and indemnity awards.
The petitioner timely filed a motion for reconsideration which the CA denied in its resolution of March 30, 2006, now similarly assailed before us.

The Issue

The lone issue the petitioner raised is whether a final and executory decision (the labor arbiters decision of February 8, 2001, as affirmed with modification by
the CA decision in CA-G.R. SP No. 74653) may be enforced beyond the terms decreed in its dispositive portion.

In the pleadings submitted to the Court, the petitioner insists on a literal reading and application of the labor arbiters February 8, 2001 decision, as modified by the CA
in CA-G.R. SP No. 74653. The petitioner argues that since the modified labor arbiters February 8, 2001 decision did not provide in its dispositive portion for a
computation of the monetary award up to the finality of the judgment in the case, the CA should have enforced the decision according to its express and literal terms.
In other words, the CA cannot now allow the execution of the labor arbiters original decision (which the CA affirmed with finality but with modification) beyond the
express terms of its dispositive portion; thus, the amounts that accrued during the pendency of the petitioners recourses with the NLRC and the CA cannot be read
into and implemented as part of the final and executory judgment.

The petitioner, as an alternative argument, argues that even assuming that the body of the CA decision in CA-G.R. SP No. 74653 intended a computation of the
monetary award up to the finality of the decision, the dispositive portion remains to be the directive that should be enforced, as it is the part of the decision that
governs, settles, and declares the rights and obligations of the parties.

The private respondent, for his part, counters that the computation of the monetary award until the finality of the CA decision in CA-G.R. SP No. 74653 is in accord
with Article 279 of the Labor Code, as amended.

The Courts Ruling

We resolve to dismiss the petition and, accordingly, affirm the CA decision.

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

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

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

Award of backwages and separation pay

A distinct feature of the judgment under execution is that the February 8, 2001 labor arbiter decision already provided for the computation of the payable separation
pay and backwages due, and did not literally order the computation of the monetary awards up to the time of the finality of the judgment. The private respondent, too,
did not contest the decision through an appeal. The petitioners argument to confine the awards to what the labor arbiter stated in the dispositive part of his decision is
largely based on these established features of the judgment.

We reject the petitioners view as a narrow and misplaced interpretation of an illegal dismissal decision, particularly of the terms of the labor arbiters decision.

While the private respondent failed to appeal the February 8, 2001 decision of the labor arbiter, the failure, at the most, had the effect of making the awards granted to
him final so that he could no longer seek any other affirmative relief, or pray for any award additional to what the labor arbiter had given. Other than these, the
illegal dismissal case remained open for adjudication based on the appeal made for the higher tribunals consideration. In other words, the higher tribunals, on
appropriate recourses made, may reverse the judgment and declare that no illegal dismissal took place, or affirm the illegal dismissal already decreed with or
without modifying the monetary consequences flowing from the dismissal.

As the case developed and is presented to us, the issue before us is not the correctness of the awards, nor the finality of the CAs judgment, nor the petitioners failure to
appeal. The issue before us is the propriety of the computation of the awards made, and, whether this violated the principle of immutability of final
judgments.

In concrete terms, the question is whether a re-computation in the course of execution of the labor arbiters original computation of the awards made, pegged as of the
time the decision was rendered and confirmed with modification by a final CA decision, is legally proper. The question is posed, given that the petitioner did not
immediately pay the awards stated in the original labor arbiters decision; it delayed payment because it continued with the litigation until final judgment at the CA
level.

A source of misunderstanding in implementing the final decision in this case proceeds from the way the original labor arbiter framed his decision. The decision
consists essentially of two parts.

The first is that part of the decision that cannot now be disputed because it has been confirmed with finality. This is the finding of the illegality of the dismissal and the
awards of separation pay in lieu of reinstatement, backwages, attorneys fees, and legal interests.

The second part is the computation of the awards made. On its face, the computation the labor arbiter made shows that it was time-bound as can be seen from the
figures used in the computation. This part, being merely a computation of what the first part of the decision established and declared, can, by its nature, be re-
computed. This is the part, too, that the petitioner now posits should no longer be re-computed because the computation is already in the labor arbiters decision that
the CA had affirmed. The public and private respondents, on the other hand, posit that a re-computation is necessary because the relief in an illegal dismissal decision
goes all the way up to reinstatement if reinstatement is to be made, or up to the finality of the decision, if separation pay is to be given in lieu reinstatement.

That the labor arbiters decision, at the same time that it found that an illegal dismissal had taken place, also made a computation of the award, is understandable in
light of Section 3, Rule VIII of the then NLRC Rules of Procedure which requires that a computation be made. This Section in part states:
[T]he Labor Arbiter of origin, in cases involving monetary awards and at all events, as far as practicable, shall embody in any such decision or order the detailed and
full amount awarded.
Clearly implied from this original computation is its currency up to the finality of the labor arbiters decision. As we noted above, this implication is apparent from the
terms of the computation itself, and no question would have arisen had the parties terminated the case and implemented the decision at that point.

However, the petitioner disagreed with the labor arbiters findings on all counts i.e., on the finding of illegality as well as on all the consequent awards made. Hence,
the petitioner appealed the case to the NLRC which, in turn, affirmed the labor arbiters decision. By law,[21] the NLRC decision is final, reviewable only by the CA on
jurisdictional grounds.

The petitioner appropriately sought to nullify the NLRC decision on jurisdictional grounds through a timely filed Rule 65 petition for certiorari. The CA decision,
finding that NLRC exceeded its authority in affirming the payment of 13 th month pay and indemnity, lapsed to finality and was subsequently returned to the labor
arbiter of origin for execution.

It was at this point that the present case arose. Focusing on the core illegal dismissal portion of the original labor arbiters decision, the implementing labor arbiter
ordered the award re-computed; he apparently read the figures originally ordered to be paid to be the computation due had the case been terminated and implemented
at the labor arbiters level. Thus, the labor arbiter re-computed the award to include the separation pay and the backwages due up to the finality of the CA decision that
fully terminated the case on the merits. Unfortunately, the labor arbiters approved computation went beyond the finality of the CA decision (July 29, 2003) and
included as well the payment for awards the final CA decision had deleted specifically, the proportionate 13 th month pay and the indemnity awards. Hence, the CA
issued the decision now questioned in the present petition.

We see no error in the CA decision confirming that a re-computation is necessary as it essentially considered the labor arbiters original decision in accordance with its
basic component parts as we discussed above. To reiterate, the first part contains the finding of illegality and its monetary consequences; the second part is the
computation of the awards or monetary consequences of the illegal dismissal, computed as of the time of the labor arbiters original decision.

To illustrate these points, had the case involved a pure money claim for a specific sum (e.g. salary for a specific period) or a specific benefit (e.g. 13th month pay for a
specific year) made by a former employee, the labor arbiters computation would admittedly have continuing currency because the sum is specific and any variation
may only be on the interests that may run from the finality of the decision ordering the payment of the specific sum.

In contrast with a ruling on a specific pure money claim, is a claim that relates to status (as in this case, where the claim is the legality of the termination of the
employment relationship). In this type of cases, the decision or ruling is essentially declaratory of the status and of the rights, obligations and monetary consequences
that flow from the declared status (in this case, the payment of separation pay and backwages and attorneys fees when illegal dismissal is found). When this type of
decision is executed, what is primarily implemented is the declaratory finding on the status and the rights and obligations of the parties therein; the arising monetary
consequences from the declaration only follow as component of the parties rights and obligations.

In the present case, the CA confirmed that indeed an illegal dismissal had taken place, so that separation pay in lieu of reinstatement and backwages should be
paid. How much that separation pay would be, would ideally be stated in the final CA decision; if not, the matter is for handling and computation by the labor arbiter
of origin as the labor official charged with the implementation of decisions before the NLRC. [22]
As the CA correctly pointed out, the basis for the computation of separation pay and backwages is Article 279 of the Labor Code, as amended, which reads:

x x x An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.

By jurisprudence derived from this provision, separation pay may be awarded to an illegally dismissed employee in lieu of reinstatement.[23] Recourse to the payment
of separation pay is made when continued employment is no longer possible, in cases where the dismissed employees position is no longer available, or the continued
relationship between the employer and the employee is no longer viable due to the strained relations between them, or when the dismissed employee opted not to be
reinstated, or payment of separation benefits will be for the best interest of the parties involved. [24]

This reading of Article 279, of course, does not appear to be disputed in the present case as the petitioner admits that separation pay in lieu of reinstatement shall be
paid, computed up to the finality of the judgment finding that illegal dismissal had taken place. What the petitioner simply disputes is the re-computation of the award
when the final CA decision did not order any re-computation while the NLRC decision that the CA affirmed and the labor arbiter decision the NLRC in turn affirmed,
already made a computation that on the basis of immutability of judgment and the rule on execution of the dispositive portion of the decision should not now be
disturbed.

Consistent with what we discussed above, we hold that under the terms of the decision under execution, no essential change is made by a re-computation as this step is
a necessary consequence that flows from the nature of the illegality of dismissal declared in that decision. A re-computation (or an original computation, if no previous
computation has been made) is a part of the law specifically, Article 279 of the Labor Code and the established jurisprudence on this provision that is read into the
decision. By the nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction, as expressed under Article 279 of the Labor Code. The re-
computation of the consequences of illegal dismissal upon execution of the decision does not constitute an alteration or amendment of the final decision being
implemented. The illegal dismissal ruling stands; only the computation of monetary consequences of this dismissal is affected and this is not a violation of the
principle of immutability of final judgments.
We fully appreciate the petitioners efforts in trying to clarify how the standing jurisprudence on the payment of separation pay in lieu of reinstatement and the
accompanying payment of backwages ought to be read and reconciled. Its attempt, however, is out of place and, rather than clarify, may only confuse the
implementation of Article 279; the core issue in this case is not the payment of separation pay and backwages but their re-computation in light of an original labor
arbiter ruling that already contained a dated computation of the monetary consequences of illegal dismissal.

That the amount the petitioner shall now pay has greatly increased is a consequence that it cannot avoid as it is the risk that it ran when it continued to seek recourses
against the labor arbiters decision. Article 279 provides for the consequences of illegal dismissal in no uncertain terms, qualified only by jurisprudence in its
interpretation of when separation pay in lieu of reinstatement is allowed. When that happens, the finality of the illegal dismissal decision becomes the reckoning point
instead of the reinstatement that the law decrees. In allowing separation pay, the final decision effectively declares that the employment relationship ended so that
separation pay and backwages are to be computed up to that point. The decision also becomes a judgment for money from which another consequence flows the
payment of interest in case of delay. This was what the CA correctly decreed when it provided for the payment of the legal interest of 12% from the finality of the
judgment, in accordance with our ruling in Eastern Shipping Lines, Inc. v. Court of Appeals.[25]

WHEREFORE, premises considered, we hereby AFFIRM the decision of the Court of Appeals dated December 19, 2005 and its resolution dated March 30,
2006 in CA-G.R. SP No. 89326.

For greater certainty, the petitioner is ORDERED to PAY the private respondent:

(a) backwages computed from August 28, 2000 (the date the employer illegally dismissed the private respondent) up to July 29, 2003, the date of finality of the
decision of the Court of Appeals in CA-G.R. SP No. 74653;

(b) separation pay computed from July 31, 2000 (the private respondents first day of employment) up to July 29, 2003 at the rate of one month pay per year of service;

(c) ten percent (10%) attorneys fees based on the total amount of the awards under (a) and (b) above; and

(d) legal interest of twelve percent (12%) per annum of the total monetary awards computed from July 29, 2003, until their full satisfaction.

The labor arbiter is hereby ORDERED to make another re-computation according to the above directives.
Costs against the petitioner.

SO ORDERED.

DANIEL P. JAVELLANA, JR., G.R. No. 181913

Petitioner,
Present:
CARPIO, J., Chairperson,
- versus - NACHURA,*
BRION,
ABAD, and
PEREZ, JJ.
ALBINO BELEN,
Respondent.

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

ALBINO BELEN, G.R. No. 182158

Petitioner,

- versus -
Promulgated:
DANIEL P. JAVELLANA, JR. and
JAVELLANA FARMS, INC.,
Respondents. March 5, 2010

This case is about the proper computation of the monetary awards of an illegally dismissed employee.
The Facts and the Case

On May 9, 2000 petitioner Albino Belen (Belen) filed a complaint [1] against respondents Javellana Farms, Inc. and Daniel Javellana, Jr. (Javellana) for illegal
dismissal and underpayment or non-payment of salaries, overtime pay, holiday pay, service incentive leave pay (SILP), 13 th month pay, premium pay for holiday, and
rest day as well as for moral and exemplary damages and attorneys fees. [2]

Petitioner Belen alleged that respondent Javellana hired him as company driver on January 31, 1994 [3] and assigned him the tasks of picking up and delivering live
hogs, feeds, and lime stones used for cleaning the pigpens. [4] On August 19, 1999 Javellana gave him instructions to (a) pick up lime stones in Tayabas, Quezon; (b)
deliver live hogs at Barrio Quiling, Talisay, Batangas; (c) have the delivery truck repaired; and (d) pick up a boar at Joliza Farms in Norzagaray, Bulacan.[5]

Petitioner Belen further alleged that his long and arduous day finally ended at 4:30 a.m. of the following day, August 20, 1999. But after just three hours of sleep,
respondent Javellana summoned him to the office. When he arrived at 8:20 a.m., Javellana had left. After being told that the latter would not be back until 4:00 p.m.,
Belen decided to go home and get some more sleep. [6]

Petitioner Belen was promptly at the office at 4:00 p.m. but respondent Javellana suddenly blurted out that he was firing Belen from work. Deeply worried that he
might not soon get another job, Belen asked for a separation pay. When Javellana offered him only P5,000.00, he did not accept it.[7]

Respondent Javellana claimed, on the other hand, that he hired petitioner Belen in 1995, not as a company driver, but as family driver. [8] Belen did not do work for his
farm on a regular basis, but picked up feeds or delivered livestock only on rare occasions when the farm driver and vehicle were unavailable. [9]

Regarding petitioner Belens dismissal from work, respondent Javellana insisted that he did it for a reason. Belen intentionally failed to report for work on August 20,
1999 and this warranted his dismissal.[10]

In a decision[11] dated November 25, 2002, the Labor Arbiter found petitioner Belen to be a company driver as evidenced by the pay slips [12] that the farm issued to
him.Since his abrupt dismissal from work violated his right to due process, it was illegal. [13] The Labor Arbiter awarded him backwages, separation pay, 13 th month
pay, SILP, holiday pay, salary differential, and attorneys fees. [14]

On appeal, the National Labor Relations Commission (NLRC) issued a resolution[15] dated October 23, 2003, modifying the decision of the Labor Arbiter. The NLRC
was convinced that respondent Javellana hired petitioner Belen as a family driver but required him to make certain errands that were related to the farm business. Like
the Labor Arbiter, the NLRC also found Belen to have been illegally dismissed. But since he was but a family driver, the NLRC deleted the award of backwages and
separation pay and instead ordered Javellana to pay him 15 days salary by way of indemnity pursuant to Article 149 of the Labor Code. Belen moved for
reconsideration, but the NLRC denied his motion.[16]

Aggrieved, petitioner Belen elevated the matter to the Court of Appeals (CA), [17] which in its Decision[18] dated September 12, 2007, reverted back to the decision of
the Labor Arbiter. The CA held that Belen was a company driver since, aside from driving respondent Javellana and his family, he also did jobs that were needed in
Javellanas business operations, such as hauling and delivering live hogs, feeds, and lime stones for the pig pens. [19] The CA also said that Javellanas abrupt dismissal
of Belen for an isolated case of neglect of duty was unjustified.[20] The appellate court, however, modified the award of backwages and separation pay, as it found the
computation to be erroneous.[21]

Both respondent Javellana and petitioner Belen moved for reconsideration of the decision but the CA denied them both on March 3, 2008. [22] Undaunted, they both
took recourse to this Court in G.R. 181913 and G.R. 182158, respectively.

The Court consolidated the two cases in its Resolution of July 2, 2008. [23] But on July 16, 2008, having initially examined the petition in G.R. 181913, the Court
denied due course to it for respondent Javellanas failure to sufficiently show reversible error in the assailed decision.[24] Javellana moved for reconsideration but the
Court denied it with finality on September 22, 2008. [25]
Questions Presented

The questions presented in this case are:

1. Whether or not the Labor Arbiter correctly computed petitioner Belens backwages and separation pay; and

2. Whether or not the monetary award in his favor should run until the finality of the decision in his case.

The Courts Rulings

One. Petitioner Belen points out that the Labor Arbiter correctly computed his monetary award although he appeared to have been awarded more than what was right
because of a typographical error in the statement of the period that his backwages covered. The Labor Arbiters approved computation gave the period as from August
20, 1999 to November 19, 2000 when the proper period was from August 20, 1999, the date he was dismissed from work, to November 25, 2002, the date the Labor
Arbiter rendered his decision in the case.[26]

For the same reason, petitioner Belen claims that his separation pay should be computed from January 31, 1994, when he was hired, up to November 25, 2002, when
the Labor Arbiter rendered his decision. Belen also insists that the 10% attorneys fees awarded to him be based on the total amount arrived at, not by the appellate
court, but by the Labor Arbiter.[27]

After taking such position initially, petitioner Belen claims that the amount awarded to him by the Labor Arbiter merely represents a portion of what he was entitled
to. The award of backwages to which he was entitled should continue to run until the decision in his favor has become final. [28]

Respondent Javellana points out, however, that the Labor Arbiters decision clearly shows that he intended to award backwages and separation pay only until
November 19, 2000.[29] Javellana also disagreed that the monetary award should be reckoned until the finality of the decision in petitioner Belens favor. The Labor
Arbiter expressly limited the amount of that award since he granted Belens request to be given separation pay instead of being reinstated. [30]

It is obvious from a reading of the Labor Arbiters decision that the date November 19, 2000 stated in the computation was mere typographical error. Somewhere in the
body of the decision is the categorical statement that petitioner Belen is entitled to backwages from August 20, 1999 up to the date of this decision.[31] Since the
Labor Arbiter actually rendered his decision on November 25, 2002,[32] it would be safe to assume that he caused the computation of the amount of backwages close to
that date or on November 19, 2002. The same could be said of the computation of petitioner Belens separation pay.

Two. This leads us to the question, does the amount that the Labor Arbiter awarded petitioner Belen represent all that he will get when the decision in his case
becomes final or does it represent only the amount that he was entitled to at the time the Labor Arbiter rendered his decision, leaving room for increase up to the date
the decision in the case becomes final?
Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715 instructs:

Art. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement.

Clearly, the law intends the award of backwages and similar benefits to accumulate past the date of the Labor Arbiters decision until the dismissed employee is
actually reinstated.[33] But if, as in this case, reinstatement is no longer possible, this Court has consistently ruled that backwages shall be computed from the time of
illegal dismissal until the date the decision becomes final. [34]

As it happens, the parties filed separate petitions before this Court. The petition in G.R. 181913, filed by respondent Javellana, questioned the CAs finding of illegality
of dismissal while the petition in G.R. 182158, filed by petitioner Belen, challenged the amounts of money claims awarded to him. The Court denied the first with
finality in its resolution of September 22, 2008;[35] the second is the subject of the present case. Consequently, Belen should be entitled to backwages from August 20,
1999, when he was dismissed, to September 22, 2008, when the judgment for unjust dismissal in G.R. 181913 became final.

Separation pay, on the other hand, is equivalent to one month pay for every year of service, a fraction of six months to be considered as one whole year.[36] Here that
would begin from January 31, 1994 when petitioner Belen began his service. Technically the computation of his separation pay would end on the day he was
dismissed on August 20, 1999 when he supposedly ceased to render service and his wages ended. But, since Belen was entitled to collect backwages until the
judgment for illegal dismissal in his favor became final, [37] here on September 22, 2008, the computation of his separation pay should also end on that date.

Further, since the monetary awards remained unpaid even after it became final on September 22, 2008 because of issues raised respecting the correct computation of
such awards, it is but fair that respondent Javellana be required to pay 12% interest per annum on those awards from September 22, 2008 until they are paid. The 12%
interest is proper because the Court treats monetary claims in labor cases the equivalent of a forbearance of credit. [38] It matters not that the amounts of the claims were
still in question on September 22, 2008. What is decisive is that the issue of illegal dismissal from which the order to pay monetary awards to petitioner Belen
stemmed had been long terminated. [39]
WHEREFORE, the Court GRANTS the petition, SETS ASIDE the decision of the Court of Appeals dated September 12, 2007 and its resolution dated March 3,
2008 in CA-G.R. SP 83354, REINSTATES the decision of the Labor Arbiter dated November 25, 2002 in NLRC-NCR Case 30-09-04294-01 with the modification
that the awards of backwages be computed from August 20, 1999 to September 22, 2008 and the separation pay, from January 31, 1994 to September 22, 2008; the
10% attorneys fees be based on the awards so computed; and that the amounts due be made to bear interest of 12% per annum from September 22, 2008 until fully
paid.

Let the records of the case be remanded to the National Labor Relations Commission upon the finality of this judgment for computation of the exact amounts due
petitioner Albino Belen from respondents Javellana Farms, Inc. and Daniel Javellana, Jr.

SO ORDERED.

TIMOTEO H. SARONA, G.R. No. 185280

Petitioner,
Present:

CARPIO, J.,
- versus - Chairperson,
PEREZ,
SERENO,
REYES, and
NATIONAL LABOR RELATIONS BERNABE, JJ.
COMMISSION, ROYALE SECURITY
AGENCY (FORMERLY SCEPTRE
SECURITY AGENCY) and Promulgated:
CESAR S. TAN,
Respondents. January 18, 2012

This is a petition for review under Rule 45 of the Rules of Court from the May 29, 2008 Decision1 of the Twentieth Division of the Court of Appeals (CA) in CA-G.R. SP
No. 02127 entitled Timoteo H. Sarona v. National Labor Relations Commission, Royale Security Agency (formerly Sceptre Security Agency) and Cesar S.
Tan (Assailed Decision), which affirmed the National Labor Relations Commissions (NLRC) November 30, 2005 Decision and January 31, 2006 Resolution, finding
the petitioner illegally dismissed but limiting the amount of his backwages to three (3) monthly salaries. The CA likewise affirmed the NLRCs finding that the
petitioners separation pay should be computed only on the basis of his length of service with respondent Royale Security Agency (Royale). The CA held that absent
any showing that Royale is a mere alter ego of Sceptre Security Agency (Sceptre), Royale cannot be compelled to recognize the petitioners tenure with Sceptre. The
dispositive portion of the CAs Assailed Decision states:

WHEREFORE, in view of the foregoing, the instant petition is PARTLY GRANTED, though piercing of the corporate veil is hereby denied for lack of merit. Accordingly,
the assailed Decision and Resolution of the NLRC respectively dated November 30, 2005 and January 31, 2006 are hereby AFFIRMED as to the monetary awards.

SO ORDERED. 2

Factual Antecedents

On June 20, 2003, the petitioner, who was hired by Sceptre as a security guard sometime in April 1976, was asked by Karen Therese Tan (Karen), Sceptres
Operation Manager, to submit a resignation letter as the same was supposedly required for applying for a position at Royale. The petitioner was also asked to fill up
Royales employment application form, which was handed to him by Royales General Manager, respondent Cesar Antonio Tan II (Cesar).3

After several weeks of being in floating status, Royales Security Officer, Martin Gono (Martin), assigned the petitioner at Highlight Metal Craft, Inc. (Highlight Metal)
from July 29, 2003 to August 8, 2003. Thereafter, the petitioner was transferred and assigned to Wide Wide World Express, Inc. (WWWE, Inc.). During his
assignment at Highlight Metal, the petitioner used the patches and agency cloths of Sceptre and it was only
when he was posted at WWWE, Inc. that he started using those of Royale. 4

On September 17, 2003, the petitioner was informed that his assignment at WWWE, Inc. had been withdrawn because Royale had allegedly been replaced by
another security agency. The petitioner, however, shortly discovered thereafter that Royale was never replaced as WWWE, Inc.s security agency. When he placed a
call at WWWE, Inc., he learned that his fellow security guard was not relieved from his post. 5

On September 21, 2003, the petitioner was once again assigned at Highlight Metal, albeit for a short period from September 22, 2003 to September 30, 2003.
Subsequently, when the petitioner reported at Royales office on October 1, 2003, Martin informed him that he would no longer be given any assignment per the
instructions of Aida Sabalones-Tan (Aida), general manager of Sceptre. This prompted him to file a complaint for illegal dismissal on October 4, 2003. 6

In his May 11, 2005 Decision, Labor Arbiter Jose Gutierrez (LA Gutierrez) ruled in the petitioners favor and found him illegally dismissed. For being unsubstantiated,
LA Gutierrez denied credence to the respondents claim that the termination of the petitioners employment relationship with Royale was on his accord following
his alleged employment in another company. That the petitioner was no longer interested in being an employee of Royale cannot be presumed from his request for
a certificate of employment, a claim which, to begin with, he vehemently denies. Allegation of the petitioners abandonment is negated by his filing of a complaint
for illegal dismissal three (3) days after he was informed that he would no longer be given any assignments. LA Gutierrez ruled:

In short, respondent wanted to impress before us that complainant abandoned his employment. We are not however, convinced.

There is abandonment when there is a clear proof showing that one has no more interest to return to work. In this instant case, the record has no proof to such
effect. In a long line of decisions, the Supreme Court ruled:

Abandonment of position is a matter of intention expressed in clearly certain and unequivocal acts, however, an interim employment does not mean
abandonment. (Jardine Davis, Inc. vs. NLRC, 225 SCRA 757).

In abandonment, there must be a concurrence of the intention to abandon and some overt acts from which an employee may be declared as having no more
interest to work. (C. Alcontin & Sons, Inc. vs. NLRC, 229 SCRA 109).

It is clear, deliberate and unjustified refusal to severe employment and not mere absence that is required to constitute abandonment. x x x (De Ysasi III vs.
NLRC, 231 SCRA 173).

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

The immediate filing of a complaint for [i]llegal [d]ismissal by an employee is inconsistent with abandonment. 7

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

To support its prayer of piercing the veil of corporate entity of respondent Royale, complainant avers that respondent Royal (sic) was using the very same office of
SCEPTRE in C. Padilla St., Cebu City. In addition, all officers and staff of SCEPTRE are now the same officers and staff of ROYALE, that all [the] properties of SCEPTRE
are now being owned by ROYALE and that ROYALE is now occupying the property of SCEPTRE. We are not however, persuaded.

It should be pointed out at this juncture that SCEPTRE, is a single proprietorship. Being so, it has no distinct and separate personality. It is owned by the late Roso T.
Sabalones. After the death of the owner, the property is supposed to be divided by the heirs and any claim against the sole proprietorship is a claim against Roso T.
Sabalones. After his death, the claims should be instituted against the estate of Roso T. Sabalones. In short, the estate of the late Roso T. Sabalones should have
been impleaded as respondent of this case.

Complainant wanted to impress upon us that Sceptre was organized into another entity now called Royale Security Agency. There is however, no proof to this
assertion. Likewise, there is no proof that Roso T. Sabalones, organized his single proprietorship business into a corporation, Royale Security Agency. On the
contrary, the name of Roso T. Sabalones does not appear in the Articles of Incorporation. The names therein as incorporators are:

Bruno M. Kuizon [P]150,000.00

Wilfredo K. Tan 100,000.00
Karen Therese S. Tan 100,000.00
Cesar Antonio S. Tan 100,000.00
Gabeth Maria K. Tan 50,000.00

Complainant claims that two (2) of the incorporators are the granddaughters of Roso T. Sabalones. This fact even give (sic) us further reason to conclude that
respondent Royal (sic) Security Agency is not an alter ego or conduit of SCEPTRE. It is obvious that respondent Royal (sic) Security Agency is not owned by the owner
of SCEPTRE.

It may be true that the place where respondent Royale hold (sic) office is the same office formerly used by SCEPTRE. Likewise, it may be true that the same
officers and staff now employed by respondent Royale Security Agency were the same officers and staff employed by SCEPTRE. We find, however, that these facts
are not sufficient to justify to require respondent Royale to answer for the liability of Sceptre, which was owned solely by the late Roso T. Sabalones. As we have
stated above, the remedy is to address the claim on the estate of Roso T. Sabalones.8
The respondents appealed LA Gutierrezs May 11, 2005 Decision to the NLRC, claiming that the finding of illegal dismissal was attended with grave abuse of
discretion. This appeal was, however, dismissed by the NLRC in its November 30, 2005 Decision, 9 the dispositive portion of which states:

WHEREFORE, premises considered, the Decision of the Labor Arbiter declaring the illegal dismissal of complainant is hereby AFFIRMED.

However[,] We modify the monetary award by limiting the grant of backwages to only three (3) months in view of complainants very limited service which lasted
only for one month and three days.

1. Backwages - [P]15,600.00
2. Separation Pay - 5,200.00
3. 13th Month Pay - 583.34
[P]21,383.34 Attorneys Fees- 2,138.33
Total [P]23,521.67

The appeal of respondent Royal (sic) Security Agency is hereby DISMISSED for lack of merit.

SO ORDERED.10

The NLRC partially affirmed LA Gutierrezs May 11, 2005 Decision. It concurred with the latters finding that the petitioner was illegally dismissed and the manner by
which his separation pay was computed, but modified the monetary award in the petitioners favor by reducing the amount of his backwages from P95,600.00
to P15,600.00. The NLRC determined the petitioners backwages as limited to three (3) months of his last monthly salary, considering that his employment with
Royale was only for a period for one (1) month and three (3) days, thus: 11

On the other hand, while complainant is entitled to backwages, We are aware that his stint with respondent Royal (sic) lasted only for one (1) month and three (3)
days such that it is Our considered view that his backwages should be limited to only three (3) months.

Backwages:

[P]5,200.00 x 3 months = [P]15,600.0012

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

On the other hand, in complainants Reply to Respondents Appeal Memorandum he prayed that the doctrine of piercing the veil of corporate fiction of respondent
be applied so that his services with Sceptre since 1976 [will not] be deleted. If complainant assails this particular finding in the Labor Arbiters Decision, complainant
should have filed an appeal and not seek a relief by merely filing a Reply to Respondents Appeal Memorandum. 13

Consequently, the petitioner elevated the NLRCs November 30, 2005 Decision to the CA by way of a Petition for Certiorari under Rule 65 of the Rules of Court. On
the other hand, the respondents filed no appeal from the NLRCs finding that the petitioner was illegally dismissed.

The CA, in consideration of substantial justice and the jurisprudential dictum that an appealed case is thrown open for the appellate courts review, disagreed with
the NLRC and proceeded to review the evidence on record to determine if Royale is Sceptres alter ego that would warrant the piercing of its corporate
veil.14 According to the CA, errors not assigned on appeal may be reviewed as technicalities should not serve as bar to the full adjudication of cases. Thus:

In Cuyco v. Cuyco, which We find application in the instant case, the Supreme Court held:

In their Reply, petitioners alleged that their petition only raised the sole issue of interest on the interest due, thus, by not filing their own petition for review,
respondents waived their privilege to bring matters for the Courts review that [does] not deal with the sole issue raised.

Procedurally, the appellate court in deciding the case shall consider only the assigned errors, however, it is equally settled that the Court is clothed with ample
authority to review matters not assigned as errors in an appeal, if it finds that their consideration is necessary to arrive at a just disposition of the case.

Therefore, for full adjudication of the case, We have to primarily resolve the issue of whether the doctrine of piercing the corporate veil be justly applied in order to
determine petitioners length of service with private respondents.15 (citations omitted)

Nonetheless, the CA ruled against the petitioner and found the evidence he submitted to support his allegation that Royale and Sceptre are one and the same
juridical entity to be wanting. The CA refused to pierce Royales corporate mask as one of the probative factors that would justify the application of the doctrine of
piercing the corporate veil is stock ownership by one or common ownership of both corporations and the petitioner failed to present clear and convincing proof
that Royale and Sceptre are commonly owned or controlled. The relevant portions of the CAs Decision state:

In the instant case, We find no evidence to show that Royale Security Agency, Inc. (hereinafter Royale), a corporation duly registered with the Securities and
Exchange Commission (SEC) and Sceptre Security Agency (hereinafter Sceptre), a single proprietorship, are one and the same entity.

Petitioner, who has been with Sceptre since 1976 and, as ruled by both the Labor Arbiter and the NLRC, was illegally dismissed by Royale on October 1, 2003,
alleged that in order to circumvent labor laws, especially to avoid payment of money claims and the consideration on the length of service of its employees, Royale
was established as an alter ego or business conduit of Sceptre. To prove his claim, petitioner declared that Royale is conducting business in the same office of
Sceptre, the latter being owned by the late retired Gen. Roso Sabalones, and was managed by the latters daughter, Dr. Aida Sabalones-Tan; that two of Royales
incorporators are grandchildren [of] the late Gen. Roso Sabalones; that all the properties of Sceptre are now owned by Royale, and that the officers and staff of
both business establishments are the same; that the heirs of Gen. Sabalones should have applied for dissolution of Sceptre before the SEC before forming a new
corporation.

On the other hand, private respondents declared that Royale was incorporated only on March 10, 2003 as evidenced by the Certificate of Incorporation issued by
the SEC on the same date; that Royales incorporators are Bruino M. Kuizon, Wilfredo Gracia K. Tan, Karen Therese S. Tan, Cesar Antonio S. Tan II and [Gabeth]
Maria K. Tan.

Settled is the tenet that allegations in the complaint must be duly proven by competent evidence and the burden of proof is on the party making the allegation.
Further, Section 1 of Rule 131 of the Revised Rules of Court provides:

SECTION 1. Burden of proof. Burden of proof is the duty of a party to present evidence on the facts in issue necessary to establish his claim or defense by the
amount of evidence required by law.

We believe that petitioner did not discharge the required burden of proof to establish his allegations. As We see it, petitioners claim that Royale is an alter ego or
business conduit of Sceptre is without basis because aside from the fact that there is no common ownership of both Royale and Sceptre, no evidence on record
would prove that Sceptre, much less the late retired Gen. Roso Sabalones or his heirs, has control or complete domination of Royales finances and business
transactions. Absence of this first element, coupled by petitioners failure to present clear and convincing evidence to substantiate his allegations, would prevent
piercing of the corporate veil. Allegations must be proven by sufficient evidence. Simply stated, he who alleges a fact has the burden of proving it; mere allegation is
not evidence.16 (citations omitted)

By way of this Petition, the petitioner would like this Court to revisit the computation of his backwages, claiming that the same should be computed from the time
he was illegally dismissed until the finality of this decision. 17 The petitioner would likewise have this Court review and examine anew the factual allegations and the
supporting evidence to determine if the CA erred in its refusal to pierce Royales corporate mask and rule that it is but a mere continuation or successor of Sceptre.
According to the petitioner, the erroneous computation of his separation pay was due to the CAs failure, as well as the NLRC and LA Gutierrez, to consider evidence
conclusively demonstrating that Royale and Sceptre are one and the same juridical entity. The petitioner claims that since Royale is no more than Sceptres alter
ego, it should recognize and credit his length of service with Sceptre. 18

The petitioner claimed that Royale and Sceptre are not separate legal persons for purposes of computing the amount of his separation pay and other benefits under
the Labor Code. The piercing of Royales corporate personality is justified by several indicators that Royale was incorporated for the sole purpose of defeating his
right to security of tenure and circumvent payment of his benefits to which he is entitled under the law: (i) Royale was holding office in the same property used by
Sceptre as its principal place of business;19 (ii) Sceptre and Royal have the same officers and employees; 20 (iii) on October 14, 1994, Roso, the sole proprietor of
Sceptre, sold to Aida, and her husband, Wilfredo Gracia K. Tan (Wilfredo), 21 the property used by Sceptre as its principal place of business; 22 (iv) Wilfredo is one of
the incorporators of Royale;23 (v) on May 3, 1999, Roso ceded the license to operate Sceptre issued by the Philippine National Police to Aida;24 (vi) on July 28, 1999,
the business name Sceptre Security & Detective Agency was registered with the Department of Trade and Industry (DTI) under the name of Aida;25 (vii) Aida
exercised control over the affairs of Sceptre and Royale, as she was, in fact, the one who dismissed the petitioner from employment;26 (viii) Karen, the daughter of
Aida, was Sceptres Operation Manager and is one of the incorporators of Royale; 27 and (ix) Cesar Tan II, the son of Aida was one of Sceptres officers and is one of
the incorporators of Royale.28

In their Comment, the respondents claim that the petitioner is barred from questioning the manner by which his backwages and separation pay were computed.
Earlier, the petitioner moved for the execution of the NLRCs November 30, 2005 Decision29 and the respondents paid him the full amount of the monetary award
thereunder shortly after the writ of execution was issued. 30 The respondents likewise maintain that Royales separate and distinct corporate personality should be
respected considering that the evidence presented by the petitioner fell short of establishing that Royale is a mere alter ego of Sceptre.

The petitioner does not deny that he has received the full amount of backwages and separation pay as provided under the NLRCs November 30, 2005
Decision.31 However, he claims that this does not preclude this Court from modifying a decision that is tainted with grave abuse of discretion or issued without
jurisdiction.32

ISSUES

Considering the conflicting submissions of the parties, a judicious determination of their respective rights and obligations requires this Court to resolve the following
substantive issues:

a. Whether Royales corporate fiction should be pierced for the purpose of compelling it to recognize the petitioners length of service with Sceptre and for holding
it liable for the benefits that have accrued to him arising from his employment with Sceptre; and

b. Whether the petitioners backwages should be limited to his salary for three (3) months.

OUR RULING

Because his receipt of the proceeds of the award under the NLRCs November 30, 2005 Decision is qualified and without prejudice to the CAs resolution of his
petition for certiorari, the petitioner is not barred from exercising his right to elevate the decision of the CA to this Court.

Before this Court proceeds to decide this Petition on its merits, it is imperative to resolve the respondents contention that the full satisfaction of the award under
the NLRCs November 30, 2005 Decision bars the petitioner from questioning the validity thereof. The respondents submit that they had paid the petitioner the
amount of P21,521.67 as directed by the NLRC and this constitutes a waiver of his right to file an appeal to this Court.

The respondents fail to convince.

The petitioners receipt of the monetary award adjudicated by the NLRC is not absolute, unconditional and unqualified. The petitioners May 3, 2007 Motion for
Release contains a reservation, stating in his prayer that: it is respectfully prayed that the respondents and/or Great Domestic Insurance Co. be ordered to
RELEASE/GIVE the amount of P23,521.67 in favor of the complainant TIMOTEO H. SARONA without prejudice to the outcome of the petition with the CA. 33
In Leonis Navigation Co., Inc., et al. v. Villamater, et al.,34 this Court ruled that the prevailing partys receipt of the full amount of the judgment award pursuant to a
writ of execution issued by the labor arbiter does not
close or terminate the case if such receipt is qualified as without prejudice to the outcome of the petition for certiorari pending with the CA.

Simply put, the execution of the final and executory decision or resolution of the NLRC shall proceed despite the pendency of a petition for certiorari, unless it is
restrained by the proper court. In the present case, petitioners already paid Villamaters widow, Sonia, the amount of P3,649,800.00, representing the total and
permanent disability award plus attorneys fees, pursuant to the Writ of Execution issued by the Labor Arbiter. Thereafter, an Order was issued declaring the case as
"closed and terminated". However, although there was no motion for reconsideration of this last Order, Sonia was, nonetheless, estopped from claiming that the
controversy had already reached its end with the issuance of the Order closing and terminating the case. This is because the Acknowledgment Receipt she signed
when she received petitioners payment was without prejudice to the final outcome of the petition for certiorari pending before the CA.35

The finality of the NLRCs decision does not preclude the filing of a petition for certiorari under Rule 65 of the Rules of Court. That the NLRC issues an entry of
judgment after the lapse of ten (10) days from the parties receipt of its decision 36 will only give rise to the prevailing partys right to move for the execution thereof
but will not prevent the CA from taking cognizance of a petition for certiorari on jurisdictional and due process considerations. 37 In turn, the decision rendered by
the CA on a petition for certiorari may be appealed to this Court by way of a petition for review on certiorari under Rule 45 of the Rules of Court. Under Section 5,
Article VIII of the Constitution, this Court has the power to review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules of Court may
provide, final judgments and orders of lower courts in x x x all cases in which only an error or question of law is involved. Consistent with this constitutional
mandate, Rule 45 of the Rules of Court provides the remedy of an appeal by certiorari from decisions, final orders or resolutions of the CA in any case, i.e.,
regardless of the nature of the action or proceedings
involved, which would be but a continuation of the appellate process over the original case. 38 Since an appeal to this Court is not an original and independent action
but a continuation of the proceedings before the CA, the filing of a petition for review under Rule 45 cannot be barred by the finality of the NLRCs decision in the
same way that a petition for certiorariunder Rule 65 with the CA cannot.

Furthermore, if the NLRCs decision or resolution was reversed and set aside for being issued with grave abuse of discretion by way of a petition for certiorari to the
CA or to this Court by way of an appeal from the decision of the CA, it is considered void ab initio and, thus, had never become final and executory. 39

A Rule 45 Petition should be confined to questions of law. Nevertheless, this Court has the power to resolve a question of fact, such as whether a corporation is
a mere alter ego of another entity or whether the corporate fiction was invoked for fraudulent or malevolent ends, if the findings in assailed decision is not
supported by the evidence on record or based on a misapprehension of facts.

The question of whether one corporation is merely an alter ego of another is purely one of fact. So is the question of whether a corporation is a paper company, a
sham or subterfuge or whether the petitioner adduced the requisite quantum of evidence warranting the piercing of the veil of the respondents corporate
personality.40

As a general rule, this Court is not a trier of facts and a petition for review on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of law.
Moreover, if factual findings of the NLRC and the LA have been affirmed by the CA, this Court accords them the respect and finality they deserve. It is well-settled
and oft-repeated that findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect, but finality when affirmed by the CA. 41

Nevertheless, this Court will not hesitate to deviate from what are clearly procedural guidelines and disturb and strike down the findings of the CA and those of the
labor tribunals if there is a showing that they are unsupported by the evidence on record or there was a patent misappreciation of facts. Indeed, that the impugned
decision of the CA is consistent with the findings of the labor tribunals does not per se conclusively demonstrate the correctness thereof. By way of exception to the
general rule, this Court will scrutinize the facts if only to rectify the prejudice and injustice resulting from an incorrect assessment of the evidence presented.

A resolution of an issue that has supposedly become final and executory as the petitioner only raised it in his reply to the respondents appeal may be revisited
by the appellate court if such is necessary for a just disposition of the case.

As above-stated, the NLRC refused to disturb LA Gutierrezs denial of the petitioners plea to pierce Royales corporate veil as the petitioner did not appeal any
portion of LA Gutierrezs May 11, 2005 Decision.

In this respect, the NLRC cannot be accused of grave abuse of discretion. Under Section 4(c), Rule VI of the NLRC Rules,42 the NLRC shall limit itself to reviewing and
deciding only the issues that were elevated on appeal. The NLRC, while not totally bound by technical rules of procedure, is not licensed to disregard and violate the
implementing rules it implemented. 43

Nonetheless, technicalities should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties. Technical rules
are not binding in labor cases and are not to be applied strictly if the result would be detrimental to the working man.44 This Court may choose not to encumber
itself with technicalities and limitations consequent to procedural rules if such will only serve as a hindrance to its duty to decide cases judiciously and in a manner
that would put an end with finality to all existing conflicts between the parties.

Royale is a continuation or successor of Sceptre.

A corporation is an artificial being created by operation of law. It possesses the right of succession and such powers, attributes, and properties expressly authorized
by law or incident to its existence. It has a personality separate and distinct from the persons composing it, as well as from any other legal entity to which it may be
related. This is basic.45

Equally well-settled is the principle that the corporate mask may be removed or the corporate veil pierced when the corporation is just an alter ego of a person or of
another corporation. For reasons of public policy and in the interest of justice, the corporate veil will justifiably be impaled only when it becomes a shield for fraud,
illegality or inequity committed against third persons. 46

Hence, any application of the doctrine of piercing the corporate veil should be done with caution. A court should be mindful of the milieu where it is to be applied. It
must be certain that the corporate fiction was misused to such an extent that injustice, fraud, or crime was committed against another, in disregard of rights. The
wrongdoing must be clearly and convincingly established; it cannot be presumed. Otherwise, an injustice that was never unintended may result from an erroneous
application.47

Whether the separate personality of the corporation should be pierced hinges on obtaining facts appropriately pleaded or proved. However, any piercing of the
corporate veil has to be done with caution, albeit the Court will not hesitate to disregard the corporate veil when it is misused or when necessary in the interest of
justice. After all, the concept of corporate entity was not meant to promote unfair objectives. 48

The doctrine of piercing the corporate veil applies only in three (3) basic areas, namely: 1) defeat of public convenience as when the corporate fiction is used as a
vehicle for the evasion of an existing obligation; 2) fraud cases or when the corporate entity is used to justify a wrong, protect fraud, or defend a crime; or 3) alter
ego cases, where a corporation is merely a farce since it is a mere alter ego or business conduit of a person, or where the
corporation is so organized and controlled and its affairs are so conducted as
to make it merely an instrumentality, agency, conduit or adjunct of another corporation. 49

In this regard, this Court finds cogent reason to reverse the CAs findings. Evidence abound showing that Royale is a mere continuation or successor of Sceptre and
fraudulent objectives are behind Royales incorporation and the petitioners subsequent employment therein. These are plainly suggested by events that the
respondents do not dispute and which the CA, the NLRC and LA Gutierrez accept as fully substantiated but misappreciated as insufficient to warrant the use of the
equitable weapon of piercing.

As correctly pointed out by the petitioner, it was Aida who exercised control and supervision over the affairs of both Sceptre and Royale. Contrary to the
submissions of the respondents that Roso had been the only one in sole control of Sceptres finances and business affairs, Aida took over as early as 1999 when
Roso assigned his license to operate Sceptre on May 3, 1999. 50 As further proof of Aidas acquisition of the rights as Sceptres sole proprietor, she caused the
registration of the business name Sceptre Security & Detective Agency under her name with the DTI a few months after Roso abdicated his rights to Sceptre in her
favor.51 As far as Royale is concerned, the respondents do not deny that she has a hand in its management and operation and possesses control and supervision of
its employees, including the petitioner. As the petitioner correctly pointed out, that Aida was the one who decided to stop giving any assignments to the petitioner
and summarily dismiss him is an eloquent testament of the power she wields insofar as Royales affairs are concerned. The presence of actual common control
coupled with the misuse of the corporate form to perpetrate oppressive or manipulative conduct or evade performance of legal obligations is patent; Royale cannot
hide behind its corporate fiction.

Aidas control over Sceptre and Royale does not, by itself, call for a disregard of the corporate fiction. There must be a showing that a fraudulent intent or illegal
purpose is behind the exercise of such control to warrant the piercing of the corporate veil. 52 However, the manner by which the petitioner was made to resign from
Sceptre and how he became an employee of Royale suggest the perverted use of the legal fiction of the separate corporate personality. It is undisputed that the
petitioner tendered his resignation and that he applied at Royale at the instance of Karen and Cesar and on the impression they created that these were necessary
for his continued employment. They orchestrated the petitioners resignation from Sceptre and subsequent employment at Royale, taking advantage of their
ascendancy over the petitioner and the latters lack of knowledge of his rights and the consequences of his actions. Furthermore, that the petitioner was made to
resign from Sceptre and apply with Royale only to be unceremoniously terminated shortly thereafter leads to the ineluctable conclusion that there was intent to
violate the petitioners rights as an employee, particularly his right to security of tenure. The respondents scheme reeks of bad faith and fraud and compassionate
justice dictates that Royale and Sceptre be merged as a single entity, compelling Royale to credit and recognize the petitioners length of service with Sceptre. The
respondents cannot use the legal fiction of a separate corporate personality for ends subversive of the policy and purpose behind its creation53 or which could not
have been intended by law to which it owed its being. 54

For the piercing doctrine to apply, it is of no consequence if Sceptre is a sole proprietorship. As ruled in Prince Transport, Inc., et al. v. Garcia, et al.,55 it is the act of
hiding behind the separate and distinct personalities of juridical entities to perpetuate fraud, commit illegal acts, evade ones obligations that the equitable piercing
doctrine was formulated to address and prevent:

A settled formulation of the doctrine of piercing the corporate veil is that when two business enterprises are owned, conducted and controlled by the same parties,
both law and equity will, when necessary to protect the rights of third parties, disregard the legal fiction that these two entities are distinct and treat them as
identical or as one and the same. In the present case, it may be true that Lubas is a single proprietorship and not a corporation. However, petitioners attempt to
isolate themselves from and hide behind the supposed separate and distinct personality of Lubas so as to evade their liabilities is precisely what the classical
doctrine of piercing the veil of corporate entity seeks to prevent and remedy. 56

Also, Sceptre and Royale have the same principal place of business. As early as October 14, 1994, Aida and Wilfredo became the owners of the property used by
Sceptre as its principal place of business by virtue of a Deed of Absolute Sale they executed with Roso.57 Royale, shortly after its incorporation, started to hold office
in the same property. These, the respondents failed to dispute.

The respondents do not likewise deny that Royale and Sceptre share the same officers and employees. Karen assumed the dual role of Sceptres Operation Manager
and incorporator of Royale. With respect to the petitioner, even if he has already resigned from Sceptre and has been employed by Royale, he was still using the
patches and agency cloths of Sceptre during his assignment at Highlight Metal.

Royale also claimed a right to the cash bond which the petitioner posted when he was still with Sceptre. If Sceptre and Royale are indeed separate entities, Sceptre
should have released the petitioners cash bond when he resigned and Royale would have required the petitioner to post a new cash bond in its favor.

Taking the foregoing in conjunction with Aidas control over Sceptres and Royales business affairs, it is patent that Royale was a mere subterfuge for Aida. Since a
sole proprietorship does not have a separate and distinct personality from that of the owner of the enterprise, the latter is personally liable. This is what she sought
to avoid but cannot prosper.

Effectively, the petitioner cannot be deemed to have changed employers as Royale and Sceptre are one and the same. His separation pay should, thus, be computed
from the date he was hired by Sceptre in April 1976 until the finality of this decision. Based on this Courts ruling in Masagana Concrete Products, et al. v. NLRC, et
al.,58 the intervening period between the day an employee was illegally dismissed and the day the decision finding him illegally dismissed becomes final and
executory shall be considered in the computation of his separation pay as a period of imputed or putative service:

Separation pay, equivalent to one month's salary for every year of service, is awarded as an alternative to reinstatement when the latter is no longer an option.
Separation pay is computed from the commencement of employment up to the time of termination, including the imputed service for which the employee is
entitled to backwages, with the salary rate prevailing at the end of the period of putative service being the basis for computation.59
It is well-settled, even axiomatic, that if reinstatement is not possible, the period covered in the computation of backwages is from the time the employee was
unlawfully terminated until the finality of the decision finding illegal dismissal.

With respect to the petitioners backwages, this Court cannot subscribe to the view that it should be limited to an amount equivalent to three (3) months of his
salary. Backwages is a remedy affording the employee a way to recover what he has lost by reason of the unlawful dismissal. 60 In awarding backwages, the
primordial consideration is the income that should have accrued to the employee from the time that he was dismissed up to his reinstatement 61 and the length of
service prior to his dismissal is definitely inconsequential.

As early as 1996, this Court, in Bustamante, et al. v. NLRC, et al.,62 clarified in no uncertain terms that if reinstatement is no longer possible, backwages should be
computed from the time the employee was terminated until the finality of the decision, finding the dismissal unlawful.

Therefore, in accordance with R.A. No. 6715, petitioners are entitled on their full backwages, inclusive of allowances and other benefits or their monetary
equivalent, from the time their actual compensation was withheld on them up to the time of their actual reinstatement.

As to reinstatement of petitioners, this Court has already ruled that reinstatement is no longer feasible, because the company would be adjustly prejudiced by the
continued employment of petitioners who at present are overage, a separation pay equal to one-month salary granted to them in the Labor Arbiter's decision was
in order and, therefore, affirmed on the Court's decision of 15 March 1996. Furthermore, since reinstatement on this case is no longer feasible, the amount of
backwages shall be computed from the time of their illegal termination on 25 June 1990 up to the time of finality of this decision.63 (emphasis supplied)

A further clarification was made in Javellana, Jr. v. Belen:64

Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715 instructs:

Art. 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and
to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement.

Clearly, the law intends the award of backwages and similar benefits to accumulate past the date of the Labor Arbiter's decision until the dismissed employee is
actually reinstated. But if, as in this case, reinstatement is no longer possible, this Court has consistently ruled that backwages shall be computed from the time of
illegal dismissal until the date the decision becomes final. 65(citation omitted)

In case separation pay is awarded and reinstatement is no longer feasible, backwages shall be computed from the time of illegal dismissal up to the finality of the
decision should separation pay not be paid in the meantime. It is the employees actual receipt of the full amount of his separation pay that will effectively
terminate the employment of an illegally dismissed employee. 66 Otherwise, the employer-employee relationship subsists and the illegally dismissed employee is
entitled to backwages, taking into account the increases and other benefits, including the 13 th month pay, that were received by his co-employees who are not
dismissed.67 It is the obligation of the employer to pay an illegally dismissed employee or worker the whole amount of the salaries or wages, plus all other benefits
and
bonuses and general increases, to which he would have been normally entitled had he not been dismissed and had not stopped working. 68

In fine, this Court holds Royale liable to pay the petitioner backwages to be computed from his dismissal on October 1, 2003 until the finality of this decision.
Nonetheless, the amount received by the petitioner from the respondents in satisfaction of the November 30, 2005 Decision shall be deducted accordingly.

Finally, moral damages and exemplary damages at P25,000.00 each as indemnity for the petitioners dismissal, which was tainted by bad faith and fraud, are in
order. Moral damages may be recovered where the dismissal of the employee was tainted by bad faith or fraud, or where it constituted an act oppressive to labor,
and done in a manner contrary to morals, good customs or public policy while exemplary damages are recoverable only if the dismissal was done in a wanton,
oppressive, or malevolent manner.69

WHEREFORE, premises considered, the Petition is hereby GRANTED. We REVERSE and SET ASIDE the CAs May 29, 2008 Decision in C.A.-G.R. SP No. 02127 and
order the respondents to pay the petitioner the following minus the amount of (P23,521.67) paid to the petitioner in satisfaction of the NLRCs November 30, 2005
Decision in NLRC Case No. V-000355-05:

a) full backwages and other benefits computed from October 1, 2003 (the date Royale illegally dismissed the petitioner) until the finality of this decision;

b) separation pay computed from April 1976 until the finality of this decision at the rate of one month pay per year of service;

c) ten percent (10%) attorneys fees based on the total amount of the awards under (a) and (b) above;

d) moral damages of Twenty-Five Thousand Pesos (P25,000.00); and

exemplary damages of Twenty-Five Thousand Pesos (P25,000.00).

This case is REMANDED to the labor arbiter for computation of the separation pay, backwages, and other monetary awards due the petitioner.

SO ORDERED.

G.R. No.170904 November 13, 2013

BANI RURAL BANK INC. ENOC THEATER I AND II and/or RAFAEL DE GUZMAN, Petitioners,
vs.
TERESA DE GUZMAN, EDGAR C. TAN and TERESA G. TAN, Respondents.

DECISION

BRION, J.:

We pass upon the petition for review on certiorari1 under Rule 45 of the Rules of Court filed by petitioners Bani Rural Bank, Inc., ENOC Theater I and
II, and Rafael de Guzman. They assail the decision2 dated September 1, 2005 and the resolution3 dated December 14, 2005 of the Court of Appeals
CA) in CA-G.R. SP No. 70085. The assailed CA rulings, in turn, affirmed the computation of the backwages due respondents Teresa de Guzman and
Edgar C. Tan4made by the National Labor Relations Commission (NLRC).

The Facts

The respondents were employees of Bani Rural Bank, Inc. and ENOC Theatre I and II who filed a complaint for illegal dismissal against the petitioners.
The complaint was initially dismissed by Labor Arbiter Roque B. de Guzman on March 15, 1994. On appeal, the National Labor Relations Commission
(NLRC) reversed Labor Arbiter De Guzman's findings, and ruled that the respondents had been illegally dismissed. In a resolution5 dated March 17,
1995 the NLRC ordered the petitioners to:

... [R]einstate the two complainants to their former positions, without loss o seniority rights and other benefits and privileges, with backwages from the
time o their dismissal (constructive) until their actual reinstatement, less earnings elsewhere.6

The parties did not file any motion for reconsideration or appeal. The March 17, 1995 resolution of the NLRC became final and executory and the
computation of the awards was remanded to the labor arbiter for execution purposes.

The first computation of he monetary award under the March ,17 1995 resolution of the NLRC

The computation of the respondents' backwages, under the terms of the March 17 1995 NLRC resolution was remanded to Labor Arbiter Rolando D.
Gambito. First, Labor Arbiter Gambito deducted the earnings derived by the respondents either from Bani Rural Bank, Inc. or ENOC Theatre I and II.
Second, Labor Arbiter Gambito fixed the period of backwages from the respondents' illegal dismissal until August 25 1995 or the date when the
respondents allegedly manifested that they no longer wanted to be reinstated.7

The respondents appealed Labor Arbiter Gambito's computation with the NLRC. In a

Decision8 dated July 31, 1998, the NLRC modified the terms of the March 17, 1995 resolution insofar as it clarified the phrase less earnings elsewhere.
The NLRC additionally awarded the payment of separation pay, in lieu of reinstatement, under the following terms:

The decision of this Commission is hereby MODIFIED to the extent that: (1) the phrase earnings elsewhere in its dispositive portion shall exclude the
complainants' salaries from the Rural Bank of Mangantarem; and (2) in lieu of reinstatement, the respondents are hereby ordered to pay the
complainants separation pay equivalent to one month salary for every year of service computed from the start of their employment up to the date of the
finality of the decision.9

The NLRC justified the award of separation pay on account of the strained relations between the parties. In doing so, the NLRC ruled:

Insofar as the second issue is concerned, it should be noted: (1) that in his report dated November 8, 1995, the NLRC Sheriff stated that on October 5,
1995, he went to the Sub-Arbitration Branch to serve the writ of execution upon the complainants; that they did not appear, but instead, sent a
representative named Samuel de la Cruz who informed him that they were interested, not on being reinstated, but only in the monetary award; (2) that
in a letter dated October 9, 1995, the complainants authorized one Samuel de la Cruz to get a copy of the writ of execution; and (3) that during the pre-
execution conference, the respondents' counsel manifested that the respondents were requiring the complainants to report for work on Monday and, in
turn, the complainants' counsel manifested that the complainants were asking to be reinstated. The proceedings already protracted as it is-would be
delayed further if this case were to be remanded to the Labor Arbiter for a hearing to ascertain the correctness of the above-mentioned sheriff's report.
Besides, if both parties were really interested in the complainants being reinstated, as their counsels stated during the pre-execution conference, the
said reinstatement should already have been effected. Since neither party has actually done anything to implement the complainants' reinstatement, it
would appear that the relations between them have been strained to such an extent as to make the resumption of the employer-employee relationship
unpalatable to both of them. Under the circumstances, separation pay may be awarded in lieu of reinstatement.10

The respondents filed a motion for reconsideration on whether the award of backwages was still included in the judgment. The NLRC dismissed the
motion for having been filed out of time.

On January 29, 1999, the July 31, 1998 decision of the NLRC lapsed to finality and became executory.

The second computation of the monetary awards under the July 31, 998 decision of the NLRC

The recomputation of the monetary awards of the respondents' backwages and separation pay, according to the decision dated July 31, 1998 and the
modified terms of the March 17, 1995 resolution of the NLRC, was referred to Labor Arbiter Gambito. In the course of the recomputation, the
petitioners filed before Labor Arbiter Gambito a Motion to Quash Writ of
Execution and Suspend Further Execution they reiterated their position that the respondents backwages should be computed only up to August 25,
1995, citing the alleged manifestation made by the respondents, through Samuel de la Cruz, as their basis.

In an order11 dated July 12, 2000, Labor Arbiter Gambito computed the respondents backwages only up to August 25, 1995.

The NLRCs Ruling

The respondents appealed the July 12, 2000 order of Labor Arbiter Gambito to the NLRC, which reversed Labor Arbiter Gambito s order. In its
decision12 dated September 28, 2001, the NLRC ruled that the computation of the respondents backwages should be until January 29 1999 which was
the date when the July 31, 1998 decision attained finality:

WHEREFORE, the Order of Labor Arbiter Rolando D. Gambito dated July 12, 2000 is SET ASIDE. In lieu thereof, judgment is hereby rendered by
ordering respondents to p y complainants backwages up to January 29, 1999 as above discussed.13

The NLRC emphasized that the issue relating to the computation of the respondents backwages had been settled in its July 31, 1998 decision. In a
resolution dated January 23, 2002, the NLRC denied the motion for reconsideration filed by the petitioners.

The petitioners disagreed with the NLRC s ruling and filed a petition for certiorari with the CA, raising the following issues:

(A) THE COMMISSION ACTED WITHOUT JURISDICTION AND WITH GRAVE . ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHEN IT REVERSED AND SET ASIDE THE ORDER OF LABOR ARBITER ROLANDO D. GAMBITO DATED JULY 12,
2000 AND ORDERED THE COMPUTATION OF PRIVATE RESPONDENTS BACKWAGES TO COVER THE PERIOD AFTER AUGUST
25, 1995, OR UNTIL JANUARY 29, 1999, THE DATE OF FINALITY OF THE SECOND RESOLUTION OF THE COMMISSION.

(B) THE COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION FOR DENYING
PETITIONERS MOTION FOR RECONSIDERA TION.14

The CA Rulings

The CA found the petition to be without merit. It held that certiorari was not the proper remedy since no error of jurisdiction was raised or no grave
abuse of discretion was committed by the NLRC. The CA stated that:

The extraordinary remedy of certiorari is proper if the tribunal, board or officer exercising judicial or quasi-judicial functions acted without or in grave
abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal or any plain, speedy, and adequate remedy in law. When a court,
tribunal or officer has jurisdiction over the person and the subject matter of dispute, the decision on all other questions arising in the case is an exercise
of that jurisdiction. Consequently, all errors committed in the exercise of said jurisdiction are merely errors of judgment. Under prevailing procedural
rules and jurisprudence, errors of judgment are not proper subjects of a special civil action for certiorari.15

Thus, the CA echoed the NLRCs conclusions:

As explained in the assailed Decision, what is controlling for purposes of the backwages is the NLRC s Resolution dated 17 March 1995 which decreed
that private respondents are entitled to backwages from the time of their dismissal (constructive) until their actual reinstatement; and considering that
the award of reinstatement was set aside by the NLRC in its final and executory Decision dated 3 July 1998 which ordered the payment of separation
pay in lieu of reinstatement to be computed up to the finality on 29 January 1999 of said Decision dated 3 July 1998, then the computation of the
backwages should also end on said date, which is 29 January 1999.16

Citing the case of Chronicle Securities Corp. v. NLRC,17 the CA held that backwages are granted to an employee or worker who had been illegally
dismissed from employment. If reinstatement is no longer possible, the backwages shall be computed from the time of the illegal termination up to the
finality of the decision.

The Present Petition

The petitioners argue that the following reversible errors were committed by the CA, namely:

(1) In ruling that no grave abuse of discretion was committed by the NLRC when it issued the September 28, 2001 decision, the January
23, 2002 resolution and the July 31, 1998 decision, which modified the final and executory resolution dated March 17, 1995 of the NLRC
computing the backwages only until the reinstatement of the respondents;

(2) When it manifestly overlooked or misappreciated relevant facts, i.e. Labor Arbiter Gambito s computation did conform to the NLRC s
March 17, 1995 resolution considering the manifestation of Samuel that the respondents no longer wanted to be reinstated, in response to
the order of execution dated August 25, 1995; and

(3) When it declared that only errors o judgment, and not jurisdiction, were committed by the NLRC.
In their Comment,18 the respondents contend that the computation of the backwages until January 29, 1999 was consistent with the tenor of the
decision dated July 31, 1998 and the modified March 17, 1995 resolution of the NLRC.

After the petitioners filed their Reply,19 the Court resolved to give due course to the petition; in compliance with our directive, the parties submitted their
respective memoranda repeating the arguments in the pleadings earlier filed.20

The Issue

As presented, the issue boils down to whether the respondents backwages had been correctly computed under the decision dated September 28,
2001 of the NLRC, as confirmed by the CA, in light of the circumstance that there were two final NLRC decisions affecting the computation of the
backwages.

The Court s Ruling

We find the petition unmeritorious.

Preliminary considerations

In Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth Division),21 we held that a decision in an illegal dismissal case consists
essentially of two components:

The first is that part of the decision that cannot now be disputed because it has been confirmed with finality. This is the finding of the illegality of the
dismissal and the awards of separation pay in lieu of reinstatement, backwages.

The second part is the computation of the awards made.22

The first part of the decision stems from the March 17, 1995 NLRC resolution finding an illegal dismissal and defining the legal consequences of this
dismissal. The second part involves the computation of the monetary award of backwages and the respondents' reinstatement. Under the terms of the
March 17, 1995 resolution, the respondents' backwages were to be computed from the time of the illegal dismissal up to their reinstatement.

In the first computation of the backwages, Labor Arbiter Gambito confronted the following circumstances and the Sheriffs Report dated November 8,
1995:23 first, how to interpret the phrase less earnings elsewhere as stated in the dispositive portion of the March 17, 1995 resolution of the NLRC;
second, the effect of the alleged manifestation (dated October 9, 1995) of Samuel that the respondents were only interested in the monetary award, not
in their reinstatement; and third, the effect of the respondents' counsel's statement during the pre-execution proceedings that the respondents simply
wanted to be reinstated.

The records indicate that the respondents denied Samuel's statement and asked for reinstatement through their counsel. Nevertheless, Labor Arbiter
Gambito relied on Samuel's statement and fixed the computation date of the respondents' backwages to be up to and until August 25, 1995 or the date
the order of execution was issued for the NLRC's March 17, 1995 decision. As stated in his July 12, 2000 order,24 Labor Arbiter Gambito found it fair
and just that in the execution of the NLRC's decision, the computation of the respondents' backwages should "stop at that time when it was put on
record by them [respondents] that they had no desire to return to work."25

The NLRC disregarded Labor Arbiter Gambito's first computation. In the dispositive portion of its July 31, 1998 decision, the NLRC modified the final
March 17, 1995 resolution. The first part of this decision -the original ruling of illegal dismissal -was left untouched while the second part of the decision
-the monetary award and its computation -was altered to conform with the strained relations between the parties that became manifest during the
execution phase of the March 17, 1995 resolution.

The effect of the modification of the March 17, 1995 resolution of the NLRC was two-fold: , the reinstatement aspect of the March 1 7, 1995 resolution
was expressly substituted by an order of payment of separation pay; and two the July 31, 1998 decision of the NLRC now provided for two monetary
awards (backwages and separation pay). The July 31, 1998 decision of the NLRC became final since neither parties appealed.

Immutability of Judgment

That there is already a final and executory March 17, 1995 resolution finding that respondents have been illegally dismissed, and awarding backwages
and reinstatement, is not disputed. That there, too, is the existence of another final and executory July 31, 1998 decision modifying the reinstatement
aspect of the March 17, 1995 resolution, by awarding separation pay, is likewise beyond dispute.

As a rule, "a final judgment may no longer be altered, amended or modified, even if the alteration, amendment or modification is meant to correct what
is perceived to be an erroneous conclusion of fact or law and regardless of what court, be it the highest Court of the land, rendered it. Any attempt on
the part of the x x x entities charged with the execution of a final judgment to insert, change or add matters not clearly contemplated in the dispositive
portion violates the rule on immutability of judgments."26 An exception to this rule is the existence of supervening events27which refer to facts
transpiring after judgment has become final and executory or to new circumstances that developed after the judgment acquired finality, including
matters that the parties were not aware of prior to or during the trial as they were not yet in existence at that time.28

Under the circumstances of this case, the existence of the strained relations between the petitioners and the respondents was a supervening event that
justified the NLRC s modification of its final March 17, 1995 resolution. The NLRC, in its July 31, 1998 decision, based its conclusion that strained
relations existed on the conduct of the parties during the first execution proceedings before Labor Arbiter Gambito. The NLRC considered the delay in
the respondents reinstatement and the parties conflicting claims on whether the respondents wanted to be reinstated.29The NLRC also observed that
during the intervening period from the first computation (which was done in 1995) to the appeal and resolution of the correctness of the first
computation (subject of the NLRC s July 31, 1998 decision), neither party actually did anything to implement the respondents reinstatement. The NLRC
considered these, actions as indicative of the strained relations between the parties so that neither of them actually wanted to implement the
reinstatement decree in the March 17, 1995 resolution. The NLRC concluded that the award of reinstatement was no longer possible; thus, it awarded
separation pay, in lieu of reinstatement. Unless exceptional reasons are presented, these above findings and conclusion can no longer be disturbed
after they lapsed to finality.

Appeal of labor case under Rule 45

A review of the CA s decision in a labor case, brought to the Court via Rule 45 of the Rules of Court, is limited to a review of errors of law imputed to
the CA. In Montoya v. Transmed Manila Corporation,30 we laid down the basic approach in reviews of Rule 45 decisions of the CA in labor cases, as
follows:

In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the review for jurisdictional error that we undertake under
Rule 65. Furthermore, Rule 45 limits us to the review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we
have to view the CA decision in the same context that the petition for certiorari it ruled upon was presented to it; we have to examine the CA decision
from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not on the basis
of whether the NLRC decision on the merits of the case was correct. In other words, we have to be keenly aware that the CA undertook a Rule 65
review, not a review on appeal, of the NLRC decision challenged before it. This is the approach that should be basic in a Rule 45 review of a CA ruling
in a labor case. In question form, the question to ask is: Did the C correctly determine whether the NLRC committed grave abuse of discretion in ruling
on the case?

This manner of review was reiterated in Holy Child Catholic School v Hon. Patricia Sta. Tomas, etc., et al.,31 where the Court limited its review under
Rule 45 of the CA s decision in a labor case to the determination of whether the CA correctly resolved the presence or absence of grave abuse of
discretion in the decision of the Secretary of Labor, and not on the basis of whether the latter's decision on the merits of the case was strictly correct.

Grave abuse of discretion, amounting to lack or excess of jurisdiction, has been defined as the capricious and whimsical exercise of judgment
amounting to or equivalent to lack of jurisdiction.32 There is grave abuse of discretion when the power is exercised in an arbitrary or despotic manner
by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to
perform the duty enjoined or to act at all in contemplation of law."33

With this standard in mind, we find no reversible error committed by the CA when it found no grave abuse of discretion in the NLRC's ruling. We find
the computation of backwages and separation pay in the September 28, 2001 decision of the NLRC consistent with the provisions of law and
jurisprudence. The computation conforms to the terms of the March 17, 1995 resolution (on illegal dismissal and payment of backwages) and the July
31, 1998 decision (on the computation of the backwages and the payment of separation pay).

Article 279 of the Labor Code, as amended,34 provides backwages and reinstatement as basic awards and consequences of illegal dismissal:

Article 279. Security of Tenure. -x x x An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement.

"By jurisprudence derived from this provision, separation pay may [also] be awarded to an illegally dismissed employee in lieu of
reinstatement."35 Section 4(b), Rule I of the Rules Implementing Book VI of the Labor Code provides the following instances when the award of
separation pay, in lieu of reinstatement to an illegally dismissed employee, is proper: (a) when reinstatement is no longer possible, in cases where the
dismissed employee s position is no longer available; (b) the continued relationship between the employer and the employee is no longer viable due to
the strained relations between them; and (c) when the dismissed employee opted not to be reinstated, or the payment of se aration benefits would be
for the best interest of the parties involved.36 In these instances, separation pay is the alternative remedy to reinstatement in addition to the award of
backwages.37 The payment of separation pay and reinstatement are exclusive remedies. The payment of separation pay replaces the legal
consequences of reinstatement to an employee who was illegally dismissed.38

For clarity, the bases for computing separation pay and backwages are different. Our ruling in Macasero v. Southern Industrial Gases
Philippines39 provides us with the manner these awards should be computed:

[U]nder Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed without just cause and without due process is
entitled to backwages and reinstatement or payment of separation pay in lieu thereof:

Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided are separate and distinct. In
instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted.
In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and
backwages.

The normal consequences of respondents illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of backwages
computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an option,
separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative. The payment of separation pay is in
addition to payment of backwages.40

The computation of separation pay is based on the length of the employee s service; and the computation of backwages is based on the actual period
when the employee was unlawfully prevented from working.41
 The basis of computation of backwages

The computation of backwages depends on the final awards adjudged as a consequence of illegal dismissal, in that:

First, when reinstatement is ordered, the general concept under Article 279 of the Labor Code, as amended, computes the backwages from the time of
dismissal until the employees reinstatement. The computation of backwages (and similar benefits considered part of the backwages) can even
continue beyond the decision of the labor arbiter or NLRC and ends only when the employee is actually reinstated.42

Second, when separation pay is ordered in lieu of reinstatement (in the event that this aspect of the case is disputed) or reinstatement is waived by the
employee (in the event that the payment of separation pay, in lieu, is not disputed), backwages is computed from the time of dismissal until the finality
of the decision ordering separation pay.

Third, when separation pay is ordered after the finality of the decision ordering the reinstatement by reason of a supervening event that makes the
award of reinstatement no longer possible (as in the case), backwages is computed from the time of dismissal until the finality of the decision ordering
separation pay.

The above computation of backwages, when separation pay is ordered, has been the Court s consistent ruling. In Session Delights Ice Cream and
Fast Foods v. Court Appeals Sixth Division, we explained that the finality of the decision becomes the reckoning point because in allowing separation
pay, the final decision effectively declares that the employment relationship ended so that separation pay and backwages are to be computed up to
that point.43

We may also view the proper computation of backwages (whether based on reinstatement or an order of separation pay) in terms of the life of the
employment relationship itself.1wphi1

When reinstatement is ordered, the employment relationship continues. Once the illegally dismissed employee is reinstated, any compensation and
benefits thereafter received stem from the employee s continued employment. In this instance, backwages are computed only up until the
reinstatement of the employee since after the reinstatement, the employee begins to receive compensation from his resumed employment.

When there is an order of separation pay (in lieu of reinstatement or when the reinstatement aspect is waived or subsequently ordered in light of a
supervening event making the award of reinstatement no longer possible), the employment relationship is terminated only upon the finality of the
decision ordering the separation pay. The finality of the decision cuts-off the employment relationship and represents the final settlement of the rights
and obligations of the parties against each other. Hence, backwages no longer accumulate upon the finality of the decision ordering the payment of
separation pay since the employee is no longer entitled to any compensation from the employer by reason of the severance of his employment.

The computation of the respondents backwages

As the records show, the contending parties did not dispute the NLRC s order of separation pay that replaced the award of reinstatement on the
ground of the supervening event arising from the newly-discovered strained relations between the parties. The parties allowed the NLRC s July 31,
1998 decision to lapse into finality and recognized, by their active participation in the second computation of the awards, the validity and binding effect
on them of the terms of the July 31, 1998 decision.

Under these circumstances, while there was no express modification on the period for computing backwages stated in the dispositive portion of the
July 31, 1998 decision of the NLRC, it is nevertheless clear that the award of reinstatement under the March 17, 1995 resolution (to which the
respondents backwages was initially supposed to have been computed) was substituted by an award of separation pay. As earlier stated, the awards
of reinstatement and separation pay are exclusive remedies; the change of awards (from reinstatement to separation pay) under the NLRC s July 31,
1998 not only modified the awards granted, but also changed the manner the respondents backwages is to be computed. The respondents
backwages can no longer be computed up to the point of reinstatement as there is no longer any award of reinstatement to speak of.

We also emphasize that the payment of backwages and separation pay cannot be computed from the time the respondents allegedly expressed their
wish to be paid separation pay. In the first place, the records show that the alleged manifestation by the respondents, through Samuel, was actually a
mere expression of interest.44 More importantly, the alleged manifestation was disregarded in the NLRC's July 31, 1998 decision where the NLRC
declared that the award of separation pay was due to the supervening event arising from the strained relations (not a waiver of reinstatement) that
justified the modification of the NLRC's final March 17, 1995 resolution on the award of reinstatement. Simply put, insofar as the computation of the
respondents' backwages, we are guided by the award, modified to separation pay, under the NLRC's July 31, 1998 decision.

Thus, the computation of the respondents' backwages must be from the time of the illegal dismissal from employment until the finality of the decision
ordering the payment of separation pay. It is only when the NLRC rendered its July 31, 1998 decision ordering the payment of separation pay (which
both parties no longer questioned and which thereafter became final) that the issue of the respondents' employment with the petitioners was decided
with finality, effectively terminating it. The respondents' backwages, therefore, must be computed from the time of their illegal dismissal until January
29, 1999, the date of finality of the NLRC's July 31, 1998 Decision. As a final point, the CA s ruling must be modified to include legal interest
commencing from the finality of the NLRC's July 31, 1998 decision. The CA failed to consider that the NLRC's July 31, 1998 decision, once final,
becomes a judgment for money from which another consequence flows -the payment of interest in case of delay.45 Under the circumstances, the
payment of legal interest of six percent (6) upon the finality of the judgment is proper. It is not barred by the principle of immutability of judgment as it is
compensatory interest arising from the final judgment.46

WHEREFORE, premises considered, we DENY the petition and thus effectively AFFIRM with MODIFICATION the decision dated September 1 2005
and the resolution dated December 14, 2005 of the Court of Appeals in CA-G.R. SP No. 70085. The petitioners Bani Rural Bank, Inc., Enoc Theatre I
and II and/or Rafael de Guzman, are ORDERED to PAY respondents Teresa de Guzman, Edgar C. Tan and Teresa G. Tan the following:
 (a) Backwages computed from the date the petitioners illegally dismissed the respondents up to January 29, 1999, the date of the finality of
the decision dated July 31, 1998 of the National Labor Relations Commission in NLRC CN. SUB-RAB-01-07- 7-0136-93 CA No. L-001403
and NLRC CN. SUB-RAB-01-07-7-0137-93 CA No. L-001405;

(b) Separation pay computed from respondents' first day of employment up to January 29, 1999 at the rate of one (1) month pay per year of
service; and

(c) Legal interest of six percent (6) per annum of the total monetary awards computed from January 29, 1999 until their full satisfaction.

The labor arbiter is hereby ORDERED to make another recomputation according to the above directives.

SO ORDERED.