Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 1 of 51

Republic of the Philippines Senior Accounting

SUPREME COURT Violeta C. Diumano 19 years
Baguio City Clerk/Documentation Clerk-San Pablo Branch
SECOND DIVISION
G.R. No. 181719 April 21, 2014
EUGENE S. ARABIT, EDGARDO C. SADSAD, LOWELL C. FUNTANOZ, GERARDO F. PUNZALAN, On the claim of financial losses, Jardine decided to reorganize and implement a redundancy program
FREDDIE M. MENDOZA, EMILIO B. BELEN, VIOLETA C. DIUMANO and MB FINANCE EMPLOYEES among its employees. The petitioners were among those affected by the redundancy program. Jardine
ASSOCIATION FFW CHAPTER (FEDERATION OF FREE WORKERS), Petitioners, thereafter hired contractual employees to undertake the functions these employees used to perform.
vs.
JARDINE PACIFIC FINANCE, INC. (FORMERLY MB FINANCE), Respondent. The Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB), questioning
DECISION the termination of employment of the petitioners who were also union officers. The Union alleged unfair
BRION, J.: labor practice on the part of Jardine, as well as discrimination in the dismissal of its officers and members.

We resolve in this petition for review on certiorari1 the challenge to the March 23, 2007 decision2 and the
February 11, 2008 resolution3 of the Court of Appeals (CA) in CA G.R. SP No. 91952. These assailed CA
rulings annulled and set aside the December 1, 2004 decision4 and the July 21, 2005 resolution5 of the
National Labor Relations Commission (NLRC) in NLRC NCR CA No. 029753-01 (NLRC NCR Case No.
06-06112-99). The NLRC rulings, in turn, fully affirmed the September 29, 2000 decision6 of Labor Arbiter
(LA) Jovencio LL Mayor, Jr. The LA's decision ordered the petitioners Eugene S. Arabit, Edgardo C.
Sadsad, Lowell C. Funtanoz, Gerardo F. Punzalan, Freddie M. Mendoza, Emilio B. Belen and Violeta C.
Diumano’s reinstatement to their former positions without loss of seniority rights and the payment of full
backwages, computed from the time of their dismissal on May 30, 1999.
Negotiations ensued between the Union and Jardine under the auspices of the NCMB, and both parties
eventually reached an amicable settlement. In the settlement, the petitioners accepted their redundancy
pay without prejudice to their right to question the legality of their dismissal with the NLRC. Jardine paid
the petitioners a separation package composed of their severance pay, plus their grossed up
transportation allowance.7
On June 1, 1999, the petitioners and the Union filed a complaint against Jardine with the NLRC for illegal
dismissal and unfair labor practice.

Factual Antecedents The Labor Arbitration Rulings

Petitioners were former regular employees of respondent Jardine Pacific Finance, Inc. (formerly MB Before the LA, the parties decided to limit the issues to two, namely: (a) whether the separation of the
Finance) (Jardine). The petitioners were also officers and members of MB Finance Employees petitioners was valid or not; and (b) whether Jardine committed an unfair labor practice against the Union.
Association-FFW Chapter (the Union), a legitimate labor union and the sole exclusive bargaining agent of
the employees of Jardine. The table below shows the petitioners’ previously occupied positions, as well as
their total length of service with Jardine before their dismissal from employment. The petitioners alleged before the LA that their dismissal was illegal and was tainted with bad faith as their
positions were not superfluous. They argued that if their positions had really been redundant, then Jardine
should have not hired contractual workers to replace them. 8
Number of
Petitioner Position Years of The petitioners also argued that Jardine was guilty of unfair labor practice for contracting out services that
Service the petitioners previously held. Unfair labor practice took place under Article 248 of the Labor Code as the
petitioners were union officers.9
Eugene S. Arabit Field Collector 20 years

Edgardo C. Sadsad Field Collector 3 years The petitioners likewise claimed that Jardine’s act of hiring contractual employees as replacements was a
restraint on the Union’s right to self-organization. The petitioners also pointed out that they were Union
Lowell C. Funtanoz Field Collector 7 years officers and panel members in the scheduled collective bargaining agreement (CBA) negotiations between
Jardine and the Union. The petitioners particularly found the company action objectionable as their
Gerardo F. Punzalan Field Collector 16 years employment was terminated when their CBA negotiations were about to commence. 10

Freddie M. Mendoza Field Collector 20 years Jardine argued in its defense that the company had been incurring substantial business losses from 1996
to 1998. According to Jardine, its audited financial statements reflect that for 1996, it suffered a net loss
Senior Credit Investigator/Field ofP5,538,960.00; for 1997,11 a net loss in the amount of P57,274,018.00;12 and a net loss
Emilio B. Belen 18 years
Collector- San Pablo Branch of P95,529,527.00 for 1998.13

Because of these serious business losses, Jardine asserted that it had to lay-off some of its employees
and reorganize its ranks to eliminate positions that were in excess of what its business required.14
Jardine, however, admitted that it hired contractual employees to replace petitioners in their previous
posts. Jardine reasoned out that no bad faith took place since the hiring of contractual employees was a
valid exercise of its management prerogative.15 Jardine argued that the distinction between redundancy
and retrenchment is not material; an employer resorts to retrenchment or redundancy for the same reason,
namely the economics of business.16 Since Jardine successfully established that it incurred serious
business losses, then termination of employment of the petitioners was valid for all intents and purposes. 17
In reply to the petitioners’ allegation of unfair labor practice, Jardine argued that had it intended to commit
union busting, then it should not have merely dismissed the seven petitioners; it should have also
dismissed other employees who were union officers and members.18 According to Jardine, the termination
of the petitioners’ services did not interfere with the Union and its remaining members’ right to self-
organization since Jardine continuously dealt with the Union and recognized it as the sole and exclusive
bargaining representative of its rank-and-file employees.19
The LA ruled in the petitioners’ favor. In its decision20 dated September 29, 2000, the LA held that the
hiring of contractual employees to replace the petitioners directly contradicts the concept of redundancy
which involves the trimming down of the workforce because a task is being carried out by too many
people.21 The LA explained that the company’s action was a circumvention of the right of the petitioners to
security of tenure.22
The LA further held that it was not enough for Jardine to simply focus on its losses. According to the LA, it
was error for Jardine to simply lump together the seven petitioners as employees whose positions have
become redundant without explaining why their respective positions became superfluous in relation to the
other positions and employees of the company.23
On the petitioners’ allegation of unfair labor practice, the LA held that not enough evidence was presented
to prove the claim against Jardine.
Both parties appealed the LA’s decision to the NLRC. In its decision24 dated December 1, 2004, the NLRC
dismissed the appeals and affirmed the LA’s decision in its entirety. 25
Jardine moved for the reconsideration of the NLRC’s decision, which motion the NLRC also denied in its
resolution26 of July 21, 2005. Jardine thereafter sought recourse with the CA via a petition for certiorari
under Rule 65.27
The CA’s Ruling
In its decision28 dated March 23, 2007, the CA reversed the LA’s and the NLRC’s rulings, and granted
Jardine’s petition for certiorari.
The CA found that Jardine’s act of hiring contractual employees in replacement of the petitioners does not
run counter to the argument that their positions are already superfluous.29 According to the CA, the hiring
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 2 of 51
of contractual employees is a management prerogative that Jardine has the right to exercise. 30 In the
absence of any showing of malice or arbitrariness on the part of Jardine in implementing its redundancy
program, the courts must not interfere with the company’s exercise of a bona fide management
decision.31 The CA cited for this purpose the case of De Ocampo v. National Labor Relations
Commission32 which explains:
The reduction of the number of workers in a company made necessary by the introduction of the services
of Gemac Machineries in the maintenance and repair of its industrial machinery is justified. There can be
no question as to the right of the company to contract the services of Gemac Machineries to replace the
services rendered by the terminated mechanics with a view to effecting more economic and efficient
methods of production.
In the same case, We ruled that "(t)he characterization of (petitioners’) services as no longer necessary or
sustainable, and therefore properly terminable, was an exercise of business judgment on the part of
(private respondent) company. The wisdom or soundness of such characterization or decision was not
subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as
violation of law or merely arbitrary and malicious action is not shown" (ibid, p. 673).
In contracting the services of Gemac Machineries, as part of the company's cost-saving program, the
services rendered by the mechanics became redundant and superfluous, and therefore properly
terminable. The company merely exercised its business judgment or management prerogative. And in the
absence of any proof that the management abused its discretion or acted in a malicious or arbitrary
manner, the court will not interfere with the exercise of such prerogative. 33
The CA further held that Jardine successfully established that for the years 1996 to 1998, the company
incurred serious losses.34 The appellate court also observed that the reduction in the number of workers,
made necessary by the introduction of the services of an independent contractor, is justified when
undertaken to implement more economic and efficient methods of production.35
These justifications led to the CA’s ruling which annulled and set aside the December 1, 2004 decision and
the July 21, 2005 resolution of the NLRC and to its own ruling that the petitioners had not been illegally
dismissed.
The CA denied the petitioners’ subsequent motion for reconsideration. The petitioners are now before this
Court on a petition for review on certiorari under Rule 45 of the Rules of Court.
The Petition
In their petition, the petitioners maintain that the CA gravely abused its discretion and that its ruling is not in
conformity with the law and jurisprudence.
The petitioners argue that there is a difference between financial loss and decline of earnings. They posit
that what Jardine actually experienced was a decline in capital and not substantial financial losses for the
years 1996 to 1998.36

The petitioners also assert that Jardine did not take any remedial measure before it implemented its
redundancy program. It simply hastily terminated the petitioners from the service. 37 In support of this
argument, the petitioners cited the case of Golden Thread Knitting Industries, Inc. v. NLRC 38 where the
Court laid down guidelines to be considered in selecting employees who would be dismissed from the
service in case of redundancy.39 The petitioners contend that the records show that Jardine did not lay
down any basis or criteria in choosing the petitioners for inclusion in the program. 40
According to the petitioners, they are all regular employees whose years of service range from three (3) to
twenty (20) years. Since Jardine immediately terminated their services without evaluating their
performance in relation with those of the other employees and without considering other relevant factors,
then Jardine’s decision was arbitrary and in disregard of the guidelines set by this Court in Golden
Thread.41
Finally, the petitioners also reiterate the findings of the LA and of the NLRC that Jardine’s act of hiring
contractual employees as their replacements is contrary to Jardine’s claim that there was
redundancy.42 They also contend that the hiring of new employees negates Jardine’s argument that it was
suffering from substantial losses.43Based on these premises, the petitioners posit that the CA erred in
annulling and setting aside the NLRC’s decision, and pray instead for its reinstatement.
The Court’s Ruling
We resolve to GRANT the petition.
Procedural consideration: the nature
of a Rule 45 petition
We emphasize at the outset that the current petition was brought under Rule 45 of the Rules of Court. As a
rule, only questions of law may be raised on appeal under this remedy. 44 This is in contrast with a petition
for certiorari brought under Rule 65 where the review centers on the jurisdictional errors the lower court or
tribunal may have committed.45
We thus limit our review to errors of law which the CA might have committed. A question of law arises
when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when
the doubt arises as to the truth or falsity of the alleged facts. For a question to be one of law, the same
must not involve an examination of the probative value of the evidence presented by the litigants or any of
them.46
"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 CA correctly determine whether the NLRC
committed grave abuse of discretion in ruling on the case?" 47
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 3 of 51
In this context, the primary question we confront is: did the CA correctly rule that the NLRC committed
grave abuse of discretion when it found that Jardine validly terminated the petitioners’ employment
because of redundancy?
Redundancy in contrast with retrenchment
Jardine, in its petition for certiorari with the CA, posited that the distinction between redundancy and
retrenchment is not material.48 It contended that employers resort to these causes of dismissal for purely
economic considerations.49 Jardine further argued that the immateriality of the distinction between these
two just causes for dismissal is shown by the fact that redundancy and retrenchment are found and
lumped together in just one single provision of the Labor Code (Article 283 thereof).
We cannot accept Jardine’s shallow understanding of the concepts of redundancy and retrenchment in
determining the validity of the severance of an employer-employee relationship. The fact that they are
found together in just one provision does not necessarily give rise to the conclusion that the difference
between them is immaterial. This Court has already ruled before that retrenchment and redundancy are
two different concepts; they are not synonymous; thus, they should not be used interchangeably. 50 The
clear distinction between these two concepts was discussed in Andrada, et al., v. NLRC, 51 citing the case
of Sebuguero v. NLRC,52 where this Court clarified:
Redundancy exists where the services of an employee are in excess of what is reasonably demanded by
the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of
a position or positions may be the outcome of a number of factors, such as over hiring of workers,
decreased volume of business, or dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with the term "lay-off." It is the termination of
employment initiated by the employer through no fault of the employee’s and without prejudice to the latter,
resorted to by management during periods of business recession, industrial depression, or seasonal
fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for
a new production program or the introduction of new methods or more efficient machinery, or of
automation. Simply put, it is an act of the employer of dismissing employees because of losses in the
operation of a business, lack of work, and considerable reduction on the volume of his business, a right
consistently recognized and affirmed by this Court.
These rulings appropriately clarify that redundancy does not need to be always triggered by a decline in
the business. Primarily, employers resort to redundancy when the functions of an employee have already
become superfluous or in excess of what the business requires. Thus, even if a business is doing well, an
employer can still validly dismiss an employee from the service due to redundancy if that employee’s
position has already become in excess of what the employer’s enterprise requires.
From this perspective, it is illogical for Jardine to terminate the petitioners’ employment and replace them
with contractual employees. The replacement effectively belies Jardine’s claim that the petitioners’
positions were abolished due to superfluity. Redundancy could have been justified if the functions of the
petitioners were transferred to other existing employees of the company.

To dismiss the petitioners and hire new contractual employees as replacements necessarily give rise to
the sound conclusion that the petitioners’ services have not really become in excess of what Jardine’s
business requires. To replace the petitioners who were all regular employees with contractual ones would
amount to a violation of their right to security of tenure. For this, we affirm the NLRC’s ruling, citing the LA’s
decision, when it ruled:
In the case at bench, respondents did not dispute that after laying-off complainants herein, they engaged
the services of an agency to perform the tasks use (sic) to be done by complainants. This is [in direct]
contradiction to the concept of redundancy which precisely requires the trimming down of the [workforce]
because a task is being carried out by just too many people. The subsequent contracting out to an agency
the functions or duties that used to be the domain of individual complainants herein is a circumvention of
their constitutional rights to security of tenure, and therefore illegal. 53
Guidelines in implementing redundancy
We recognize that management has the prerogative to characterize an employee’s services as no longer
necessary or sustainable, and therefore properly terminable.54
The CA also correctly cited De Ocampo, et al., v. NLRC55 when it discussed that Jardine’s decision to hire
contractual employees as replacements is a management prerogative which the company has the right to
undertake to implement a more economic and efficient operation of its business. 56
In De Ocampo, this Court held that, in the absence of proof that the management abused its discretion or
acted in a malicious or arbitrary manner in replacing dismissed employees with contractual ones, judicial
intervention should not be made in the company’s exercise of its management prerogative. 57
The employer’s exercise of its management prerogative, however, is not an unbridled right that cannot be
subjected to this Court’s scrutiny. The exercise of management prerogative is subject to the caveat that it
should not performed in violation of any law and that it is not tainted by any arbitrary or malicious motive on
the part of the employer.58
This Court, in several cases, sufficiently explained that the employer must follow certain guidelines to
dismiss employees due to redundancy. These guidelines aim to ensure that the dismissal is not
implemented arbitrarily and is not tainted with bad faith against the dismissed employees.
In Golden Thread Knitting Industries, Inc. v. NLRC,59 this Court laid down the principle that the employer
must use fair and reasonable criteria in the selection of employees who will be dismissed from employment
due to redundancy. Such fair and reasonable criteria may include the following, but are not limited to: (a)
less preferred status (e.g. temporary employee); (b) efficiency; and (c) seniority. The presence of these
criteria used by the employer shows good faith on its part and is evidence that the implementation of
redundancy was painstakingly done by the employer in order to properly justify the termination from the
service of its employees.60
As the petitioners pointed out, the records are bereft of indications that Jardine employed clear criteria
when it decided who among its employees, who held similar positions as the petitioners, should be
removed from their posts because of redundancy. Jardine never bothered to explain how and why the
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 4 of 51
petitioners were the ones dismissed. Jardine’s acts became more suspect given that the petitioners were
all union officers and some of them were panel members in the scheduled CBA negotiations between
Jardine and the Union.
Aside from the guidelines for the selection of employees who will be terminated, the Court, in Asian
Alcohol Corp. v. NLRC,61 also laid down guidelines for redundancy to be characterized as validly
undertaken by the employer. The Court ruled:
For the implementation of a redundancy program to be valid, the employer must comply with the following
requisites: (1) written notice served on both the employees and the Department of Labor and Employment
at least one month prior to the intended date of retrenchment; (2) payment of separation pay equivalent to
at least one month pay or at least one month pay for every year of service, whichever is higher; (3) good
faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what
positions are to be declared redundant and accordingly abolished. 62
Admittedly, Jardine complied with guidelines 1 and 2 of the guidelines in Asian Alcohol. Jardine informed
the Department of Labor and Employment of the petitioners’ separation from the service due to
redundancy on April 30, 1999, one month before their termination’s effectivity. Also, the petitioners were
given their individual separation packages, composed of their severance pay, plus their grossed up
transportation allowance.
Guidelines 3 and 4 of Asian Alcohol, however, are different matters. These last two guidelines are
interrelated to ensure good faith in abolishing redundant positions; the employer must clearly show that it
used fair and reasonable criteria in ascertaining what positions are to be declared redundant.
In this cited case, the employer took pains to discuss and elaborate on the reasons why the position of the
private respondent was the one chosen by the employer to be abolished. We quote the Court’s ruling:
In 1992, the lease contract, which also provided for a right of way leading to the site of the wells, was
terminated. Also, the water from the wells had become salty due to extensive prawn farming nearby and
could no longer be used by Asian Alcohol for its purpose.1awp++i1 The wells had to be closed and
needless to say, the services of Carias, Martinez and Sendon had to be terminated on the twin grounds of
redundancy and retrenchment.
xxxx
Private respondent Amacio was among the ten (10) mechanics who manned the machine shop at the plant
site. At their current production level, the new management found that it was more cost efficient to maintain
only nine (9) mechanics. In choosing whom to separate among the ten (10) mechanics, the management
examined employment records and reports to determine the least efficient among them. It was private
respondent Amacio who appeared the least efficient because of his poor health condition. 63
Jardine never undertook what the employer in Asian Alcohol did.1âwphi1 Jardine was never able to
explain in any of its pleadings why the petitioners’ positions were redundant. It never even attempted to
discuss the attendant facts and circumstances that led to the conclusion that the petitioners’ positions had

become superfluous and unnecessary to Jardine’s business requirements. Thus, we can only speculate on
what actually happened.
As the LA correctly found, Jardine lumped together the seven petitioners into one group whose positions
had become redundant. This move was despite the fact that not all of them occupied the same positions
and performed the same functions.64 Under the circumstances of the case, Jardine’s move was thus
illegal. We affirm the LA’s ruling that fair play and good faith require that where one employee will be
chosen over the others, the employer must be able to clearly explain the merit of the choice it has taken.65
To sum up, based on the guidelines set by the Court in the cases of Golden Thread and Asian Alcohol, we
find that at two levels, Jardine failed to set the required fair and reasonable criteria in the termination of the
petitioners’ employment, leading to the conclusion that the termination from the service was arbitrary and
in bad faith.
The first level, based on Asian Alcohol, is broader as the case recognized distinctions on a per position
basis. At this level, Jardine failed to explain why among all of the existing positions in its organization,
Jardine chose the petitioners’ posts as the ones which have already become redundant and
terminable.1âwphi1
The second level, derived from Golden Thread, is more specific. Here the distinction narrows down to the
particular employees occupying the same positions which were already declared to be redundant. At this
level, Jardine’s lapse is shown by its failure to explain why among all of its employees whose positions
were determined to be redundant, the petitioners were the ones selected to be dismissed from the service.
Notably, the LA and the NLRC also arrived at the same conclusion that the redundancy program was not
valid because Jardine hired contractual employees as replacements, thus, contradicting underlying
reasons of redundancy. The CA significantly chose to disregard these coherent labor findings without fully
justifying its move. At the very least, this was an indicator that something was wrong somewhere in these
dismissals. It was clear legal error for the CA to recognize grave abuse of discretion when none occurred.
WHEREFORE, we hereby GRANT the petition. We REVERSE the decision dated March 23, 2007 and the
resolution dated February 11, 2008 of the Court of Appeals in CA G.R. SP No. 91952, and uphold the
decision dated December 1, 2004 and the resolution dated July 21, 2005 of the National Labor Relations
Commission which affirmed in its entirety the September 29, 2000 decision of the Labor Arbiter.SO
ORDERED.
THIRD DIVISION
G.R. No. 176908, March 25, 2015
PURISIMO M. CABAOBAS, EXUPERIO C. MOLINA, GILBERTO V. OPINION,
VICENTE R. LAURON, RAMON M. DE PAZ, JR., ZACARIAS E. CARBO, JULITO G.
ABARRACOSO, DOMINGO B. GLORIA, AND FRANCISCO P.
CUMPIO, Petitioners, v. PEPSI-COLA PRODUCTS, PHILIPPINES,
INC., Respondents.
DECISION
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 5 of 51
PERALTA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Court of Appeals
(CA) Decision1 dated July 31, 2006, and its Resolution2 dated February 21, 2007 in CA-G.R. S.P. No.
81712. The assailed decision denied the petition for certiorari filed by petitioners Purisimo M. Cabaobas,
Exuperio C. Molina, Gilberto V. Opinion, Vicente R. Lauron, Ramon M. De Paz, Jr., Zacarias E. Carbo,
Julito G. Abarracoso, Domingo B. Gloria and Francisco P. Cumpio, seeking a partial nullification of the
Decision3 dated September 11, 2002 of the National Labor Relations Commission (NLRC) in NLRC
Certified Case No. V-000001-2000.4 The NLRC dismissed petitioners' complaints for illegal dismissal and
declared the retrenchment program of respondent Pepsi-Cola Products Philippines, Inc. as a valid exercise
of management prerogative.
The facts follow.
Respondent Pepsi-Cola Products Philippines, Inc. (PCPPI) is a domestic corporation engaged in the
manufacturing, bottling and distribution of soft drink products, which operates plants all over the country,
one of which is the Tanauan Plant in Tanauan, Leyte.
In 1999, PCPPI’s Tanauan Plant allegedly incurred business losses in the total amount of Twenty-Nine
Million One Hundred Sixty-Seven Thousand and Three Hundred Ninety (P29,167,390.00) Pesos. To avert
further losses, PCPPI implemented a company-wide retrenchment program denominated as Corporate-
wide Rightsizing Program (CRP) from 1999 to 2000, and retrenched forty-seven (47) employees of its
Tanauan Plant on July 31, 1999.
On September 24, 1999, twenty-seven (27) of said employees,5 led by Anecito Molon (Molon, et al.), filed
complaints for illegal dismissal before the NLRC which were docketed as NLRC RAB Cases Nos. VIII-9-
0432-99 to 9-0458-99, entitled “Molon, et al. v. Pepsi-Cola Products, Philippines, Inc.”
On January 15, 2000, petitioners, who are permanent and regular employees of the Tanauan Plant,
received their respective letters, informing them of the cessation of their employment on February 15,
2000, pursuant to PCPPI's CRP. Petitioners then filed their respective complaints for illegal dismissal
before the National Labor Relations Commission Regional Arbitration Branch No. VIII in Tacloban City.
Said complaints were docketed as NLRC RAB VIII-03-0246-00 to 03-0259-00, entitled “Kempis, et al. v.
Pepsi-Cola Products, Philippines, Inc.”
In their Consolidated Position Paper,6 petitioners alleged that PCPPI was not facing serious financial
losses because after their termination, it regularized four (4) employees and hired replacements for the
forty-seven (47) previously dismissed employees. They also alleged that PCPPI's CRP was just designed
to prevent their union, Leyte Pepsi-Cola Employees Union-Associated Labor Union (LEPCEU-ALU), from
becoming the certified bargaining agent of PCPPI's rank-and-file employees.
In its Position Paper,7 PCPPI countered that petitioners were dismissed pursuant to its CRP to save the
company from total bankruptcy and collapse; thus, it sent notices of termination to them and to the
Department of Labor and Employment. In support of its argument that its CRP is a valid exercise of
management prerogative, PCPPI submitted audited financial statements showing that it suffered financial
reverses in 1998 in the total amount of SEVEN HUNDRED MILLION (P700,000,000.00) PESOS,
TWENTY- SEVEN MILLION (P27,000,000.00) PESOS of which was allegedly incurred in the Tanauan
Plant in 1999.
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 6 of 51

On December 15, 2000, Labor Arbiter Vito C. Bose rendered a Decision 8 finding the dismissal of retrenchment program of Pepsi Cola Products Phils., Inc. pursuant to its CRP, a valid exercise of
petitioners as illegal, the dispositive portion of which reads:chanRoblesvirtualLawlibrary management prerogatives; Further, ORDERING Pepsi Cola Products Philippines, Inc. to pay the
following complainants their package separation benefits of 1 & ½ months salary for every year of
WHEREFORE, premises duly considered, judgment is hereby rendered finding the dismissal of the ten service, plus commutation of all vacation and sick leave credits in the respective amounts
(10) complainants herein illegal. Consequently, respondent Pepsi-Cola Products Phils., Inc. (PCPPI) is hereunder indicated opposite their names:
ordered to reinstate them to their former positions without loss of seniority rights and to pay them full
backwages and other benefits reckoned from February 16, 2000 until they are actually reinstated, which as 1. ARTEMIO S. KEMPIS – P167,486.80
of date amounted to NINE HUNDRED FORTY-SEVEN THOUSAND FIVE HUNDRED FIFTY-EIGHT 2. EXUPERIO C. MOLINA – 168,196.38
PESOS AND THIRTY-TWO CENTAVOS (P947,558.32) inclusive of the 10% attorney's fees. 3. GILBERTO V. OPINION – 31,799.74
4. PURISIMO M. CABAOBAS – 165,466.09
Other claims are dismissed for lack of merit. 5. VICENTE P. LAURON – 167,325.86
6. RAMON M. DE PAZ, JR. - 109,652.98
SO ORDERED.9cralawred 7. ZACARIAS E. CARBO – 160,376.47
cralawlawlibrary 8. JULITO C. ABARRACOSO – 161,366.44
9. DOMINGO B. GLORIA – 26,119.26
10. FRANCISCO P. CUMPIO – 165,204.41
PCPPI appealed from the Decision of the Labor Arbiter to the Fourth Division of the NLRC of Tacloban
City. Meanwhile, the NLRC consolidated all other cases involving PCPPI and its dismissed employees.
(6) DECLARING, in NLRC Injunction Case No. V-000003-2001, Pepsi-Cola's Petition for Injunction and
10 Application for immediate issuance of Temporary Restraining Order, moot and academic, and
On September 11, 2002, the NLRC rendered a Consolidated Decision, the dispositive portion of which
DISMISSING the same; Further, DECLARING moot and academic all incidents to the case of Kempis, et
states:chanRoblesvirtualLawlibrary
al. vs. PCPPI (NLRC Case No. V-000071-2000 relating to the execution or implementation of the nullified
Decision dated December 15, 2000, and likewise, nullifying them.
WHEREFORE, judgment is hereby rendered:
All other claims and petitions are dismissed for want of merit.
(1) DECLARING, in NLRC Certified Case No. V-000001-2000 (NLRC NCR CC No. 000171-99), Pepsi-
Cola Products Philippines, Incorporated, not guilty of union busting/unfair labor practice, and dismissing SO ORDERED.11cralawlawlibrary
LEPCEU-ALU's Notice of Strike dated July 19, 1999;ChanRoblesVirtualawlibrary
Petitioners and PCPPI filed their respective motions for reconsideration of the consolidated decision, which
(2) DECLARING, in the subsumed NLRC Case No. 7-0301-99, LEPCEU-ALU's strike on July 23, 1999 the NLRC denied in a Resolution12 dated September 15, 2003. Dissatisfied, petitioners filed a petition
ILLEGAL for having been conducted without legal authority and without observing the 7-day strike vote for certiorari with the CA [docketed as CA-G.R. SP No. 81712 and raffled to the Eighteenth (18th) Division].
notice requirement as provided in Section 2 and Section 7 of Rule XXII, Book V of the Omnibus Rules On July 31, 2006, the CA rendered a Decision, denying their petition and affirming the NLRC Decision
Implementing Art. 263 (c) and (f) of the Labor Code, but DENYING PEPSI-COLA's supplemental prayer to dated September 11, 2002, the dispositive portion of which reads:chanRoblesvirtualLawlibrary
declare loss of employment status of union leaders and some of its members as identification of officers
and members, and the knowing participation of union officers in the illegal strike, or that of the officers and
WHEREFORE, premises considered, the petition filed in this case is hereby DENIEDand the decision
members in illegal acts during the strike, have not been established;ChanRoblesVirtualawlibrary
dated September 11, 2002, and the resolution dated September 15, 2003, promulgated by the National
Labor Relations Commission, Fourth Division in NLRC Certified Case No. V-000001-2000 (NCR CC. No.
(3) DISMISSING in the subsumed NLRC Injunction Case No. V-000013-99, LEPCEU-ALU's Petition for a
000171-99) are hereby AFFIRMED.
Writ of Preliminary Injunction with Prayer for the Issuance of Temporary Restraining Order, because Pepsi
SO ORDERED.13cralawlawlibrary
Cola had already implemented its Corporate-wide CRP in the exercise of management prerogative.
Moreover, LEPCEU-ALU had adequate remedy in law;ChanRoblesVirtualawlibrary
On February 21, 2007, the CA 18th Division issued a Resolution14 denying petitioners' motion for
reconsideration.
(4) DISMISSING, in subsumed case NLRC RAB VIII Cases Nos. 9-0432-99 to 9-0459-99 (Molon, et al. vs.
PCPPI) all the complaints for Illegal Dismissal except that of Saunder Santiago T. Remandaban III, for
In contrast, when Molon, et al. earlier questioned the consolidated decision of the NLRC via a petition
having been validly and finally settled by the parties, and ORDERING PEPSI COLA Products Phils., Inc. to
for certiorari [docketed as CA-G.R. SP No. 82354 and raffled to its Twentieth (20th) Division], the CA
reinstate Saunder Santiago T. Remandaban III to his former position without loss of seniority rights but
rendered on March 31, 2006 a Decision15 granting their petition and reversing the same NLRC Decision
without backwages;ChanRoblesVirtualawlibrary
dated September 11, 2002, the dispositive portion of which states:chanRoblesvirtualLawlibrary
(5) Nullifying, in NLRC Consolidated Case No. V-000071-01 (RAB VIII cases nos. 3-0246-2000 to 3-
0258-2000; Kempis, et al. vs. PCPPI), the Executive Labor Arbiter's Decisions dated December 15, IN LIGHT OF ALL THE FOREGOING, the instant petition is GRANTED. The decision of the NLRC dated
2000, and DISMISSING the complaints for illegal dismissal, and in its stead DECLARING the September 11, 2002 is hereby REVERSED and SET ASIDE and judgment is rendered as follows:
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 7 of 51

Declaring the strike conducted on July 23, 1999 as legal, it falling under the exception of Article 263, Labor During the pendency of the petition, the Court rendered a Decision dated February 18, 2013 in the related
Code;ChanRoblesVirtualawlibrary case of Pepsi-Cola Products Philippines, Inc. v. Molon,18 the dispositive portion of which
reads:chanRoblesvirtualLawlibrary
Declaring the manner by which the corporate rightsizing program or retrenchment was effected by PEPSI-
COLA to be contrary to the prescribed rules and procedure;ChanRoblesVirtualawlibrary WHEREFORE, the petition is GRANTED. The assailed March 31, 2006 Decision and September 18, 2006
Resolution of the Court of Appeals in CA-G.R. SP No. 82354 are hereby REVERSED and SET ASIDE.
Declaring that petitioners were illegally terminated. Their reinstatement to their former positions or its Accordingly, the September 11, 2002 Decision of the National Labor Relations Commission is hereby
equivalent is hereby ordered, without loss of seniority rights and privileges and PEPSI-COLA is also REINSTATED insofar as (1) it dismissed subsumed cases NLRC-RAB VIII Case Nos. 9-0432-99 to 9-
ordered the payment of their backwages from the time of their illegal dismissal up to the date of their actual 0458-99 and; (2) ordered the reinstatement of respondent Saunder Santiago Remandaban III without loss
reinstatement. If reinstatement is not feasible because of strained relations or abolition of their respective of seniority rights but without backwages in NLRC-RAB VIII Case No. 9-0459-99.
positions, the payment of separation pay equivalent to 1 month salary for every year of service, a fraction SO ORDERED.
of at least 6 months shall be considered a whole year. The monetary considerations received by some of cralawlawlibrary
the employees shall be deducted from the total amount they ought to receive from the company.
Attorney's fees equivalent to 10% of the amount which petitioners may recover pursuant to Article 111 of Subsumed cases NLRC-RAB VIII Case Nos. 9-0432-99 to 9-0458-99 pertain to the dismissal of the
the Labor Code is also awarded. complaints for illegal dismissal filed by Molon, et al., the 27 former co-employees of petitioners in PCPPI.
On the issue of whether the retrenchment of the petitioners' former co-employees was in accord with law,
No pronouncement as to costs. the Court ruled that PCPPI had validly implemented its retrenchment
program,viz.:chanRoblesvirtualLawlibrary
SO ORDERED.16cralawlawlibrary

Aggrieved, petitioners come before the Court in this petition for review on certiorari assailing the CA
18th Division Decision dated July 31, 2006, and its Resolution dated February 21, 2007 on these
grounds:chanRoblesvirtualLawlibrary
A.
THE HONORABLE COURT OF APPEALS, SPECIAL FORMER EIGHTEENTH DIVISION, COMMITTED
AN ERROR OF LAW WHEN IT IGNORED THE EARLIER DECISION OF THE TWENTIETH DIVISION
ON THE SAME FACTUAL AND LEGAL ISSUES.chanroblesvirtuallawlibrary
B.
THE HONORABLE COURT OF APPEALS, SPECIAL FORMER EIGHTEENTH DIVISION, COMMITTED
AN ERROR OF LAW WHEN IT REFUSED TO REVERSE THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION, FOURTH DIVISION, DESPITE PRIVATE RESPONDENT’S FAILURE TO
COMPLY WITH THE REQUISITES OF A VALID RETRENCHMENT.chanroblesvirtuallawlibrary
C.
THE HONORABLE COURT OF APPEALS, SPECIAL FORMER EIGHTEENTH DIVISION, COMMITTED
AN ERROR OF LAW WHEN IT AFFIRMED THE DECISION OF THE NATIONAL LABOR RELATIONS
COMMISSION, FOURTH DIVISION, DECLARING AS LEGAL THE ILLEGAL DISMISSAL OF
PETITIONERS AND DISMISSING THEIR COMPLAINTS FOR ILLEGAL DISMISSAL.17cralawlawlibrary
Essentially, the prerogative of an employer to retrench its employees must be exercised only as a last
resort, considering that it will lead to the loss of the employees' livelihood. It is justified only when all other
less drastic means have been tried and found insufficient or inadequate. Corollary thereto, the employer
must prove the requirements for a valid retrenchment by clear and convincing evidence; otherwise, said
ground for termination would be susceptible to abuse by scheming employers who might be merely
feigning losses or reverses in their business ventures in order to ease out employees. These requirements
are:
(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2)
That the employer served written notice both to the employees and to the Department of Labor
and Employment at least one month prior to the intended date of retrenchment;
(3)
That the employer pays the retrenched employees separation pay equivalent to one (1) month
pay or at least one-half (½) month pay for every year of service, whichever is higher;
(4)
That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees’ right to security of
tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained among the employees, such as status, efficiency, seniority, physical
fitness, age, and financial hardship for certain workers.

The three issues raised by petitioners boil down to the legality of their dismissal pursuant to PCPPI's In due regard of these requisites, the Court observes that Pepsi had validly implemented its retrenchment
retrenchment program. program:
(1) Records disclose that both the CA and the NLRC had already determined that Pepsi complied with the
The petition has no merit. requirements of substantial loss and due notice to both the DOLE and the workers to be retrenched. The
pertinent portion of the CA’s March 31, 2006 Decision reads:
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 8 of 51

In the present action, the NLRC held that PEPSI-COLA’s financial statements are substantial evidence
which carry great credibility and reliability viewed in light of the financial crisis that hit the country which (5) On the final requirement of fair and reasonable criteria for determining who would or would not be
saw multinational corporations closing shops and walking away, or adapting [sic] their own corporate dismissed, records indicate that Pepsi did proceed to implement its rightsizing program based on fair and
rightsizing program. Since these findings are supported by evidence submitted before the NLRC, we reasonable criteria recommended by the company supervisors.
resolve to respect the same. x x x x The notice requirement was also complied with by PEPSI-COLA when
it served notice of the corporate rightsizing program to the DOLE and to the fourteen (14) employees who Therefore, as all the requisites for a valid retrenchment are extant, the Court finds Pepsi’s rightsizing
will be affected thereby at least one (1) month prior to the date of retrenchment. (Citations omitted) program and the consequent dismissal of respondents in accord with law. 19cralawlawlibrary

It is axiomatic that absent any clear showing of abuse, arbitrariness or capriciousness, the findings of fact In view of the Court's ruling in Pepsi-Cola Products Philippines, Inc. v. Molon,20 PCPPI contends that the
by the NLRC, especially when affirmed by the CA – as in this case – are binding and conclusive upon the petition for review on certiorari should be denied and the CA decision should be affirmed under the
Court. Thus, given that there lies no discretionary abuse with respect to the foregoing findings, the Court principle of stare decisis.
sees no reason to deviate from the same.
The Court sustains PCPPI's contention.
(2) Records also show that the respondents had already been paid the requisite separation pay as
evidenced by the September 1999 quitclaims signed by them. Effectively, the said quitclaims serve inter The principle of stare decisis et non quieta movere (to adhere to precedents and not to unsettle things
alia the purpose of acknowledging receipt of their respective separation pays. Appositely, respondents which are established) is well entrenched in Article 8 of the New Civil Code which states that judicial
never questioned that separation pay arising from their retrenchment was indeed paid by Pepsi to them. decisions applying or interpreting the laws or the Constitution shall form part of the legal system of the
As such, the foregoing fact is now deemed conclusive. Philippines.

(3) Contrary to the CA’s observation that Pepsi had singled out members of the LEPCEU-ALU in
implementing its retrenchment program, records reveal that the members of the company union (i.e.,
LEPCEU-UOEF#49) were likewise among those retrenched.
Also, as aptly pointed out by the NLRC, Pepsi’s Corporate Rightsizing Program was a company-wide
program which had already been implemented in its other plants in Bacolod, Iloilo, Davao, General Santos
and Zamboanga. Consequently, given the general applicability of its retrenchment program, Pepsi could
not have intended to decimate LEPCEU-ALU’s membership, much less impinge upon its right to self-
organization, when it employed the same.
In fact, it is apropos to mention that Pepsi and its employees entered into a collective bargaining
agreement on October 17, 1995 which contained a union shop clause requiring membership in LEPCEU-
UOEF#49, the incumbent bargaining union, as a condition for continued employment. In this regard, Pepsi
had all the reasons to assume that all employees in the bargaining unit were all members of LEPCEU-
UOEF#49; otherwise, the latter would have already lost their employment. In other words, Pepsi need not
implement a retrenchment program just to get rid of LEPCEU-ALU members considering that the union
shop clause already gave it ample justification to terminate them. It is then hardly believable that union
affiliations were even considered by Pepsi in the selection of the employees to be retrenched.
Moreover, it must be underscored that Pepsi’s management exerted conscious efforts to incorporate
employee participation during the implementation of its retrenchment program. Records indicate that Pepsi
had initiated sit-downs with its employees to review the criteria on which the selection of who to be
retrenched would be based. This is evidenced by the report of NCMB Region VIII Director Juanito
Geonzon which states that “Pepsi’s] [m]anagement conceded on the proposal to review the criteria and to
sit down for more positive steps to resolve the issue.”
In Pepsi-Cola Products Philippines, Incorporated v. Pagdanganan,21 the Court explained such principle in
this wise:chanRoblesvirtualLawlibrary
The doctrine of stare decisis embodies the legal maxim that a principle or rule of law which has been
established by the decision of a court of controlling jurisdiction will be followed in other cases involving a
similar situation. It is founded on the necessity for securing certainty and stability in the law and does not
require identity of or privity of parties. This is unmistakable from the wordings of Article 8 of the Civil Code.
It is even said that such decisions “assume the same authority as the statute itself and, until authoritatively
abandoned, necessarily become, to the extent that they are applicable, the criteria which must control the
actuations not only of those called upon to decide thereby but also of those in duty bound to enforce
obedience thereto.” Abandonment thereof must be based only on strong and compelling reasons,
otherwise, the becoming virtue of predictability which is expected from this Court would be immeasurably
affected and the public’s confidence in the stability of the solemn pronouncements
diminished.22cralawlawlibrary
In Philippine Carpet Manufacturing Corporation v. Tagyamon,23 the Court further
held:chanRoblesvirtualLawlibrary
Under the doctrine of stare decisis, when a court has laid down a principle of law as applicable to a certain
state of facts, it will adhere to that principle and apply it to all future cases in which the facts are
substantially the same, even though the parties may be different. Where the facts are essentially different,
however, stare decisis does not apply, for a perfectly sound principle as applied to one set of facts might
be entirely inappropriate when a factual variant is introduced.24cralawlawlibrary

Lastly, the allegation that the retrenchment program was a mere subterfuge to dismiss the respondents Guided by the jurisprudence on stare decisis, the remaining question is whether the factual circumstances
considering Pepsi’s subsequent hiring of replacement workers cannot be given credence for lack of of this present case are substantially the same as the Pepsi-Cola Products Philippines, Inc. v. Molon
sufficient evidence to support the same. case.25cralawred

Verily, the foregoing incidents clearly negate the claim that the retrenchment was undertaken by Pepsi in The Court rules in the affirmative.
bad faith.
There is no dispute that the issues, subject matters and causes of action between the parties inPepsi-Cola

Products Philippines, Inc. v. Molon26 and the present case are identical, namely, the validity of PCPPI's
retrenchment program, and the legality of its employees' termination. There is also substantial identity of
parties because there is a community of interest between the parties in the first case and the parties in the
second case, even if the latter was not impleaded in the first case. 27The respondents in Pepsi-Cola
Products Philippines, Inc. v. Molon28 are petitioners' former co-employees and co-union members of
LEPCEU-ALU who were also terminated pursuant to the PCPPI's retrenchment program. The only
difference between the two cases is the date of the employees' termination, i.e., Molon, et al. belong to the
first batch of employees retrenched on July 31, 1999, while petitioners belong to the second batch
retrenched on February 15, 2000. That the validity of the same PCPPI retrenchment program had already
been passed upon and, thereafter, sustained in the related case of Pepsi-Cola Products Philippines, Inc. v.
Molon,29 albeit involving different parties, impels the Court to accord a similar disposition and uphold the
legality of same program. To be sure, the Court is well aware of the pronouncement in Philippine Carpet
Manufacturing Corporation v. Tagyamon,30 that:chanRoblesvirtualLawlibrary
The doctrine though is not cast in stone for upon a showing that circumstances attendant in a particular
case override the great benefits derived by our judicial system from the doctrine of stare decisis, the Court
is justified in setting it aside. For the Court, as the highest court of the land, may be guided but is not
controlled by precedent. Thus, the Court, especially with a new membership, is not obliged to follow blindly
a particular decision that it determines, after re-examination, to call for a rectification.cralawlawlibrary
However, abandonment of the ruling in Pepsi-Cola Products Philippines, Inc. v. Molon31 on the same issue
of the validity of PCPPI's retrenchment program must be based only on strong and compelling reasons.
After a careful review of the records, the Court finds no such reasons were shown to obtain in this case.
Even upon evaluation of petitioners' arguments on its supposed merits, the Court still finds no reason to
disturb the CA ruling that affirmed the NLRC. In their petition for review on certiorari, petitioners argue that
PCPPI failed to prove that it was suffering from financial losses, and that its financial statements were
perplexing. In support of their argument, they cite the observation of the Labor Arbiter that the alleged
losses amounting to P1.2 billion in PCPPI's audited financial statements included those of two subsidiaries
that were not yet in commercial operation, interest payments on short-term and long-term debts, and the
adverse effect of the peso devaluation.32 They also cite the Dissenting Opinion of Commissioner Edgardo
M. Enerlan that the Majority decision ignored the previous financial statement and relied on the new
document presented by PCPPI during the appeal stage, and that the accountant admitted that the financial
statement as of and for the year ended June 30, 2000 and 1999 are still incomplete. 33 They also insist that
PCPPI failed to explain its acts of regularizing four (4) employees and hiring sixty-three (63) replacements
and additional workers.
Petitioners' arguments are untenable.
At the outset, the issues petitioners raised would entail an inquiry into the factual veracity of the evidence
presented by the parties, the determination of which is not the Court's statutory function. Indeed,
petitioners are asking the Court to sift through the evidence on record and pass upon whether PCPPI had,
in fact, suffered from serious business losses. That task, however, would be contrary to the well-settled
principle that the Court is not a trier of facts, and cannot re-examine and re-evaluate the probative value of
the evidence presented to the Labor Arbiter, and the NLRC, which formed the basis of the questioned CA
decision.34cralawred
At any rate, the Court finds that the September 11, 2002 NLRC Decision has exhaustively discussed
PCPPI's compliance with the requirement that for a retrenchment to be valid, such must be reasonably
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 9 of 51
necessary and likely to prevent business losses which, if already incurred, are not merelyde minimis, but
substantial, serious, actual and real, to wit:chanRoblesvirtualLawlibrary
More pertinent would have been SGV & Co.'s report to the stockholder. It says:
The accompanying statement of assets, liabilities and home office account of Tanauan Operations of
Pepsi-Cola Products Philippines, Inc. ('company') as of June 30, 1999 and the related statement of income
for the year then ended, are integral parts of the financial statements of the company taken as a whole. In
1999, the Company's Tanauan Operations incurred a net loss of P29,167,390 as reported in such plant's
financial statement (ANNEX I) which forms part of the audited consolidated financial statements as of and
for the year ended June 30, 1999, to which we have rendered our opinion dated October 28, 1999,
attached hereto as ANNEX II.
On the other hand, the accompanying financial statements as of and for the year ended June 30, 2000 of
the company's Tanauan Plant operations, which reported a net loss P22,327,175 (ANNEX III) areincluded
in the financial statements of the company taken as a whole as also hereto attached (as ANNEX IV). The
financial statements were accordingly derived from the Company's accounting records, with certain
adjustments and are subject to any additional adjustments as may be disclosed upon the completion of an
audit of the financial statements of the company taken as a whole, which is currently in progress. Since the
audit of the company's financial statements as of and for the year ended June 2000 has not yet been
completed, we are unable to express and we do not express our opinion on the statement of assets,
liabilities and home office account of Tanauan operations of the company as of June 30, 2000 and the
related statement if income for the year then ended.
The statements of assets, liabilities and home office account and the related statements of income of the
company's Tanauan Operations are not intended to be a complete presentation of the company's financial
statement as of end for the year ended June 30, 2000 and 1999.
The letter of SGV & Co. was accompanied by a consolidat[ed] statement of Income and Deficit
(supplementary schedule) showing a net loss of P29,167,000. in the company's Tanauan Operations as of
June 30, 1999, and P22,328,000 as of June 2000. This illustrates that the income statements and the
balance sheets pertaining to the Tanauan Plant Operations as prepared by Rodante F. Ramos were
audited by SGV & Co. This situation would have been avoided had the persistent requests for ample
opportunity to present evidence made by the respondent were not persistently denied by the Executive
Labor Arbiter.
At least the Income Statements and the Balance Sheets regularly prepared and submitted by AVR-Asst.
Controller Rodante Ramos to SGV & Co. for audit are substantial evidence which carry great credibility
and responsibility viewed in the light of the financial crisis that hit the country which saw multinational
corporations closing shops and walking away, or adapting their own corporate rightsizing
programs.35cralawlawlibrary
The aforequoted NLRC ruling also explains why there is no merit in Commissioner Enerlan's contention
that the incomplete financial statements as of and for the year ended June 30, 2000 and 1999 are
inconclusive to establish that PCPPI incurred serious business losses. Given that the financial statements
are incomplete, the independent auditing firm, SGV & Co., aptly explained nonetheless that they were
derived from the PCPPI's accounting records, and were subject to further adjustments upon the
completion of the audit of financial statements of the company taken as a whole, which was then in
progress. The Court thus agrees with the CA and the NLRC that the letter of SGV & Co., accompanied by
a consolidated Statement of Income and Deficit showing a net loss of P29,167,000. in the company's
Tanauan Operations as of June 30, 1999, and P22,328,000 as of June 2000, 36 is sufficient and convincing
proof of serious business losses which justified PCPPI's retrenchment program. After all, the settled rule in

quasi-judicial proceedings is that proof beyond reasonable doubt is not required in determining the legality
of an employer's dismissal of an employee, and not even a preponderance of evidence is necessary, as
substantial evidence is considered sufficient.37 Substantial evidence is more than a mere scintilla of
evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion,
even if other minds, equally reasonable, might conceivably opine otherwise. 38cralawred
There is likewise no merit in Commissioner Enerlan's dissenting opinion that the majority decision ignored
the previous financial statement and relied on the new document presented by PCPPI during the appeal
stage. Such act of the majority is sanctioned by no less than Article 221 of the Labor Code, as amended,
and Section 10, Rule VII of the 2011 NLRC Rules of Procedure which provide that in any proceeding
before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or
equity shall not be controlling and it is the spirit and intention of the Code that the Commission and its
members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each
case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of
due process.
On PCPPI's alleged failure to explain its acts of regularizing four (4) employees and hiring sixty-thee (63)
replacements and additional workers, the Court upholds the NLRC's correct ruling
thereon,viz.:chanRoblesvirtualLawlibrary
Let Us squarely tackle this issue of replacements in the cases of the complainants in this case. We bear in
mind that replacements refer to the regular workers subjected to retrenchment, occupying regular positions
in the company structure. Artemio Kempis, a filer mechanic with a salary of P9,366.00 was replaced by
Rogelio Castil. Rogelio Castil was hired through an agency named Helpmate Janitorial Services. Castil’s
employer is Helpmate Janitorial Services. How can a janitorial service employee perform function of a filer
mechanic? How much does Pepsi Cola pay Helpmate Janitorial Services for the contract of service?
These questions immediately come to mind. Being not a regular employee of Pepsi Cola, he is not a
replacement of Kempis. The idea of rightsizing is to reduce the number of workers and related functions
and trim down, streamline, or simplify the structure of the organization to the level of utmost efficiency and
productivity in order to realize profit and survive. After the CRP shall have been implemented, the desired
size of the corporation is attained. Engaging the services of service contractors does not expand the size
of the corporate structure. In this sense, the retrenched workers were not replaced.
The same is true in the case of Exuperio C. Molina who was allegedly replaced by Eddie Piamonte, an
employee of, again, Helpmate Janitorial Services; of Gilberto V. Opinion who was allegedly replaced by
Norlito Ulahay, an employee of Nestor Ortiga General Services; of Purisimo M. Cabasbas who was
allegedly replaced by Christopher Albadrigo, an employee of Helpmate Janitorial Services; of Vicente R.
Lauron who was allegedly replaced by Wendylen Bron, an employee of Doublt “N” General Services; of
Ramon M. de Paz, who was disabled, and replaced by Alex Dieta, an employee of Nestor Ortiga General
Services; and of Zacarias E. Carbo who was allegedly replaced by an employee of Double “N” General
Services. x x x39cralawlawlibrary
On petitioners' contention that the true motive of the retrenchment program was to prevent their union,
LEPCEU-ALU, from becoming the certified bargaining agent of all the rank-and-file employees of PCPPI,
such issue of union-busting was duly resolved in the September 11, 2002 NLRC Decision, as
follows:chanRoblesvirtualLawlibrary
The issue of union busting has been debunked by Us in the Certified Notice of Strike Case No. V-000001-
2000. We said in that case that Pepsi Cola, in the selection of workers to be retrenched, did not take into
consideration union affiliation because the unit was supposed to be composed of all members of good
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 10 of 51
standing of LEPCEU-UOEF#49 there being a “UNION SHOP” provision in the existing CBA. In the
conciliation conference, PEPSI COLA expressed its willingness to sit down with unions and review the
criteria. When this was suggested by the conciliator, the idea was then and there rejected by the unions,
giving the impression that the real conflict was inter-union. There being no cooperation from the unions,
PEPSI COLA went on with the first batch of retrenchment involving 47 workers. It bears stressing that all
47 workers signed individual release and quitclaims and settled their complaints with respondent Pepsi
Cola, apparently with the assistance of LEPCEU-ALU. It is awkward for LEPCEU-ALU to argue that a
serious corporate-wide rightsizing program cannot be implemented in PEPSI-COLA Tanauan Plant
because a nascent unrecognized union would probably be busted. Even the Executive Labor Arbiter did
not take this issue up in his Decision. The issue does not merit consideration.40cralawlawlibrary
Significantly, the foregoing NLRC ruling was validated in Pepsi-Cola Products Philippines, Inc. v.
Molon,41 thus:chanRoblesvirtualLawlibrary
Mindful of their nature, the Court finds it difficult to attribute any act of union busting or ULP on the part of
Pepsi considering that it retrenched its employees in good faith. As earlier discussed, Pepsi tried to sit-
down with its employees to arrive at mutually beneficial criteria which would have been adopted for their
intended retrenchment. In the same vein, Pepsi’s cooperation during the NCMB-supervised conciliation
conferences can also be gleaned from the records. Furthermore, the fact that Pepsi’s rightsizing program
was implemented on a company-wide basis dilutes respondents’ claim that Pepsi’s retrenchment scheme
was calculated to stymie its union activities, much less diminish its constituency. Therefore, absent any
perceived threat to LEPCEU-ALU’s existence or a violation of respondents’ right to self-organization–as
demonstrated by the foregoing actuations–Pepsi cannot be said to have committed union busting or ULP
in this case.cralawlawlibrary
Finally, this case does not fall within any of the recognized exceptions 42 to the rule that only questions of
law are proper in a petition for review on certiorari under Rule 45 of the Rules of Court. Settled is the rule
that factual findings of labor officials, who are deemed to have acquired expertise in matters within their
respective jurisdiction, are generally accorded not only respect but even finality, and bind us when
supported by substantial evidence.43 Certainly, it is not the Court's function to assess and evaluate the
evidence all over again, particularly where the findings of both the CA and the NLRC coincide. 44cralawred
WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated July 31, 2006, and its
Resolution dated February 21, 2007 in CA-G.R. SP No. 81712, are AFFIRMED.
SO ORDERED.chanroblesvirtu allawlibrary
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 204944-45 December 3, 2014
FUJI TELEVISION NETWORK, INC., Petitioner,
vs.
ARLENE S. ESPIRITU, Respondent.
DECISION
LEONEN, J.:
It is the burden of the employer to prove that a person whose services it pays for is an independent
contractor rather than a regular employee with or without a fixed term. That a person has a disease does
not per se entitle the employer to terminate his or her services. Termination is the last resort. At the very
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 11 of 51

least, a competent public health authority must certify that the disease cannot be cured within six ( 6) WHEREFORE, premises considered, judgment is hereby rendered GRANTING the instant appeal. The
months, even with appropriate treatment. Decision of the Labor Arbiter dated 19 September 2009 is hereby REVERSED and SET ASIDE, and a new
one is issued ordering respondents-appellees to pay complainant-appellant backwages computed from the
date of her illegal dismissal until finality of this Decision.SO ORDERED. 24
We decide this petition for review1 on certiorari filed by Fuji Television Network, Inc., seeking the reversal
of the Court of Appeals’ Decision2 dated June 25, 2012, affirming with modification the decision3 of the
National Labor Relations Commission. Arlene and Fuji filed separat emotions for reconsideration.25 Both motions were denied by the National
Labor Relations Commission for lack of merit in the resolution dated April 26, 2010. 26 From the decision of
the National Labor Relations Commission, both parties filed separate petitions for certiorari 27 before the
In 2005, Arlene S. Espiritu ("Arlene") was engaged by Fuji Television Network, Inc. ("Fuji") asa news
Court of Appeals. The Court of Appeals consolidated the petitions and considered the following issues for
correspondent/producer4 "tasked to report Philippine news to Fuji through its Manila Bureau field
resolution:
office."5 Arlene’s employment contract initially provided for a term of one (1) year but was successively
renewed on a yearly basis with salary adjustment upon every renewal.6 Sometime in January 2009,
Arlenewas diagnosed with lung cancer.7She informed Fuji about her condition. In turn, the Chief of News 1) Whether or not Espirituis a regular employee or a fixed-term contractual employee;
Agency of Fuji, Yoshiki Aoki, informed Arlene "that the company will have a problem renewing her
contract"8 since it would be difficult for her to perform her job. 9 She "insisted that she was still fit to work as
2) Whether or not Espiritu was illegally dismissed; and
certified by her attending physician."10

3) Whether or not Espirituis entitled to damages and attorney’s fees.28

After several verbal and written communications,11 Arlene and Fuji signed a non-renewal contract on May
5, 2009 where it was stipulated that her contract would no longer be renewed after its expiration on May
31, 2009. The contract also provided that the parties release each other from liabilities and responsibilities In the assailed decision, the Court of Appeals affirmed the National Labor Relations Commission
under the employment contract.12 with the modification that Fuji immediately reinstate Arlene to her position as News Producer
without loss of seniority rights, and pay her backwages, 13th-month pay, mid-year and year-end
bonuses, sick leave and vacation leave with pay until reinstated, moral damages, exemplary
In consideration of the non-renewal contract, Arlene "acknowledged receipt of the total amount of
damages, attorney’sfees, and legal interest of 12% per annum of the total monetary
US$18,050.00 representing her monthly salary from March 2009 to May 2009, year-end bonus, mid-year
awards.29 The Court of Appeals ruled that:
bonus, and separation pay."13 However, Arlene affixed her signature on the nonrenewal contract with the
initials "U.P." for "under protest."14
WHEREFORE, for lack of merit, the petition of Fuji Television Network, Inc. and Yoshiki Aoki is DENIED
and the petition of Arlene S. Espiritu is GRANTED. Accordingly, the Decision dated March 5, 2010 of the
On May 6, 2009, the day after Arlene signed the non-renewal contract, she filed a complaint for illegal
National Labor Relations Commission, 6th Division in NLRC NCR Case No. 05-06811-09 and its
dismissal and attorney’s fees with the National Capital Region Arbitration Branch of the National Labor
subsequent Resolution dated April 26, 2010 are hereby AFFIRMED with MODIFICATIONS, as follows:
Relations Commission. She alleged that she was forced to sign the nonrenewal contract when Fuji came
to know of her illness and that Fuji withheld her salaries and other benefits for March and April 2009 when
she refused to sign.15 Fuji Television, Inc. is hereby ORDERED to immediately REINSTATE Arlene S. Espiritu to her position as
News Producer without loss of seniority rights and privileges and to pay her the following:
Arlene claimed that she was left with no other recourse but to sign the non-renewal contract, and it was
only upon signing that she was given her salaries and bonuses, in addition to separation pay equivalent to 1. Backwages at the rate of $1,900.00 per month computed from May 5, 2009 (the date of
four (4) years.16 dismissal), until reinstated;

In the decision17 dated September 10, 2009, Labor Arbiter Corazon C. Borbolla dismissed Arlene’s 2. 13th Month Pay at the rate of $1,900.00 per annum from the date of dismissal, until
complaint.18Citing Sonza v. ABS-CBN19 and applying the four-fold test, the Labor Arbiter held that Arlene reinstated;
was not Fuji’s employee but an independent contractor.20
3. One and a half (1 1/2) months pay or $2,850.00 as midyear bonus per year from the date of
Arlene appealed before the National Labor Relations Commission. In its decision dated March 5, 2010, the dismissal, until reinstated;
National Labor Relations Commission reversed the Labor Arbiter’s decision. 21 It held that Arlene was a
regular employee with respect to the activities for which she was employed since she continuously
rendered services that were deemednecessary and desirable to Fuji’s business. 22 The National Labor 4. One and a half (1 1/2) months pay or $2,850.00 as year-end bonus per year from the date of
Relations Commission ordered Fuji to pay Arlene backwages, computed from the date of her illegal dismissal, until reinstated;
dismissal.23 The dispositive portion of the decision reads:

5. Sick leave of 30 days with pay or $1,900.00 per year from the date of dismissal, until
reinstated; and
6. Vacation leave with pay equivalent to 14 days or $1,425.00 per annum from date of dismissal,
until reinstated.
7. The amount of P100,000.00 as moral damages;
8. The amount of P50,000.00 as exemplary damages;
9. Attorney’s fees equivalent to 10% of the total monetary awards herein stated; and
10. Legal interest of twelve percent (12%) per annum of the total monetary awards computed
from May 5, 2009, until their full satisfaction.
The Labor Arbiter is hereby DIRECTED to make another recomputation of the above monetary awards
consistent with the above directives.
SO ORDERED.30
In arriving at the decision, the Court of Appeals held that Arlene was a regular employee because she was
engaged to perform work that was necessary or desirable in the business of Fuji, 31 and the successive
renewals of her fixed-term contract resulted in regular employment.32
According to the Court of Appeals, Sonzadoes not apply in order to establish that Arlene was an
independent contractor because she was not contracted on account of any peculiar ability, special talent,
or skill.33 The fact that everything used by Arlene in her work was owned by Fuji negated the idea of job
contracting.34
The Court of Appeals also held that Arlene was illegally dismissed because Fuji failed to comply with the
requirements of substantive and procedural due process necessary for her dismissal since she was a
regular employee.35
The Court of Appeals found that Arlene did not sign the non-renewal contract voluntarily and that the
contract was a mere subterfuge by Fuji to secure its position that it was her choice not to renew her
contract. She was left with no choice since Fuji was decided on severing her employment.36
Fuji filed a motion for reconsideration that was denied in the resolution37 dated December 7, 2012 for
failure to raise new matters.38
Aggrieved, Fuji filed this petition for review and argued that the Court of Appeals erred in affirming with
modification the National Labor Relations Commission’s decision, holding that Arlene was a regular
employee and that she was illegally dismissed. Fuji also questioned the award of monetary claims,
benefits, and damages.39
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 12 of 51
Fuji points out that Arlene was hired as a stringer, and it informed her that she would remain one. 40 She
was hired as an independent contractor as defined in Sonza. 41 Fuji had no control over her work.42 The
employment contracts were executed and renewed annually upon Arlene’s insistence to which Fuji
relented because she had skills that distinguished her from ordinary employees. 43 Arlene and Fuji dealt on
equal terms when they negotiated and entered into the employment contracts.44 There was no illegal
dismissal because she freely agreed not to renew her fixed-term contract as evidenced by her e-mail
correspondences with Yoshiki Aoki.45 In fact, the signing of the non-renewal contract was not necessary to
terminate her employment since "such employment terminated upon expiration of her contract."46 Finally,
Fuji had dealt with Arlene in good faith, thus, she should not have been awarded damages. 47
Fuji alleges that it did not need a permanent reporter since the news reported by Arlene could easily be
secured from other entities or from the internet. 48 Fuji "never controlled the manner by which she
performed her functions."49 It was Arlene who insisted that Fuji execute yearly fixed-term contracts so that
she could negotiate for annual increases in her pay.50
Fuji points out that Arlene reported for work for only five (5) days in February 2009, three (3) days in March
2009, and one (1) day in April 2009.51 Despite the provision in her employment contract that sick leaves in
excess of 30 days shall not be paid, Fuji paid Arlene her entire salary for the months of March, April, and
May; four(4) months of separation pay; and a bonus for two and a half months for a total of
US$18,050.00.52 Despite having received the amount of US$18,050.00, Arlene still filed a case for illegal
dismissal.53
Fuji further argues that the circumstances would show that Arlene was not illegally dismissed. The decision
tonot renew her contract was mutually agreed upon by the parties as indicated in Arlene’s e-mail54 dated
March 11, 2009 where she consented to the non-renewal of her contract but refused to sign
anything.55 Aoki informed Arlene in an e-mail56 dated March 12, 2009 that she did not need to sign a
resignation letter and that Fuji would pay Arlene’s salary and bonus until May 2009 as well as separation
pay.57
Arlene sent an e-mail dated March 18, 2009 with her version of the non-renewal agreement that she
agreed to sign this time.58 This attached version contained a provision that Fuji shall re-hire her if she was
still interested to work for Fuji.59 For Fuji, Arlene’s e-mail showed that she had the power to bargain.60
Fuji then posits that the Court of Appeals erred when it held that the elements of an employer-employee
relationship are present, particularly that of control; 61 that Arlene’s separation from employment upon the
expiration of her contract constitutes illegal dismissal; 62 that Arlene is entitled to reinstatement;63 and that
Fuji is liable to Arlene for damages and attorney’s fees.64
This petition for review on certiorari under Rule 45 was filed on February 8, 2013.65 On February 27, 2013,
Arlene filed a manifestation66 stating that this court may not take jurisdiction over the case since Fuji failed
to authorize Corazon E. Acerden to sign the verification. 67 Fuji filed a comment on the manifestation68 on
March 9, 2013.
Based on the arguments of the parties, there are procedural and substantive issues for resolution:

I. Whether the petition for review should be dismissed as Corazon E. Acerden, the signatory of
the verification and certification of non forum shopping of the petition, had no authority to sign
the verification and certification on behalf of Fuji;
II. Whether the Court of Appeals correctly determined that no grave abuse of discretion was
committed by the National Labor Relations Commission when it ruled that Arlene was a regular
employee, not an independent contractor, and that she was illegally dismissed; and
III. Whether the Court of Appeals properly modified the National Labor Relations Commission’s
decision by awarding reinstatement, damages, and attorney’s fees.
The petition should be dismissed.
I prejudice to the corresponding administrative and criminalactions. If the acts of the party or his counsel
Validity of the verification and certification against forum shopping
In its comment on Arlene’s manifestation, Fuji alleges that Corazon was authorized to sign the verification
and certification of non-forum shopping because Mr. Shuji Yano was empowered under the secretary’s
certificate to delegate his authority to sign the necessary pleadings, including the verification and
certification against forum shopping.69
On the other hand, Arlene points outthat the authority given to Mr. Shuji Yano and Mr. Jin Eto in the
secretary’s certificate is only for the petition for certiorari before the Court of Appeals. 70 Fuji did not attach
any board resolution authorizing Corazon orany other person tofile a petition for review on certiorari with
this court.71 Shuji Yano and Jin Eto could not re-delegate the power thatwas delegated to them.72 In
addition, the special power of attorney executed by Shuji Yano in favor of Corazon indicated that she was
empowered to sign on behalf of Shuji Yano, and not on behalf of Fuji. 73
The Rules of Court requires the
submission of verification and
certification against forum shopping
Rule 7, Section 4 of the 1997 Rules of Civil Procedure provides the requirement of verification, while
Section 5 of the same rule provides the requirement of certification against forum shopping. These
sections state:
SEC. 4. Ver if ica tio n. — Except when otherwise specifically required by law or rule, pleadings need not
be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein
are true and correct of his knowledge and belief.
A pleading required to be verifiedwhich containsa verification based on "information and belief," or upon
"knowledge, information and belief," or lacks a proper verification, shall be treated as an unsigned
pleading.
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 13 of 51
SEC. 5. Certification against forum shopping.— The plaintiff or principal party shall certify under oath in the
complaint orother initiatory pleading asserting a claim for relief or in a sworn certification annexed thereto
and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim
involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge,
no such other action or claim is pending therein; (b) if there is such other pending action or claim, a
complete statement of the present status thereof; and (c) if he should thereafter learn that the same or
similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to
the court wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice,
unless otherwise provided, upon motion and after hearing. The submission of a false certification or non-
compliance with any of the undertakings therein shall constitute indirect contempt ofcourt, without
clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal
with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions.
Section 4(e) of Rule 4574 requires that petitions for review should "contain a sworn certification against
forum shopping as provided in the last paragraph of section 2, Rule 42." Section 5 of the same rule
provides that failure to comply with any requirement in Section 4 is sufficient ground to dismiss the petition.
Effects of non-compliance
Uy v. Landbank75 discussed the effect of non-compliance with regard to verification and stated that:
[t]he requirement regarding verification of a pleading is formal, not jurisdictional. Such requirement is
simply a condition affecting the form of pleading, the non-compliance of which does not necessarily render
the pleading fatally defective. Verification is simply intended to secure an assurance that the allegations in
the pleading are true and correct and not the product of the imagination or a matter of speculation, and
that the pleading is filed in good faith. The court may order the correction of the pleading if the verification
is lacking or act on the pleading although it is not verified, if the attending circumstances are such that
strict compliance with the rules may be dispensed with inorder that the ends of justice may thereby be
served.76 (Citations omitted)
Shipside Incorporated v. Court of Appeals77 cited the discussion in Uy and differentiated its effect from
non-compliance with the requirement of certification against forum shopping:
On the other hand, the lack of certification against forum shopping is generally not curable by the
submission thereof after the filing of the petition. Section 5, Rule 45 of the 1997 Rules of Civil Procedure
provides that the failure of the petitioner tosubmit the required documents that should accompany the
petition, including the certification against forum shopping, shall be sufficient ground for the dismissal
thereof. The same rule applies to certifications against forum shopping signed by a person on behalf of a
corporation which are unaccompanied by proof that said signatory is authorized to file a petition on behalf
of the corporation.78 (Emphasis supplied) Effects of substantial compliance with the requirement of
verification and certification against forum shopping

Although the general rule is that failure to attach a verification and certification against forum shopping isa
ground for dismissal, there are cases where this court allowed substantial compliance.
In Loyola v. Court of Appeals,79 petitioner Alan Loyola submitted the required certification one day after
filing his electoral protest.80 This court considered the subsequent filing as substantial compliance since
the purpose of filing the certification is to curtail forum shopping. 81
In LDP Marketing, Inc. v. Monter,82 Ma. Lourdes Dela Peña signed the verification and certification against
forum shopping but failed to attach the board resolution indicating her authority to sign.83 In a motion for
reconsideration, LDP Marketing attached the secretary’s certificate quoting the board resolution that
authorized Dela Peña.84 Citing Shipside, this court deemed the belated submission as substantial
compliance since LDP Marketing complied with the requirement; what it failed to do was to attach proof of
Dela Peña’s authority to sign.85 Havtor Management Phils., Inc. v. National Labor Relations
Commission86 and General Milling Corporation v. National Labor Relations Commission87 involved
petitions that were dismissed for failure to attach any document showing that the signatory on the
verification and certification against forum-shopping was authorized.88 In both cases, the secretary’s
certificate was attached to the motion for reconsideration. 89 This court considered the subsequent
submission of proof indicating authority to sign as substantial compliance. 90 Altres v. Empleo91 summarized
the rules on verification and certification against forum shopping in this manner:
For the guidance of the bench and bar, the Court restates in capsule form the jurisprudential
pronouncements . . . respecting non-compliance with the requirement on, or submission of defective,
verification and certification against forum shopping:
1) A distinction must be made between non-compliance with the requirement on or submission
of defective verification, and noncompliance with the requirement on or submission of defective
certification against forum shopping.
2) As to verification, non-compliance therewith or a defect therein does not necessarily render
the pleading fatally defective. The court may order its submission or correction or act on the
pleading if the attending circumstances are such that strict compliance with the Rule may be
dispensed with in order that the ends of justice may be served thereby.
3) Verification is deemed substantially complied with when one who has ample knowledge to
swear to the truth of the allegations in the complaint or petition signs the verification, and when
matters alleged in the petition have been made in good faith or are true and correct.
4) As to certification against forum shopping, non-compliance therewith or a defect therein,
unlike in verification, is generally not curable by its subsequent submission or correction thereof,
unless there is a need to relax the Rule on the ground of "substantial compliance" or presence of
"special circumstances or compelling reasons."
5) The certification against forum shopping must be signed by all the plaintiffs or petitioners in a
case; otherwise, those who did not sign will be dropped as parties to the case. Under reasonable
or justifiable circumstances, however, as when all the plaintiffs or petitioners share a common
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 14 of 51
interest and invoke a common cause of action or defense, the signature of only one of them
inthe certification against forum shopping substantially complies with the Rule.
6) Finally, the certification against forum shopping must be executed by the party-pleader, not by
his counsel. If, however, for reasonable or justifiable reasons, the party-pleader is unable to sign,
he must execute a Special Power of Attorney designating his counsel of record to sign on his
behalf.92
There was substantial compliance
by Fuji Television Network, Inc.
Being a corporation, Fuji exercises its power to sue and be sued through its board of directors or duly
authorized officers and agents. Thus, the physical act of signing the verification and certification against
forum shopping can only be done by natural persons duly authorized either by the corporate by-laws or a
board resolution.93
In its petition for review on certiorari, Fuji attached Hideaki Ota’s secretary’s certificate, 94 authorizing Shuji
Yano and Jin Eto to represent and sign for and on behalf of Fuji.95 The secretary’s certificate was duly
authenticated96by Sulpicio Confiado, Consul-General of the Philippines in Japan. Likewise attached to the
petition is the special power of attorney executed by Shuji Yano, authorizing Corazon to sign on his
behalf.97 The verification and certification against forum shopping was signed by Corazon. 98
Arlene filed the manifestation dated February 27, 2013, arguing that the petition for review should be
dismissed because Corazon was not duly authorized to sign the verification and certification against forum
shopping.
Fuji filed a comment on Arlene’s manifestation, stating that Corazon was properly authorized to sign. On
the basis of the secretary’s certificate, Shuji Yano was empowered to delegate his authority.
Quoting the board resolution dated May 13, 2010, the secretary's certificate states:
(a) The Corporation shall file a Petition for Certiorari with the Court of Appeals, against
Philippines’ National Labor Relations Commission ("NLRC") and Arlene S. Espiritu, pertaining to
NLRC-NCR Case No. LAC 00-002697-09, RAB No. 05-06811-00 and entitled "Arlene S. Espiritu
v. Fuji Television Network, Inc./Yoshiki Aoki", and participate in any other subsequent
proceeding that may necessarily arise therefrom, including but not limited to the filing of appeals
in the appropriate venue;
(b) Mr. Shuji Yano and Mr. Jin Etobe authorized, as they are hereby authorized, to verify and
execute the certification against nonforum shopping which may be necessary or required to be
attached to any pleading to [sic] submitted to the Court of Appeals; and the authority to so verify
and certify for the Corporation in favor of the said persons shall subsist and remain effective until
the termination of the said case;
....

(d) Mr. Shuji Yano and Mr. Jin Etobe authorized, as they are hereby authorized, to represent and
appear on behalf the [sic] Corporation in all stages of the [sic] this case and in any other
proceeding that may necessarily arise thereform [sic], and to act in the Corporation’s name,
place and stead to determine, propose, agree, decide, do, and perform any and all of the
following:
1. The possibility of amicable settlement or of submission to alternative mode of
dispute resolution;
2. The simplification of the issue;
3. The necessity or desirability of amendments to the pleadings;
4. The possibility of obtaining stipulation or admission of facts and documents; and
5. Such other matters as may aid in the prompt disposition of the action. 99 (Emphasis
in the original; Italics omitted)
Shuji Yano executed a special power of attorney appointing Ms. Ma. Corazon E. Acerden and Mr. Moises
A. Rollera as his attorneys-in-fact.100 The special power of attorney states:
That I, SHUJI YANO, of legal age, Japanese national, with office address at 2-4-8 Daiba, Minato-Ku,
Tokyo, 137-8088 Japan, and being the representative of Fuji TV, INc., [sic] (evidenced by the attached
Secretary’s Certificate) one of the respondents in NLRC-NCR Case No. 05-06811-00 entitled "Arlene S.
Espiritu v. Fuji Television Network, Inc./Yoshiki Aoki", and subsequently docketed before the Court of
Appeals asC.A. G.R. S.P. No. 114867 (Consolidated with SP No. 114889) do hereby make, constitute and
appoint Ms. Ma. Corazon E. Acerden and Mr. Moises A. Rolleraas my true and lawful attorneys-infact for
me and my name, place and stead to act and represent me in the above-mentioned case, with special
power to make admission/s and stipulations and/or to make and submit as well as to accept and approve
compromise proposals upon such terms and conditions and under such covenants as my attorney-in-fact
may deem fit, and to engage the services of Villa Judan and Cruz Law Officesas the legal counsel to
represent the Company in the Supreme Court;
The said Attorneys-in-Fact are hereby further authorized to make, sign, execute and deliver such papers
ordocuments as may be necessary in furtherance of the power thus granted, particularly to sign and
execute the verification and certification of non-forum shopping needed to be filed.101 (Emphasis in the
original)
In its comment102 on Arlene’s manifestation, Fuji argues that Shuji Yano could further delegate his authority
because the board resolution empowered him to "act in the Corporation’s name, place and stead to
determine, propose, agree, decided [sic], do and perform any and all of the following: . . . such other
matters as may aid in the prompt disposition of the action."103 To clarify, Fuji attached a verification and
certification against forum shopping, but Arlene questions Corazon’s authority to sign. Arlene argues that
the secretary’s certificate empowered Shuji Yano to file a petition for certiorari before the Court of Appeals,
and not a petition for review before this court, and that since Shuji Yano’s authority was delegated to him,
he could not further delegate such power. Moreover, Corazon was representing Shuji Yano in his personal
capacity, and not in his capacity as representative of Fuji.
A review of the board resolution quoted in the secretary’s certificate shows that Fuji shall "file a Petition for
Certiorari with the Court of Appeals"104 and "participate in any other subsequent proceeding that may
necessarily arise therefrom, including but not limited to the filing of appeals in the appropriate
venue,"105 and that Shuji Yano and Jin Eto are authorized to represent Fuji "in any other proceeding that
may necessarily arise thereform [sic]."106 As pointed out by Fuji, Shuji Yano and Jin Eto were also
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 15 of 51
authorized to "act in the Corporation’s name, place and stead to determine, propose, agree, decide, do,
and perform anyand all of the following: . . . 5. Such other matters as may aid in the prompt disposition of
the action."107
Considering that the subsequent proceeding that may arise from the petition for certiorari with the Court of
Appeals is the filing of a petition for review with this court, Fuji substantially complied with the procedural
requirement.
On the issue of whether Shuji Yano validly delegated his authority to Corazon, Article 1892 of the Civil
Code of the Philippines states:
ART. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he
shall be responsible for the acts of the substitute:
(1) When he was not given the power to appoint one;
(2) When he was given such power, but without designating the person, and the person
appointed was notoriously incompetent or insolvent. All acts of the substitute appointed against
the prohibition of the principal shall be void.
The secretary’s certificate does not state that Shuji Yano is prohibited from appointing a substitute. In fact,
heis empowered to do acts that will aid in the resolution of this case.
This court has recognized that there are instances when officials or employees of a corporation can sign
the verification and certification against forum shopping without a board resolution. In Cagayan Valley Drug
Corporation v. CIR,108 it was held that:
In sum, we have held that the following officials or employees of the company can sign the verification and
certification without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the
President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and
(5) an Employment Specialist in a labor case.
While the above cases109 do not provide a complete listing of authorized signatories to the verification and
certification required by the rules, the determination of the sufficiency of the authority was done on a case
to case basis. The rationale applied in the foregoing cases is to justify the authority of corporate officers or
representatives of the corporation to sign the verification or certificate against forum shopping, being ‘in a
position to verify the truthfulness and correctness of the allegations in the petition.’110
Corazon’s affidavit111 states that she is the "office manager and resident interpreter of the Manila Bureau of
Fuji Television Network, Inc."112 and that she has "held the position for the last twenty-three years."113
As the office manager for 23 years,Corazon can be considered as having knowledge of all matters in Fuji’s
Manila Bureau Office and is in a position to verify "the truthfulness and the correctness of the allegations in
the Petition."114
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 16 of 51

Thus, Fuji substantially complied with the requirements of verification and certification against forum not of fact, unless the factual findings complained of are completely devoid of support from the evidence
shopping. on record, or the assailed judgment is based on a gross misapprehension of facts. Besides, factual
findings of quasi-judicial agencies like the NLRC, when affirmed by the Court of Appeals, are conclusive
upon the parties and binding on this Court.126
Before resolving the substantive issues in this case, this court will discuss the procedural parameters of a
Rule 45 petition for review in labor cases.
II Career Philippines v. Serna,127 citing Montoya v. Transmed,128 is instructive on the parameters of judicial
Procedural parameters of petitions for review in labor cases review under Rule 45:

Article 223 of the Labor Code115 does not provide any mode of appeal for decisions of the National Labor
As a rule, only questions of law may be raised in a Rule 45 petition. In one case, we discussed the
Relations Commission. It merely states that "[t]he decision of the Commission shall be final and executory
particular parameters of a Rule 45 appeal from the CA’s Rule 65 decision on a labor case, as follows:
after ten (10) calendar days from receipt thereof by the parties." Being final, it is no longer appealable.
However, the finality of the National Labor Relations Commission’s decisions does not mean that there is
no more recourse for the parties. 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
In St. Martin Funeral Home v. National Labor Relations Commission, 116 this court cited several
the CA decision in the same context that the petition for certiorari it ruled upon was presented to it; we
cases117 and rejected the notion that this court had no jurisdiction to review decisions of the National Labor
have to examine the CA decision from the prism of whether it correctly determined the presence or
Relations Commission. It stated that this court had the power to review the acts of the National Labor
absence of grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC
Relations Commission to see if it kept within its jurisdiction in deciding cases and alsoas a form of check
decision on the merits of the case was correct. In other words, we have to be keenly aware that the CA
and balance.118 This court then clarified that judicial review of National Labor Relations Commission
undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before
decisions shall be by way of a petition for certiorari under Rule 65. Citing the doctrine of hierarchy of
it.129 (Emphasis in the original)
courts, it further ruled that such petitions shall be filed before the Court of Appeals. From the Court of
Appeals, an aggrieved party may file a petition for review on certiorari under Rule 45.
Justice Brion’s dissenting opinion in Abott Laboratories, PhiIippines v. Aicaraz130 discussed that in petitions
for review under Rule 45, "the Court simply determines whether the legal correctness of the CA’s finding
A petition for certiorari under Rule 65 is an original action where the issue is limited to grave abuse of
that the NLRC ruling . . . had basis in fact and in Iaw." 131 In this kind of petition, the proper question to be
discretion. As an original action, it cannot be considered as a continuation of the proceedings of the labor
raised is, "Did the CA correctly determine whether the NLRC committed grave abuse of discretion in ruling
tribunals.
on the case?"132

On the other hand, a petition for review on certiorari under Rule 45 is a mode of appeal where the issue is
Justice Brion’s dissenting opinion also laid down the following guidelines:
limited to questions of law. In labor cases, a Rule 45 petition is limited toreviewing whether the Court of
Appeals correctly determined the presence or absence of grave abuse of discretion and deciding other
jurisdictional errors of the National Labor Relations Commission. 119 If the NLRC ruling has basis in the evidence and the applicable law and jurisprudence, then no grave
abuse of discretion exists and the CA should so declare and, accordingly, dismiss the petition. If grave
abuse of discretion exists, then the CA must grant the petition and nullify the NLRC ruling, entering at the
In Odango v. National Labor Relations Commission,120 this court explained that a petition for certiorari is an
same time the ruling that isjustified under the evidence and the governing law, rules and jurisprudence. In
extraordinary remedy that is "available only and restrictively in truly exceptional cases" 121 and that its sole
our Rule 45 review, this Court must denythe petition if it finds that the CA correctly acted. 133 (Emphasis in
office "is the correction of errors of jurisdiction including commission of grave abuse of discretion
the original)
amounting to lack or excess of jurisdiction."122 A petition for certiorari does not include a review of findings
of fact since the findings of the National Labor Relations Commission are accorded finality. 123 In cases
where the aggrieved party assails the National Labor Relations Commission’s findings, he or she must be These parameters shall be used in resolving the substantive issues in this petition.
able to show that the Commission "acted capriciously and whimsically or in total disregard of evidence
material to the controversy."124
III
Determination of employment status; burden of proof
When a decision of the Court of Appeals under a Rule 65 petition is brought to this court by way of a
petition for review under Rule 45, only questions of law may be decided upon. As held in Meralco Industrial In this case, there is no question thatArlene rendered services to Fuji. However, Fuji alleges that Arlene
v. National Labor Relations Commission:125 was an independent contractor, while Arlene alleges that she was a regular employee. To resolve this
issue, we ascertain whether an employer-employee relationship existed between Fuji and Arlene.
This Court is not a trier of facts. Well-settled is the rule that the jurisdiction of this Court ina petition for
review on certiorari under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law,
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 17 of 51

This court has often used the four-fold test to determine the existence of an employer-employee celebrity status.146 On her illness, Arlene points outthat it was not a ground for her dismissal because her
relationship. Under the four-fold test, the "control test" is the most important.134 As to how the elements in attending physician certified that she was fit to work.147
the four-fold test are proven, this court has discussed that:
Arlene admits that she signed the non-renewal agreement with quitclaim, not because she agreed to
[t]here is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant itsterms, but because she was not in a position to reject the non-renewal agreement. Further, she badly
evidence to prove the relationship may be admitted. Identification cards, cash vouchers, social security needed the salary withheld for her sustenance and medication. 148 She posits that her acceptance of
registration, appointment letters or employment contracts, payrolls, organization charts, and personnel separation pay does not bar filing of a complaint for illegal dismissal.149
lists, serve as evidence of employee status.135
Article 280 of the Labor Code provides that:
If the facts of this case vis-à-vis the four-fold test show that an employer-employee relationship existed, we
then determine the status of Arlene’s employment, i.e., whether she was a regular employee. Relative to
Art. 280. Regular and casual employment.The provisions of written agreement to the contrary
this, we shall analyze Arlene’s fixed-term contract and determine whether it supports her argument that
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
she was a regular employee, or the argument of Fuji that she was an independent contractor. We shall
regular where the employee has been engaged to perform activities which are usually necessary or
scrutinize whether the nature of Arlene’s work was necessary and desirable to Fuji’s business or whether
desirable in the usual business or trade of the employer, except where the employment has been fixed for
Fuji only needed the output of her work. If the circumstances show that Arlene’s work was necessary and
a specific project or undertaking the completion or termination of which has been determined at the time of
desirable to Fuji, then she is presumed to be a regular employee. The burden of proving that she was an
the engagement of the employee or where the work or services to be performed is seasonal in nature and
independent contractor lies with Fuji.
the employment is for the duration of the season.

In labor cases, the quantum of proof required is substantial evidence. 136 "Substantial evidence" has been
An employment shall be deemed to be casual if it is not covered by the preceding paragraph; Provided,
defined as "such amount of relevant evidence which a reasonable mind might accept as adequate to justify
That, any employee who has rendered at least one year of service, whether such service is continuous or
a conclusion."137
broken, shall be considered a regular employee with respect to the activity in which heis employed and his
employment shall continue while such activity exist.
If Arlene was a regular employee, we then determine whether she was illegally dismissed. In complaints
for illegal dismissal, the burden of proof is on the employee to prove the fact of dismissal. 138 Once the
This provision classifies employees into regular, project, seasonal, and casual. It further classifies regular
employee establishes the fact of dismissal, supported by substantial evidence, the burden of proof shifts
employees into two kinds: (1) those "engaged to perform activities which are usually necessary or
tothe employer to show that there was a just or authorized cause for the dismissal and that due process
desirable in the usual business or trade of the employer"; and (2) casual employees who have "rendered at
was observed.139
least one year of service, whether such service is continuous or broken."

IV
Another classification of employees, i.e., employees with fixed-term contracts, was recognized in Brent
Whether the Court of Appeals correctly affirmed the National Labor
School, Inc. v. Zamora150 where this court discussed that:
Relations Commission’s finding that Arlene was a regular employee

Logically, the decisive determinant in the term employment should not be the activities that the employee
Fuji alleges that Arlene was anindependent contractor, citing Sonza v. ABS-CBN and relying on the
is called upon to perform, but the day certain agreed upon by the parties for the commencement and
following facts: (1) she was hired because of her skills; (2) her salary was US$1,900.00, which is higher
termination of their employment relationship, a day certainbeing understood to be "that which must
than the normal rate; (3) she had the power to bargain with her employer; and (4) her contract was for a
necessarily come, although it may not be known when."151 (Emphasis in the original)
fixed term. According to Fuji, the Court of Appeals erred when it ruled that Arlene was forcedto sign the
non-renewal agreement, considering that she sent an email with another version of the non-renewal
agreement.140 Further, she is not entitled tomoral damages and attorney’s fees because she acted in bad This court further discussed that there are employment contracts where "a fixed term is an essential and
faith when she filed a labor complaint against Fuji after receiving US$18,050.00 representing her salary natural appurtenance"152 such as overseas employment contracts and officers in educational institutions. 153
and other benefits.141 Arlene argues that she was a regular employee because Fuji had control and
supervision over her work. The news events that she covered were all based on the instructions of
Fuji.142 She maintains that the successive renewal of her employment contracts for four (4) years indicates Distinctions among fixed-term
employees, independent contractors,
that her work was necessary and desirable.143 In addition, Fuji’s payment of separation pay equivalent to
one (1) month’s pay per year of service indicates that she was a regular employee.144 To further support and regular employees
her argument that she was not an independent contractor, she states that Fuji owns the laptop computer
and mini-camera that she used for work.145 Arlene also argues that Sonza is not applicable because she GMA Network, Inc. v. Pabriga154 expounded the doctrine on fixed term contracts laid down in Brentin the
was a plain reporter for Fuji, unlike Jay Sonza who was a news anchor, talk show host, and who enjoyed a following manner:

Cognizant of the possibility of abuse in the utilization of fixed term employment contracts, we emphasized
in Brentthat where from the circumstances it is apparent that the periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck down as contrary to public policy or
morals. We thus laid down indications or criteria under which "term employment" cannot be said to be in
circumvention of the law on security of tenure, namely:
1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any
force, duress, or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each other on more or less equal
terms with no moral dominance exercised by the former or the latter.
These indications, which must be read together, make the Brent doctrine applicable only in a few special
cases wherein the employer and employee are on more or less in equal footing in entering into the
contract. The reason for this is evident: whena prospective employee, on account of special skills or
market forces, is in a position to make demands upon the prospective employer, such prospective
employee needs less protection than the ordinary worker. Lesser limitations on the parties’ freedom of
contract are thus required for the protection of the employee.155 (Citations omitted)
For as long as the guidelines laid down in Brentare satisfied, this court will recognize the validity of the
fixed-term contract.
In Labayog v. M.Y. San Biscuits, Inc.,156 this court upheld the fixedterm employment of petitioners because
from the time they were hired, they were informed that their engagement was for a specific period. This
court stated that:
[s]imply put, petitioners were notregular employees. While their employment as mixers, packers and
machine operators was necessary and desirable in the usual business ofrespondent company, they were
employed temporarily only, during periods when there was heightened demand for production.
Consequently, there could have been no illegal dismissal when their services were terminated on
expiration of their contracts. There was even no need for notice of termination because they knew exactly
when their contracts would end. Contracts of employment for a fixed period terminate on their own at the
end of such period.
Contracts of employment for a fixed period are not unlawful. What is objectionable is the practice of some
scrupulous employers who try to circumvent the law protecting workers from the capricious termination of
employment.157 (Citation omitted)
158
Caparoso v. Court of Appeals upheld the validity of the fixed-term contract of employment. Caparoso
and Quindipan were hired as delivery men for three (3) months. At the end of the third month, they were
hired on a monthly basis. In total, they were hired for five (5) months. They filed a complaint for illegal
dismissal.159 This court ruled that there was no evidence indicating that they were pressured into signing
the fixed-term contracts. There was likewise no proof that their employer was engaged in hiring workers for
five (5) months onlyto prevent regularization. In the absence of these facts, the fixed-term contracts were
upheld as valid.160 On the other hand, an independent contractor is defined as:
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 18 of 51
. . . one who carries on a distinct and independent business and undertakes to perform the job, work, or
service on its own account and under one’s own responsibility according to one’s own manner and
method, free from the control and direction of the principal in all matters connected with the performance of
the work except as to the results thereof.161
In view of the "distinct and independent business" of independent contractors, no employer-employee
relationship exists between independent contractors and their principals. Independent contractors are
recognized under Article 106 of the Labor Code:
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for
the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if
any, shall be paid in accordance with the provisions of this Code.
....
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only contracting and job contracting as
well as differentiations within these types of contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latterwere directly employed by him.
In Department Order No. 18-A, Seriesof 2011, of the Department of Labor and Employment, a contractor is
defined as having:
Section 3. . . .
....
(c) . . . an arrangement whereby a principal agrees to put out or farm out with a contractor the performance
or completion of a specific job, work or service within a definite or predetermined period, regardless of
whether such job, work or service is to be performed or completed within oroutside the premises of the
principal.
This department order also states that there is a trilateral relationship in legitimate job contracting and
subcontracting arrangements among the principal, contractor, and employees of the contractor. There is
no employer-employee relationship between the contractor and principal who engages the contractor’s
services, but there is an employer-employee relationship between the contractor and workers hired to
accomplish the work for the principal.162
Jurisprudence has recognized another kind of independent contractor: individuals with unique skills and
talents that set them apart from ordinary employees. There is no trilateral relationship in this case because

the independent contractor himself or herself performs the work for the principal. In other words, the
relationship is bilateral.
In Orozco v. Court of Appeals,163 Wilhelmina Orozco was a columnist for the Philippine Daily Inquirer. This
court ruled that she was an independent contractor because of her "talent, skill, experience, and her
unique viewpoint as a feminist advocate."164 In addition, the Philippine Daily Inquirer did not have the
power of control over Orozco, and she worked at her own pleasure. 165
Semblante v. Court of Appeals166 involved a masiador167 and a sentenciador.168 This court ruled that
"petitioners performed their functions as masiadorand sentenciador free from the direction and control of
respondents"169 and that the masiador and sentenciador "relied mainly on their ‘expertise that is
characteristic of the cockfight gambling.’"170 Hence, no employer-employee relationship existed.
Bernarte v. Philippine Basketball Association171 involved a basketball referee. This court ruled that "a
referee is an independent contractor, whose special skills and independent judgment are required
specifically for such position and cannot possibly be controlled by the hiring party." 172
In these cases, the workers were found to be independent contractors because of their unique skills and
talents and the lack of control over the means and methods in the performance of their work.
In other words, there are different kinds of independent contractors: those engaged in legitimate job
contracting and those who have unique skills and talents that set them apart from ordinary employees.
Since no employer-employee relationship exists between independent contractors and their principals,
their contracts are governed by the Civil Code provisions on contracts and other applicable laws.173
A contract is defined as "a meeting of minds between two persons whereby one binds himself, with respect
to the other, to give something or to render some service."174 Parties are free to stipulate on terms and
conditions in contracts as long as these "are not contrary to law, morals, good customs, public order, or
public policy."175 This presupposes that the parties to a contract are on equal footing. Theycan bargain on
terms and conditions until they are able to reach an agreement.
On the other hand, contracts of employment are different and have a higher level of regulation because
they are impressed with public interest. Article XIII, Section 3 of the 1987 Constitution provides full
protection to labor:
ARTICLE XIII. SOCIAL JUSTICE AND HUMAN RIGHTS
....
LABOR
Section 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 19 of 51
security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to its
just share in the fruits of production and the right of enterprises to reasonable returns on investments, and
to expansion and growth.
Apart from the constitutional guarantee of protection to labor, Article 1700 of the Civil Code states:
ART. 1700. The relations between capital and labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good. Therefore, such contracts are
subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop,
wages, working conditions, hours of labor and similar subjects.
In contracts of employment, the employer and the employee are not on equal footing. Thus, it is subject to
regulatory review by the labor tribunals and courts of law. The law serves to equalize the unequal. The
labor force is a special class that is constitutionally protected because of the inequality between capital and
labor.176 This presupposes that the labor force is weak. However, the level of protection to labor should
vary from case to case; otherwise, the state might appear to be too paternalistic in affording protection to
labor. As stated in GMA Network, Inc. v. Pabriga, the ruling in Brent applies in cases where it appears that
the employer and employee are on equal footing.177 This recognizes the fact that not all workers are weak.
To reiterate the discussion in GMA Network v. Pabriga:
The reason for this is evident: when a prospective employee, on account of special skills or market forces,
is in a position to make demands upon the prospective employer, such prospective employee needs less
protection than the ordinary worker. Lesser limitations on the parties’ freedom of contract are thus required
for the protection of the employee.178
The level of protection to labor mustbe determined on the basis of the nature of the work, qualifications of
the employee, and other relevant circumstances.
For example, a prospective employee with a bachelor’s degree cannot be said to be on equal footing witha
grocery bagger with a high school diploma. Employees who qualify for jobs requiring special qualifications
such as "[having] a Master’s degree" or "[having] passed the licensure exam" are different from employees
who qualify for jobs that require "[being a] high school graduate; withpleasing personality." In these
situations, it is clear that those with special qualifications can bargain with the employer on equal footing.
Thus, the level of protection afforded to these employees should be different.
Fuji’s argument that Arlene was an independent contractor under a fixed-term contract is contradictory.
Employees under fixed-term contracts cannot be independent contractors because in fixed-term contracts,
an employer-employee relationship exists. The test in this kind of contract is not the necessity and
desirability of the employee’s activities, "but the day certain agreed upon by the parties for the
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 20 of 51

commencement and termination of the employment relationship."179 For regular employees, the necessity
and desirability of their work in the usual course of the employer’s business are the determining factors. On
the other hand, independent contractors do not have employer-employee relationships with their principals.
Hence, before the status of employment can be determined, the existence of an employer-employee
relationship must be established.
The four-fold test180 can be used in determining whether an employeremployee relationship exists. The
elements of the four-fold test are the following: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power of control, which is the most important
element.181
The "power of control" was explained by this court in Corporal, Sr. v. National Labor Relations
Commission:182
The power to control refers to the existence of the power and not necessarily to the actual exercise
thereof, nor is it essential for the employer to actually supervise the performance of duties of the employee.
It is enough that the employer has the right to wield that power. 183 (Citation omitted)
Orozco v. Court of Appeals further elucidated the meaning of "power of control" and stated the following:
Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement
of the mutually desired result without dictating the means or methods to be employed in attaining it, and
those that control or fix the methodology and bind or restrict the party hired to the use of such means. The
first, which aim only to promote the result, create no employer-employee relationship unlike the second,
which address both the result and the means used to achieve it. . . . 184 (Citation omitted)
contractor rather than a regular employee.191 Meanwhile, Dumpit-Murillo’s monthly salary was P28,000.00,
a very low amount compared to what Sonza received.192
Sonza was unable to prove that ABS-CBN could terminate his services apart from breach of contract.
There was no indication that he could be terminated based on just or authorized causes under the Labor
Code. In addition, ABS-CBN continued to pay his talent fee under their agreement, even though his
programs were no longer broadcasted.193 Dumpit-Murillo was found to have beenillegally dismissed by her
employer when they did not renew her contract on her fourth year with ABC. 194
In Sonza, this court ruled that ABS-CBN did not control how Sonza delivered his lines, how he appeared
on television, or how he sounded on radio.195 All that Sonza needed was his talent.196 Further, "ABS-CBN
could not terminate or discipline SONZA even if the means and methods of performance of his work . . .
did not meet ABS-CBN’s approval."197 In Dumpit-Murillo, the duties and responsibilities enumerated in her
contract was a clear indication that ABC had control over her work. 198
Application of the four-fold test
The Court of Appeals did not err when it relied on the ruling in Dumpit-Murillo and affirmed the ruling of the
National Labor Relations Commission finding that Arlene was a regular employee. Arlene was hired by Fuji
as a news producer, but there was no showing that she was hired because of unique skills that would
distinguish her from ordinary employees. Neither was there any showing that she had a celebrity status.
Her monthly salary amounting to US$1,900.00 appears tobe a substantial sum, especially if compared to
her salary whenshe was still connected with GMA. 199 Indeed, wages may indicate whether oneis an
independent contractor. Wages may also indicate that an employee is able to bargain with the employer
for better pay. However, wages should not be the conclusive factor in determining whether one is an
employee or an independent contractor.

In Locsin, et al. v. Philippine Long Distance Telephone Company,185 the "power of control" was defined as
Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of her professional employment
"[the] right to control not only the end to be achieved but also the means to be used in reaching such
contract.200Her contract also indicated that Fuji had control over her work because she was required to
end."186
work for eight (8) hours from Monday to Friday, although on flexible time. 201 Sonza was not required to
work for eight (8) hours, while Dumpit-Murillo had to be in ABC to do both on-air and off-air tasks.
Here, the Court of Appeals applied Sonza v. ABS-CBN and Dumpit Murillo v. Court of Appeals187 in
determining whether Arlene was an independent contractor or a regular employee.
On the power to control, Arlene alleged that Fuji gave her instructions on what to report.202 Even the mode
of transportation in carrying out her functions was controlled by Fuji. Paragraph 6 of her contract states:
In deciding Sonza and Dumpit-Murillo, this court used the four-fold test. Both cases involved newscasters
and anchors. However, Sonza was held to be an independent contractor, while Dumpit-Murillo was held to
6. During the travel to carry out work, if there is change of place or change of place of work, the train, bus,
be a regular employee.
or public transport shall be used for the trip. If the Employee uses the private car during the work and there
is an accident the Employer shall not be responsible for the damage, which may be caused to the
Comparison of the Sonza and Employee.203
Dumpit-Murillo cases using
the four-fold test
Thus, the Court of Appeals did not err when it upheld the findings of the National Labor Relations
Commission that Arlene was not an independent contractor.
Sonza was engaged by ABS-CBN in view of his "unique skills, talent and celebrity status not possessed by
ordinary employees."188 His work was for radio and television programs.189 On the other hand, Dumpit-
Having established that an employer-employee relationship existed between Fuji and Arlene, the next
Murillo was hired by ABC as a newscaster and co-anchor.190 Sonza’s talent fee amounted to P317,000.00
questions for resolution are the following: Did the Court of Appeals correctly affirm the National Labor
per month, which this court found to be a substantial amount that indicatedhe was an independent

Relations Commission that Arlene had become a regular employee? Was the nature of Arlene’s work
necessary and desirable for Fuji’s usual course of business?
Arlene was a regular employee
with a fixed-term contract
The test for determining regular employment is whether there is a reasonable connection between the
employee’s activities and the usual business of the employer. Article 280 provides that the nature of work
must be "necessary or desirable in the usual business or trade of the employer" as the test for determining
regular employment. As stated in ABS-CBN Broadcasting Corporation v. Nazareno:204
In determining whether an employment should be considered regular or non-regular, the applicable test is
the reasonable connection between the particular activity performed by the employee in relation to the
usual business or trade of the employer. The standard, supplied by the law itself, is whether the work
undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be
assessed by looking into the nature of the services rendered and its relation to the general scheme under
which the business or trade is pursued in the usual course. It is distinguished from a specific undertaking
that is divorced from the normal activities required incarrying on the particular business or trade. 205
However, there may be a situation where an employee’s work is necessary but is not always desirable
inthe usual course of business of the employer. In this situation, there is no regular employment.
In San Miguel Corporation v. National Labor Relations Commission,206 Francisco de Guzman was hired to
repair furnaces at San Miguel Corporation’s Manila glass plant. He had a separate contract for every
furnace that he repaired. He filed a complaint for illegal dismissal three (3) years after the end of his last
contract.207 In ruling that de Guzman did not attain the status of a regular employee, this court explained:
Note that the plant where private respondent was employed for only seven months is engaged in the
manufacture of glass, an integral component of the packaging and manufacturing business of petitioner.
The process of manufacturing glass requires a furnace, which has a limited operating life. Petitioner
resorted to hiring project or fixed term employees in having said furnaces repaired since said activity is not
regularly performed. Said furnaces are to be repaired or overhauled only in case of need and after being
used continuously for a varying period of five (5) to ten (10) years. In 1990, one of the furnaces of
petitioner required repair and upgrading. This was an undertaking distinct and separate from petitioner's
business of manufacturing glass. For this purpose, petitioner must hire workers to undertake the said
repair and upgrading. . . .
....
Clearly, private respondent was hired for a specific project that was not within the regular business of the
corporation. For petitioner is not engaged in the business of repairing furnaces. Although the activity was
necessary to enable petitioner to continue manufacturing glass, the necessity therefor arose only when a
particular furnace reached the end of its life or operating cycle. Or, as in the second undertaking, when a
particular furnace required an emergency repair. In other words, the undertakings where private
respondent was hired primarily as helper/bricklayer have specified goals and purposes which are fulfilled
once the designated work was completed. Moreover, such undertakings were also identifiably separate
and distinct from the usual, ordinary or regular business operations of petitioner, which is glass
manufacturing. These undertakings, the duration and scope of which had been determined and made
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 21 of 51
known to private respondent at the time of his employment, clearly indicated the nature of his employment
as a project employee.208
Fuji is engaged in the business of broadcasting,209 including news programming.210 It is based in
Japan211 and has overseas offices to cover international news.212
Based on the record, Fuji’s Manila Bureau Office is a small unit 213 and has a few employees.214 As such,
Arlene had to do all activities related to news gathering. Although Fuji insists that Arlene was a stringer, it
alleges that her designation was "News Talent/Reporter/Producer." 215
A news producer "plans and supervises newscast . . . [and] work[s] with reporters in the field planning and
gathering information. . . ."216 Arlene’s tasks included "[m]onitoring and [g]etting [n]ews [s]tories, [r]eporting
interviewing subjects in front of a video camera,"217 "the timely submission of news and current events
reports pertaining to the Philippines[,] and traveling [sic] to [Fuji’s] regional office in Thailand."218 She also
had to report for work in Fuji’s office in Manila from Mondays to Fridays, eight (8) hours per day. 219 She
had no equipment and had to use the facilities of Fuji to accomplish her tasks.
The Court of Appeals affirmed the finding of the National Labor Relations Commission that the successive
renewals of Arlene’s contract indicated the necessity and desirability of her work in the usual course of
Fuji’s business. Because of this, Arlene had become a regular employee with the right to security of
tenure.220 The Court of Appeals ruled that:
Here, Espiritu was engaged by Fuji as a stinger [sic] or news producer for its Manila Bureau. She was
hired for the primary purpose of news gathering and reporting to the television network’s headquarters.
Espiritu was not contracted on account of any peculiar ability or special talent and skill that she may
possess which the network desires to make use of. Parenthetically, ifit were true that Espiritu is an
independent contractor, as claimed by Fuji, the factthat everything that she uses to perform her job is
owned by the company including the laptop computer and mini camera discounts the idea of job
contracting.221
Moreover, the Court of Appeals explained that Fuji’s argument that no employer-employee relationship
existed in view of the fixed-term contract does not persuade because fixed-term contracts of employment
are strictly construed.222 Further, the pieces of equipment Arlene used were all owned by Fuji, showing that
she was a regular employee and not an independent contractor.223
The Court of Appeals likewise cited Dumpit-Murillo, which involved fixed-term contracts that were
successively renewed for four (4) years.224 This court held that "[t]his repeated engagement under contract
of hire is indicative of the necessity and desirability of the petitioner’s work in private respondent ABC’s
business."225
With regard to Fuji’s argument that Arlene’s contract was for a fixed term, the Court of Appeals cited
Philips Semiconductors, Inc. v. Fadriquela226 and held that where an employee’s contract "had been
continuously extended or renewed to the same position, with the same duties and remained in the employ
without any interruption,"227 then such employee is a regular employee. The continuous renewal is a
scheme to prevent regularization. On this basis, the Court of Appeals ruled in favor of Arlene.

As stated in Price, et al. v. Innodata Corp., et al.:228
The employment status of a person is defined and prescribed by law and not by what the parties say it
should be. Equally important to consider is that a contract of employment is impressed with public interest
such that labor contracts must yield to the common good. Thus, provisions of applicable statutes are
deemed written into the contract, and the parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting with each
other.229 (Citations omitted)
Arlene’s contract indicating a fixed term did not automatically mean that she could never be a regular
employee. This is precisely what Article 280 seeks to avoid. The ruling in Brent remains as the exception
rather than the general rule.
Further, an employee can be a regular employee with a fixed-term contract. The law does not preclude the
possibility that a regular employee may opt to have a fixed-term contract for valid reasons. This was
recognized in Brent: For as long as it was the employee who requested, or bargained, that the contract
have a "definite date of termination," or that the fixed-term contract be freely entered into by the employer
and the employee, then the validity of the fixed-term contract will be upheld.230
V
Whether the Court of Appeals correctly affirmed
the National Labor Relations Commission’s finding of illegal dismissal
Fuji argues that the Court of Appeals erred when it held that Arlene was illegally dismissed, in view of the
non-renewal contract voluntarily executed by the parties. Fuji also argues that Arlene’s contract merely
expired; hence, she was not illegally dismissed.231
Arlene alleges that she had no choice but to sign the non-renewal contract because Fuji withheldher salary
and benefits.
With regard to this issue, the Court of Appeals held:
We cannot subscribe to Fuji’s assertion that Espiritu’s contract merely expired and that she voluntarily
agreed not to renew the same. Even a cursory perusal of the subject Non-Renewal Contract readily shows
that the same was signed by Espiritu under protest. What is apparent is that the Non-Renewal Contract
was crafted merely as a subterfuge to secure Fuji’s position that it was Espiritu’s choice not to renew her
contract.232
As a regular employee, Arlene was entitled to security of tenure and could be dismissed only for just or
authorized causes and after the observance of due process.
The right to security of tenureis guaranteed under Article XIII, Section 3 of the 1987 Constitution: ARTICLE
XIII. SOCIAL JUSTICE AND HUMAN RIGHTS
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 22 of 51
....
LABOR
....
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law.
Article 279 of the Labor Code also provides for the right to security of tenure and states the following:
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 of 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, on the right to security of tenure, no employee shall be dismissed, unless there are just orauthorized
causes and only after compliance with procedural and substantive due process is conducted.
Even probationary employees are entitled to the right to security of tenure. This was explained in Philippine
Daily Inquirer, Inc. v. Magtibay, Jr.:233
Within the limited legal six-month probationary period, probationary employees are still entitled to security
of tenure. It is expressly provided in the afore-quoted Article 281 that a probationary employee may be
terminated only on two grounds: (a) for just cause, or (b) when he fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the employee at the time of his
engagement.234 (Citation omitted)
The expiration of Arlene’s contract does not negate the finding of illegal dismissal by Fuji. The manner by
which Fuji informed Arlene that her contract would no longer be renewed is tantamount to constructive
dismissal. To make matters worse, Arlene was asked to sign a letter of resignation prepared by Fuji. 235 The
existence of a fixed-term contract should not mean that there can be no illegal dismissal. Due process
must still be observed in the pre-termination of fixed-term contracts of employment.
In addition, the Court of Appeals and the National Labor Relations Commission found that Arlene was
dismissed because of her health condition. In the non-renewal agreement executed by Fuji and Arlene, it is
stated that:
WHEREAS, the SECOND PARTY is undergoing chemotherapy which prevents her from continuing to
effectively perform her functions under the said Contract such as the timely submission of news and
current events reports pertaining to the Philippines and travelling [sic] to the FIRST PARTY’s regional
office in Thailand.236 (Emphasis supplied)
Disease as a ground for termination is recognized under Article 284 of the Labor Code:
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 23 of 51

Art. 284. Disease as ground for termination. An employer may terminate the services of an employee who ordered reinstatement, reasoning that the grounds when separation pay was awarded in lieu of
has been found to be suffering from any disease and whose continued employment is prohibited by law or reinstatement were not proven.241
is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid
separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year
Article 279 of the Labor Code provides:
of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole
year.
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
Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor Code provides:
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
Sec. 8. Disease as a ground for dismissal.– Where the employee suffers from a disease and his continued computed from the time his compensation was withheld from him up to the time of his actual
employment is prohibited by law or prejudicial to his healthor to the health of his coemployees, the reinstatement. (Emphasis supplied)
employer shall not terminate his employment unless there is a certification by a competent public health
authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six
The Court of Appeals’ modification of the National Labor Relations Commission’s decision was proper
(6) months even with proper medical treatment. If the disease or ailment can be cured within the period,
because the law itself provides that illegally dismissed employees are entitled to reinstatement, backwages
the employer shall not terminate the employee but shall ask the employee to take a leave. The employer
including allowances, and all other benefits.
shall reinstate such employee to his former position immediately upon the restoration of his normal health.

On reinstatement, the National Labor Relations Commission ordered payment of separation pay in lieu of
For dismissal under Article 284 to bevalid, two requirements must be complied with: (1) the employee’s
reinstatement, reasoning "that the filing of the instant suit may have seriously abraded the relationship of
disease cannot be cured within six (6) months and his "continued employment is prohibited by law or
the parties so as to render reinstatement impractical."242 The Court of Appeals reversed this and ordered
prejudicial to his health as well as to the health of his co-employees"; and (2) certification issued by a
reinstatement on the ground that separation pay in lieu of reinstatement is allowed only in several
competent public health authority that even with proper medical treatment, the disease cannot be cured
instances such as (1) when the employer has ceased operations; (2) when the employee’s position is no
within six (6) months.237 The burden of proving compliance with these requisites is on the
longer available; (3) strained relations; and (4) a substantial period has lapsed from date of filing to date of
employer.238 Noncompliance leads to the conclusion that the dismissal was illegal. 239
finality.243

There is no evidence showing that Arlene was accorded due process. After informing her employer of her
lung cancer, she was not given the chance to present medical certificates. Fuji immediately concluded that
Arlene could no longer perform her duties because of chemotherapy. It did not ask her how her condition
would affect her work. Neither did it suggest for her to take a leave, even though she was entitled to sick
leaves. Worse, it did not present any certificate from a competent public health authority. What Fuji did was
to inform her thather contract would no longer be renewed, and when she did not agree, her salary was
withheld. Thus, the Court of Appeals correctly upheld the finding of the National Labor Relations
Commission that for failure of Fuji to comply with due process, Arlene was illegally dismissed. 240
VI
Whether the Court of Appeals properly modified
the National Labor Relations Commission’s decision
when it awarded reinstatement, damages, and attorney’s fees
The National Labor Relations Commission awarded separation pay in lieu of reinstatement, on the ground
that the filing of the complaint for illegal dismissal may have seriously strained relations between the
parties. Backwages were also awarded, to be computed from date of dismissal until the finality of the
National Labor Relations Commission’s decision. However, only backwages were included in the
dispositive portion because the National Labor Relations Commission recognized that Arlene had received
separation pay in the amount of US$7,600.00. The Court of Appeals affirmed the National Labor Relations
Commission’s decision but modified it by awarding moral and exemplary damages and attorney’s fees,
and all other benefits Arlene was entitled to under her contract with Fuji. The Court of Appeals also
On this matter, Quijano v. Mercury Drug Corp.244 is instructive:
Well-entrenched is the rule that an illegally dismissed employee is entitled to reinstatement as a matter of
right. . . .
To protect labor’s security of tenure, we emphasize that the doctrine of "strained relations" should be
strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Every
labor dispute almost always results in "strained relations" and the phrase cannot be given an overarching
interpretation, otherwise, an unjustly dismissed employee can never be reinstated. 245 (Citations omitted)
The Court of Appeals reasoned that strained relations are a question of fact that must be supported by
evidence.246 No evidence was presented by Fuji to prove that reinstatement was no longer feasible. Fuji
did not allege that it ceased operations or that Arlene’s position was no longer available. Nothing in the
records shows that Arlene’s reinstatement would cause an atmosphere of antagonism in the workplace.
Arlene filed her complaint in 2009. Five (5) years are not yet a substantial period247 to bar reinstatement.
On the award of damages, Fuji argues that Arlene is notentitled to the award of damages and attorney’s
fees because the non-renewal agreement contained a quitclaim, which Arlene signed. Quitclaims in labor
cases do not bar illegally dismissed employees from filing labor complaints and money claim. As explained
by Arlene, she signed the non-renewal agreement out of necessity. In Land and Housing Development
Corporation v. Esquillo,248this court explained: We have heretofore explained that the reason why
quitclaims are commonly frowned upon as contrary to public policy, and why they are held to be ineffective

to bar claims for the full measure of the workers’ legal rights, is the fact that the employer and the
employee obviously do not stand on the same footing. The employer drove the employee to the wall. The
latter must have to get holdof money. Because, out of a job, he had to face the harsh necessities of life. He
thus found himself in no position to resist money proffered. His, then, is a case of adherence, not of
choice.249
With regard to the Court of Appeals’ award of moral and exemplary damages and attorney’s fees, this
court has recognized in several cases that moral damages are awarded "when the dismissal is attended
by bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good
morals, good customs or public policy."250 On the other hand, exemplary damages may be awarded when
the dismissal was effected "in a wanton, oppressive or malevolent manner."251
The Court of Appeals and National Labor Relations Commission found that after Arlene had informed Fuji
of her cancer, she was informed that there would be problems in renewing her contract on account of her
condition. This information caused Arlene mental anguish, serious anxiety, and wounded feelings that can
be gleaned from the tenor of her email dated March 11, 2009. A portion of her email reads:
I WAS SO SURPRISED . . . that at a time when I am at my lowest, being sick and very weak, you
suddenly came to deliver to me the NEWS that you will no longer renew my contract.1awp++i1 I knew this
will come but I never thought that you will be so ‘heartless’ and insensitive to deliver that news just a month
after I informed you that I am sick. I was asking for patience and understanding and your response was not
to RENEW my contract.252
Apart from Arlene’s illegal dismissal, the manner of her dismissal was effected in an oppressive approach
withher salary and other benefits being withheld until May 5, 2009, when she had no other choice but to
sign the non-renewal contract. Thus, there was legal basis for the Court of Appeals to modify the National
Labor Relations Commission’s decision.
However, Arlene receivedher salary for May 2009.253 Considering that the date of her illegal dismissal was
May 5, 2009,254 this amount may be subtracted from the total monetary award. With regard to the award of
attorney’s fees, Article 111 of the Labor Code states that "[i]n cases of unlawful withholding of wages, the
culpable party may be assessed attorney’s fees equivalent to ten percent of the amount of wages
recovered." Likewise, this court has recognized that "in actions for recovery of wages or where an
employee was forced to litigate and, thus, incur expenses to protect his rights and interest, the award of
attorney’s fees is legallyand morally justifiable."255 Due to her illegal dismissal, Arlene was forced to litigate.
In the dispositive portion of its decision, the Court of Appeals awarded legal interest at the rate of 12% per
annum.256 In view of this court’s ruling in Nacar v. Gallery Frames, 257 the legal interest shall be reducd to a
rate of 6% per annum from July 1, 2013 until full satisfaction.
WHEREFORE, the petition is DENIED. The assailed Court of Appeals decision dated June 25, 2012 is
AFFIRMED with the modification that backwages shall be computed from June 2009. Legal interest shall
be computed at the rate of 6% per annum of the total monetary award from date of finality of this decision
until full satisfaction.SO ORDERED.
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 24 of 51
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 202996 June 18, 2014
MARLO A. DEOFERIO, Petitioner,
vs.
INTEL TECHNOLOGY PHILIPPINES, INC. and/or MIKE WENTLING, Respondents.
DECISION
BRION, J.:
We resolve the petition for review on certiorari1 filed by petitioner Marlo A. Deoferio to challenge the
February 24, 2012 decision2 and the August 2, 2012 resolution3 of the Court of Appeals (CA) in CA-G.R.
SP No. 115708.
The Factual Antecedents
On February 1, 1996, respondent Intel Technology Philippines, Inc. (Intel)employed Deoferio as a product
quality and reliability engineer with a monthly salary of P9,000.00. In July2001, Intel assigned him to the
United States as a validation engineer for an agreed period of two years and with a monthly salary of
US$3,000.00. On January 27, 2002, Deoferio was repatriated to the Philippines after being confined at
Providence St. Vincent Medical Center for major depression with psychosis. 4 In the Philippines, he worked
as a product engineer with a monthly salary of P23,000.00.5
Deoferio underwent a series of medical and psychiatric treatment at Intel’s expense after his confinement
in the United States. In 2002, Dr. Elizabeth Rondain of Makati Medical Center diagnosed him to be
suffering from mood disorder, major depression, and auditory hallucination. 6 He was also referred to Dr.
Norieta Balderrama, Intel’s forensic psychologist, and to a certain Dr. Cynthia Leynes who both confirmed
his mental condition.7 On August 8, 2005, Dr. Paul Lee, a consultant psychiatrist of the Philippine General
Hospital, concluded that Deoferio was suffering from schizophrenia. After several consultations, Dr. Lee
issued a psychiatric report dated January 17,2006 concluding and stating that Deoferio’s psychotic
symptoms are not curable within a period of six months and "will negatively affect his work and social
relation with his co-worker[s]."8 Pursuant to these findings, Intel issued Deoferio a notice of termination on
March 10, 2006.9
Deoferio responded to his termination of employment by filing a complaint for illegal dismissal with prayer
for money claims against respondents Intel and Mike Wentling (respondents). He denied that he ever had
mental illness and insisted that he satisfactorily performed his duties as a product engineer. He argued that
Intel violated his statutory right to procedural due process when it summarily issued a notice of termination.
He further claimed that he was entitled to a salary differential equivalent to the pre-terminated period of his
assignment in the United States minus the base pay that he had already received. Deoferio also prayed for
backwages, separation pay, moral and exemplary damages, as well as attorney’s fees. 10
In defense, the respondents argued that Deoferio’s dismissal was based on Dr. Lee’s certification that: (1)
his schizophrenia was not curable within a period of six months even with proper medical treatment; and
(2) his continued employment would be prejudicial to his and to the other employees’ health. 11 The
respondents also insisted that Deoferio’s presence at Intel’s premises would pose an actual harm to his
co-employees as shown by his previous acts. On May 8, 2003, Deoferio emailed an Intel employee with
this message: "All soul’s day back to work Monday WW45.1." On January 18, 2005, he cut the mouse
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 25 of 51

cables, stepped on the keyboards, and disarranged the desks of his co-employees.12 The respondents The Respondents’ Position
also highlighted that Deoferio incurred numerous absences from work due to his mental condition,
specifically, from January 31, 2002 until February 28, 2002, 13from August 2002 until September
In their Comment,29 the respondents posit that the petition raises purely questions of fact which a petition
2002,14 and from May 2003 until July 2003.15 Deoferio also took an administrative leave with pay from
for review on certiorari does not allow. They submit that Deoferio’s arguments have been fully passed
January 2005 until December 2005.16
upon and found unmeritorious by the lower tribunals and by the CA. They additionally argue that
Deoferio’s subsequent employment in other corporations is irrelevant in determining the validity of his
The respondents further asserted that the twin-notice requirement in dismissals does not apply to dismissal; the law merely requires the non-curability of the disease within a period of six months even with
terminations under Article 284 of the Labor Code.17 They emphasized that the Labor Code’s implementing proper medical treatment.
rules (IRR) only requires a competent public health authority’s certification to effectively terminate the
services of an employee.18They insisted that Deoferio’s separation and retirement payments
The respondents also maintain that Deoferio’s claim for salary differential is already barred by prescription
for P247,517.35 were offset by his company car loan which amounted to P448,132.43.19 He was likewise
under Article 291 of the Labor Code.30 Even assuming that the claim for salary differential has been timely
not entitled to moral and exemplary damages, as well as attorney’s fees, because the respondents
filed, the respondents assert that the parties expressly agreed in the International Assignment Relocation
faithfully relied on Dr. Lee’s certification that he was not fit to work as a product engineer. 20
Agreement that "the assignment length is only an estimate and not a guarantee of employment for any
particular length of time."31Moreover, his assignment in the United States was merely temporary and did
The Labor Arbitration Ruling not change his salary base, an amount which he already received.

In a decision21 dated March 6, 2008,the Labor Arbiter (LA) ruled that Deoferio had been validly dismissed. The Issues
The LA gave weight to Dr. Lee’s certification that Deoferio had been suffering from schizophrenia and was
not fit for employment. The evidence on record shows that Deoferio’s continued employment at Intel would
This case presents to us the following issues:
pose a threat to the health of his co-employees. The LA further held that the Labor Code and its IRR do
not require the employer to comply with the twin-notice requirement in dismissals due to disease. The LA
(1) Whether Deoferio was suffering from schizophrenia and whether his continued employment
also found unmeritorious Deoferio’s money claims against Intel.22
was prejudicial to his health, as well as to the health of his co-employees;
(2) Whether the twin-notice requirement in dismissals applies to terminations due to disease;
On appeal by Deoferio, the National Labor Relations Commission (NLRC) wholly affirmed the LA’s and
ruling.23 The NLRC also denied24 Deoferio’s motion for reconsideration,25 prompting him to seek relief from
the CA through a petition for certiorari under Rule 65 of the Rules of Court. As part of the second issue, the following issues are raised:

(a) Whether Deoferio is entitled to nominal damages for violation of his right to statutory
The CA’s Ruling
procedural due process; and
(b) Whether the respondents are solidarily liable to Deoferio for nominal damages.
On February 24, 2012, the CA affirmed the NLRC decision. It agreed with the lower tribunals’ findings that (3) Whether Deoferio is entitled to salary differential, backwages, separation pay, moral and
Deoferio was suffering from schizophrenia and that his continued employment at Intel would be prejudicial exemplary damages, as well as attorney’s fees.
to his health and to those of his co-employees. It ruled that the only procedural requirement under the IRR
is the certification by a competent public health authority on the non-curability of the disease within a
The Court’s Ruling
period of six months even with proper medical treatment. It also concurred with the lower tribunals that
Intel was justified in not paying Deoferio separation pay as required by Article 284 of the Labor Code
because this obligation had already been offset by the matured car loan that Deoferio owed Intel. 26 We find the petition partly meritorious.

Deoferio filed the present petition after the CA denied his motion for reconsideration. 27 Intel had an authorized cause to dismiss Deoferio from employment

The Petition Concomitant to the employer’s right to freely select and engage an employee is the employer’s right to
discharge the employee for just and/or authorized causes. To validly effect terminations of employment,
the discharge must be for a valid cause in the manner required by law. The purpose of these two-pronged
In the present petition before the Court, Deoferio argues that the uniform finding that he was suffering from
qualifications is to protect the working class from the employer’s arbitrary and unreasonable exercise of its
schizophrenia is belied by his subsequent employment at Maxim Philippines Operating Corp. and Philips
right to dismiss. Thus, in termination cases, the law places the burden of proof upon the employer to show
Semiconductors Corp., which both offered him higher compensations. He also asserts that the Labor Code
by substantial evidence that the termination was for a lawful cause and in the manner required by law.
does not exempt the employer from complying with the twin-notice requirement in terminations due to
disease.28

In concrete terms, these qualifications embody the due process requirement in labor cases - substantive
and procedural due process. Substantive due process means that the termination must be based on just
and/or authorized causes of dismissal. On the other hand, procedural due process requires the employer
to effect the dismissal in a manner specified in the Labor Code and its IRR.32
The present case involves termination due to disease – an authorized cause for dismissal under Article
284 of the Labor Code. As substantive requirements, the Labor Code and its IRR33 require the presence of
the following elements:
(1) An employer has been found to be suffering from any disease.
(2) His continued employment is prohibited by law or prejudicial to his health, as well as to the
health of his co-employees.
(3) A competent public health authority certifies that the disease is of such nature or at such a
stage that it cannot be cured within a period of six months even with proper medical treatment.
With respect to the first and second elements, the Court liberally construed the phrase
"prejudicial to his health as well as to the health of his co-employees" to mean "prejudicial to his
health or to the health of his co-employees." We did not limit the scope of this phrase to
contagious diseases for the reason that this phrase is preceded by the phrase "any disease"
under Article 284 of the Labor Code, to wit:
Art. 284. Disease as ground for termination. – An employer may terminate the services of an employee
who has been found to be suffering from any disease and whose continued employment is prohibited by
law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid
separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year
of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole
year. [underscores, italics and emphases ours]
Consistent with this construction, we applied this provision in resolving illegal dismissal cases due to non-
contagious diseases such as stroke, heart attack, osteoarthritis, and eye cataract, among others. In Baby
Bus, Inc. v. Minister of Labor,34 we upheld the labor arbitration’s finding that Jacinto Mangalino’s continued
employment – after he suffered several strokes – would be prejudicial to his health. In Duterte v.
Kingswood Trading Co., Inc.,35 we recognized the applicability of Article 284 of the Labor Code to heart
attacks. In that case, we held that the employer- company’s failure to present a certification from a public
health authority rendered Roque Duterte’s termination due to a heart attack illegal. We also applied this
provision in Sy v. Court of Appeals36to determine whether Jaime Sahot was illegally dismissed dueto
various ailments such as presleyopia, hypertensive retinopathy, osteoarthritis, and heart enlargement,
among others. In Manly Express, Inc. v. Payong, Jr.,37 we ruled that the employer-company’s non-
presentment of a certification from a public health authority with respect to Romualdo Payong Jr.’s eye
cataract was fatal to its defense.
The third element substantiates the contention that the employee has indeed been suffering from a
disease that: (1) is prejudicial to his health as well as to the health of his co-employees; and (2) cannot be
cured within a period of six months even with proper medical treatment. Without the medical certificate,
there can be no authorized cause for the employee’s dismissal. The absence of this element thus renders
the dismissal void and illegal.
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 26 of 51
Simply stated, this requirement is not merely a procedural requirement, but a substantive one.1âwphi1 The
certification from a competent public health authority is precisely the substantial evidence required by law
to prove the existence of the disease itself, its non-curability within a period of six months even with proper
medical treatment, and the prejudice that it would cause to the health of the sick employee and to those of
his co-employees.
In the current case, we agree with the CA that Dr. Lee’s psychiatric report substantially proves that
Deoferio was suffering from schizophrenia, that his disease was not curable within a period of six months
even with proper medical treatment, and that his continued employment would be prejudicial to his mental
health. This conclusion is further substantiated by the unusual and bizarre acts that Deoferio committed
while at Intel’s employ.
The twin-notice requirement applies
to terminations under Article 284 of
the Labor Code
The Labor Code and its IRR are silent on the procedural due process required in terminations due to
disease. Despite the seeming gap in the law, Section 2, Rule 1, Book VI of the IRR expressly states that
the employee should be afforded procedural due process in all cases of dismissals. 38
In Sy v. Court of Appeals39 and Manly Express, Inc. v. Payong, Jr.,40 promulgated in 2003 and 2005,
respectively, the Court finally pronounced the rule that the employer must furnish the employee two written
notices in terminations due to disease, namely: (1) the notice to apprise the employee of the ground for
which his dismissal is sought; and (2) the notice informing the employee of his dismissal, to be issued after
the employee has been given reasonable opportunity to answer and to be heard on his defense. These
rulings reinforce the State policy of protecting the workers from being terminated without cause and without
affording them the opportunity to explain their side of the controversy.
From these perspectives, the CA erred in not finding that the NLRC gravely abused its discretion when it
ruled that the twin-notice requirement does not apply to Article 284 of the Labor Code. This conclusion is
totally devoid of any legal basis; its ruling is wholly unsupported by law and jurisprudence. In other words,
the NLRC’s unprecedented, whimsical and arbitrary ruling, which the CA erroneously affirmed, amounted
to a jurisdictional error.
Deoferio is entitled to nominal
damages for violation of his right to
statutory procedural due process
Intel’s violation of Deoferio’s right to statutory procedural due process warrants the payment of indemnity in
the form of nominal damages. In Jaka Food Processing Corp. v. Pacot, 41 we distinguished between
terminations based on Article 282 of the Labor Code42 and dismissals under Article 283 of the Labor
Code.43 We then pegged the nominal damages at P30,000.00 if the dismissal is based on a just cause but
the employer failed to comply with the twin-notice requirement. On the other hand, we fixed the nominal
damages at P50,000.00 if the dismissal is due to an authorized cause under Article 283 of the Labor Code
but the employer failed to comply with the notice requirement. The reason is that dismissals for just cause
imply that the employee has committed a violation against the employer, while terminations under Article
283 of the Labor Code are initiated by the employer in the exercise of his management prerogative.

With respect to Article 284 of the Labor Code, terminations due to disease do not entail any wrongdoing on
the part of the employee. It also does not purely involve the employer’s willful and voluntary exercise of
management prerogative – a function associated with the employer's inherent right to control and
effectively manage its enterprise.44 Rather, terminations due to disease are occasioned by matters
generally beyond the worker and the employer's control.
In fixing the amount of nominal damages whose determination is addressed to our sound discretion, the
Court should take into account several factors surrounding the case, such as: (1) the employer’s financial,
medical, and/or moral assistance to the sick employee; (2) the flexibility and leeway that the employer
allowed the sick employee in performing his duties while attending to his medical needs; (3) the employer’s
grant of other termination benefits in favor of the employee; and (4) whether there was a bona fide attempt
on the part of the employer to comply with the twin-notice requirement as opposed to giving no notice at
all.
We award Deoferio the sum of P30,000.00 as nominal damages for violation of his statutory right to
procedural due process. In so ruling, we take into account Intel’s faithful compliance with Article 284 of the
Labor Code and Section 8, Rule 1, Book 6 of the IRR. We also note that Deoferio’s separation pay
equivalent to one-half month salary for every year of service45 was validly offset by his matured car loan.
Under Article 1278 of the Civil Code, in relation to Article 1706 of the Civil Code 46 and Article 113(c) of the
Labor Code,47 compensation shall take place when two persons are creditors and debtors of each other in
their own right. We likewise consider the fact that Intel exhibited real concern to Deoferio when it financed
his medical expenses for more than four years. Furthermore, prior to his termination, Intel liberally allowed
Deoferio to take lengthy leave of absences to allow him to attend to his medical needs.
Wentling is not personally liable for
the satisfaction of nominal damages
in favor of Deoferio
Intel shall be solely liable to Deoferio for the satisfaction of nominal damages. Wentling, as a corporate
officer, cannot be held liable for acts done in his official capacity because a corporation, by legal fiction,
has a personality separate and distinct from its officers, stockholders, and members. There is also no
ground for piercing the veil of corporate fiction because Wentling acted in good faith and merely relied on
Dr. Lee’s psychiatric report in carrying out the dismissal.48
Deoferio is not entitled to salary
differential, backwages, separation
pay, moral and exemplary damages,
as well as attorney's fees
Deoferio's claim for salary differential is already barred by prescription. Under Article 291 of the Labor
Code, all money claims arising from employer-employee relations shall be filed within three years from the
time the cause of action accrued. In the current case, more than four years have elapsed from the pre-
termination of his assignment to the United States until the filing of his complaint against the respondents.
We thus see no point in further discussing this matter. His claim for backwages, separation pay, moral and
exemplary damages, as well as attorney's fees must also necessarily fail as a consequence of our finding
that his dismissal was for an authorized cause and that the respondents acted in good faith when they
terminated his services.
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 27 of 51
WHEREFORE, premises considered, we partially grant the petition; the assailed February 24, 2012
decision and the August 2, 2012 resolution of the Court of Appeals stand but respondent Intel Technology
Philippines, Inc. is ordered to pay petitioner Marlo A. Deoferio nominal damages in the amount
of P30,000.00. We totally deny the petition with respect to respondent Mike Wending.SO ORDERED
Republic of the Philippines
SUPREME COURT
Baguio City
SECOND DIVISION
G.R. No. 195227 April 21, 2014
FROILAN M. BERGONIO, JR., DEAN G. PELAEZ, CRISANTO O. GEONGO, WARLITO O. JANAYA,
SALVADOR VILLAR, JR., RONALDO CAFIRMA, RANDY LUCAR, ALBERTO ALBUERA, DENNIS
NOPUENTE and ALLAN SALVACION, Petitioners,
vs.
SOUTH EAST ASIAN AIRLINES and IRENE DORNIER, Respondents.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge to the September 30, 2010 decision2 and
the January 13, 2011 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 112011.
This CA decision reversed the July 16, 2008 decision4 of the National Labor Relations Commission
(NLRC), which, in turn, affirmed the March 13, 2008 order5 of the Labor Arbiter (LA) in NLRC Case No. 00-
04-05469- 2004. The LA granted the Motion filed by petitioners Froilan M. Bergonio, Jr., Dean G. Pelaez,
et.al., (collectively, the petitioners) for the release of the garnished amount to satisfy the petitioners’
accrued wages.
The Factual Antecedents
On April 30, 2004, the petitioners filed before the LA a complaint for illegal dismissal and illegal suspension
with prayer for reinstatement against respondents South East Asian Airlines (SEAIR) and Irene Dornier as
SEAIR’s President (collectively, the respondents).
In a decision dated May 31, 2005, the LA found the petitioners illegally dismissed and ordered the
respondents, among others, to immediately reinstate the petitioners with full backwages. The respondents
received their copy of this decision on July 8, 2005.6
On August 20, 2005, the petitioners filed before the LA a Motion for issuance of Writ of Execution for their
immediate reinstatement.
During the scheduled pre-execution conference held on September 14, 2005, the respondents manifested
their option to reinstate the petitioners in the payroll. The payroll reinstatement, however, did not
materialize. Thus, on September 22, 2005, the petitioners filed before the LA a manifestation for their
immediate reinstatement.

On October 3, 2005, the respondents filed an opposition to the petitioners’ motion for execution. 7 They
claimed that the relationship between them and the petitioners had already been strained because of the
petitioners’ threatening text messages, thus precluding the latter’s reinstatement.
On October 7, 2005, the LA granted the petitioners’ motion and issued a writ of execution. 8
The respondents moved to quash the writ of execution with a prayer to hold in abeyance the
implementation of the reinstatement order.9 They maintained that the relationship between them and the
petitioners had been so strained that reinstatement was no longer possible.
The October 7, 2005 writ of execution was returned unsatisfied. In response, the petitioners filed a motion
for re-computation of accrued wages, and, on January 25, 2006, a motion for execution of the re-computed
amount. On February 16, 2006, the LA granted this motion and issued an alias writ of execution.10
On February 21, 2006, the respondents issued a Memorandum 11 directing the petitioners to report for work
on February 24, 2006. The petitioners failed to report for work on the appointed date. On February 28,
2006, the respondents moved before the LA to suspend the order for the petitioners’ reinstatement. 12
Meanwhile, the respondents appealed with the NLRC the May 31, 2005 illegal dismissal ruling of the LA.
In an order dated August 15, 2006,13 the NLRC dismissed the respondents’ appeal for non-perfection. The
NLRC likewise denied the respondents’ motion for reconsideration in its November 29, 2006 resolution,
prompting the respondents to file before the CA a petition for certiorari.
The NLRC issued an Entry of Judgment on February 6, 2007 declaring its November 29, 2006 resolution
final and executory. The petitioners forthwith filed with the LA another motion for the issuance of a writ of
execution, which the LA granted on April 24, 2007. The LA also issued another writ of execution. 14 A
Notice of Garnishment was thereafter issued to the respondents’ depositary bank – Metrobank-San
Lorenzo Village Branch, Makati City – in the amount of P1,900,000.00 on June 6, 2007.
On December 18, 2007, the CA rendered its decision (on the illegal dismissal ruling of the LA) partly
granting the respondents’ petition. The CA declared the petitioners’ dismissal valid and awarded
them P30,000.00 as nominal damages for the respondents’ failure to observe due process.
The records show that the petitioners appealed the December 18, 2007 CA decision with this Court. In a
resolution dated August 4, 2008, the Court denied the petition. The Court likewise denied the petitioners’
subsequent motion for reconsideration, and thereafter issued an Entry of Judgment certifying that its
August 4, 2008 resolution had become final and executory on March 9, 2009.
On January 31, 2008, the petitioners filed with the LA an Urgent Ex-Parte Motion for the Immediate
Release of the Garnished Amount.
In its March 13, 2008 order,15 the LA granted the petitioners’ motion; it directed Metrobank-San Lorenzo to
release the P1,900,000.00 garnished amount. The LA found valid and meritorious the respondents’ claim
for accrued wages in view of the respondents’ refusal to reinstate the petitioners despite the final and
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 28 of 51
executory nature of the reinstatement aspect of its (LA’s) May 31, 2005 decision. The LA noted that as of
the December 18, 2007 CA decision (that reversed the illegal dismissal findings of the LA), the petitioners’
accrued wages amounted to P3,078,366.33.
In its July 16, 2008 resolution,16 the NLRC affirmed in toto the LA’s March 13, 2008 order. The NLRC
afterwards denied the respondents’ motion for reconsideration for lack of merit. 17
The respondents assailed the July 16, 2008 decision and September 29, 2009 resolution of the NLRC via
a petition for certiorari filed with the CA.
The CA’s ruling
The CA granted the respondents’ petition.18 It reversed and set aside the July 16, 2008 decision and the
September 29, 2009 resolution of the NLRC and remanded the case to the Computation and Examination
Unit of the NLRC for the proper computation of the petitioners’ accrued wages, computed up to February
24, 2006.
The CA agreed that the reinstatement aspect of the LA’s decision is immediately executory even pending
appeal, such that the employer is obliged to reinstate and pay the wages of the dismissed employee
during the period of appeal until the decision (finding the employee illegally dismissed including the
reinstatement order) is reversed by a higher court. Applying this principle, the CA noted that the petitioners’
accrued wages could have been properly computed until December 18, 2007, the date of the CA’s
decision finding the petitioners validly dismissed.
The CA, however, pointed out that when the LA’s decision is "reversed by a higher tribunal, an employee
may be barred from collecting the accrued wages if shown that the delay in enforcing the reinstatement
pending appeal was without fault" on the employer’s part. In this case, the CA declared that the delay in
the execution of the reinstatement order was not due to the respondents’ unjustified act or omission.
Rather, the petitioners’ refusal to comply with the February 21, 2006 return-to-work Memorandum that the
respondents issued and personally delivered to them (the petitioners) prevented the enforcement of the
reinstatement order.
Thus, the CA declared that, given this peculiar circumstance (of the petitioners’ failure to report for work),
the petitioners’ accrued wages should only be computed until February 24, 2006 when they were
supposed to report for work per the return-to-work Memorandum. Accordingly, the CA reversed, for grave
abuse of discretion, the NLRC’s July 16, 2008 decision that affirmed the LA’s order to release the
garnished amount.
The Petition
The petitioners argue that the CA gravely erred when it ruled, contrary to Article 223, paragraph 3 of the
Labor Code, that the computation of their accrued wages stopped when they failed to report for work on
February 24, 2006. They maintain that the February 21, 2006 Memorandum was merely an afterthought on
the respondents’ part to make it appear that they complied with the LA’s October 7, 2005 writ of execution.
They likewise argue that had the respondents really intended to have them report for work to comply with
the writ of execution, the respondents could and should have issued the Memorandum immediately after

the LA issued the first writ of execution. As matters stand, the respondents issued the Memorandum more
than four months after the issuance of this writ and only after the LA issued the alias writ of execution on
February 16, 2006.
Additionally, the petitioners direct the Court’s attention to the several pleadings that the respondents filed
to prevent the execution of the reinstatement aspect of the LA’s May 31, 2005 decision, i.e., the Opposition
to the Issuance of the Writ of Execution, the Motion to Quash the Writ of Execution and the Motion to
Suspend the Order of Reinstatement. They also point out that in all these pleadings, the respondents
claimed that strained relationship barred their (the petitioners’) reinstatement, evidently confirming the
respondents’ lack of intention to reinstate them.
Finally, the petitioners point out that the February 21, 2006 Memorandum directed them to report for work
at Clark Field, Angeles, Pampanga instead of at the NAIA-Domestic Airport in Pasay City where they had
been assigned. They argue that this directive to report for work at Clark Field violates Article 223,
paragraph 3 of the Labor Code that requires the employee’s reinstatement to be under the same terms
and conditions prevailing prior to the dismissal. Moreover, they point out that the respondents handed the
Memorandum only to Pelaez, who did not act in representation of the other petitioners, and only in the
afternoon of February 23, 2006.
Thus, the petitioners claim that the delay in their reinstatement was in fact due to the respondents’
unjustified acts and that the respondents never really complied with the LA’s reinstatement order.
The Case for the Respondents
The respondents counter, in their comment,19 that the issues that the petitioners raise in this petition are all
factual in nature and had already considered and explained in the CA decision. In any case, the
respondents maintain that the petitioners were validly dismissed and that they complied with the LA’s
reinstatement order when it directed the petitioners to report back to work, which directive the petitioners
did not heed.
The respondents add that while the reinstatement of an employee found illegally dismissed is immediately
executory, the employer is nevertheless not prohibited from questioning this rule especially when the latter
has valid and legal reasons to oppose the employee’s reinstatement. In the petitioners’ case, the
respondents point out that their relationship had been so strained that reinstatement was no longer
possible. Despite this strained relationship, the respondents point out that they still required the petitioners
to report back to work if only to comply with the LA’s reinstatement order. Instead of reporting for work as
directed, the petitioners, however, insisted for a payroll reinstatement, which option the law grants to them
(the respondents) as employer. Also, contrary to the petitioners’ claim, the Memorandum directed them to
report at Clark Field, Pampanga only for a re-orientation of their respective duties and responsibilities.
Thus, relying on the CA’s ruling, the respondents claim that the delay in the petitioners’ reinstatement was
in fact due to the latter’s refusal to report for work after the issuance of the February 21, 2006
Memorandum in addition to their strained relationship.
The Court’s Ruling
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 29 of 51
We GRANT the petition.
Preliminary considerations: jurisdictional
limitations of the Court’s Rule 45 review of
the CA’s Rule 65 decision in labor cases
In a Rule 45 petition for review on certiorari, what we review are the legal errors that the CA may have
committed in the assailed decision, in contrast with the review for jurisdictional errors that we undertake in
an original certiorari action. In reviewing the legal correctness of the CA decision in a labor case taken
under Rule 65 of the Rules of Court, we examine the CA decision in the context that it determined the
presence or the absence of grave abuse of discretion in the NLRC decision before it and not on the basis
of whether the NLRC decision, on the merits of the case, was correct. Otherwise stated, we proceed from
the premise that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision
challenged before it. Within this narrow scope of our Rule 45 review, the question that we ask is: Did the
CA correctly determine whether the NLRC committed grave abuse of discretion in ruling on the case?20
In addition, the Court’s jurisdiction in a Rule 45 petition for review on certiorari is limited to resolving only
questions of law.
The present petition essentially raises the question – whether the petitioners may recover the accrued
wages prior to the CA’s reversal of the LA’s May 31, 2005 decision. This is a question of law that falls well
within the Court’s power in a Rule 45 petition.
Resolution of this question of law, however, is inextricably linked with the largely factual issue of whether
the accrued wages should be computed until December 17, 2008 when the CA reversed the illegal
dismissal findings of the LA or only until February 24, 2006 when the petitioners were supposed to report
for work per the February 21, 2006 Memorandum. In either case, the determination of this factual issue
presupposes another factual issue, i.e., whether the delay in the execution of the reinstatement order was
due to the respondents’ fault. As questions of fact, they are proscribed by our Rule 45 jurisdiction; we
generally cannot address these factual issues except to the extent necessary to determine whether the CA
correctly found the NLRC in grave abuse of discretion in affirming the release of the garnished amount
despite the respondents’ issuance of and the petitioners’ failure to comply with the February 21, 2006
return-to-work Memorandum.
The jurisdictional limitations of our Rule 45 review of the CA’s Rule 65 decision in labor cases,
notwithstanding, we resolve this petition’s factual issues for we find legal errors in the CA’s decision. Our
consideration of the facts taken within this narrow scope of our factual review power convinced us, as our
subsequent discussion will show, that no grave abuse of discretion attended the NLRC decision.
Nature of the reinstatement aspect of the
LA’s decision on a finding of illegal
dismissal
Article 223 (now Article 229)21 of the Labor Code governs appeals from, and the execution of, the LA’s
decision. Pertinently, paragraph 3, Article 223 of the Labor Code provides:
Article 223. APPEAL
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 30 of 51

xxxx As we amply discussed above, an employer is obliged to immediately reinstate the employee upon the
LA’s finding of illegal dismissal; if the employer fails, it is liable to pay the salary of the dismissed
employee. Of course, it is not always the case that the LA’s finding of illegal dismissal is, on appeal by the
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as
employer, upheld by the appellate court. After the LA’s decision is reversed by a higher tribunal, the
the reinstatement aspect is concerned, shall immediately be executory, pending appeal. The employee
employer’s duty to reinstate the dismissed employee is effectively terminated. This means that an
shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal
employer is no longer obliged to keep the employee in the actual service or in the payroll. The employee,
or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by
in turn, is not required to return the wages that he had received prior to the reversal of the LA’s decision.31
the employer shall not stay the execution for reinstatement provided herein. [Emphasis and underscoring
supplied]
The reversal by a higher tribunal of the LA’s finding (of illegal dismissal), notwithstanding, an employer,
who, despite the LA’s order of reinstatement, did not reinstate the employee during the pendency of the
Under paragraph 3, Article 223 of the Labor Code, the LA’s order for the reinstatement of an employee
appeal up to the reversal by a higher tribunal may still be held liable for the accrued wages of the
found illegally dismissed is immediately executory even during pendency of the employer’s appeal from the
employee, i.e., the unpaid salary accruing up to the time the higher tribunal reverses the decision. 32 The
decision. Under this provision, the employer must reinstate the employee – either by physically admitting
rule, therefore, is that an employee may still recover the accrued wages up to and despite the reversal by
him under the conditions prevailing prior to his dismissal, and paying his wages; or, at the employer’s
the higher tribunal. This entitlement of the employee to the accrued wages proceeds from the immediate
option, merely reinstating the employee in the payroll until the decision is reversed by the higher
and self-executory nature of the reinstatement aspect of the LA’s decision.
court.22 Failure of the employer to comply with the reinstatement order, by exercising the options in the
alternative, renders him liable to pay the employee’s salaries.23
By way of exception to the above rule, an employee may be barred from collecting the accrued wages if
shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the
Otherwise stated, a dismissed employee whose case was favorably decided by the LA is entitled to
employer. To determine whether an employee is thus barred, two tests must be satisfied: (1) actual delay
receive wages pending appeal upon reinstatement, which reinstatement is immediately
or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the
executory.24 Unless the appellate tribunal issues a restraining order, the LA is duty bound to implement the
delay must not be due to the employer’s unjustified act or omission. Note that under the second test, the
order of reinstatement and the employer has no option but to comply with it. 25
delay must be without the employer’s fault. If the delay is due to the employer’s unjustified refusal, the
employer may still be required to pay the salaries notwithstanding the reversal of the LA’s decision. 33
Moreover, and equally worth emphasizing, is that an order of reinstatement issued by the LA is self-
executory, i.e., the dismissed employee need not even apply for and the LA need not even issue a writ of
Application of the two-fold test; the
execution to trigger the employer’s duty to reinstate the dismissed employee.
petitioners are entitled to receive their
accrued salaries until December 18, 2007
In Pioneer Texturizing Corp. v. NLRC, et. al.,26 decided in 1997, the Court clarified once and for all this
self-executory nature of a reinstatement order. After tracing back the various Court rulings interpreting the
As we earlier pointed out, the core issue to be resolved is whether the petitioners may recover the accrued
amendments introduced by Republic Act No. 671527 on the reinstatement aspect of a labor decision under
wages until the CA’s reversal of the LA’s decision. An affirmative answer to this question will lead us to
Article 223 of the Labor Code, the Court concluded that to otherwise "require the application for and
reverse the assailed CA decision for legal errors and reinstate the NLRC’s decision affirming the release of
issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly
the garnished amount. Otherwise, we uphold the CA’s decision to be legally correct. To resolve this
betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a
question, we apply the two-fold test.
reinstatement order."28

First, the existence of delay - whether there was actual delay or whether the order of reinstatement
In short, therefore, with respect to decisions reinstating employees, the law itself has determined a
pending appeal was not executed prior to its reversal? We answer this test in the affirmative.
sufficiently overwhelming reason for its immediate and automatic execution even pending appeal. 29 The
employer is duty-bound to reinstate the employee, failing which, the employer is liable instead to pay the
dismissed employee’s salary. The Court’s consistent and prevailing treatment and interpretation of the To recall, on May 31, 2005, the LA rendered the decision finding the petitioners illegally dismissed and
reinstatement order as immediately enforceable, in fact, merely underscores the right to security of tenure ordering their immediate reinstatement. Per the records, the respondents received copy of this decision on
of employees that the Constitution30 protects. July 8, 2005. On August 20, 2005, the petitioners filed before the LA a Motion for Issuance of Writ of
Execution for their immediate reinstatement. The LA issued the Writ of Execution on October 7, 2005.
From the time the respondents received copy of the LA’s decision, and the issuance of the writ of
The employer is obliged to pay the
execution, until the CA reversed this decision on December 17, 2008, the respondents had not reinstated
dismissed employee’s salary if he
the petitioners, either by actual reinstatement or in the payroll. This continued non-execution of the
refuses to reinstate until actual
reinstatement order in fact moved the LA to issue an alias writ of execution on February 16, 2006 and
reinstatement or reversal by a higher
another writ of execution on April 24, 2007.
tribunal; circumstances that may bar an
employee from receiving the accrued wages
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 31 of 51

From these facts and without doubt, there was actual delay in the execution of the reinstatement aspect of this duty that was not yet in effect when the LA rendered its decision (finding illegal dismissal) and issued
the LA’s May 31, 2005 decision before it was reversed in the CA’s decision. the writ of execution in 2005. Nevertheless, when the LA issued the February 16, 2006 alias writ of
execution and the April 24, 2007 writ of execution, the 2005 NLRC Rules was already in place such that
the respondents had become duty-bound to submit the required compliance report; their noncompliance
Second, the cause of the delay – whether the delay was not due to the employer’s unjustified act or
with this rule all the more showed a clear and determined refusal to reinstate.
omission. We answer this test in the negative; we find that the delay in the execution of the reinstatement
pending appeal was due to the respondents’ unjustified acts.
All told, under the facts and the surrounding circumstances, the delay was due to the acts of the
respondents that we find were unjustified. We reiterate and emphasize, Article 223, paragraph 3, of the
In reversing, for grave abuse of discretion, the NLRC’s order affirming the release of the garnished
Labor Code mandates the employer to immediately reinstate the dismissed employee, either by actually
amount, the CA relied on the fact of the issuance of the February 21, 2006 Memorandum and of the
reinstating him/her under the conditions prevailing prior to the dismissal or, at the option of the employer, in
petitioners’ failure to comply with its return-to-work directive. In other words, with the issuance of this
the payroll. The respondents' failure in this case to exercise either option rendered them liable for the
Memorandum, the CA considered the respondents as having sufficiently complied with their obligation to
petitioners' accrued salary until the LA decision was reversed by the CA on December 17, 2008. We,
reinstate the petitioners. And, the subsequent delay in or the non-execution of the reinstatement order was
therefore, find that the NLRC, in affirming the release of the garnished amount, merely implemented the
no longer the respondents’ fault, but rather of the petitioners who refused to report back to work despite
mandate of Article 223; it simply recognized as immediate and self-executory the reinstatement aspect of
the directive.
the LA's decision.

Our careful consideration of the facts and the circumstances that surrounded the case convinced us that
Accordingly, we reverse for legal errors the CA decision.1âwphi1 We find no grave abuse of discretion
the delay in the reinstatement pending appeal was due to the respondents’ fault. For one, the respondents
attended the NLRC's July 16, 2008 resolution that affirmed the March 13, 2008 decision of the LA granting
filed several pleadings to suspend the execution of the LA’s reinstatement order, i.e., the opposition to the
the release of the garnished amount.
petitioners’ motion for execution filed on October 3, 2005; the motion to quash the October 7, 2005 writ of
execution with prayer to hold in abeyance the implementation of the reinstatement order; and the motion to
suspend the order for the petitioners’ reinstatement filed on February 28, 2006 after the LA issued the WHEREFORE, in light of these considerations, we hereby GRANT the petition. We REVERSE and SET
February 16, 2006 alias writ of execution. These pleadings, to our mind, show a determined effort on the ASIDE the September 30, 2010 decision and the January 13, 2011 resolution of the Court of Appeals (CA)
respondents’ part to prevent or suspend the execution of the reinstatement pending appeal. in CA-G.R. Sp No. 112011. Accordingly, we REINSTATE the July 16, 2008 decision of the National Labor
Relations Commission (NLRC) affirming the March 13, 2008 order of the Labor Arbiter in NLRC Case No.
00-04-05469-2004.
Another reason is that the respondents, contrary to the CA’s conclusion, did not sufficiently notify the
petitioners of their intent to actually reinstate them; neither did the respondents give them ample
opportunity to comply with the return-to-work directive. We note that the respondents delivered the Costs against the respondents South East Asian Airlines and Irene Dornier.SO ORDERED.
February 21, 2006 Memorandum (requiring the petitioners to report for work on February 24, 2006) only in
the afternoon of February 23, 2006. Worse, the respondents handed the notice to only one of the
SECOND DIVISION
petitioners – Pelaez – who did not act in representation of the others. Evidently, the petitioners could not
G.R. No. 207286, July 29, 2015
reasonably be expected to comply with a directive that they had no or insufficient notice of.
DELA ROSA LINER, INC. AND/OR ROSAURO DELA ROSA, SR. AND NORA DELA
ROSA,Petitioners, v. CALIXTO B. BORELA AND ESTELO A. AMARILLE, Respondents.
Lastly, the petitioners continuously and actively pursued the execution of the reinstatement aspect of the DECISION
LA’s decision, i.e., by filing several motions for execution of the reinstatement order, and motion to cite the BRION, J.:
respondents in contempt and re-computation of the accrued wages for the respondents’ continued failure
to reinstate them. Before us is Dela Rosa Liner, et al.'s petition for review on certiorari1 which seeks to annul the March 8,
2013 decision2 and May 21, 2013 resolution3 of the Court of Appeals in CA-G.R. SP No. 128188.
The Antecedents
These facts altogether show that the respondents were not at all sincere in reinstating the petitioners.
These facts – when taken together with the fact of delay – reveal the respondents’ obstinate resolve and
The facts as set out in the CA decision are summarized below.
willful disregard of the immediate and self-executory nature of the reinstatement aspect of the LA’s
decision.
On September 23, 2011, respondents Calixto Borela, bus driver, and Estelo Amarille, conductor, filed
separate complaints4 (later consolidated) against petitioners Dela Rosa Liner, Inc., a public transport
A further and final point that we considered in concluding that the delay was due to the respondents’ fault company, Rosauro Dela Rosa, Sr., and Nora Dela Rosa, for underpayment/non-payment of salaries,
is the fact that per the 2005 Revised Rules of Procedure of the NLRC (2005 NLRC Rules),34 employers are holiday pay, overtime pay, service incentive leave pay, 13th month pay, sick leave and vacation leave,
required to submit a report of compliance within ten (10) calendar days from receipt of the LA’s decision, night shift differential, illegal deductions, and violation of Wage Order Nos. 13, 14, 15 and 16.
noncompliance with which signifies a clear refusal to reinstate. Arguably, the 2005 NLRC Rules took effect
only on January 7, 2006; hence, the respondents could not have been reasonably expected to comply with In a motion dated October 26, 2011, the petitioners asked the labor arbiter to dismiss the case for forum

shopping. They alleged that on September 28, 2011, the CA 13th Division disposed of a similar case
between the parties (CA-G.R. SP No. 118038) after they entered into a compromise agreement5 which
covered all claims and causes of action they had against each other in relation to the respondents'
employment.
The respondents opposed the motion, contending that the causes of action in the present case aredifferent
from the causes of action settled in the case the petitioners cited.
The Rulings on Compulsory Arbitration
Labor Arbiter (LA) Danna A. Castillon, in an order6 dated November 24, 2011, upheld the petitioners'
position and dismissed the complaint on grounds of forum shopping. Respondents appealed the LA's
ruling. On July 31, 2012, the National Labor Relations Commission (NLRC) 1st Division granted the
appeal,7 reversed LA Castillon's dismissal order, and reinstated the complaint.
The NLRC held that the respondents could not have committed forum shopping as there was no identity of
causes of action between the two cases. The first complaint, the NLRC pointed out, charged the
petitioners with illegal dismissal and unfair labor practice; while the second complaintwas based on the
petitioners' alleged nonpayment/underpayment of their salaries and monetary benefits, and violation of
several wage orders.
The petitioners moved for reconsideration, but the NLRC denied their motion, prompting them to file with
the CA a petition for certiorari, for alleged grave abuse of discretion by the NLRC in: (1) holding that the
respondents did not commit forum shopping when they filed the second complaint; and (2) disregarding
respondents' quitclaim in relation to the compromise agreement in the first complaint.
The CA Decision
In its decision under review, the CA 15th Division denied the petition; it found no grave abuse of discretion
in the NLRC ruling that the respondents did not commit forum shopping when they filed their second
complaint. The NLRC likewise held that neither was the case barred by res judicataarising from the CA
judgment in the first case.
The appeals court explained that the first case involved the issues of whether respondents had been
illegally dismissed and whether petitioners should be liable for unfair labor practice. The labor
arbiter8 dismissed the first complaint for lack of merit in his decision of November 6, 2008.
On the respondents' appeal against the LA ruling in this first case, the NLRC 6th Division rendered a
decision on March 25, 2010, reversing the dismissal of the complaint. It awarded respondents back wages
(P442,550.00 for Borela and P215,775.00 for Amarille), damages (P10,000.00 each in moral and
exemplary damages for Borela), and moral and exemplary damages (P25,000.00 each for Amarille), plus
10% attorney's fees for each of them.9chanrobleslaw
On the petitioners' motion for reconsideration of the NLRC ruling in the first complaint, however, the NLRC
vacated its decision, and in its resolution of September 30, 2010, issued a new ruling that followed the LA's
ruling, with modification. It awarded the respondents financial assistance of P10,000.00 each, in
consideration of their long years of service to the company.
The respondents sought relief from the CA through a petition for certiorari (CA-G.R. SP No. 118038).
Thereafter, the parties settled the case (involving the first complaint) amicably through the compromise
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 32 of 51
agreement10 adverted to earlier. Under the terms of this agreement, "(t)he parties has(sic) agreed to
terminate the case now pending before the Court of Appeals and that both parties further agree that no
further action based on the same grounds be brought against each other, and this Agreement applies to all
claims and damages or losses either party may have against each other whether those damages or losses
are known or unknown, foreseen or unforeseen."
Based on this agreement, Borela and Amarille received from respondents P350,000.00 and P150,000.00,
respectively, and executed a quitclaim. Consequently, the CA 13th Division rendered judgment in
accordance with the compromise agreement and ordered an entry of judgment which was issued on
September 28, 2011. In this manner, the parties resolved the first case.
To go back to the present case CA-G.R. SP No. 128188, which arose from the second complaint the
respondents subsequently filed), the CA 15th Division upheld the NLRC's (1st Division) decision and ruled
out the presence of forum shopping and res judicata as bars to the respondents' subsequent money claims
against the petitioners. The petitioners moved for reconsideration, but the CA denied the motion in its
resolution of May 21, 2013.
The Petition
The petitioners now ask the Court to nullify the CA judgment in CA-G.R. SP No. 128188 (arising from the
second complaint), contending that the appellate court erred in upholding the NLRC ruling that there was
no forum shopping nor res judicata that would bar the second complaint. They submit that private
respondents should be penalized and be dealt with more severely, knowing fully well that the same action
had been settled and they both received a considerable amount for the settlement. 11chanrobleslaw
The Respondents' Position
In their Comment12 filed on September 4, 2013, the respondents pray for the denial of the petition for
having been filed out of time and for lack of merit.
They argue that the petition should not prosper as it was belatedly filed. They claim that according to the
petitioners' counsel herself, her law firm received a copy of the CA resolution of May 21, 2013, denying
their motion for reconsideration on May 28, 2013, and giving them until June 12, 2013, to file the petition.
The petition, they point out, was notarized only on June 13, 2013, which means that it was filed only on
that day, or beyond the 15-day filing period.
On the substantive aspect of the case, respondents contend that their second complaint involved two
causes of action: (1) their claim for sick leave, vacation leave, and 13th-month pay under the collective
bargaining agreement of the company; and (2) the petitioners' noncompliance with wage orders since the
year 2000 until the present.
They quote the NLRC's (1st Division) decision of July 31, 2012,13 almost in its entirety, to support their
position that they did not commit forum shopping in the filing of the second complaint and that they should
be heard on their money claims against the petitioners.

The Court's Ruling
The procedural issue
We find the petition for review on certiorari timely filed pursuant to Rule 45, Section 2 of the Rules of
Court.14chanrobleslaw
The last day for filing of the petition, as respondents claim, fell on June 12, 2013, Independence Day, a
legal holiday. In Reiner Pacific International Shipping, et al., v. Captain Francisco B. Guevarra, et al.,15 the
Court explained that under Section 1, Rule 22 of the Rules of Court, as clarified by A.M. 00-2-14 SC (in
relation to the filing of pleadings in courts), when the last day on which a pleading is due falls on a
Saturday, Sunday, or a legal holiday, the filing of the pleading on the next working day is deemed on time.
The filing of the petition therefore on June 13, 2013, a working day, fully complied with the rules.
The merits of the case
The CA 15th Division committed no reversible error when it affirmed the NLRC ruling that the second
complaint is not barred by the rule on forum shopping nor by the principle of res judicata. In other words,
no grave abuse of discretion could be attributed to the NLRC when it reinstated the second complaint.
Contrary to the petitioners' submission, respondents' second complaint (CA-G.R. SP No. 128188), a
money claim, is not a "similar case" to the first complaint (CA-G.R. SP No. 118038). Thus, the filing of
the second complaint did not constitute forum shopping and the judgment in the first case is not ares
judicata ruling that bars the second complaint.
As the CA aptly cited, the elements of forum shopping are: (1) identity of parties; (2) identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two
preceding particulars such that any judgment rendered in the other action will, regardless of which party is
successful, amount to res judicata in the action under consideration.16chanrobleslaw
We concur with the C A that forum shopping and res judicata are not applicable in the present case. There
is no identity of rights asserted and reliefs prayed for, and the judgment rendered in the previous action will
not amount to res judicata in the action now under consideration.
There is also no identity of causes of action in the first complaint and in the second complaint. In Yap v.
Chua,17 we held that the test to determine whether causes of action are identical is to ascertain whether
the same evidence would support both actions, or whether there is an identity in the facts essential to the
maintenance of the two actions. If the same facts or evidence would support both actions, then they are
considered the same; a judgment in the first case would be a bar to the subsequent action.
Under the circumstances of the case before us, sufficient basis exists for the NLRC's and CA's conclusions
that there is no identity of causes of action between the respondents' two complaints against the
petitioners. The first complaint involved illegal dismissal/suspension, unfair labor practicewith prayer
for damages and attorney's fees; while the second complaint (the subject of the present appeal)
involves claims for labor standards benefits — the petitioners' alleged violation of Wage Orders Nos. 13,
14, 15 and 16; nonpayment of respondents' sick and vacation leave pays, 13th-month pay, service
incentive leave benefit, overtime pay, and night shift differential.
As the CA correctly held, the same facts or evidence would not support both actions. To put it simply, the
facts or the evidence that would determine whether respondents were illegally dismissed, illegally
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 33 of 51
suspended, or had been the subject of an unfair labor practice act by the petitioners are not the same facts
or evidence that would support the charge of non-compliance with labor standards benefits and several
wage orders. We thus cannot find a basis for petitioners' claim that "the same action had been settled x
x x."18chanrobleslaw
Neither are we persuaded by petitioners' argument that "The Compromise Agreement covered all claims
and causes of action that the parties may have against each other in relation to the private respondents'
employment."19 The compromise agreement had been concluded to terminate the illegal dismissal and
unfair labor case then pending before the CA. While the parties agreed that no further action shall be
brought by the parties against each other, they pointedly stated that they referred to actions on the same
grounds. The phrase same grounds can only refer to the grounds raised in the first complaint and not to
any other grounds.
We likewise cannot accept the compromise agreement's application "to all claims and damages or
losses either party may have against each other whether those damages or losses are known or
unknown, foreseen or unforeseen."20chanrobleslaw
This coverage is too sweeping and effectively excludes any claims by the respondents against the
petitioners, including those that by law and jurisprudence cannot be waived without appropriate
consideration such as nonpayment or underpayment of overtime pay and wages.
In Pampanga Sugar Development, Co., Inc., v. Court of Industrial Relations, et al.,21 the Court reminded
the parties that while rights may be waived, the waiver must not be contrary to law, public policy, morals, or
good customs; or prejudicial to a third person with a right recognized by law. 22 In labor law, respondents'
claim for 13th-month pay, overtime pay, and statutory wages (under Wages Orders 13, 14, 15 and 16),
among others, cannot simply be generally waived as they are granted for workers' protection and welfare;
it takes more than a general waiver to give up workers' rights to these legal entitlements.
Lastly, the petitioners' insinuation, that the respondents are not and should not be entitled to anything
more, because they had already "received a considerable amount for the settlement" 23 (P350,000.00 for
Borela and P150,000.00 for Amarille), should be placed and understood in its proper context.
We note that in the illegal dismissal case where the compromise agreement took place, the NLRC 6th
Division (acting on the appeal from the LA's ruling) awarded Borela P442,550.00 in backwages;
P20,000.00 in moral and exemplary damages, plus 10% attorney's fees; and to Amarille P215,775.00 in
back wages and P50,000.00 in moral and exemplary damages, plus 10% attorney's fees. 24chanrobleslaw
Although the NLRC reconsidered these awards and eventually granted financial assistance of P10,000.00
each to Borela and Amarille,25 it is reasonable to regard the amounts they received as a fair compromise in
the settlement of the first complaint in relation with the initial NLRC award, indicated above, before its
reconsideration. To be sure, the parties, especially the respondents, could not have considered the
P10,000.00 financial assistance or their labor standards claims, particularly the alleged violation of the
wage orders, as a factor in their effort to settle the case amicably. The compromise agreement, it should
be emphasized, was executed on September 8, 2011,26 while the labor standards complaint was filed only
on September 23, 2011.27chanrobleslaw
For the reasons discussed above, we find the petition without merit.
WHEREFORE, premises considered, the petition for review on certiorari is DISMISSED for lack of merit.
The assailed decision and resolution of the Court of Appeals are AFFIRMED.SO

ORDERED.cralawlawlibrary
FIRST DIVISION
G.R. No. 206612, August 17, 2015
TOYOTA ALABANG, INC., Petitioner, v. EDWIN GAMES, Respondent.
RESOLUTION
SERENO, C.J.:
Remaining at bench is the Motion for Reconsideration1 of petitioner Toyota Alabang, Inc. We had
unanimously denied2 its Petition for Review on Certiorari with Urgent Prayer for Injunctive Relief, 3which
sought the nullity of the Court of Appeals (CA) Decision and Resolution.4 The CA affirmed the
Resolutions5 of the National Labor Relations Commission (NLRC) dismissing petitioner's appeal for non-
perfection and for lack of merit. In effect, the NLRC sustained the ruling6 of the labor arbiter (LA) finding
that petitioner had illegally dismissed respondent Edwin Games (Games).
In gist, the antecedent facts are as follows:LawlibraryofCRAlaw
Games, who worked as a foreman for petitioner, allegedly stole its vehicle lubricants. Subsequently, it
charged him with qualified theft before the trial court. Two years thereafter, or on 24 August 2007, Games
filed a Complainant for illegal dismissal, nonpayment of benefits, and damages against petitioner. The
latter, through counsel, failed to file its Position Paper on the date set on 15 November 2007.
Several resettings of the hearings ensued. During the 21 December 2007 hearing, petitioner manifested
that it had failed to file its Position Paper because its handling lawyer was no longer connected with the
company. Then, in the hearing of 11 January 2008, petitioner failed to appear and even reneged on
submitting its pleading. Accordingly, on 25 January 2008, the case was declared submitted for decision.
On 5 February 2008, the LA ruled against petitioner and ordered the latter to pay Games P535,553.07 for
his separation pay, back wages, service incentive leave pay and attorney's fees resulting from his illegal
dismissal. Petitioner no longer filed a motion for reconsideration. As a result, the LA's ruling became final
and executory.
The LA issued a Writ of Execution, which petitioner sought to quash. It prayed that the proceedings be
reopened, explaining that it had failed to present evidence because of its counsel's negligence in filing the
appropriate pleadings. The LA denied the claims of petitioner. Aggrieved, the latter appealed before the
NLRC.
The appeal of petitioner was denied due course because it had failed to show proof of its security deposit
for the appeal bond under Section 6, Rule VI of the 2005 NLRC Rules of Procedure. According to the
NLRC, the bonding company's mere declaration in the Certification of Security Deposit that the bond was
fully secured7 was not tantamount to a faithful compliance with the rule, because there must first be an
accompanying assignment of the employer's bank deposit.
On the merits, the NLRC dismissed the case on the basis of the rule that no appeal may be taken from an
order of execution of a final judgment.8 For the NLRC, petitioner's failure to appeal the LA Decision already
made the ruling final and executory.
Petitioner elevated the case to the CA via a Petition for Certiorari, but the action was dismissed. Firstly, the
CA ruled that the NLRC did not gravely abuse its discretion in denying the appeal, given that petitioner had
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 34 of 51
failed to comply faithfully with the bond requirement. Secondly, it echoed the ruling of the NLRC that a final
judgment is no longer appealable. Thirdly, the CA found that petitioner's own negligence had caused it to
lose its right to appeal.
Aggrieved, petitioner filed a Petition for Review on Certiorari with Urgent Prayer for Injunctive Relief before
this Court. It disputed the finding that it did not show proof of its security deposit for the appeal bond. It also
insisted that its counsel's gross negligence justified the reopening of the proceedings below.
By way of a minute Resolution, this Court denied the petition considering that the allegations, issues and
arguments raised by petitioner failed to sufficiently show that the CA had committed any reversible error in
the challenged decision and resolution as to warrant the exercise of this Court'sdiscretionary appellate
jurisdiction. Hence, the instant Motion for Reconsideration.
The determinative issues in this case remain the same. This Court is tasked to review, on reconsideration,
whether or not the CA committed a reversible error in refusing to reopen the proceedings below.
RULING OF THE COURT
To recall, the LA's decision finding that petitioner illegally dismissed respondent was already final and
executory because of petitioner's failure to file a timely appeal. Therefore, the labor dispute between the
parties should have been considered a closed case by then, and no longer subject to appeal. At that point,
Games should have already reaped the benefits of a favorable judgment. Still, petitioner sought the
reopening of the case, which the tribunals a quo denied.
This Court maintains that the CA correctly refused to reopen the proceedings below. The reopening of a
case is an extraordinary remedy,9 which, if abused, can make a complete farce of a duly promulgated
decision that has long become final and executory. Hence, there must be good cause on the movant's part
before it can be granted.
In this case, petitioner itself was negligent in advancing its case. As found by the appellate court, petitioner
was present during the mandatory conference hearing in which the latter was informed by the LA of the
need to file a Position Paper on 15 November 2007. However, petitioner not only reneged on the
submission of its Position Paper, but even failed to move for the filing of the pleading at any point before
the LA resolved the case on 5 February 2008.
Moreover, petitioner had failed to exhibit diligence when it did not attend the hearing on 11 January 2008,
or any of the proceedings thereafter, despite its manifestation that it no longer had any legal
representative. Given the instances of negligence by petitioner itself, the Court finds that the CA justly
refused to reopen the case in the former's favor. Definitely, petitioner cannot now be allowed to claim
denial of due process when it was petitioner who was less than vigilant of its rights. 10redarclaw
At this stage of appellate review, Justice Lucas P. Bersamin dissents and votes to remand the case to the
LA for the reception of petitioner's evidence. He posits three reasons as follows:LawlibraryofCRAlaw
First, he states that the NLRC gravely abused its discretion in requiring petitioner to post an appeal bond,
because this requirement does not cover an appeal from a decision of the LA denying a motion to quash a
writ of execution.
Second, he writes that in any event, the NLRC erred in requiring petitioner to accompany the appeal bond
with proof of a security deposit or collateral securing the bond. He bases this point on the fact that the

bonding company has already issued a Certificate of Security Deposit declaring that the appeal bond was
fully secured by a security deposit equivalent to the judgment award.
Third, he advances the opinion that there may be merit in the Rule 45 petition filed by petitioner. He cites
that it had a just cause to dismiss respondent after he had allegedly stolen its vehicle lubricants.
Before discussing these points, it is apropos to elucidate that this Court must be faithful to the framework
of resolving labor cases on appellate review before this Court. Universal Robina Sugar Milling Corporation
v. Acibo aptly explains:11redarclaw
This Court's power of review in a Rule 45 pet1t1on is limited to resolving matters pertaining to any
perceived legal errors, which the CA may have committed in issuing the assailed decision. In reviewing the
legal correctness of the CA's Rule 65 decision in a labor case, we examine the CA decision in the
context that it determined, i.e., the presence or absence of grave abuse of discretion in the NLRC
decision before it and 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. (Emphasis supplied)
Based on the foregoing, the task at hand involves a determination of whether or not the CA gravely erred
in finding that the NLRC did not exceed its jurisdiction in refusing to grant petitioner's entreaty to reopen
the case. In other words, as long as the exercise of discretion below is based on well founded factual and
legal bases,12 no abuse of discretion amounting to lack or excess of jurisdiction can be imputed, and we
are then justified to deny due course both to the Rule 45 petition and the concomitant Motion for
Reconsideration.
The tribunals below gave overwhelming justifications for their rulings. In contrast, the first pointespoused in
the dissenting opinion has no basis. The paraphrased proposition that "an appeal bond is not required in
appeals from decisions of the LA denying a motion to quash a writ of execution" lacks any citation sourced
from a statute or case law. Article 223 of the Labor Code and Section 6, Rule VI of the 2011 NLRC Rules
of Procedure, uniformly state thus:LawlibraryofCRAlaw
In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal
by the employer may be perfected only upon the posting of a bond, which shall either be in the form of
cash deposit or surety bond equivalent in amount to the monetary award, exclusive of damages and
attorney's fees. (Emphasis supplied)
Evidently, the above rules do not limit the appeal bond requirement only to certain kinds of rulings of the
LA. Rather, these rules generally state that in case the ruling of the LA involves a monetary award, an
employer's appeal may be perfected only upon the posting of a bond. Therefore, absent any qualifying
terms,13 so long as the decision of the LA involves a monetary award, as in this case,14 that ruling can only
be appealed after the employer posts a bond.
Clearly, this construction is but proper considering the avowed purpose of appeal bonds demanded by the
law from employers in labor cases. This matter was discussed by the Court in Computer Innovations
Center v. NLRC,15 to wit:LawlibraryofCRAlaw
As earlier stated, the underlying purpose of the appeal bond is to ensure that the employee has
properties on which he or she can execute upon in the event of a final, providential award. The non
payment or woefully insufficient payment of the appeal bond by the employer frustrates these ends.
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 35 of 51
Respondent Cariño alleges in hisComment before this Court that petitioner Quilos and his wife have since
gone abroad, and wonders aloud whether he still would be able to collect his monetary award considering
the circumstances. Petitioners, in their Reply and Memorandum, do not aver otherwise. Indeed, such
eventuality appears plausible considering that Quilos himself did not personally verify the petition, and had
in fact executed a Special Power of Attorney in favor of his counsel, Atty. Bernabe B. Alabastro,
authorizing the filing of cases in his name. ft does not necessarily follow that the absence of Quilos from
this country precludes the execution of the award due Cariño. However, if the absence of Quilos from this
country proves to render impossible the execution of judgment in favor of Cariño, then the latter's victory
may sadly be rendered pyrrhic. The appeal bond requirement precisely aims to prevent empty or
inconsequential victories by the laborer, and it is hoped that herein petitioners' refusal to post the
appropriate legal appeal bond does not frustrate the ends of justice in this case. (Emphasis supplied)
If we are to construe otherwise, then an aggrieved party may simply seek the quashal of a writ of
execution, instead of going through the normal modes of appeal, to altogether avoid paying for an appeal
bond. This ruse will then circumvent the requirement of both labor rules and jurisprudence16to post an
appeal bond before contesting the LA's grant of monetary award. Hence, the first point is not only
incorrect, but also dangerous.
The second point likewise fails to justify the grant of petitioner's Motion for Reconsideration. This point
refers to the proper construction of Section 6, Rule VI of the 2011 NLRC Rules of Procedure, which
demands that an appeal bond must be accompanied by a "proof of security deposit or collateral securing
the bond."
According to the NLRC and the CA, the bonding company's mere declaration in the Certification of
Security Deposit that the bond is fully secured17 is not tantamount to a faithful compliance with the rule,
because there must first be an accompanying assignment of the employer's bank deposit. On the other
hand, the dissent sees this declaration as an act that satisfies Section 6, Rule VI of the 2011 NLRC Rules
of Procedure. For this reason, he opines that the NLRC should have entertained the appeal of petitioner.
Notwithstanding this issue, the NLRC has given a well-founded reason for refusing to entertain petitioner's
appeal, namely, no appeal may be taken from an order of execution of a final and executory
judgment.
An appeal is not a matter of right, but is a mere statutory privilege. It may be availed of only in the manner
provided by law and the rules.18 Thus, a party who seeks to elevate an action must comply with the
requirements of the 2011 NLRC Rules of Procedure as regards the period, grounds, venue, fees, bonds,
and other requisites for a proper appeal before the NLRC; and in Section 6, Rule VI, the aforesaid rules
prohibit appeals from final and executory decisions of the Labor Arbiter.
In this case, petitioner elevated to the NLRC an already final and executory decision of the LA. To recall,
after petitioner learned of its former counsel's negligence in filing a Position Paper before the LA, it
nonetheless failed to file a motion reconsideration to question the ruling of the LA that it illegally dismissed
Games. At that point, the Decision was already final and executory, so the LA dutifully issued a Writ of
Execution. Petitioner sought the quashal of the writ of execution and the reopening of its case only at that
stage; and only after it was rebuffed by the LA did petitioner appeal before the NLRC. Based on the
timeline, therefore, the LA's adverse Decision had become final and executory even prior to petitioner's
appeal before the NLRC contesting the denial of the Motion to Quash the Writ of Execution. Consequently,
the NLRC dismissed the appeal based on its clear prohibition under Section 5, Rule V of the 2011 NLRC
Rules of Procedure.19redarclaw

The NLRC's reasoning that no appeal may be taken from an order of execution of a final and executory
judgment is also rooted in case law. Jurisprudence dictates that a final and executory decision of the LA
can no longer be reversed or modified.20 After all, just as a losing party has the right to file an appeal within
the prescribed period, so does the winning party have the correlative right to enjoy the finality of the
resolution of the case.21 On this basis, theCA did not grievously err when it concluded that the ruling of the
NLRC denying petitioner's appeal was not baseless, arbitrary, whimsical, or despotic.22redarclaw
Finally, as regards the third point pertaining to the advancement of the merits23 of the case, it may no
longer be properly considered by this Court. To adjudicate on the merits of the instant appeal would
require the reopening of the whole case, a step that all the tribunals below - the LA, the NLRC, and the
CA- have already refused to take.
As correctly ruled by the CA, the reopening of a case is, by default, not allowed merely on the ground that
the counsel has been negligent in taking the required steps to protect the interest of the client, such as
timely filing a pleading, appearing during hearings, and perfecting appeals. 24 An exception arises only
when there is good cause and excusable negligence on the client's part.25redarclaw
Both the explanation of the CA and the records undeniably show no good cause or excusable negligence
on the part of the client - petitioner Toyota Alabang, Inc. given the totality of the instances of the latter's
own negligence in these proceedings, viz: (1) despite being informed, during the mandatory conference
hearing, of the necessity to file a Position Paper, petitioner reneged on its duty to timely submit its Position
Paper to the LA on 15 November 2007; (2) after manifesting that it no longer had a counsel, petitioner was
still absent on 11 January 2008, the date when it could still have submitted its belated Position Paper; (3)
thereafter, it altogether absented itself from all the proceedings before the LA; (4) at no point before the
LA's resolution of the case on 5 February 2008 did petitioner file a Position Paper; and (5) after allowing
the LA Decision to attain finality as a result of its non-submission of an appeal or a motion for
reconsideration, petitioner belatedly sought the quasha1 of the execution of the LA Decision granting
compensation to respondent.
Despite the overwhelming lapses mentioned above, the dissent maintains that petitioner cannot be
considered negligent by any measure. According to the dissent, petitioner could not be faulted for failing to
file a position paper because the filing of pleadings has been entrusted to its counsel. For the dissent,
"given the nature and extent of its business and operations, the petitioner could not be expected to
supervise and monitor all the cases it had entrusted to its lawyer." But, this stance is baseless as can be
seen by the lack of legal citation in the dissent.
More importantly, this Court cannot give special treatment to petitioner. In our past cases, this Court
already held that the failure of the counsel to file the required position papers before the LA is not a ground
to declare that petitioner had been deprived of due process; and is not a cause to conclude that the
proceedings a quo had been null and void.26 In Building Care Corporation v. Macaraeg,27 this Court
thoroughly explained that:LawlibraryofCRAlaw
It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bind the client. A
departure from this rule would bring about never-ending suits, so long as lawyers could allege their own
fault or negligence to support the client's case and obtain remedies and reliefs already lost by the
operation of law. The only exception would be, where the lawyer's gross negligence would result in the
grave injustice of depriving his client of the due process of law. In this case, there was no such deprivation
of due process. Respondent was able to fully present and argue her case before the Labor Arbiter. She
was accorded the opportunity to be heard.
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 36 of 51
We have consistently held that the requirements of due process are satisfied when the parties are given
the opportunity to submit position papers wherein they are supposed to attach all the documents that
would prove their claim in case it be decided that no hearing should be conducted or was
necessary.28 Here, petitioner, despite being given several chances to pass its position paper, did not at all
comply. Worse, petitioner also had other instances of negligence. Consequently, this Court cannot redo
the whole proceedings of the Labor Arbiter who had already afforded due process to the former.
Given the foregoing reasons, juxtaposed with the high threshold for resolving appellate reviews in labor
cases before this Court, we rule for the denial of petitioner's Motion for Reconsideration.
WHEREFORE, the Petition for Review with Urgent Prayer for Injunctive Relief filed by Toyota Alabang,
Inc. is DENIED with FINALITY. No further pleadings shall be entertained in this case. Let an Entry of
Judgment be issued in due course.
SO ORDERED.cralawlawlibrary
DISSENTING OPINION
BERSAMIN, J.:
Recognizing the imbalance of power between Management and Labor, the Court often gravitates towards
the latter as a measure of compassion under the principle of social justice. However, our mandate to
protect and promote the rights of employees should not lead us to ignore altogether the cause of the
employers whose rights are just as forcefully protected under the law. In dispensing justice between
Management and Labor, therefore, we should bear in mind that in the realm of labor law, the proposition
that technical rules of procedure should not rigidly apply equally favors Management and Labor. 1redarclaw
For this reason, I DISSENT. I call for caution and prudence in dealing with the employer's motion for
reconsideration. If we were to deny the motion for reconsideration, we would be fixated with technicalities
that force us to overlook the substantial merits of the petition.
Antecedents
Respondent Edwin Games worked as a foreman at the Quality Control Department of petitioner Toyota
Alabang, Inc. since August 1997. On December 14, 2005,2 during a routine inspection of the car that
Games was driving to test outside of the petitioner's premises, the security guard on duty found a box of
expensive vehicle lubricants belonging to the petitioner inside the car's compartment. Games underwent
inquest proceedings that led to the filing on December 16, 2005 of an information for frustrated qualified
theft in the Regional Trial Court (RTC), Branch 197, in Las Pinas City (docketed as Criminal Case No. 05-
1283).3redarclaw
Almost two years later, or on August 24, 2007, Games filed a complaint for illegal dismissal.The
petitioner claims that its previous counsel negligently failed to attend the scheduled hearings and to file
any position paper or pleading in its behalf.
On February 5, 2008, Labor Arbiter Marita V. Padolina rendered a decision declaring that Games had
been illegally dismissed due to the absence of both substantive and procedural due
process,4disposing:LawlibraryofCRAlaw

WHEREFORE, premises considered, judgment is hereby rendered ordering TOYOTA ALABANG INC., to
pay complainant Edwin B. Games separation pay in the amount of P135,454.00, backwages in the amount
of P348,320.00, service incentive leave pay in the amount of P3,092.34 and attorney's fees in the amount
of P48,686.64 or a total amount of FIVE HUNDRED THIRTY FIVE THOUSAND FIVE HUNDRED FIFTY
THREE PESOS AND SEVEN CENTAVOS (P535,553.07).
All other claims are dismissed for want of factual basis.
SO ORDERED.
A writ of execution was issued after the petitioner's counsel failed to appeal the decision. 5redarclaw
On October 17, 2008, the petitioner, through a new counsel, filed a motion to quash the writ of execution,
and prayed, among others, for there opening of the case for the reception of its evidence. Unfortunately,
however, Labor Arbiter Padolina denied the motion to quash, and her order was received by the petitioner
on January 27, 2009.6redarclaw
The petitioner consequently filed a memorandum of appeal, but the National Labor Relations Commission
(NLRC)-First Division issued its resolution on January 20, 2010 denying the appeal for failure to attach an
assignment of bank deposit that would serve as proof of security deposit of its appeal bond pursuant to
Section 6, Rule VI of the 2005 NLRC Revised Rules of Procedure. The NLRC further noted that the
petitioner was estopped from questioning the writ because it voluntarily made a partial payment with an
undertaking to pay the balance at a later date; and ruled that an order of execution or garnishment of a
final and executory judgment was not appealable.7 The petitioner then moved for reconsideration, but its
motion was denied on May 11, 2010.8redarclaw
The petitioner elevated the matter to the Court of Appeals (CA) on certiorari, 9 but its petition was
dismissed,10 with the CA holding that the petitioner was not denied due process because it was able to
participate in the scheduled hearings through its representative and counsel. 11redarclaw
The petitioner moved to reconsider, but the CA denied the motion on March 25, 2013. 12redarclaw
Hence, this appeal,13 in which the petitioner argues that: (a) Section 6, Rule VI of the 2005 NLRC Revised
Rules of Procedure did not require proof of actual assignment of bank deposit; and (b) the gross
negligence of its previous counsel to attend the hearings and file the appropriate pleadings in its behalf
amounted to the denial of due process.
The Court denied the petition for review on certiorari m the resolution promulgated on September 30,
2013.14redarclaw
Before the Court now is the petitioner's motion for reconsideration, 15 whereby it maintains that it had
substantially complied with the requirements of an appeal as prescribed under Section 6, Rule VI of the
2005 NLRC Rules of Procedure.
I VOTE TO GRANT the motion for reconsideration for the following reasons.
I
The Certificate of Security Deposit
constitutes proof of security deposit
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 37 of 51
required in Section 6(c), Rule VI
of the 2005 NLRC Rules of Procedure
The petitioner posits that the Certificate of Security Deposit executed by Visayan Surety and Insurance
Corporation attached to the memorandum of appeal was sufficient proof of security deposit as required by
Section 6(c), Rule VI of the 2005 NLRC Rules of Procedure.16 Hence, the NLRC erred in requiring an
"assignment of bank deposit" as proof of security deposit.
I find for the petitioner.
To require an "assignment of bank deposit" as proof of security deposit constituted grave abuse of
discretion on the part of the NLRC, for there was nothing in Section 6(c), Rule VI of the 2005 NLRC Rules
that prescribed the requirement. The provision only demanded "proof of security deposit or collateral
securing the bond," and did not specify that an assignment of bank deposit should constitute as proof of
security deposit. Clearly, the rule mentioned only a "check" as an unacceptable security.
Verily, the certificate constituted sufficient proof of security deposit, as borne out by its text, to
wit:LawlibraryofCRAlaw
CERTIFICATION OF SECURITY DEPOSIT
This certifies "V.S.I.C Bond No. G-FE-2009/522, MLA/G(l6)4000 in the amount of Php
535,553.07 issued in NLRC NCR-Case No. 00-08-091201-2007 entitled EDWIN B. GAMES versus
TOYOTA ALABANG, INC., is fully secured by a Security Deposit of equivalent amount.
This certification is issued in compliance with the provisions of Section 6, Rule VI of the New Rules
of Procedure of the National Labor Relations Commission (as amended by Resolution No. 01-02,
series of 2002).
x x x x17 (Emphasis supplied)
Moreover, Visayan Surety and Insurance Corporation solidarily bound itself as a surety with the petitioner
as the principal debtor to assure the fulfillment of its obligation.18 Hence, there was no rhyme or reason to
still further require the petitioner to execute a deed of assignment or a deposit in favor of the NLRC in
order to secure the payment of the money judgment.
At any rate, the petitioner submitted a certification from the Philippine Business Bank stating that it had set
aside the amount of P535,553.07 under a Certificate of Time Deposit in the name of Toyota Alabang,
Inc.19 This submission sufficiently indicated the willingness on the part of the petitioner to submit to the
judgment of the Labor Arbiter in the event of an adverse ruling.
Well to stress that the purpose in requiring a bond was to assure the employee that he would receive the
money judgment in his favor upon the denial of the employers' appeal. The bond requirement was
intended to discourage the employer from using the appeal to delay, or even evade, the obligation to
satisfy the employee's just and lawful claims.20 Given the actions taken by the petitioner, there was no
reason to doubt its sincerity to be bound by the ruling of the Labor Arbiter in favor of Games.
It is more in line with the desired objective of our labor laws to resolve controversies on their merits that the
filing of a bond in appeals involving monetary awards should be given liberal construction.21redarclaw

Furthermore, Section 6(c), Rule VI of the NLRC Rules applies to appeals from decisions of the Labor
Arbiter involving a monetary award to the employee. Conversely, an appeal from an order denying a
motion to quash a writ of execution does not require a bond.
The ponente opines in her December 23, 2014 reply, however, that the cited rule generally covers appeals
from rulings of the Labor Arbiter involving a monetary award, and includes the denial of a motion to quash
a writ of execution.
I humbly differ from this opinion considering that a writ of execution is not a decision, but an order directing
the sheriff to enforce, implement or satisfy the final decisions, orders or awards of the Labor Arbiter or the
Commission. The appeal bond requirement cannot be made to apply herein; hence, the NLRC gravely
abused its discretion in requiring the petitioner to comply with the inapplicable rule.
The requirement of an appeal bond notwithstanding, the NLRC should have treated the petitioner's appeal
as akin to a petition for relief from judgment that was permissible under Section 15, Rule V of the 2005
NLRC Rules of Procedure. It cannot be denied that the negligence of its previous counsel prevented the
petitioner from meaningfully participating in the proceedings before the Labor Arbiter, and even from filing
its appeal.
II
The dismissal of respondent employee
rested on evidently substantial grounds
The petitioner maintains that Games was validly dismissed for stealing company property. As a result of
his offense, the petitioner properly charged him criminally, such that the information for frustrated qualified
theft was then filed in court.22 He was subsequently arraigned, and then tried. Under the circumstances,
stealing company property constituted serious misconduct, and involved no less the commission of a crime
against the employer, either or both of which were just causes for terminating an employee under
Article 288 of the Labor Code, as amended.
The accusation for frustrated qualified theft should not be ignored by the Court because Games
had been caught in flagrante delicto. He need not be found guilty beyond reasonable doubt for the
crime, for it was enough that substantial evidence established his culpability. If we were to ignore
his having committed a very serious offense against the interest of the petitioner as his employer
in order to still favor the latter as a way of serving the liberal policy towards Labor, we would be
preferring technicality to substance. I wish to remind that the constitutional policy to provide full
protection to Labor is not meant to be a sword to oppress Management. Our commitment to the
cause of Labor should not prevent us from sustaining the employer when it is in the
right.23redarclaw
With all due respect, I humbly differ from the ponente's view that "a final and executory decision of the LA
can no longer be reversed or modified."24 The Court is first and foremost a court of law andjustice, and for
that reason it may relax the rule on finality of judgments in order to serve the ends of substantial justice.
This the Court has not hesitated to do in meritorious circumstances. The Court emphatically did so in favor
of the employer in McBurnie v. Ganzon:25redarclaw
It is also recognized that in some instances, the prudent action towards a just resolution of a case is for the
Court to suspend rules of procedure, for "the power of this Court to suspend its own rules or to except a
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 38 of 51
particular case from its operations whenever the purposes of justice require it, cannot be questioned."
In De Guzman v. Sandiganbayan, the Court, thus, explained:LawlibraryofCRAlaw
[T]he rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice.
Their strict and rigid application, which would result in technicalities that tend to frustrate rather than
promote substantial justice, must always be avoided. Even the Rules of Court envision this liberality. This
power to suspend or even disregard the rules can be so pervasive and encompassing so as to alter even
that which this Court itself has already declared to be final, as we are now compelled to do in this case. x x
x.
x x x x
The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of justice
but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere slaves to or robots
of technical rules, shorn of judicial discretion. That is precisely why courts in rendering real justice have
always been, as they in fact ought to be, conscientiously guided by the norm that when on the balance,
technicalities take a backseat against substantive rights, and not the other way around. Truly then,
technicalities, in the appropriate language of Justice Makalintal, "should give way to the realities of the
situation." x x x. (Citations omitted)
Consistent with the foregoing precepts, the Court has then reconsidered even decisions that have attained
finality, finding it more appropriate to lift entries of judgments already made in these cases. In Navarro v.
Executive Secretary, we reiterated the pronouncement in De Guzman that the power to suspend or even
disregard rules of procedure can be so pervasive and compelling as to alter even that which this Court
itself has already declared final. The Court then recalled in Navarro an entry of judgment after it had
determined the validity and constitutionality of Republic Act No. 9355, explaining that:LawlibraryofCRAlaw
Verily, the Court had, on several occasions, sanctioned the recall of entries of judgment in light of
attendant extraordinary circumstances. The power to suspend or even disregard rules of procedure can be
so pervasive and compelling as to alter even that which this Court itself had already declared final. In this
case, the compelling concern is not only to afford the movants-intervenors the right to be heard since they
would be adversely affected by the judgment in this case despite not being original parties thereto, but also
to arrive at the correct interpretation of the provisions of the [Local Government Code (LGC)] with respect
to the creation of local government units. x x x. (citations omitted)
In Muñoz v. CA, the Court resolved to recall an entry of judgment to prevent a miscarriage of justice. This
justification was likewise applied in Tan Tiac Chiong v. Hon. Cosico, wherein the Court held that:
The recall of entries of judgments, albeit rare, is not a novelty. In Munoz v. CA, where the case was
elevated to this Court and a first and second motion for reconsideration had been denied with finality, the
Court, in the interest of substantial justice, recalled the Entry of Judgment as well as the letter of transmittal
of the records to the Court of Appeals. (citations omitted)
In Barnes v. Judge Padilla, we ruled:
[A] final and executory judgment can no longer be attacked by any of the parties or be modified, directly or
indirectly, even by the highest court of the land.
However, this Court has relaxed this rule in order to serve substantial justice considering (a) matters of life,
liberty, honor or property, (b) the existence of special or compelling circumstances, (c) the merits of the
case, (d) a cause not entirely attributable to the fault or negligence of the party favored by the suspension
of the rules, (e) a lack of any showing that the review sought is merely frivolous and dilatory, and (f) the
other party will not be unjustly prejudiced thereby.
Relaxation of the rules in this instance is proper in view of the emerging trend in our jurisprudence to afford
every party-litigant the amplest opportunity for the proper and just determination of his cause free from the

constraints of technicalities.26 In Aguam v. Court of Appeals,27 we said that disposing an appeal based on
technicalities only gives a wrong impression of speedy disposal of cases while inappropriately resulting in
miscarriage of justice.
Manila Trading & Supply Co. v. Zulueta, et al.,28 even underscored the need to dig deep into the core of
the controversy involving a malfeasance of an employee towards his employer, thus:LawlibraryofCRAlaw
[T]he right of an employer to freely select or discharge his employees, is subject to regulation by the State
basically in the exercise of its paramount police power. (Commonwealth Acts Nos. 103 and 213). But much
as we should expand beyond economic orthodoxy, we hold that 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
interests. The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction
of the employer. There may, of course, be cases where the suspension or dismissal of an employee is
whimsical or unjustified or otherwise illegal in which case he will be protected. Each case will be
scrutinized carefully and the proper authorities will go to the core of the controversy and not close their
eyes to the real situation.
In view of the gravity of the misconduct committed by Games, the motion for reconsideration is undeniably
meritorious, and should be granted. The petitioner must be given the sufficient opportunity to prove its
claim, and thus rebut the unfair finding of the Labor Arbiter that Games had been illegally dismissed, to
wit:LawlibraryofCRAlaw
The box in the Toyota Altis car which complainant drive test belong to respondent Toyota Alabang and it
was the security guard who took the same.
The fact that complainant was not afforded the opportunity to be heard shows that complainant was
terminated without due process of law.
Even if complainant found the box inside the Toyota Altis, the complainant is not guilty of anything as it
was Janus Demetrio who placed the same inside the car of which complainant has no knowledge. 29
Given that the Labor Arbiter found the absence of both substantive and procedural due process in
dismissing Games, the more that the petitioner should be allowed to fully ventilate its side on the matter.
This is only fair because Games brought his complaint for illegal dismissal almost two years after his arrest
for qualified theft, indicating its being an afterthought. According to Agabon v. National Labor Relations
Commission,30 the absence of procedural due process did not nullify the dismissal that was based on a
just cause. Such situation did not entitle the employee to backwages, reinstatement or separation pay,
damages and attorney's fees under Article 285 of the Labor Code, as amended.
Assuming that the allegations of the petitioner were true, then Games was not entitled to the monetary
award representing the reliefs accorded to an illegally dismissed employee under Article 285 of the Labor
Code. At best, he could only be entitled to nominal damages of P30,000.00 pursuant to Agabon. The
disparity between the monetary award to Games, and the nominal damages recognized
in Agabon inevitably warrants a remand of the case for appropriate reception of evidence.
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 39 of 51
III
The petitioner should not suffer from
the gross negligence committed by its counsel
Generally, the negligence of counsel binds the client. Nonetheless, the courts accord relief to the client
who suffers by reason of the lawyer's gross or palpable mistake: (a) where reckless or gross negligence of
counsel deprives the client of due process of law; (b) when its application will result in outright deprivation
of the client's liberty or property; or (c) where the interests of justice31 or equity32 so require. These
exceptions obtain in this case.
The petitioner showed that its former counsel did not appear during the scheduled hearings, did not file the
position paper, and did not timely appeal the adverse result. Such omissions of counsel occurred without
its knowledge and consent, and resulted in its inability to fully participate in the proceedings below. The
counsel's negligence prevented it from ably defending its interest, and led to the denial of its right to due
process. Hence, it should not be allowed to suffer the consequences of its former lawyer's palpable and
gross negligence.
Unfortunately, the ponencia would make it appear that the petitioner was equally guilty of negligence. I
respectfully disagree.
Negligence does not obtain on the part of the petitioner for its brief participation during the preliminary
stages of the proceedings below, particularly the mandatory conciliation and mediation conference. A
mandatory and conciliation proceeding does not provide litigants with an opportunity to be heard and
present evidence in its behalf. Section 3, Rule V of the 2005 NLRC Rules of Procedure provides that the
purpose of the mandatory and conciliation conference shall be to (1) amicably settle the case upon a fair
compromise; (2) determine the real parties in interest; (3) determine the necessity of amending the
complaint and including all causes of action; (4) define and simplify the issues in the case; (5) enter into
admissions or stipulations of facts; and (6) thresh out all other preliminary matters.
Neither should we fault the petitioner for its failure to file the position paper despite having been informed
of the necessity to file the same. The petitioner was not in the position to know the legal consequences of
the non filing of the position paper, for the knowledge was within the competence of the lawyer to whom it
had already entrusted the duty and responsibility to take full charge of the legal matter.
The petitioner does not deserve condemnation for bestowing its full trust and confidence in its former
counsel. Given the nature and extent of its business and operations, the petitioner could not be expected
to supervise and monitor all the cases it had entrusted to its lawyer whose avowed duty was to protect and
promote the client's interests at all times with utmost dedication and care.
The negligence of the petitioner's counsel should not also defeat an employer's prerogative to weed out an
undesirable employee. To completely ignore the counsel's negligence, and thus to sideline the employer's
lawful right to exercise its prerogatives, in order to favor a really unworthy employee would grossly
undermine and render iniquitous the liberality that Labor deserves. In Pampanga Bus Company v.
Pambusco Employees' Union,33 we said:LawlibraryofCRAlaw
The right of a laborer to sell his labor to such persons as he may choose is, in its essence, the
same as the right of an employer to purchase labor from any person whom it chooses. The
employer and the employee have thus an equality of right guaranteed by the Constitution. If the
employer can compel the employee to work against the latter's will, this is servitude. If the

employee can compel the employer to give him work against the employer's will, this is
oppression.
Furthermore, the interests of justice demand that we save the petitioner from the consequences of its
counsel's reckless disregard of his duty. To reiterate, the respondent had undeniably stolen company
property, and his act constituted a most valid and urgent ground for his dismissal from his employment and
for which he must not be rewarded. Instead of being held to account for his willful and felonious acts,
the ponencia's insistence on the strict application of the rules and the seeming disinterest in hearing the
value of reason, inadvertently validates the employee's noxious behavior by generously rewarding him with
separation pay, backwages, service incentive pay, and attorney's fees - awards which may arguably have
been warranted, except that they are hinged on precarious technicality. Surely this is not how justice
works. To allow the petitioner to be fully heard considering the visible merit of its cause will be more in
consonance with the ends of justice. Needless to stress, the courts may waive or dispense with procedural
rules in absolutely meritorious cases.34redarclaw
The constitutional policy of providing full protection to Labor is not intended to oppress or destroy
Management. Indeed, the capital and management sector must also be protected under a regime of justice
and the rule of law.35redarclaw
ACCORDINGLY, I VOTE TO GRANT the petitioner's motion for reconsideration, and TO REMAND the
case to the Labor Arbiter for reception of the petitioner's evidence.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 201483 August 4, 2014
CONRADO A. LIM, Petitioner,
vs.
HMR PHILIPPINES, INC., TERESA SANTOS-CASTRO, HENRY BUNAG and NELSON
CAMILLER,Respondents.
DECISION
MENDOZA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the
March 30, 20121 Decision of the Court of Appeals (CA) in CA G.R. SP No. 112708, a case involving the
computation of the back wages of an illegally dismissed employee. The Facts
On February 8, 200 I, petitioner Conrado A. Lim (Lim) filed a case for illegal dismissal and money claims
against respondents, HMR Philippines, Inc. (HMR)and its officers, Teresa G. Santos-Castro, Henry G.
Bunag and Nelson S. Camiller. The Labor Arbiter (LA) dismissedthe complaint for lack of merit. On April
11, 2003, the National Labor Relations Commission (NLRC)in NLRC NCR No. 02-00926-01, reversedthe
LA and declared Lim to have been illegally dismissed. The dispositive portion of the NLRC decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring the appealed Decision
REVERSED and SET ASIDE; that the dismissal of herein complainant-appellant was illegal and the
respondent-appellee Company is hereby ordered to reinstate immediately the said employee to his former
position without loss of seniority rights and other privileges. Furthermore, the respondent-appellee
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 40 of 51
Company is hereby ordered to pay the complainant-appellant his full backwages, reckoned from his
dismissal on February 3, 2001 up to the promulgation of this Decision.
All other claims are hereby DISMISSED for lack of merit.
The Computation and Research Unit (CRU) of this Commission is hereby directed to compute the
backwages and the 10% annual increase from 1998 to 2000.
SO ORDERED.2[Emphases supplied]
Both Lim and HMR filed their respective petitions for certiorari before the CA, docketed as CA-G.R. SP No.
80379 and CA-G.R. SP No. 80630, respectively, which were consolidated. Pending resolution of the
petitions, the CA issued the Temporary Restraining Order (TRO)enjoining the execution of the NLRC
decision.
On November 15, 2005, the CA affirmed the NLRC decision with modification as follows: WHEREFORE,
the Decision of the National Labor Relations Commission is AFFIRMED, with MODIFICATION by awarding
moral damages and exemplary damages to Conrado A. Lim in the amount of P50,000.00 and P20,000.00,
respectively, as well as attorney’s fees equivalent to 10% of the total amount due him.SO ORDERED. 3
On February 7, 2007, this Court, in G.R. No. 175950-51, dismissed the petition for certiorari4 filed by HMR
assailing the November 15, 2005 CA decision. Entry of judgment was ordered on July 27, 2007. 5
On September 24, 2007, Lim moved for execution.6 On November 28, 2007, the Computation and
Research Unit (CRU) of the NLRC computed the total award to amount to P2,020,053.46,7 which
computed the backwages from February 3, 2001, the date of the illegal dismissal, up to October 31, 2007,
the date ofactual reinstatement.
HMR opposed the computation arguing that the backwages should be computed until April 11, 2003 only,
the date of promulgation of the NLRC decision, as stated in the dispositive portion of the NLRC decision,
which provided that backwages shall be "reckoned from his dismissal on February 3, 2001 up to the
promulgation of this Decision." It also noted that the 10% annual increase was computed from 1998 to
2007, instead of only from 1998 to 2000 as decreed.8
In his Comment, Lim argued that the body of the NLRC decision explictly stated that he was entitled tofull
backwages from the time he was illegally dismissed until his actual reinstatement, which was also in
accord with Article 279 of the Labor Codeand all prevailing jurisprudence. 9 Ruling of the LA
On April 21, 2009, the LA issued the order10 granting the motion for execution filed by Lim. Holding thatthe
backwages should be reckoned until April 11, 2003 only in accordance with the NLRC decision, the LA
disposed:
Accordingly, in computing complainant’s backwages, the following conditions must apply: 1) that the
backwages cover the period February 3, 2001 up to April 11, 2003; 2) that the base rate applicable is his
salary as of February 3, 2001 inclusive of the ten percent adjustment due at the time, or P12,500.00 plus
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 41 of 51

ten percent (10%) orP13,750.00; 3) that the computation should include his 13th month pay; and 4) 15
days vacation pay in accordance with the personnel policy handbook, in lieu of 5 days service incentive
leave pay.
While complainant claims that he is entitled to 15 days sick leave pay, a perusal of the personnel policy
handbook on the grant of said benefit shows that sick leave pay is availed of only upon notification of
illness and conversion thereof to cash is subject to the discretion of management. Accordingly,
complainant’s monetary award, which is the proper subject of enforcement through a writ of execution, in
accordance with the Decision of the Commission as modified by the Court of Appeals, is computed as
follows:
Ruling of the CA
In its assailed March 30, 2012 Decision,14 the CA dismissed the petition. It emphasized that the April 11,
2003 NLRC decision had long become final and executory after it was affirmed by the Court and, as such,
it may no longer be amended or corrected. While noting that the body of the NLRC decision stated that
petitioner was entitled to backwages until his actual reinstatement, the CA ruled that when there was a
conflict between the dispositive portion and the body of the decision, the former must prevail as the
dispositive portion was the final order, and that it was the dispositive portion which was the subject of
execution. It wrote that the fallowas clear and unequivocal and could, therefore, be given effect without
going to the body of the decision or further interpretation or construction.

A. Backwages: The CA found that although the NLRC had recognized that petitioner was entitled to backwages until
actual reinstatement, nonetheless, it expressly limited the computation of backwages to the promulgation
2/3/01 to 4/11/03 = 26.26 date of its decision. It wrote that the issue ofwhether such limitation was lawful or improper could no longer
be ventilated due to the finality of the judgment.
P13,750.00 x 26.26 = P361,075.00
Hence, the present petition.
13th month pay (P366,575.00/12) = 30,089.58

Vacation Leave (P687.50 x 15 x 26.26/12) = 22,859.37 P414,023.95 ISSUES AND ARGUMENTS

B. Moral Damages = 50,000.00 I

C. Exemplary Damages = 20,000.00
Whether or not the Court of Appeals erred in peremptorily applying the doctrine laid down in PH
Credit Corporation v. Court of Appealsand contrary to law as well as the established jurisprudence
P484,023.95
mandating the payment of backwages until the illegally dismissed employee is actually reinstated.
D. Attorney’s Fees = 48,402.39
II
P532,426.34
Whether or not the Court of Appeals erred in not affirming the applicability of Eastern Shipping
Lines v. Court of Appealsin the computation of interest since the Decision on the illegal
WHEREFORE, complainant’s Motion for Issuance of Writ of Execution is GRANTED. A Writ of Execution termination case had become final and executory on June 6, 2007 inconsistent with existing
is hereby issued for the satisfaction of the judgment award rendered in this case. jurisprudence by its failure to include interest payments.15

SO ORDERED.11
Ruling of the NLRC
Lim filed his "Motion Ad Cautelamfor Reconsideration or Recomputation and Partial Execution of Monetary
Award," insisting that his backwages should be computed up to his actual reinstatement. 12 On August 28,
2009, the NLRC treated the motion as an appeal and sustained the computation of the LA, explaining that
the dispositive portion was clear, and that it could not alter or amend the amount based on the final
decision of the NLRC which was affirmed by both the CA and this Court.13 Aggrieved, petitioner filed a
petition for certioraribefore the CA.
Petitioner Lim argues that Article279 of the Labor Code and the prevailing jurisprudence provide that
illegally dismissed workers are entitled to an award of backwages from the timeof the illegal dismissal until
they are actually reinstated. He states that the body of the NLRC decision was explicit in its intent to award
backwages until actual reinstatement, especially when read with its fallo,which ordered his immediate
reinstatement. He further avers that it has been held that the dispositive part of a decision must find
support from the decision’s ratio decidendi, because, while the opinion of the court is not partof the
judgment, it may, in case of uncertainty or ambiguity, be referred tofor the purpose of construing the
judgment, where the court may clarify by amendment even after judgment has become final.
Lim also points out that the LA completely failed to include in the computation the unpaid 10% annual
increase in his salary from 1998 to 2000, as awarded in the falloof the NLRC decision. He posits that the
LA also failed to include the payment of other benefits, such as a 10% increase in salary per annum, 15

days vacation leave and 15 days sick leave per annum, all as part of employee benefitsfound in HMR’s
Personnel Policy.
Petitioner Lim also argues that in accordance with the rules laid down in Eastern Shipping Lines v. Court of
Appeals,16 the monetary awards should be subject to interest. He prays that the respondents be made to
pay, jointly and severally, additional moral and exemplary damages on account of their bad faith in
delaying the payment and reinstatement of the petitioner, which prompted him to file the present petition.
Respondents’ Comment
In their Comment,17 the respondents argue that the August 28, 2009 NLRC Resolution had already
becomefinal and executory and could no longer be modified as the petitioner belatedly filed his motion for
reconsideration. In the same vein, they argue that the April 21, 2009 LA Order had also become final and
executory considering that the petitioner’s motion ad cautelam/appeal was not seasonably filed.
The respondents insist that the "decretal portion of the NLRC decision, dated April 11, 2003 limited the
amount of petitioner’s backwages from February 3, 2001 and up to promulgation of such Decision on April
11, 2003 only.18Granting that the body of such decision controls, they aver that the recoverable backwages
cannot go beyond December 26, 2007, the date HMR offered to reinstate Lim, who refused to be
reinstated and abandoned his job. They add that it was also clearfrom the dispositive portion that the 10%
annual salary increase awarded was only for the years 1998 to 2000.
They also point out that the P12,500.00 base pay of Lim was already inclusive of holiday pay, and that the
conversion of sick leave to cash was subject to management discretion in accordance with company
policy.
They further argue that the claimsfor legal interest and additional moral and exemplary damages are
without merit because these were not awarded in the decision and they simply acted in good faith in
pursuing the legal remedies available to them.
Petitioner’s Reply
In his Reply,19 Lim counters that his pleadings before the NLRC and the LA were timely filed as the notices
of their respective orders had not been received by an authorized representative. As to HMR’s offer of
reinstatement, the petitioner explainsthat the respondent company never responded to his reply-letter
asking for a meeting to discuss the matter of his compensation upon reinstatement. Lim also argued that
holiday pay was not shown by HMR to be included in his salary, and that it is unjust to leave the sick leave
conversion to management discretion. Specifically, the Court has to address the following
ISSUES:
1. Whether the petitioner’s motion for reconsideration and motion ad cautelam/appeal were
belatedly filed?
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 42 of 51
2. Whether the computation of backwages should be reckoned until the promulgation of the
NLRC Decision on April 11, 2003 or until actual reinstatement?
3. Whether the petitioner is entitled to the unpaid 10% annual salary increase from 1998-2000?
4. Whether the petitioner is entitled to the 10% annual salary increase after the year 2000?
5. Whether the petitioner is entitled to holiday pay?
6. Whether the petitioner is entitled to sick leave pay?
7. Whether the respondents should beheld jointly and severally liable for additional moral and
exemplary damages?
8. Whether the interest in accordance with Eastern Shipping should be awarded?
Ruling of The Court
The petition is partly meritorious.
Preliminarily, the Court shall first dispose of the lone procedural issue. The respondents argue thatthe
August 28, 2009 NLRC Resolution was already final and executory and could no longer be modified as the
petitioner belatedly filed his motion for reconsideration thereto. In the same vein, they aver that the April
21,2009 LA Order was also final and executory considering that petitioner’s motion ad cautelam/appeal
was not seasonably filed. The petitioner counters that his pleadings were timely filed because the
aforementioned NLRC Resolution and LA Order were not duly received by an authorized representative.
It appears that the respondents raised this issue before the NLRC and the CA. The lower courts,
nonetheless, ruled on the merits of the assailed pleadings of the petitioner. The lower courts, thus, gave
credence to the petitioner’s argument that the notices were not received by an authorized representative.
The Court sees no reason to deviate from their findings. In any case, this issue is a question of fact which
is beyond the Court’s ambit of review under Rule 45 of the Rules of Court, considering that a resolution of
the issue would require a review of the evidence presented in connection therewith.
The Court now moves on to the substantive issues.
Backwages
It is beyond question that Lim was illegally dismissed by HMR. All that remains to be settled is the exact
amount owing to petitioner as an illegally dismissed employee.

Article 279 of the Labor Code is clear in providing that an illegally dismissed employee is entitled to his full
backwages computed from the time his compensation was withheld up to the time of his actual
reinstatement, to wit:
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. [Emphases and underscoring supplied]
In accordance with this provision, the body of the April 11, 2003 NLRC decision expressly recognizes that
Lim is entitled to his full backwages until his actual reinstatement, as follows:
In fine, the act of complainant-appellant herein, do not constitute a serious misconduct as tojustify his
dismissal. As such, he is, thus, entitled to reinstatement to his former position as Assistant Technical
Manager, unless such position no longer exists, in which case, he shall be given a substantially equivalent
position without loss of seniority rights. He is, likewise, entitled to his full backwages from the time he was
illegally dismissed until his actual reinstatement.20 [Emphasis and underscoring supplied]
Nowhere in the body of the NLRC decision was there a discussion restricting the award of backwages.
Nonetheless, the falloof the said decision limited the computation of the backwages up to its promulgation
on April 11, 2003, in this wise:
WHEREFORE, premises considered, judgment is hereby rendered declaring the appealed Decision
REVERSED and SET ASIDE; that the dismissal of herein complainant-appellant was illegal and the
respondent-appellee Company is hereby ordered to reinstate immediately the said employee to his former
position without loss of seniority rights and other privileges. Furthermore, the respondent-appellee
Company is hereby ordered to pay the complainant-appellant his full backwages, reckoned from his
dismissal on February 3, 2001 up to the promulgation of this Decision.
All other claims are hereby DISMISSED for lack of merit.
The Computation and Research Unit (CRU) of this Commission is hereby directed tocompute the
backwages and the 10% annual increase from 1998 to 2000.
SO ORDERED.21
[Emphasis and underscoring supplied]
Considering that the judgmentdecreeing the computation of backwages up to the promulgation of the
NLRC decision has long become final and executory, the key question is whether a recomputation of
backwages up to the date of the actual reinstatement of Lim would violate the principle of immutability of
judgments.
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 43 of 51
The rule is that it is the dispositive portion that categorically states the rights and obligations of the parties
tothe dispute as against each other. Thus, it is the dispositive portion that must be enforced to ensure the
validity of the execution. That a judgment should be implemented according to the terms of its dispositive
portion is a long and well-established rule. A companion to this rule is the principle of immutability of final
judgments. Save for recognized exceptions, 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 renders it. Any attempt to insert, change
or add matters not clearly contemplated inthe dispositive portion violates the rule on immutability of
judgments.22
The cases of Session Delights Ice Cream and Fast Foods v. Court of Appeals (Session Delights) 23 and
Nacar v. Gallery Frames (Nacar)24 shed much light on the apparent discrepancy inthe case at hand. As in
the present case, both involve labor cases findingthat the employees therein were illegally dismissed. At
the LA level,in awarding backwages, a precise computation was provided from the time of illegal dismissal
up to the promulgation of the LA decision.25 Additionally, the dispositive portion of the LA decision in
Nacaralso made a declaration that separation pay in lieu of reinstatement be "computed only up to
promulgation of this decision."26The LA decisions in these cases were affirmed by the NLRC and the CA
and subsequently became final and executory. At the execution stage, the computation of backwages
came into issue.
Session Delights made clear that a case for illegal dismissal is one that relates to status, where the
decision or ruling is essentially declaratory of the status and of the rights, obligations and monetary
consequences that flow from the declared status, such as, the payment of separation pay and backwages.
In execution, 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.27 The precise amount of backwages should ideally be
stated in the final decision; otherwise, the matter is for handling and computation by the LA of origin as the
labor official charged with the implementation of decisions before the NLRC. 28
The Court’s disquisition in Session Delights, also referenced with approval in Nacar, is enlightening:
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, attorney’s fees, and legal interests.
The secondpart 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 recomputed. This is the part, too, that the petitioner now posits should no longer be re-
computed because the computation is already in the labor arbiter’s decision that the CA had affirmed. The
public and private respondents, onthe other hand, posit that a recomputation 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 of reinstatement.
xxx
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 44 of 51

Clearly implied from this original computation is its currency up to the finality of the labor arbiter’s decision. would ideally be stated in the final CA decision; if not, the matter is for handling and computation by the
As we noted above, this implication is apparent from the terms of the computation itself, and no question labor arbiter of origin as the labor official charged with the implementation of decisions before the NLRC.
would have arisen had the parties terminated the case and implemented the decision at that point.
xxx
However, the petitioner disagreed with the labor arbiter’s 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
Consistent with what we discussed above, we hold that under the terms of the decision under execution,
NLRC which, in turn, affirmed the labor arbiter’s decision. By law, the NLRC decision is final, reviewable
no essential change is made by a re-computation as this step is a necessary consequence that flows from
only by the CA on jurisdictional grounds.
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 partof the law – specifically, Article 279 of
The petitioner appropriately sought to nullify the NLRC decision on jurisdictional grounds through a timely the Labor Code and the established jurisprudence on this provision – that is read into the decision. By the
filed Rule 65 petition for certiorari. The CA decision, finding that NLRC exceeded its authority in affirming nature of an illegal dismissal case, the reliefs continue toadd on until full satisfaction, as expressed under
the payment of 13th month pay and indemnity, lapsed to finalityand was subsequently returned to the labor Article 279 of the Labor Code. The re-computation of the consequences of illegal dismissal upon execution
arbiter of origin for 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.
It was at this point that the present case arose. Focusing on the core illegal dismissal portion of the original
labor arbiter’s decision, the implementing labor arbiter ordered the award recomputed; he apparently read
the figures originally ordered to be paid to be the computation due had the case been terminated and xxx
implemented at the labor arbiter’s level. Thus, the labor arbiter recomputed the award to include the
separation pay and the backwages due up to the finality of the CA decision that fully terminated the case
That the amount the petitioner shall now pay has greatly increased is a consequence that it cannot avoid
on the merits. Unfortunately, the labor arbiter’s approved computation went beyond the finality of the CA
as itis the risk that it ran when it continued to seek recourses against the labor arbiter’s decision.Article 279
decision (July 29, 2003) and included as well the payment for awards the final CA decision had deleted –
provides for the consequences of illegal dismissal in no uncertain terms, qualified only by jurisprudence in
specifically, the proportionate 13th month pay and the indemnity awards. Hence, the CA issued the
its interpretation of when separationpay in lieu of reinstatement is allowed. When that happens, the finality
decision now questioned in the present petition.
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
We see no error in the CA decision confirming that a recomputation is necessary as it essentially ended so that separation pay and backwages are to be computed up to that point. x x x29
considered the labor arbiter’s 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
[Emphases and underscoring supplied]
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 arbiter’s original decision.
Although the NLRC decision in the present case did not provide a precise computation, the principles
enunciated in Session Delightsstill equally apply. In Session Delights, the computation of the LA was found
To illustrate these points, had the case involved a pure money claim for a specific sum (e.g. salary for a
to be time-bound, which implied the currency of the computation up to the finality of the LA decision. In the
specific period) or a specific benefit (e.g. 13th month pay for a specific year) made by a former employee,
present case, the NLRC declared backwages to be reckoned "up to the promulgation" of its decision,
the labor arbiter’s computation would admittedly have continuing currency because the sum is specific and
which was an express declaration of the currency of the computation up to the finality of the NLRC
any variation may only be on the interests that may run from the finality of the decision ordering the
decision, especially considering that HMR was "ordered to reinstate immediately" petitioner Lim. The
payment of the specific sum.
decisions in both cases are premised on their immediate execution, in that no question would have arisen
had the parties terminated the case and the decision implemented at that point. 30
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
As discussed above, no essential change is being made by a recomputation because such is a necessary
decision or ruling is essentially declaratory of the status and of the rights, obligations and monetary
consequence which flows from the nature of the illegality of the dismissal. To reiterate, a recomputation, or
consequences that flow from the declared status (in this case, the payment of separation pay and
an original computation, if no previous computation was made, as in the present case, is a part of the law
backwages and attorney’s fees when illegal dismissal is found). When this type of decision is executed,
that is read into the decision, namely, Article 279 of the Labor Code and established
what is primarily implemented is the declaratory finding on the status and the rights and obligations of the
jurisprudence.31 Article 279 provides for the consequences of illegal dismissal, one of which is the payment
parties therein; the arising monetary consequences from the declaration only follow as component of the
of full backwages until actual reinstatement, qualified only by jurisprudence whenseparation pay in lieu of
parties’ rights and obligations.
reinstatement is allowed, where the finality of the illegal dismissal decision instead becomes the reckoning
point.32
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,
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 45 of 51

The nature of an illegal dismissal case requires that backwages continue to add on until full 2) that the base rate applicable is his salary as of February 3, 2003 inclusive of the ten percent adjustment
satisfaction.The computation required to reflect full satisfaction does not constitute an alteration or due at the time, or P12,500.00 plus ten percent (10%) or P13,750.00;38
amendment of the final decision being implemented as the illegal dismissal ruling stands. Thus, in the
present case, a computation of backwages until actual reinstatement is not a violation of the principle of
This is incorrect on two counts. First, the LA failed to include the actual unpaid 10% annual increase from
immutability of final judgments.33
1998-2000. The first computation of the LA,39 as well as the suggested computation of respondent HMR
itself,40 gave the correct computation ofthe unpaid salary increase from 1998-2000, as follows:
The respondents aver that the recoverable backwages cannot go beyond December 26, 2007, the date
HMR offered to reinstate Lim, who allegedly refused to be reinstated and abandoned his job.
Monthly Annual
Year Rate (P) Increase
HMR sent the petitioner a letter,34 dated December 22, 2007, directing him to report for work on December Increase (P) Increase (P)
26,2007, with an offer of separation pay in the amount of P150,000.00 in lieu of reinstatement which he
could avail of not later than December26, 2007. Lim replied in a letter, 35 dated December 24, 2007, 1998 12,500.00 10% 1,250.00 15,000.00
requesting for a meeting in January 2008, considering that his counsel was out of the country; that the
NLRC was still in the process of computing the amount of the award which was necessary to consider the
offer of separation pay; and that a writ of execution had not yet been issued. HMR never responded to the 1999 13,750.00 10% 1,375.00 16,500.00
petitioner’s request, and up to the present, the latter has yet to be reinstated.

2000 15,125.00 10% 1,512.50 18,150.00

From the above, it is apparent that the petitioner cannot be deemed to have refused reinstatement or to
have abandoned his job. HMR’s offer of reinstatement appeared superficial and insincere considering that
it never replied to the petitioner’s letter. It did not make any further attempt to reinstate the petitioner either.
The recoverable backwages, thus, continue to run, and must be reckoned up until the petitioner’s actual
reinstatement.
10% annual salary increase
Petitioner Lim argues that the LA completely failed to include in its computation the unpaid 10% annual
increase in his salary from 1998 to 2000, as stated in the falloof the NLRC decision, and the 10% salary
increase per annumin backwages until actual reinstatement.
The pertinent portion of the falloof the NLRC decision reads:
The Computation and Research Unit (CRU) of this Commission is hereby directed tocompute the
backwages and the 10% annual increase from 1998 to 2000.36
Total 49,650.00
Second, based on the above, the applicable base rate for the computation of the petitioner’s backwages
from the time he was illegally dismissed on February 3, 2001 should be P15,125.00. Lim cannot, however,
insist that the 10% annual salary increase be applied to his backwages past the year 2000 up to his actual
reinstatement. In Equitable Banking Corporation v. Sadac,41 the Court held that although Article 279 of the
Labor Code mandates that an employee’s full backwages be inclusive of allowances and other benefits,
salary increases cannot be interpreted as either an allowance or a benefit, as allowances and benefits are
separate from salary, while a salary increase is added to salary as an increment thereto. 42 It was further
held therein that the base figure to be used in the computation of backwages was pegged at the wage rate
at the time of the employee’s dismissal, inclusive of regular allowances that the employee had been
receiving such as the emergency living allowances and the 13th month pay mandated by law. The award
of salary differentials was not allowed, the rule being that upon reinstatement, illegally dismissed
employees were to be paid their backwages without deduction and qualification as to any wage increases
orother benefits that might have been received by their co-workerswho were not dismissed.43

In awarding the 10% annual salary increase from 1998 to 2000, the body of the NLRC decision explained:
We see no reason, therefore, why complainant-appellant herein, being a regular employee, should be
deprived of what he is entitled to under Company policy. As such, he should be paid his unpaid 10%
annual increase for the years 1998, 1999 and 2000.37
It must be noted that the NLRC did not err in awarding the unpaid salary increase for the years 1998-2000
as such did not constitute backwages as a consequence of the petitioner’s illegal dismissal, but was
earned and owing to the petitioner before he was illegally terminated.
Holiday pay

[Emphasis and underscoring supplied] The respondents insist that the base pay of Lim is already inclusive of holiday pay. The records, however,
are insufficient to determine whether holiday pay is indeed included in the petitioner’s base pay.
Lim is, thus, entitled to be paid his unpaid 10% annual salary increase for the years 1998-2000. A reading
of the assailed order of the LA would reveal that it made the following adjustment in connection to the 10%
annual salary increase:

Under Article 94 of the Labor Code, every worker shall be paid his regular daily wage during regular
holidays. Thus, anemployee must receive his daily wage even if he does not work on a regular holiday.
The purpose of holiday pay is to prevent diminution ofthe monthly income of workers on account of work
interruptions declared by the State.44
Whether or not holiday pay is included in the monthly salary of an employee, may be gleaned from the
divisors used by the company in the computation of overtime pay and employees’ absences. To illustrate,
if all nonworking days are paid, the divisor ofthe monthly salary to obtain daily rate should be 365. If
nonworking days are not paid, the divisor is 251, which is a result of subtracting all Saturdays, Sundays,
and the ten legal holidays.45 Hence, if the petitioner’s base pay does not yet include holiday pay, it must be
added tohis monetary award.
This matter is clearly for the LA to determine being the labor official charged with the implementation of
decision46and concomitant computations.
Sick leave pay
The LA found that that the petitioner was not entitled to have his sick leaves converted to cash because
such was subject to the discretion of management in accordance with company policy. The pertinent
provision on sick leave conversion in the Personnel Policy handbook of HMR reads:
d) Accumulated days of unused sick leave may be converted into cash, time-off or vacation allowance at
the end of the calendar year, any of these upon the discretion of the General Manager. 47
It is clear from the above that the provision does not give HMR the absolute discretion to decide whether
ornot to grant sick leave conversion. The discretion of the general manager only pertains to what form the
sick leave conversion may take, and not to whether or not sick leave conversion will be granted at all. An
HMR employee is, therefore, entitled to conversion of unused sick leave, subject only to the general
manager’sdiscretion as to the form it will take, namely – cash,time-off, or vacation allowance. Considering
that the conversion optionsof time-off and vacation allowance are no longer feasible because the petitioner
was illegally dismissed, he is now entitled to have his unused sick leaves converted to cash.
Additional moral and exemplary damages
Petitioner Lim prays that the respondents be made to pay, jointly and severally, additional moral and
exemplary damages on account of their bad faith in delaying the payment and his reinstatement.
There appears, however, no basis to award additional damages considering that the respondents simply
availed of the remedies available to them under the law in good faith.
Legal interest
The petitioner argues that legal interest in accordance with the case of Eastern Shippingmust also be
awarded, as follows:
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 46 of 51
1. the unpaid 10% annual increasefrom 1998 to 2000 shall earn a 6% interest annually starting
1998 until October 23, 2003 (Entry of Judgment of the April 11, 2003 NLRC decision); and 12%
legal interest per annumthereafter until the same is fully paid; and
2. the backwages, 13th month pay as well asunpaid vacation and sick leaves shall earn a 6%
per annuminterest starting at the time of petitioner’s illegal dismissal on February 3, 2001 until
October 23, 2003; and 12% legal interest per annumthereafter until the same is fully paid.48
The respondents counter that interest may no longer be added considering that such was not included in
the any of the courts’ decisions before the judgment became final and executory.
In both Session Delightsand Nacar, no interest was expressly awarded before the judgments became final
and executory, yet in both cases, the Court, nonetheless, awarded legal interest. Session
Delightsexplained that the decision had become a judgment for money from which another consequence
flowed, namely, the payment of interest in case of delay in accordance with Eastern Shipping Lines v.
Court of Appeals. It was held therein that when the judgment of the court awarding a sum of money
became final and executory, the rateof legal interest, should be 12% per annumfrom finality until
satisfaction.49
The rules on legal interest in Eastern Shippinghave, however, been recently modified by Nacar in
accordance with Bangko Sentral ng Pilipinas Monetary Board (BSP-MB) Circular No. 799, which became
effective on July 1, 2013. Pertinently, it amended the rate of legal interest in judgments from 12% to 6%
per annum, with the qualification that the new rate be applied prospectively. Thus, the 12% per
annumlegal interest in judgments under Eastern Shippingshall apply only until June 30, 2013, and the new
rate of 6% per annumshall be applied from July 1, 2013 onwards. 50
Petitioner also prays that he be awarded interest at a rate of 6% per annumon the amounts awarded from
the time they became legally due him until entry of judgment, presumably under the second paragraph in
Eastern Shipping (which was not modified by Nacar), which states:
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the discretion of the courtat the rate of 6% per annum.
No interest, however, shall be adjudged on unliquidated claims or damages except when or until the
demand can be established with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the
time the demand is made, the interest shall begin to run only from the date the judgment of the court is
made (at which time the quantification of damages may be deemed to have been reasonably ascertained).
The actual base for the computation of legal interest shall, in any case, be on the amount finally
adjudged.51
[Emphasis supplied]
It is plain from the above that the interest of 6% per annumfor obligations not constituting a loan or
forbearance of money is one that may be imposed at the discretion of the court. This form of interest is not
 Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 47 of 51

mandatory but discretionary in nature and therefore, not necessarily owing to the petitioner in the present for certiorari the petitioner Session Delights Ice Cream and Fast Foods (petitioner) filed to challenge the
case. 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).
WHEREFORE, the petition is PARTLY GRANTED, the March 30, 2012 Decision of the Court of Appeals,
in CA-G.R. SP No. 112708 is REVERSED and SET ASIDE.1awp++i1 Respondent HMR Philippines, Inc. is
The Facts
ORDERED to PAY petitioner Conrado A. Lim:
The private respondent filed against the petitioner a complaint for illegal dismissal, entitled Adonis Armenio
(1) back wages computed from the time the petitioner was illegally dismissed on February 3, M. Flora, Complainant versus Session Delights Ice Cream & Fast Foods, et. al, Private
2001 up to his actual reinstatement, with a monthly base pay in the amount of P15,125.00; respondents, docketed as NLRC Case No. RAB-CAR 09-0507-00.
(2) the unpaid 10% annual salary increase from 1998-2000 in the amount of P49,650.00;
(3) 13th monthpay; The labor arbiter decided the complaint on February 8, 2001, finding that the petitioner illegally
(4) vacation pay in accordance with the personnel policy handbook; dismissed the private respondent. The decision awarded the private respondent backwages, separation
(5) the cash value of his unused sick leaves; pay in lieu of reinstatement, indemnity, and attorneys fees, under a computation that the decision itself
(6) holiday pay, provided that the Labor Arbiter finds that such is not yet included in the base outlined in its dispositive portion. The dispositive portion reads:
pay;
(7) moral damages in the amount of P50,000.00; WHEREFORE, judgment is hereby rendered declaring private respondent guilty of
(8) exemplary damages in the amount of P20,000.00; illegal dismissal. Accordingly, private respondent SESSION DELIGHTS is ordered to
(9) attorney's fees equivalent to 10% of the total amount due to the petitioner; and pay complainant the following:
(10) legal interest of 12% per annum of the total monetary awards computed from July 27, 2007
to June 30, 2013, and 6% per annum from July 1, 2013 until their full satisfaction. a) Backwages:
P170.00 x 154 days P 26,180.00
Proportional 13th month pay
The Labor Arbiter is ORDERED to compute the total monetary benefits awarded and due the petitioner in P 26,180/12 2,181.65 28,361.65
accordance with this decision.1âwphi1SO ORDERED b) Separation Pay:
P 170.00 x 314/12 x 1 4,448.35
Republic of the Philippines c) Indemnity of P5,000.00 for failure to observe due process
Supreme Court d) Attorneys fees which is 10% of the total award in the amount
Manila of P3,781.00.
SO ORDERED.[8]
SECOND DIVISION
On the petitioners appeal, the NLRC affirmed the labor arbiters decision in its resolutions dated May 31,
SESSION DELIGHTS ICE CREAM AND FAST FOODS, G.R. No. 172149 2002 and September 30, 2002.[9] The dispositive portion of the NLRCs resolution of May 31, 2002 states:
Petitioner, WHEREFORE, premises considered, the decision under review is hereby
AFFIRMED, and the appeal, DISMISSED, for lack of merit.[10]
- versus -
Promulgated: The petitioner continued to seek relief, this time by filing a petition for certiorari before the CA, which
THE HON. COURT OF APPEALS (Sixth Division), HON. petition was docketed as CA-G.R. SP No. 74653.
NATIONAL LABOR RELATIONS COMMISSION (Second February 8, 2010
Division) and ADONIS ARMENIO M. FLORA, On July 4, 2003, the CA dismissed the petition and affirmed with modification the NLRC decision
Respondents. 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:
x---------------------------------------------------------------------------------------------------------x
DECISION WHEREFORE, premises considered, the instant petition is hereby
DISMISSED. The decision of the National Labor Relations Commission is AFFIRMED
BRION, J.: 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.

We rule on the petition for review on certiorari assailing the decision[1] and resolution[2] of the In January 2004, and in the course of the execution of the above final judgment pursuant to
Court of Appeals[3] (CA) in CA-G.R. SP No. 89326. These CA rulings dismissed the petition 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.
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 48 of 51
SO ORDERED.[15]
The CA explained in this ruling that employees illegally dismissed are entitled to reinstatement, full
backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the
time actual compensation was withheld from them, up to the time of actual reinstatement. If reinstatement
is no longer feasible, the backwages shall be computed from the time of their illegal dismissal up to the
finality of the decision. The CA reasoned that a re-computation of the monetary awards was necessary to
determine the correct amount due the private respondent from the time his salary was withheld from him
until July 29, 2003 (the date of finality of the July 4, 2003 decision in CA-G.R. SP No. 74653) since the
separation pay, which was awarded in lieu of reinstatement, had not been paid by the petitioner. The
attorneys fees likewise have to be re-computed in light of the deletion of the proportionate 13th month pay
and indemnity awards.
The petitioner timely filed a motion for reconsideration which the CA denied in its resolution
of March 30, 2006, now similarly assailed before us.
The Issue
The lone issue the petitioner raised is whether a final and executory decision (the labor arbiters
decision of February 8, 2001, as affirmed with modification by the CA decision in CA-G.R. SP No.
74653) may be enforced beyond the terms decreed in its dispositive portion.
In the pleadings submitted to the Court, the petitioner insists on a literal reading and application
of the labor arbiters February 8, 2001 decision, as modified by the CA in CA-G.R. SP No. 74653. The
petitioner argues that since the modified labor arbiters February 8, 2001 decision did not provide in its
dispositive portion for a computation of the monetary award up to the finality of the judgment in the case,
the CA should have enforced the decision according to its express and literal terms. In other words, the CA
cannot now allow the execution of the labor arbiters original decision (which the CA affirmed with finality
but with modification) beyond the express terms of its dispositive portion;thus, the amounts that accrued
during the pendency of the petitioners recourses with the NLRC and the CA cannot be read into and
implemented as part of the final and executory judgment.
The petitioner, as an alternative argument, argues that even assuming that the body of the CA
decision in CA-G.R. SP No. 74653 intended a computation of the monetary award up to the finality of the
decision, the dispositive portion remains to be the directive that should be enforced, as it is the part of the
decision that governs, settles, and declares the rights and obligations of the parties.
The private respondent, for his part, counters that the computation of the monetary award until the finality
of the CA decision in CA-G.R. SP No. 74653 is in accord with Article 279 of the Labor Code, as amended.
The Courts Ruling
We resolve to dismiss the petition and, accordingly, affirm the CA decision.
We state at the outset that, as a rule, we frown upon any delay in the execution of final and
executory decisions, as the immediate enforcement of the parties rights, confirmed by a final decision, is a
major component of the ideal administration of justice. We admit, however, that circumstances may
transpire rendering delay unavoidable. One such occasion is when the execution of the final judgment is
not in accord with what the final judgment decrees in its dispositive portion. Just as the execution of a final
judgment is a matter of right for the winning litigant who should not be denied the fruits of his or her victory,

the right of the losing party to give, perform, pay, and deliver only what has been decreed in the final
judgment should also be respected.
That a judgment should be implemented according to the terms of its dispositive portion is a long
and well-established rule.[16] Otherwise stated, it is the dispositive portion that categorically states the rights
and obligations of the parties to the dispute as against each other. [17] Thus, it is the dispositive portion
which the entities charged with the execution of a final judgment that must be enforced to ensure the
validity of the execution.[18]
A companion to the above rule on the execution of a final judgment is the principle of its
immutability. Save for recognized exceptions,[19] a final judgment may no longer be altered, amended or
modified, even if the alteration, amendment or modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law and regardless of what court, be it the highest Court of the land,
renders it.[20] Any attempt on the part of the responsible entities charged with the execution of a final
judgment to insert, change or add matters not clearly contemplated in the dispositive portion violates the
rule on immutability of judgments.
In the present case, with the CAs deletion of the proportionate 13th month pay and indemnity
awards in the labor arbiters February 8, 2001 decision, only the awards of backwages, separation pay, and
attorneys fees remain. These are the awards subject to execution.
Award of backwages and separation pay
A distinct feature of the judgment under execution is that the February 8, 2001 labor arbiter
decision already provided for the computation of the payable separation pay and backwages due, and did
not literally order the computation of the monetary awards up to the time of the finality of the judgment. The
private respondent, too, did not contest the decision through an appeal. The petitioners argument to
confine the awards to what the labor arbiter stated in the dispositive part of his decision is largely based on
these established features of the judgment.
We reject the petitioners view as a narrow and misplaced interpretation of an illegal dismissal
decision, particularly of the terms of the labor arbiters decision.
While the private respondent failed to appeal the February 8, 2001 decision of the labor arbiter,
the failure, at the most, had the effect of making the awards granted to him final so that he could no longer
seek any other affirmative relief, or pray for any award additional to what the labor arbiter had given. Other
than these, the illegal dismissal case remained open for adjudication based on the appeal made for the
higher tribunals consideration. In other words, the higher tribunals, on appropriate recourses made, may
reverse the judgment and declare that no illegal dismissal took place, or affirm the illegal dismissal already
decreed with or without modifying the monetary consequences flowing from the dismissal.
As the case developed and is presented to us, the issue before us is not the correctness of the
awards, nor the finality of the CAs judgment, nor the petitioners failure to appeal. The issue before us is
the propriety of the computation of the awards made, and, whether this violated the principle of
immutability of final judgments.
In concrete terms, the question is whether a re-computation in the course of execution of the
labor arbiters original computation of the awards made, pegged as of the time the decision was rendered
and confirmed with modification by a final CA decision, is legally proper. The question is posed, given that
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 49 of 51
the petitioner did not immediately pay the awards stated in the original labor arbiters decision; it delayed
payment because it continued with the litigation until final judgment at the CA level.
A source of misunderstanding in implementing the final decision in this case proceeds from the way the
original labor arbiter framed his decision. The decision consists essentially of two parts.
The first is that part of the decision that cannot now be disputed because it has been confirmed
with finality. This is the finding of the illegality of the dismissal and the awards of separation pay in lieu of
reinstatement, backwages, attorneys fees, and legal interests.
The second part is the computation of the awards made. On its face, the computation the labor
arbiter made shows that it was time-bound as can be seen from the figures used in the computation. This
part, being merely a computation of what the first part of the decision established and declared, can, by its
nature, be re-computed. This is the part, too, that the petitioner now posits should no longer be re-
computed because the computation is already in the labor arbiters decision that the CA had affirmed. The
public and private respondents, on the other hand, posit that a re-computation is necessary because the
relief in an illegal dismissal decision goes all the way up to reinstatement if reinstatement is to be made, or
up to the finality of the decision, if separation pay is to be given in lieu reinstatement.
That the labor arbiters decision, at the same time that it found that an illegal dismissal had taken
place, also made a computation of the award, is understandable in light of Section 3, Rule VIII of the then
NLRC Rules of Procedure which requires that a computation be made. This Section in part states:
[T]he Labor Arbiter of origin, in cases involving monetary awards and at all events, as
far as practicable, shall embody in any such decision or order the detailed and full
amount awarded.
Clearly implied from this original computation is its currency up to the finality of the labor arbiters
decision. As we noted above, this implication is apparent from the terms of the computation itself, and no
question would have arisen had the parties terminated the case and implemented the decision at that
point.
However, the petitioner disagreed with the labor arbiters findings on all counts i.e., on the finding
of illegality as well as on all the consequent awards made. Hence, the petitioner appealed the case to the
NLRC which, in turn, affirmed the labor arbiters decision. By law,[21] the NLRC decision is final, reviewable
only by the CA on jurisdictional grounds.
The petitioner appropriately sought to nullify the NLRC decision on jurisdictional grounds through
a timely filed Rule 65 petition for certiorari. The CA decision, finding that NLRC exceeded its authority in
affirming the payment of 13th month pay and indemnity, lapsed to finality and was subsequently returned to
the labor arbiter of origin for execution.
It was at this point that the present case arose. Focusing on the core illegal dismissal portion of
the original labor arbiters decision, the implementing labor arbiter ordered the award re-computed; he
apparently read the figures originally ordered to be paid to be the computation due had the case been
terminated and implemented at the labor arbiters level. Thus, the labor arbiter re-computed the award to
include the separation pay and the backwages due up to the finality of the CA decision that fully terminated
the case on the merits. Unfortunately, the labor arbiters approved computation went beyond the finality of
the CA decision (July 29, 2003) and included as well the payment for awards the final CA decision had
deleted specifically, the proportionate 13th month pay and the indemnity awards. Hence, the CA issued the
decision now questioned in the present petition.

We see no error in the CA decision confirming that a re-computation is necessary as it
essentially considered the labor arbiters original decision in accordance with its basic component parts as
we discussed above. To reiterate, the first part contains the finding of illegality and its monetary
consequences; the second part is the computation of the awards or monetary consequences of the illegal
dismissal, computed as of the time of the labor arbiters original decision.
To illustrate these points, had the case involved a pure money claim for a specific sum
(e.g. salary for a specific period) or a specific benefit (e.g. 13th month pay for a specific year) made by
a former employee, the labor arbiters computation would admittedly have continuing currency because the
sum is specific and any variation may only be on the interests that may run from the finality of the decision
ordering the payment of the specific sum.
In contrast with a ruling on a specific pure money claim, is a claim that relates to status (as in
this case, where the claim is the legality of the termination of the employment relationship). In this type of
cases, the decision or ruling is essentially declaratory of the status and of the rights, obligations and
monetary consequences that flow from the declared status (in this case, the payment of separation pay
and backwages and attorneys fees when illegal dismissal is found). When this type of decision is
executed, what is primarily implemented is the declaratory finding on the status and the rights and
obligations of the parties therein; the arising monetary consequences from the declaration only follow as
component of the parties rights and obligations.
In the present case, the CA confirmed that indeed an illegal dismissal had taken place, so that
separation pay in lieu of reinstatement and backwages should be paid. How much that separation pay
would be, would ideally be stated in the final CA decision; if not, the matter is for handling and computation
by the labor arbiter of origin as the labor official charged with the implementation of decisions before the
NLRC.[22]
As the CA correctly pointed out, the basis for the computation of separation pay and backwages
is Article 279 of the Labor Code, as amended, which reads:
x x x An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.
By jurisprudence derived from this provision, separation pay may be awarded to an illegally
dismissed employee in lieu of reinstatement.[23] Recourse to the payment of separation pay is made when
continued employment is no longer possible, in cases where the dismissed employees position is no
longer available, or the continued relationship between the employer and the employee is no longer viable
due to the strained relations between them, or when the dismissed employee opted not to be reinstated, or
payment of separation benefits will be for the best interest of the parties involved. [24]
This reading of Article 279, of course, does not appear to be disputed in the present case as the petitioner
admits that separation pay in lieu of reinstatement shall be paid, computed up to the finality of the
judgment finding that illegal dismissal had taken place. What the petitioner simply disputes is the re-
computation of the award when the final CA decision did not order any re-computation while the NLRC
decision that the CA affirmed and the labor arbiter decision the NLRC in turn affirmed, already made a
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 50 of 51
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.
Labor Relations Set II * Arabit v Jardine to Lim v HMR * Page 51 of 51