work), the petitioners’ accrued wages should only be
computed until when they were supposed to report for
FROILAN M. BERGONIO, et al. v. SOUTH EAST ASIAN
AIRLINES and IRENE DORNIER
G.R. No. 195227 April 21, 2014
BRION, J.:
ART. 223 JURISDICTION OF THE LABOR ARBITERS AND
THE COMMISSION
DOCTRINE:
Under paragraph 3, Article 223 of the Labor Code, the LA’s
order for the reinstatement of an employee found illegally
dismissed is immediately executory even during pendency
of the employer’s appeal from the decision. Under this
provision, the employer must reinstate the employee –
either by physically admitting him under the conditions
prevailing prior to his dismissal, and paying his wages; or,
at the employer’s option, merely reinstating the employee
in the payroll until the decision is reversed by the higher
court. 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.
FACTS:
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.
LA RULING: LA found the petitioners illegally dismissed
and ordered the respondents, among others, to
immediately reinstate the petitioners with full backwages.
NLRC RULING: NLRC dismissed the respondents’ appeal for
non-perfection. The NLRC likewise denied the
respondents’ MR, prompting the respondents to file
before the CA a petition for certiorari.
CA RULING: CA rendered its decision (on the illegal
dismissal ruling of the LA) partly granting the respondents’
petition, declaring the dismissal valid and awarded the
petitioners P30,000.00 as nominal damages for the
respondents’ failure to observe due process.
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 the date of the CA’s decision
finding the petitioners validly dismissed.
Thus, the CA declared that, given this peculiar
circumstance (of the petitioners’ failure to report for
work per the return-to-work Memorandum.
ISSUES:
(1) Is the LA’s order for reinstatement of an illegally
dismissed employee immediately executory even during
pendency of the employer’s appeal from the decision?
(2) Should the accrued wages 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?
SC RULING:
(1) YES. Under paragraph 3, Article 223 of the Labor Code,
the LA’s order for the reinstatement of an employee found
illegally dismissed is immediately executory even during
pendency of the employer’s appeal from the decision.
Under this provision, the employer must reinstate the
employee – either by physically admitting him under the
conditions prevailing prior to his dismissal, and paying his
wages; or, at the employer’s option, merely reinstating the
employee in the payroll until the decision is reversed by
the higher court. 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.
Otherwise stated, a dismissed employee whose case was
favorably decided by the LA is entitled to receive wages
pending appeal upon reinstatement, which reinstatement
is immediately executory. Unless the appellate tribunal
issues a restraining order, the LA is duty bound to
implement the order of reinstatement and the employer
has no option but to comply with it.
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 execution to trigger the
employer’s duty to reinstate the dismissed employee.
After the LA’s decision is reversed by a higher tribunal, the
employer’s duty to reinstate the dismissed employee is
effectively terminated. This means that an employer is no
longer obliged to keep the employee in the actual service
or in the payroll. The employee, in turn, is not required to
return the wages that he had received prior to the reversal
of the LA’s decision.
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 appeal up to the
reversal by a higher tribunal may still be held liable for the
accrued wages of the employee, i.e., the unpaid salary
accruing up to the time the higher tribunal reverses the
decision.32 The rule, therefore, is that an employee may
still recover the accrued wages up to and despite the
reversal by the higher tribunal. This entitlement of the
employee to the accrued wages proceeds from the
immediate and self-executory nature of the reinstatement
aspect of the LA’s decision.
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 employer.

(2) To determine whether an employee is thus barred, two

tests must be satisfied: (1) actual delay or the fact that the
order of reinstatement pending appeal was not executed
prior to its reversal; and (2) the delay must not be due to
the employer’s unjustified act or omission. Note that
under the second test, the 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.
First, the existence of delay - whether there was actual
delay or whether the order of reinstatement pending
appeal was not executed prior to its reversal? We answer
this test in the affirmative.
To recall, on May 31, 2005, the LA rendered the decision
finding the petitioners illegally dismissed and ordering
their immediate reinstatement. Per the records, the
respondents received copy of this decision on 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 execution, until the CA reversed this
decision on December 17, 2008, the respondents had not
reinstated the petitioners, either by actual reinstatement
or in the payroll. This continued non-execution of the
reinstatement order in fact moved the LA to issue an alias
writ of execution on February 16, 2006 and another writ of
execution on April 24, 2007.
From these facts and without doubt, there was actual
delay in the execution of the reinstatement aspect of the
LA’s May 31, 2005 decision before it was reversed in the
CA’s decision.
Second, the cause of the delay –whether the delay was not
due to the employer’s unjustified act or 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. For one, the
respondents filed several pleadings to suspend the
execution of the LA’s reinstatement order. These
pleadings, to our mind, show a determined effort on the
respondents’ part to prevent or suspend the execution of
the reinstatement pending appeal.
The respondents 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.
Lastly, the petitioners continuously and actively pursued
the execution of the reinstatement aspect of the LA’s
decision, i.e., by filing several motions for execution of the
reinstatement order, and motion to cite the respondents
in contempt and re-computation of the accrued wages for
the respondents’ continued failure to reinstate them.
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 willful disregard of the
immediate and self-executory nature of the reinstatement
aspect of the LA’s decision.
EUGENE S. ARABIT, EDGARDO C. SADSAD, LOWELL C.
FUNTANOZ, GERARDO F.PUNZALAN, FREDDIE M.
MENDOZA, EMILIO B. BELEN, VIOLETA C. DIUMANO
andMB FINANCE EMPLOYEES ASSOCIATION FFW CHAPTER
(FEDERATION OF FREEWORKERS), Petitioners,vs.JARDINE
PACIFIC FINANCE, INC. (FORMERLY MB FINANCE),
Respondent.[G.R. No. 181719, April 21, 2014
FACTS:
Petitioners were former regular employees of
respondent Jardine Pacific Finance, Inc.(formerly MB
Finance). Who were also officers and members of MB
Finance Employees Association-FFW Chapter (the Union) --
-- a legitimate labor union and the sole exclusive
bargaining agent of the employees of Jardine.
Due to financial losses, Jardine decided to reorganize
and implement a redundancy program among its
employees. The petitioners were among those
affected by the redundancy program. Jardine thereafter
hired contractual employees to undertake the functions
these employees used to perform.
The Union filed a notice of strike with the National
Conciliation and Mediation Board(NCMB), questioning the
termination of employment of the petitioners who were
also union officers. The Union alleged unfair labor practice
on the part of Jardine, as well as discrimination in the
dismissal of its officers and members.
There was negotiation between Union and Jardine under
NCMB, and parties 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.
On June 1, 1999, the petitioners and the Union filed a
complaint against Jardine with the NLRC for illegal
dismissal and unfair labor practice.**Labor Arbiter - LA
ruled in Union’s favor. In its decision, they 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. LA explained
that the company’s action was a circumvention of the right
of the petitioners to security of tenure.- 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.**NLRC - dismissed the
appeals and affirmed the LA’s decision in its entirety**CA
- CA reversed the LA’s and the NLRC’s rulings, and granted
Jardine’s petition for certiorari.- 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. According to the
CA, the hiring of contractual employees is a management
prerogative that Jardine has the right to exercise. 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. - CA further held that
Jardine successfully established that for the years 1996 to
1998, the company incurred serious losses. 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.
ISSUE: WON CA correctly rule that the NLRC committed
grave abuse of discretion when it found that Jardine validly
terminated the petitioners’ employment because of
redundancy
RULING: SC Granted the petition. it stated that: 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. 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. 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.**
Aside from the guidelines for the selection of employees
who will be terminated, the Court, in Asian Alcohol Corp.
v. NLRC, the Guidelines in implementing redundancy are as
follows: 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.
G.R. No. 181490 : April 23, 2014
MIRANT (PHILIPPINES) CORPORATION, ET. AL.,
Petitioners, v. JOSELITO A. CARO, Respondent.
VILLARAMA, JR., J.:
FACTS:
Petitioner corporation is organized and operating under
and by virtue of the laws of the Republic of the Philippines.
It is a holding company that owns shares in project
companies such as Mirant Sual Corporation and Mirant
Pagbilao Corporation (Mirant Pagbilao) which operate and
maintain power stations located in Sual, Pangasinan and
Pagbilao, Quezon, respectively. Petitioner corporation and
its related companies maintain around 2,000 employees
detailed in its main office and other sites. Petitioner
corporation had changed its name to CEPA Operations in
1996 and to Southern Company in 2001. In 2002, Southern
Company was sold to petitioner Mirant whose corporate
parent is an Atlanta-based power producer in the United
States of America. Petitioner corporation is now known as
Team Energy Corporation.
Petitioner Edgardo A. Bautista (Bautista) was the President
of petitioner corporation when respondent was
terminated from employment.
Respondent was hired by Mirant Pagbilao on January 3,
1994 as its Logistics Officer. In 2002, when Southern
Company was sold to Mirant, respondent was already a
Supervisor of the Logistics and Purchasing Department of
petitioner. At the time of the severance of his
employment, respondent was the Procurement Supervisor
of Mirant Pagbilao assigned at petitioner corporations
corporate office. As Procurement Supervisor, his main task
was to serve as the link between the Materials
Management Department of petitioner corporation and its
staff, and the suppliers and service contractors in order to
ensure that procurement is carried out in conformity with
set policies, procedures and practices. In addition,
respondent was put in charge of ensuring the timely,
economical, safe and expeditious delivery of materials at
the right quality and quantity to petitioner corporations
plant. Respondent was also responsible for guiding and
overseeing the welfare and training needs of the staff of
the Materials Management Department. Due to the
nature of respondents functions, petitioner corporation
considers his position as confidential.
Respondent filed a complaint for illegal dismissal and
money claims for 13th and 14th month pay, bonuses and
other benefits, as well as the payment of moral and
exemplary damages and attorneys fees. It is the
contention of respondent that he was illegally dismissed
by petitioner corporation due to the latters non-
compliance with the twin requirements of notice and
hearing. He asserts that while there was a notice charging
him of unjustified refusal to submit to random drug
testing, there was no notice of hearing and petitioner
corporations investigation was not the equivalent of the
hearing required under the law which should have
accorded respondent the opportunity to be heard.
In a decision dated August 31, 2005, Labor Arbiter Aliman
D. Mangandog found respondent to have been illegally
dismissed. The Labor Arbiter also found that the quitclaim
purportedly executed by respondent was not a bona fide
quitclaim which effectively discharged petitioners of all the
claims of respondent in the case at bar. If at all, the Labor
Arbiter considered the execution of the quitclaim as a
clear attempt on the part of petitioners to mislead its
office into thinking that respondent no longer had any
cause of action against petitioner corporation.
On appeal to the NLRC, petitioners alleged that the
decision of the Labor Arbiter was rendered with grave
abuse of discretion for being contrary to law, rules and
established jurisprudence, and contained serious errors in
the findings of facts which, if not corrected, would cause
grave and irreparable damage or injury to petitioners. The
NLRC, giving weight and emphasis to the inconsistencies in
respondents explanations, considered his omission as
unjustified refusal in violation of petitioner corporations
drug policy. Respondent filed a motion for
reconsideration, while petitioners filed a motion for partial
reconsideration of the NLRC decision. In a Resolution
dated June 30, 2006, the NLRC denied both motions.
ISSUES:
1) Whether the petition for certiorari filed by respondent
with the CA should have been summarily dismissed as it
lacked the requisite verification and certification against
forum shopping under Sections 4 and 5, Rule 7 of the
Rules;
2) Whether respondent was illegally dismissed
HELD:
LABOR LAW
We agree with the disposition of the appellate court that
there was illegal dismissal in the case at bar.
While the adoption and enforcement by petitioner
corporation of its Anti-Drugs Policy is recognized as a valid
exercise of its management prerogative as an employer,
such exercise is not absolute and unbridled. Managerial
prerogatives are subject to limitations provided by law,
collective bargaining agreements, and the general
principles of fair play and justice. In the exercise of its
management prerogative, an employer must therefore
ensure that the policies, rules and regulations on work-
related activities of the employees must always be fair and
reasonable and the corresponding penalties, when
prescribed, commensurate to the offense involved and to
the degree of the infraction. The Anti-Drugs Policy of
Mirant fell short of these requirements.
Petitioner corporations subject Anti-Drugs Policy fell short
of being fair and reasonable.
First. The policy was not clear on what constitutes
unjustified refusal when the subject drug policy prescribed
that an employees unjustified refusal to submit to a
random drug test shall be punishable by the penalty of
termination for the first offense. To be sure, the term
unjustified refusal could not possibly cover all forms of
refusal as the employees resistance, to be punishable by
termination, must be unjustified. To the mind of the Court,
it is on this area where petitioner corporation had fallen
short of making it clear to its employees as well as to
management as to what types of acts would fall under the
purview of unjustified refusal. Even petitioner
corporations own Investigating Panel recognized this
ambiguity.
Crisanto F. Castro, Jr. vs Ateneo De Naga University, et
al., G.R. No. 175293, 23 July 2014
Facts: started his employment with respondent Ateneo
de Naga University (University) in the first semester of
school year 1960-1961. At the time of his dismissal, he
was a regular and full-time faculty member of the
University's Accountancy Department in the College of
Commerce with a monthly salary of P29,846.20.3
Allegedly, he received on February 22, 2000 a letter from
respondent Fr. Joel Tabora, SJ., the University President,
informing him that his contract (which was set to expire
on May 31, 2000) would no longer be renewed.4 After
several attempts to discuss the matter with Fr. Tabora in
person, and not having been given any teaching load or
other assignments effective June 2000, he brought his
complaint for illegal dismissal.
The University denied the allegation of illegal dismissal,
and maintained that the petitioner was a participant and
regular contributor to the Ateneo de Naga Employees
Retirement Plan (Plan); that upon reaching the age of 60
years on June 26, 1999, he was deemed automatically
retired under the Plan; and that he had been allowed to
teach after his retirement only on contractual basis.
LA Quinones, explaining that Article 223 of the Labor
Code granted to the employer the option to implement
either a physical or a payroll reinstatement, and that,
therefore, the respondents must first exercise the option
regardless of the petitioner's employment with the
Government, denied the petitioner's motion, but ordered
the respondents to exercise the option of either actual or
payroll reinstatement of the petitioner. NLRC affirmed
with modification. But on MR, it reversed its decision and
held that his execution of the receipt and quitclaim
respecting his benefits under the Plan estopped the
petitioner from pursuing other claims arising from his
employer-employee relationship with the University.
CA dismissed the petitioner's petition for certiorari on
the ground of its having been rendered moot and
academic by the aforecited August 31, 2005 decision of
the NLRC.

Issue: whether or not the petitioner's claim for the

payment of accrued salaries and benefits for the period
that he was not reinstated was rendered moot and
academic by: (a) his receipt of the retirement benefits
and execution of the corresponding receipt and quitclaim
in favor of the respondents; and (b) the dismissal of his
complaint for illegal dismissal by the NLRC.

Held: The Court holds that the order of reinstatement of

the petitioner was not rendered moot and academic. He
remained entitled to accrued salaries from notice of the
LA’s order of reinstatement until reversal thereof. In Islriz
Trading v. Capada, we even clarified that the employee
could be barred from claiming accrued salaries only
when the failure to reinstate him was without the fault of
the employer.

Considering that the respondents reinstated the

petitioner only in November 2002, and that their inability
to reinstate him was without valid ground, they were
liable to pay his salaries accruing from the time of the
decision of the LA (i.e., September 3, 2001) until his
reinstatement in November 2002. It did not matter that
the respondents had yet to exercise their option to
choose between actual or payroll reinstatement at that
point because the order of reinstatement was
immediately executory.