Garcia v. Philippine Airlines, Inc.

EN BANC

[G.R. No. 164856. January 20, 2009.]

JUANITO A. GARCIA and ALBERTO J. DUMAGO, petitioners, vs. PHILIPPINE AIRLINES, INC., respondent.

D E C I S I O N

CARPIO-MORALES, J p:

Petitioners Juanito A. Garcia and Alberto J. Dumago assail the December 5, 2003 Decision and April 16, 2004 Resolution of the Court of Appeals 1 in CA-G.R. SP No. 69540 which granted the petition for certiorari of respondent, Philippine Airlines, Inc. (PAL), and denied petitioners' Motion for Reconsideration, respectively. The dispositive portion of the assailed Decision reads: ECDaTI

WHEREFORE, premises considered and in view of the foregoing, the instant petition is hereby GIVEN DUE COURSE. The assailed November 26, 2001 Resolution as well as the January 28, 2002 Resolution of public respondent National Labor Relations Commission [NLRC] is hereby ANNULLED and SET ASIDE for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Consequently, the Writ of Execution and the Notice of Garnishment issued by the Labor Arbiter are hereby likewise ANNULLED and SET ASIDE.

SO ORDERED. 2

The case stemmed from the administrative charge filed by PAL against its employees-herein petitioners 3 after they were allegedly caught in the act of sniffing shabu when a team of company security personnel and law enforcers raided the PAL Technical Center's Toolroom Section on July 24, 1995.

After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL Code of Discipline, 4 prompting them to file a complaint for illegal dismissal and damages which was, by Decision of January 11, 1999, 5 resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter alia,immediately comply with the reinstatement aspect of the decision.

Prior to the promulgation of the Labor Arbiter's decision, the Securities and Exchange Commission (SEC) placed PAL (hereafter referred to as respondent), which was suffering from severe financial losses, under an Interim Rehabilitation Receiver, who was subsequently replaced by a Permanent Rehabilitation Receiver on June 7, 1999.

From the Labor Arbiter's decision, respondent appealed to the NLRC which, by Resolution of January 31, 2000, reversed said decision and dismissed petitioners' complaint for lack of merit. 6

Petitioners' Motion for Reconsideration was denied by Resolution of April 28, 2000 and Entry of Judgment was issued on July 13, 2000. 7 TEcCHD

Subsequently or on October 5, 2000, the Labor Arbiter issued a Writ of Execution (Writ) respecting the reinstatement aspect of his January 11, 1999 Decision, and on October 25, 2000, he issued a Notice of Garnishment (Notice). Respondent thereupon moved to quash the Writ and to lift the Notice while petitioners moved to release the garnished amount.

In a related move, respondent filed an Urgent Petition for Injunction with the NLRC which, by Resolutions of November 26, 2001 and January 28, 2002, affirmed the validity of the Writ and the Notice issued by the Labor Arbiter but suspended and referred the action to the Rehabilitation Receiver for appropriate action.

Respondent elevated the matter to the appellate court which issued the herein challenged Decision and Resolution nullifying the NLRC Resolutions on two grounds, essentially espousing that: (1) a subsequent finding of a valid dismissal removes the basis for implementing the reinstatement aspect of a labor arbiter's decision (the first ground), and (2) the impossibility to comply with the reinstatement order due to corporate rehabilitation provides a reasonable justification for the failure to exercise the options under Article 223 of the Labor Code (the second ground).

By Decision of August 29, 2007, this Court PARTIALLY GRANTED the present petition and effectively reinstated the NLRC Resolutions insofar as it suspended the proceedings, viz.:

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

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

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

SO ORDERED. 8 (Italics in the original; underscoring supplied)

By Manifestation and Compliance of October 30, 2007, respondent informed the Court that the SEC, by Order of September 28, 2007, granted its request to exit from rehabilitation proceedings. 9

In view of the termination of the rehabilitation proceedings, the Court now proceeds to resolve the remaining issue for consideration, which is whether petitioners may collect their wages during the period between the Labor Arbiter's order of reinstatement pending appeal and the NLRC decision overturning that of the Labor Arbiter, now that respondent has exited from rehabilitation proceedings.

Amplification of the First Ground

The appellate court counted on as its first ground the view that a subsequent finding of a valid dismissal removes the basis for implementing the reinstatement aspect of a labor arbiter's decision.

On this score, the Court's attention is drawn to seemingly divergent decisions concerning reinstatement pending appeal or, particularly, the option of payroll reinstatement. On the one hand is the jurisprudential trend as expounded in a line of cases including Air Philippines Corp. v. Zamora, 10 while on the other is the recent case of Genuino v. National Labor Relations Commission. 11 At the core of the seeming divergence is the application of paragraph 3 of Article 223 of the Labor Code which reads:

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

The view as maintained in a number of cases is that: cSIADa

. . . [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. 12 (Emphasis in the original; italics and underscoring supplied)

In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages pending appeal upon reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to comply therewith. 13

The opposite view is articulated in Genuino which states:

If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries s/he received while the case was pending appeal, or it can be deducted from the accrued benefits that the dismissed employee was entitled to receive from his/her employer under existing laws, collective bargaining agreement provisions, and company practices. However, if the employee was reinstated to work during the pendency of the appeal, then the employee is entitled to the compensation received for actual services rendered without need of refund.

Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is based on a just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC Decision. 14 (Emphasis, italics and underscoring supplied)

It has thus been advanced that there is no point in releasing the wages to petitioners since their dismissal was found to be valid, and to do so would constitute unjust enrichment.

Prior to Genuino, there had been no known similar case containing a dispositive portion where the employee was required to refund the salaries received on payroll reinstatement. In fact, in a catena of cases, 15 the Court did not order the refund of salaries garnished or received by payroll-reinstated employees despite a subsequent reversal of the reinstatement order. SCIAaT

The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise render inutile the rationale of reinstatement pending appeal.

. . . [T]he law itself has laid down a compassionate policy which, once more, vivifies and enhances the provisions of the 1987 Constitution on labor and the working man.

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

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

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. . . Then, by and pursuant to the same power (police power), the State may authorize an immediate implementation, pending appeal, of a decision reinstating a dismissed or separated employee since that saving act is designed to stop, although temporarily since the appeal may be decided in favor of the appellant, a continuing threat or danger to the survival or even the life of the dismissed or separated employee and his family. 16

The social justice principles of labor law outweigh or render inapplicable the civil law doctrine of unjust enrichment espoused by Justice Presbitero Velasco, Jr. in his Separate Opinion. The constitutional and statutory precepts portray the otherwise "unjust" situation as a condition affording full protection to labor.

Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the "refund doctrine" easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a dismissed employee. The employee, to make both ends meet, would necessarily have to use up the salaries received during the pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff of insolvency. SADECI

Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option of payroll reinstatement belongs to the employer, even if the employee is able and raring to return to work. Prior to Genuino, it is unthinkable for one to refuse payroll reinstatement. In the face of the grim possibilities, the rise of concerned employees declining payroll reinstatement is on the horizon.

Further, the Genuinoruling not only disregards the social justice principles behind the rule, but also institutes a scheme unduly favorable to management. Under such scheme, the salaries dispensed pendente lite merely serve as a bond posted in installment by the employer. For in the event of a reversal of the Labor Arbiter's decision ordering reinstatement, the employer gets back the same amount without having to spend ordinarily for bond premiums. This circumvents, if not directly contradicts, the proscription that the "posting of a bond [even a cash bond] by the employer shall not stay the execution for reinstatement." 17

In playing down the stray posture in Genuino requiring the dismissed employee on payroll reinstatement to refund the salaries in case a final decision upholds the validity of the dismissal, the Court realigns the proper course of the prevailing doctrine on reinstatement pending appeal vis-à-vis the effect of a reversal on appeal.

Respondent insists that with the reversal of the Labor Arbiter's Decision, there is no more basis to enforce the reinstatement aspect of the said decision. In his Separate Opinion, Justice Presbitero Velasco, Jr. supports this argument and finds the prevailing doctrine in Air Philippines and allied cases inapplicable because, unlike the present case, the writ of execution therein was secured prior to the reversal of the Labor Arbiter's decision.

The proposition is tenuous. First, the matter is treated as a mere race against time. The discussion stopped there without considering the cause of the delay. Second, it requires the issuance of a writ of execution despite the immediately executory nature of the reinstatement aspect of the decision. In Pioneer Texturing * Corp. v. NLRC, 18 which was cited in Panuncillo v. CAP Philippines, Inc., 19 the Court observed:

. . . The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223. In other words, if the requirements of Article 224 [including the issuance of a writ of execution] were to govern, as we so declared in Maranaw,then the executory nature of a reinstatement order or award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual. In enacting the law, the legislature is presumed to have ordained a valid and sensible law, one which operates no further than may be necessary to achieve its specific purpose. Statutes, as a rule, are to be construed in the light of the purpose to be achieved and the evil sought to be remedied. . . . In introducing a new rule on the reinstatement aspect of a labor decision under Republic Act No. 6715, Congress should not be considered to be indulging in mere semantic exercise. . . . 20 (Italics in the original; emphasis and underscoring supplied) HDCAaS

The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. 21 It settles the view that the Labor Arbiter's order of reinstatement is immediately executory and the employer has to either re-admit them to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the alternative, employer must pay the employee's salaries. 22

Amplification of the Second Ground

The remaining issue, nonetheless, is resolved in the negative on the strength of the second ground relied upon by the appellate court in the assailed issuances. The Court sustains the appellate court's finding that the peculiar predicament of a corporate rehabilitation rendered it impossible for respondent to exercise its option under the circumstances.

The spirit of the rule on reinstatement pending appeal animates the proceedings once the Labor Arbiter issues the decision containing an order of reinstatement. The immediacy of its execution needs no further elaboration. Reinstatement pending appeal necessitates its immediate execution during the pendency of the appeal, if the law is to serve its noble purpose. At the same time, any attempt on the part of the employer to evade or delay its execution, as observed in Panuncillo and as what actually transpired in Kimberly, 23 Composite, 24 Air Philippines, 25 and Roquero, 26 should not be countenanced.

After the labor arbiter's decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer. SIaHDA

The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be due to the employer's unjustified act or omission. If the delay is due to the employer's unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiter's decision.

In Genuino, there was no showing that the employer refused to reinstate the employee, who was the Treasury Sales Division Head, during the short span of four months or from the promulgation on May 2, 1994 of the Labor Arbiter's Decision up to the promulgation on September 3, 1994 of the NLRC Decision. Notably, the former NLRC Rules of Procedure did not lay down a mechanism to promptly effectuate the self-executory order of reinstatement, making it difficult to establish that the employer actually refused to comply.

In a situation like that in International Container Terminal Services, Inc. v. NLRC 27 where it was alleged that the employer was willing to comply with the order and that the employee opted not to pursue the execution of the order, the Court upheld the self-executory nature of the reinstatement order and ruled that the salary automatically accrued from notice of the Labor Arbiter's order of reinstatement until its ultimate reversal by the NLRC. It was later discovered that the employee indeed moved for the issuance of a writ but was not acted upon by the Labor Arbiter. In that scenario where the delay was caused by the Labor Arbiter, it was ruled that the inaction of the Labor Arbiter who failed to act upon the employee's motion for the issuance of a writ of execution may no longer adversely affect the cause of the dismissed employee in view of the self-executory nature of the order of reinstatement. 28

The new NLRC Rules of Procedure, which took effect on January 7, 2006, now require the employer to submit a report of compliance within 10 calendar days from receipt of the Labor Arbiter's decision, 29 disobedience to which clearly denotes a refusal to reinstate. The employee need not file a motion for the issuance of the writ of execution since the Labor Arbiter shall thereafter motu proprio issue the writ. With the new rules in place, there is hardly any difficulty in determining the employer's intransigence in immediately complying with the order.

In the case at bar, petitioners exerted efforts 30 to execute the Labor Arbiter's order of reinstatement until they were able to secure a writ of execution, albeit issued on October 5, 2000 after the reversal by the NLRC of the Labor Arbiter's decision. Technically, there was still actual delay which brings to the question of whether the delay was due to respondent's unjustified act or omission.

It is apparent that there was inaction on the part of respondent to reinstate them, but whether such omission was justified depends on the onset of the exigency of corporate rehabilitation. ADaECI

It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any court, tribunal or board against the corporation shall ipso jure be suspended. 31 As stated early on, during the pendency of petitioners' complaint before the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation Receiver. After the Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation Receiver.

Case law recognizes that unless there is a restraining order, the implementation of the order of reinstatement is ministerial and mandatory. 32 This injunction or suspension of claims by legislative fiat 33 partakes of the nature of a restraining order that constitutes a legal justification for respondent's non-compliance with the reinstatement order. Respondent's failure to exercise the alternative options of actual reinstatement and payroll reinstatement was thus justified. Such being the case, respondent's obligation to pay the salaries pending appeal, as the normal effect of the non-exercise of the options, did not attach.

While reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even the life of the dismissed employee and his family, it does not contemplate the period when the employer-corporation itself is similarly in a judicially monitored state of being resuscitated in order to survive.

The parallelism between a judicial order of corporation rehabilitation as a justification for the non-exercise of its options, on the one hand, and a claim of actual and imminent substantial losses as ground for retrenchment, on the other hand, stops at the red line on the financial statements. Beyond the analogous condition of financial gloom, as discussed by Justice Leonardo Quisumbing in his Separate Opinion, are more salient distinctions. Unlike the ground of substantial losses contemplated in a retrenchment case, the state of corporate rehabilitation was judicially pre-determined by a competent court and not formulated for the first time in this case by respondent.

More importantly, there are legal effects arising from a judicial order placing a corporation under rehabilitation. Respondent was, during the period material to the case, effectively deprived of the alternative choices under Article 223 of the Labor Code,not only by virtue of the statutory injunction but also in view of the interim relinquishment of management control to give way to the full exercise of the powers of the rehabilitation receiver. Had there been no need to rehabilitate, respondent may have opted for actual physical reinstatement pending appeal to optimize the utilization of resources. Then again, though the management may think this wise, the rehabilitation receiver may decide otherwise, not to mention the subsistence of the injunction on claims.

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

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

SO ORDERED.

Puno, C.J., Ynares-Santiago, Carpio, Austria-Martinez, Corona, Azcuna, Tinga, Nachuraand Leonardo-de Castro, JJ., concur.

Quisumbing, J., with Separate Opinion.

Chico-Nazario, J., I join the concurring and dissenting opinion of J. Brion.

Velasco, Jr., J., I concur in the result. With separate opinion.

Brion, J., with concurring and dissenting opinion.

Separate Opinions

QUISUMBING, J.:

From this Court's Decision 1 dated August 29, 2007, which ordered the suspension of the proceedings in this case, respondent Philippine Airlines, Inc. (PAL) filed a Manifestation and Compliance 2 on November 13, 2007 containing an Order 3 dated September 28, 2007, from the Securities and Exchange Commission (SEC) granting its request to exit from the rehabilitation proceedings. SIcEHD

In a letter dated September 14, 2007, the members of the Permanent Rehabilitation Receiver (PRR) recommended PAL's exit from rehabilitation "because the same is feasible based on the corporation's improved financial condition, capability to service debts or obligations, rosy projected cash flows, sustainable profitability and adherence to its Amended and Restated Rehabilitation Plan". 4 This assessment was bolstered by the Office of the General Accountant of the SEC in its Memorandum dated September 26, 2007, which concluded that PAL's projected income and projected cash flow for the next three years, cost of debt and equity capital, and latest interim (unaudited) financial statements, satisfactorily addressed concerns on its financial condition and sustainability of profit. 5

Based on these recommendations, the SEC found the termination of the rehabilitation proceedings, on the ground of successful rehabilitation, in order, thus:

WHEREFORE, in the light of the foregoing, and considering PAL's firm commitment to settle its outstanding obligations as well as the fact that its operations and its financial condition have been normalized and stabilized in conformity with the Amended and Restated Rehabilitation Plan, exemplifying a successful corporate rehabilitation, the PAL's request to exit from rehabilitation is hereby GRANTED.

The PRR is likewise directed to furnish all creditors and parties concerned with copies of this Order at the expense of the Petitioner and submit proof of service thereof to the Commission, within fifteen (15) days from date of receipt of this Order.

SO ORDERED. 6 CDAcIT

In view of the foregoing development, the instant case may now be resolved. But first, a brief summation of the antecedent proceedings.

Petitioners Alberto J. Dumago and Juanito A. Garcia were Aircraft Furnishers Master "C" and Aircraft Inspector, respectively, assigned in the PAL Technical Center. On October 9, 1995, they were dismissed for violation of Chapter II, Section 6, Article 46 (Violation of Law/Government Regulations) and Chapter II, Section 6, Article 48 (Prohibited Drugs) of the PAL Code of Discipline. 7 Both simultaneously filed a case for illegal dismissal and damages.

On January 11, 1999, the Labor Arbiter rendered a Decision 8 in petitioners' favor:

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

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

  34,125.00 for 13th month pay

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

  107,562.00 for 13th month pay

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

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

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

SO ORDERED. 9

On appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter's decision and dismissed the case for lack of merit. 10 Reconsideration having been denied, an Entry of Judgment 11 was issued on July 13, 2000.

On October 5, 2000, the Labor Arbiter issued a Writ of Execution 12 commanding the sheriff to proceed:

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

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

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Although PAL filed an Urgent Motion to Quash Writ of Execution, the Labor Arbiter issued a Notice of Garnishment 14 addressed to the President/Manager of the Allied Bank Head Office in Makati City for the amount of P549,309.60.

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

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

SO ORDERED. 15

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

On December 5, 2003, 16 the appellate court ruled that the Labor Arbiter issued the writ of execution and the notice of garnishment without jurisdiction. Hence, the NLRC erred in upholding its validity. Since PAL was under receivership, it could not have possibly reinstated petitioners due to retrenchment and cash-flow constraints. The appellate court declared that a stay of execution may be warranted by the fact that PAL was under rehabilitation receivership. The dispositive portion of the decision dated December 5, 2003, reads: HAIDcE

WHEREFORE, premises considered and in view of the foregoing, the instant petition is hereby GIVEN DUE COURSE. The assailed November 26, 2001 Resolution, as well as the January 28, 2002 Resolution of public respondent National Labor Relations Commission is hereby ANNULLED and SET ASIDE for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Consequently, the Writ of Execution and the Notice of Garnishment issued by the Labor Arbiter are hereby likewise ANNULLED and SET ASIDE.

SO ORDERED. 17

Petitioners moved for reconsideration which the appellate court denied on April 16, 2004, 18 thus:

Considering the Motion for Reconsideration filed by private respondents dated [January] 6, 2004 of this Court's Decision promulgated on December 5, 2003, as well as the Comment filed by petitioner dated February 20, 2003, the Court, finding no sufficient and compelling reason which will merit a reconsideration of the Decision rendered in this case as the issues raised therein had already been carefully considered and passed upon in the Decision sought to be reconsidered, hereby resolves to DENY the instant motion for reconsideration for lack of merit.

SO ORDERED. 19

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

WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE PETITIONERS ARE ENTITLED TO THEIR ACCRUED WAGES DURING THE PENDENCY OF PAL'S APPEAL. 20

Simply put, the issue is: Are petitioners entitled to their wages during the pendency of PAL's appeal to the NLRC?

Petitioners argue that pursuant to this Court's ruling in International Container Terminal Services, Inc. v. NLRC, 21 the reinstatement aspect of the Labor Arbiter's decision, albeit under appeal, is immediately enforceable as a consequence of which, the employer is duty-bound to choose forthwith whether to re-admit the employee or to reinstate him in the payroll. Failing to exercise the options in the alternative, the employer must pay the salary of the employee which automatically accrued from notice of the Labor Arbiter's order of reinstatement until its ultimate reversal by the NLRC. 22 Petitioners add that PAL should not be excused from complying with the order of reinstatement on the ground that it was under receivership. At the time PAL received a copy of the Labor Arbiter's decision, PAL was not yet under receivership.

Respondent counters that PAL was already under an Interim Rehabilitation Receiver at the time it received a copy of the Labor Arbiter's decision. It also contends that it cannot be compelled to reinstate petitioners pending appeal to the NLRC since retrenchment and cash flow constraints rendered it impossible to exercise its option under Article 223 of the Labor Code.

At the crux of the controversy is the application of Article 223 of the Labor Code which provides that:

ART. 223. Appeal. — . . .

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

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To be sure, the Court has divergent views on the immediately executory nature of reinstatement pending appeal particularly where the reinstatement order is reversed on appeal. On one hand, the Court has ruled that even if the Labor Arbiter's reinstatement order is reversed on appeal, it is the employer's obligation to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the NLRC. However, if the employee has been reinstated during the period of appeal and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. 23 EHSTcC

On the other hand, the Court has held that if the decision of the Labor Arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries s/he received while the case was pending appeal, or it can be deducted from the accrued benefits that the dismissed employee was entitled to receive from his/her employer under existing laws, collective bargaining agreement provisions, and company practices. However, if the employee was reinstated to work during the pendency of the appeal, then the employee is entitled to the compensation received for actual services rendered without need of refund. 24

In his dissenting opinion, Justice Presbitero J. Velasco, Jr. adopts the second interpretation and explains that since no actual or payroll reinstatement pending appeal transpired, petitioners are no longer entitled to their salaries for the period in question with the reversal of the Labor Arbiter's reinstatement order. There is no more legal basis for the payment of their salaries since their right to reinstatement pending appeal has been lost and extinguished. To release their salaries for the period in question would constitute unjust enrichment.

The rationale for execution pending appeal has been explained by this Court in Aris (Phil.), Inc. v. NLRC, 25 thus:

In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a dismissed or separated employee, the law itself has laid down a compassionate policy which, once more, vivifies and enhances the provisions of the 1987 Constitution on labor and the working-man. 26

xxx xxx xxx

If in ordinary civil actions execution of judgment pending appeal is authorized for reasons the determination of which is merely left to the discretion of the judge, We find no plausible reason to withhold it in cases of decisions reinstating dismissed or separated employees. In such cases, the poor employees had been deprived of their only source of livelihood, their only means of support for their family — their very lifeblood. To Us, this special circumstance is far better than any other which a judge, in his sound discretion, may determine. In short, with respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its execution pending appeal. 27 DaECST

Clearly, the principle of unjust enrichment does not apply. First, the provision on reinstatement pending appeal is in accord with the social justice philosophy of our Constitution. It is meant to afford full protection to labor as it aims to stop (albeit temporarily, since the appeal may be decided in favor of the employer) a continuing threat or danger to the survival or even the life of the dismissed employee and his family. 28 Second, the provision on reinstatement pending appeal partakes of a special law that must govern the instant case. The provision of the Civil Code on unjust enrichment, being of general application, must give way.

In any case, Justice Velasco points out that the writ of execution in the instant case was issued after the promulgation of the NLRC resolution. As petitioners failed to act on their rights and seek enforcement of the reinstatement pending appeal, PAL is not liable to pay their accrued salaries for the period in question.

In Pioneer Texturizing Corp. v. NLRC, 29 this Court clarified that an award or order for reinstatement is self-executory, to wit:

A closer examination, however, shows that the necessity for a writ of execution under Article 224 applies only to final and executory decisions which are not within the coverage of Article 223. . . .

xxx xxx xxx

. . . It can not relate to an award or order of reinstatement still to be appealed or pending appeal which Article 223 contemplates. The provision of Article 223 is clear that an award for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a reinstatement order. . . . 30 (Italics in the original.) aSDHCT

Since the reinstatement order is self-executory, it is inaccurate to say that its non-implementation was due to petitioners' fault who failed to enforce their rights at the proper and opportune time. To reiterate, the reinstatement order does not require a writ of execution, much less a motion for its issuance. To require petitioners to move for the enforcement of the reinstatement order and blame them for its belated enforcement, as Justice Velasco does, would render nugatory the self-executory nature of the award.

Justice Velasco also posits that Article 223 of the Labor Code does not automatically make the employer liable for accrued salaries during the reinstatement pending appeal where no reinstatement took place. He stresses that the only relief given under the NLRC Rules of Procedure is the remedy of compulsion via a citation for contempt, thus:

RULE V. SEC. 14. Contents of Decisions. — . . .

In case the decision of the Labor Arbiter includes an order of reinstatement, it shall likewise contain: a) a statement that the reinstatement aspect is immediately executory; and b) a directive for the employer to submit a report of compliance within ten (10) calendar days from receipt of the said decision.

RULE IX. SEC. 6. Execution of Reinstatement Pending Appeal. — In case the decision includes an order of reinstatement, and the employer disobeys the directive under the second paragraph of Section 14 of Rule V or refuses to reinstate the dismissed employee, the Labor Arbiter shall immediately issue a writ of execution, even pending appeal, directing the employer to immediately reinstate the dismissed employee either physically or in the payroll, and to pay the accrued salaries as a consequence of such reinstatement at the rate specified in the decision.

The Sheriff shall serve the writ of execution upon the employer or any other person required by law to obey the same. If he disobeys the writ, such employer or person may be cited for contempt in accordance with Rule IX. (Emphasis and underscoring supplied.)

Contrary to the position of Justice Velasco, there are actually two reliefs given in the foregoing provisions: (1) the payment of accrued salaries, and (2) a citation for contempt. aIcSED

If the Labor Arbiter's decision includes a reinstatement order, the decision should state that the reinstatement aspect is immediately executory and direct the employer to submit a compliance report within ten calendar days from receipt of the said decision. Should the employer disobey the directive of the Labor Arbiter or refuse to reinstate the dismissed employee, the Labor Arbiter shall immediately issue a writ of execution, even pending appeal, directing the employer to immediately reinstate the dismissed employee either physically or in the payroll, and to pay the accrued salaries as a consequence of such reinstatement. If the employer still disobeys the writ of execution, then he may be cited for contempt.

Finally, the majority put forth the view that after the Labor Arbiter's reinstatement order is reversed by the NLRC, the employee may be barred from collecting his accrued salaries if it is shown that the non-implementation of the reinstatement order was not due to the fault of the employer. In the instant case, the corporate rehabilitation of PAL had the effect of suspending all actions or claims against it. It partakes of the nature of a restraining order that constitutes a legal justification for PAL's non-compliance with the reinstatement order. The writer adds that reinstatement pending appeal does not contemplate the period when the employer is similarly in a state of being resuscitated in order to survive.

In Rubberworld (Phils.), Inc. v. NLRC, 31 we recognized that the automatic stay of all pending actions for claims is intended to enable the management committee or the rehabilitation receiver to effectively exercise its/his powers free from any judicial or extra judicial interference that might unduly hinder or prevent the 'rescue' of the distressed corporation. To allow such other actions to continue would only add to the burden of the management committee or rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the corporation instead of being directed toward its restructuring and rehabilitation.

Indeed, rehabilitation merely provides for the automatic stay of all pending actions or the suspension of payments of the distressed corporation to prevent the dissipation of its assets; it does not relieve the corporation of its obligations. Upon its successful rehabilitation, it must settle in full all claims previously suspended. HIAESC

Applying the foregoing rule, we cannot adhere to the posture taken by the majority. Just because PAL was under rehabilitation did not necessarily mean that immediately executory orders such as reinstatement pending appeal will be put to naught. That would in effect nullify the relief given to the employee when all the law seeks to do is suspend it.

Furthermore, we do not agree that reinstatement pending appeal is inapplicable in the instant case since, as the majority puts it, PAL is similarly in a state of being resuscitated in order to survive. PAL even argues that retrenchment and cash flow constraints rendered it impossible to comply with the reinstatement order. In Flight Attendants and Stewards Association of the Philippines (FASAP) v. Philippine Airlines, Inc., et al., 32 we noted that PAL failed to substantiate its claim of actual and imminent substantial losses which would justify the retrenchment of more than 1,400 of its cabin crew personnel. Although the Philippine economy was gravely affected by the Asian financial crisis, however, it cannot be assumed that it has likewise brought PAL to the brink of bankruptcy. 33 In effect, we held that the mere fact that PAL underwent corporate rehabilitation does not automatically mean that it suffered specific and substantial losses that would necessitate retrenchment. In fact, PAL was on the road to recovery as early as February 1999 and was declaring profits in millions in the succeeding years. 34

Given the circumstances in this case, delay on the employee's part was not an issue. But we cannot agree that the petitioners could be barred from collecting accrued wages, merely on the ground of their delay in enforcing reinstatement pending appeal. For it was the statutory duty of the respondent as employer to comply with a self-executory order in favor of the employees, herein petitioners.

Thus, while its rehabilitation may have prevented PAL from exercising its option either to re-admit petitioners to work or to reinstate them in the payroll, it did not defeat petitioners' right to reinstatement pending appeal which vested upon rendition of the Labor Arbiter's decision; more so when no actual and imminent substantial losses were proven by PAL.

To reiterate, there is no longer any legal impediment to hold PAL liable for petitioners' salaries which automatically accrued from notice of the Labor Arbiter's order of reinstatement until its ultimate reversal by the NLRC. 35 ESCDHA

WHEREFORE, I would vote to GRANT the petition.

VELASCO, JR., J.:

The ponencia affirms the December 5, 2003 Decision and the April 16, 2004 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 69540, annulling the National Labor Relations Commission (NLRC) resolutions that affirmed the validity of the Writ of Execution and Notice of Garnishment in question. I concur with the ponencia but for a different reason. cADSCT

A summary of the facts as contained in the ponencia is as follows:

Petitioners Juanito A. Garcia and Alberto J. Dumago were dismissed by Philippine Airlines, Inc. (PAL) in 1995 for violation of company and government regulations regarding illegal drugs. Both Garcia and Dumago filed a case for illegal dismissal and damages. Subsequently, on January 11, 1999, the labor arbiter decided the case in their favor and ordered PAL to immediately reinstate both employees and to pay them backwages, among other items. On appeal, the NLRC reversed the labor arbiter's decision and dismissed the complaint for lack of merit. After the motion for reconsideration was denied, an Entry of Judgment was issued on July 13, 2000.

Thereafter, on October 5, 2000, the labor arbiter issued a Writ of Execution which commanded the sheriff to "cause [the] reinstatement of complainants to their former positions and to cause the collection of the amount of [P]549,309.60 from respondent PAL representing the backwages of said complainants on the reinstatement aspect." On October 25, 2000, the labor arbiter issued a notice of garnishment.

The only issue in this case is whether Garcia and Dumago are entitled to their wages for the period between the labor arbiter's order of reinstatement and the NLRC's decision overturning the labor arbiter's decision.

The issue should be resolved in the negative.

In addition to the ground enunciated by the majority view that there was no unjustified act or omission on the part of PAL to reinstate the employees due to corporate rehabilitation, I submit that, in the light of the facts of the case where the employees failed to obtain a writ of execution and their reinstatement was not implemented prior to the reversal of the arbiter's decision granting reinstatement, they are not entitled to payment of backwages. aHADTC

 

Consider the following reasons:

(1) Paragraph 3 of Article 223 of the Labor Code provides:

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

A plain reading of the provision easily reveals that it is procedural in nature. Procedural laws are "adjective laws which prescribe rules and forms of procedure of enforcing right or obtaining redress for their invasion". 1 This is differentiated from substantive law which "creates, defines, or regulates rights concerning life, liberty or property or the powers of agencies or instrumentalities for the administration of public affairs". 2 Art. 223 of the Labor Code is not a substantive, but basically a procedural provision conferring at most on the prevailing employee at the labor arbiter's level the right to execution of the reinstatement order pending appeal. It does away with the application or motion for the issuance of a writ of execution to prevent delay in the reinstatement of the employee. While the filing of the motion and the need to justify execution pending appeal are dispensed with, still, there appears to be a need for the issuance of a writ of execution contrary to the pronouncement in the ponencia citing Pioneer Texturizing Corp. v. NLRC (Pioneer). 3 Rule XI, Section 6 of the 2005 NLRC Revised Rules of Procedure provides:

Section 6. Execution of Reinstatement Pending Appeal. — In case the decision includes an order of reinstatement, and the employer disobeys the directive under the second paragraph of Section 14 of Rule V or refuses to reinstate the dismissed employee, the Labor Arbiter shall immediately issue writ of execution, even pending appeal, directing the employer to immediately reinstate the dismissed employee either physically or in the payroll, and to pay the accrued salaries as a consequence of such reinstatement at the rate specified in the decision.

The Sheriff shall serve the writ of execution upon the employer or any other person required by law to obey the same. If he disobeys the writ, such employer or person may be cited for contempt in accordance with Rule IX. SCHcaT

In this respect, while it is mandatory for the arbiter to issue the writ, still, in view of the numerous cases handled by the arbiter, there is a necessity for the employee to work for the release of said writ and have it implemented. If the employee fails to have the writ implemented and the decision of the labor arbiter is eventually overturned by the NLRC or a higher body, then the employee loses the right to reinstatement.

The only instance when an employer becomes liable to pay the salaries of a dismissed employee is when the employer, despite the service on him of the writ of execution, unjustifiably refuses to reinstate the employee, thus:

. . . the unjustified refusal of the employer to reinstate an illegally dismissed employee entitles the employee to payment of his salaries, effective from the date the employer failed to reinstate despite an executory writ of execution served upon him. Such ruling is in accord with the mandate of the new law awarding full backwages until actual reinstatement (Article 279 of the Labor Code as amended.). 4

Art. 223 does not, as couched, accord the dismissed employee the substantive right to wages under any and all circumstances during such pendency of the appeal regardless of the outcome of the appeal before the NLRC. As explained, if reinstatement remains unimplemented due to inaction of the employee, then he is not entitled to payment of wages for the appeal period. If it were otherwise, there is, in a limited sense, no reason for the employer to challenge the pay aspect of the labor arbiter's decision on appeal as the employee would be adjudged entitled to backwages before the NLRC at any event. Worse, it will in effect nullify the first paragraph of Art. 223 which grants the employer the right to appeal the labor arbiter's decision to the NLRC within 10 calendar days from receipt of the decision. It will even emasculate the judicial power of review of the CA and this Court. The reason is simple — the employee will be paid his salaries anyway even if the appeal of the employer is found meritorious and the dismissal of the employee is upheld. It puts to naught the right of appeal of the employer even if the employee waives or, by sheer indifference, neglects to pursue reinstatement pending appeal. IcHTAa

Moreover, the employee need not strive to secure reinstatement in the interim as payment of his wages from rendition of the labor arbiter's decision to the time the NLRC issues its own is most assured. The employee may opt not to avail of the reinstatement and instead obtain work somewhere else since payment of his salaries is guaranteed regardless of the outcome of the appeal, a classic case of having one's cake and eating it too. Simply put, the situation is oppressive, most unfair, and unjust to the employer.

(2) Undoubtedly, the reinstatement of the employee under Art. 223 contemplates an execution pending appeal. Aris (Phil.), Inc. v. NLRC (Aris) clarified the nature of the provisional relief of reinstatement pending the final resolution of the appeal of the losing party in the following wise:

Execution pending appeal is interlinked with the right to appeal . . . . The latter may be availed of by the losing party or a party who is not satisfied with a judgment, while the former may be applied for by the prevailing party during the pendency of the appeal. The right to appeal, however, is . . . a statutory privilege of statutory origin and, therefore, available only if granted or provided by statute. The law may then validly provide limitations or qualifications thereto or relief to the prevailing party in the event an appeal is interposed by the losing party. Execution pending appeal is one such relief long recognized in this jurisdiction. The Revised Rules of Court allows execution pending appeal and the grant thereof is left to the discretion of the court upon good reasons to be stated in a special order." 5 (Emphasis supplied.)

Thus, reinstatement pending appeal in illegal dismissal cases is a species of execution pending appeal sanctioned by the Rules of Court, which applies suppletorily to the rules of procedure in labor cases under Sec. 3 Rule I of the 2005 NLRC Revised Rules of Procedure. While Sec. 2, Rule 39 of the Rules of Court allows such preliminary relief upon due motion and for good reasons, Art. 233 requires the immediate execution pending appeal of the reinstatement aspect of the arbiter's decision and is self-executory. The reinstated employee need not file a motion nor adduce good reasons for the grant of a reinstatement order pending appeal. Such good reasons required in Rule 39 of the Rules of Court are, as articulated in Aris, already captured in the raison de 'etre behind Art. 223, viz.:

If in ordinary civil actions execution of judgment pending appeal is authorized for reasons the determination of which is merely left to the discretion of the judge, We find no plausible reason to withhold it in cases of decisions reinstating dismissed or separated employees. In such cases, the poor employees had been deprived of their only source of livelihood, their only means of support for their family — their very lifeblood. To Us, this special circumstance is far better than any other which a judge, in his sound discretion, may determine. In short, with respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its execution pending appeal. 6 IDaEHC

It is established in this jurisdiction that in discretionary execution envisaged under said Rule 39, the prevailing party is obliged to make restitution or reparation, as justice and equity may warrant, in case the executed judgment is reversed on appeal. 7 If the party granted execution pending appeal is required to make restitution or reparation in ordinary civil cases, then an employee reinstated under payroll reinstatement is likewise obliged to make restitution of the salaries paid to him once the dismissal is upheld. 8 Such being the case, the right to reinstatement pending appeal is not a substantive but merely a procedural right.

(3) The complaint of the petitioners alleges "illegal dismissal" as their cause of action. Such is a pleading allowed the dismissed employee under Sec. 1, Rule III of the 2005 NLRC Revised Rules of Procedure which defines complaint as a "pleading alleging the cause or causes of action of the complainant or petitioner". There is no definition of cause of action in the NLRC Rules of Procedure. Since the Rules of Court applies in a suppletory character and effect to the 2005 NLRC Revised Rules of Procedure, 9 then the definition of cause of action in Sec. 2, Rule 2 of the 1997 Rules of Civil Procedure is adopted — that it is "the act or omission by which a party violates a right of another". In an illegal dismissal case, the cause of action of the dismissed employee is the employer's unlawful act in dismissing him from the service, thus violating the right of the employee to employment. Hence, the employee must prove his cause of action before he is entitled to relief. When the labor arbiter declares the illegality of the dismissal and orders his immediate reinstatement pending appeal, the cause of action of the employee is sustained subject to the appeal before the NLRC. While the appeal is pending, the employee is entitled to a provisional relief — execution pending appeal of the reinstatement aspect of the decision of the arbiter. Thus, he has the right to the immediate execution of the order of reinstatement based on the arbiter's decision. This is predicated on Art. 223 which declares that reinstatement pending appeal is immediately executory, and supported by Pioneer, 10 which allowed the employee's reinstatement even without a motion being filed or the need to justify said relief pending appeal. In short, there is a legal basis for the reinstatement pending appeal — the arbiter's decision. If the reinstatement is not implemented prior to the reversal decision of the NLRC, and the NLRC decision becomes final, like in the case at bar, certainly the employee is no longer entitled to reinstatement since there is no more legal basis for such relief. The finding that the dismissal is valid and legal removes the legal anchorage for reinstatement. The right of employment of the dismissed worker is, therefore, lost and forfeited. Necessarily, the employee is not even entitled to payment of salaries he could have earned had he been reinstated pending appeal for the simple reason that there is also no legal basis for such payment.

In the case at bar, when the NLRC rendered its reversal decision and held the petitioner's dismissal from PAL valid, it had in effect removed the legal basis for petitioners' reinstatement. Accordingly, as there is no more basis for reinstatement, the payment of unearned wages during the appeal, therefore, has no legal basis either. The labor arbiter, to stress, issued his decision on January 11, 1999, while the NLRC decision became final on July 13, 2000. In the interim, petitioners never lifted a finger to have the execution pending appeal implemented. They secured the writ of execution only on October 5, 2000, long after the finality of the NLRC's decision. By that time, the execution of the reinstatement pending appeal had no more legal basis and was lost and forfeited. We cannot fault the employer for the failed reinstatement when the employees themselves failed to enforce their rights at the proper and opportune moment. In the end, they were not able to substantiate and prove their cause of action. All reliefs that could have been granted to them were extinguished by the final NLRC decision that their dismissal is valid and legal. IAaCST

(4) Art. 223 of the Labor Code does not automatically render the employer liable for backwages for the period reckoned from the date of the labor arbiter's decision up to the date of the decision of a higher body reversing the arbiter's decision if there the employee failed to enforce the labor arbiter's order of reinstatement. Art. 223, 3rd paragraph is SILENT as to the consequences of the non-implementation of reinstatement pending appeal through the inaction of the employee, in the event the reinstatement is subsequently set aside. What should be applied is the literal meaning or plain-meaning rule under the maxim — speech is the index of intention (index animi sumo). If the statute is clear, plain, and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. 11 What is not clearly provided and specified in the law cannot be extended to those matters outside its scope. 12 Since the payment of backwages for the period reckoned from the date of decision awarding reinstatement up to the reversal thereof was not explicitly provided in the 3rd paragraph of Art. 223, then such award is unauthorized and without legal basis.

(5) The labor arbiter is duty-bound to order reinstatement by issuing a writ of execution if his decision directs that reinstatement is immediately executory. While it was explained in Pioneer that there is no need for the issuance of a writ of execution regarding reinstatement pending appeal, the Department of Labor and Employment saw the need for the issuance of a writ of execution to implement an order or decision. The suggested procedure in Pioneer is ineffective and the losing party does not generally comply with the order or decision possibly due to ignorance of the NLRC Rules of Procedure and jurisprudence. More importantly, a writ of execution or garnishment is always the generally accepted procedure in implementing final orders and decisions. The 2005 NLRC Revised Rules of Procedure, particularly Sec. 14, Rule V, has always prescribed the necessity for a writ of execution, thus:

SEC. 14. Contents of Decisions. — The decisions and orders of the Labor Arbiter shall be clear and concise and shall include a brief statement of the: a) facts of the case; b) issues involved; c) applicable laws or rules; d) conclusions and the reason therefor; and e) specific remedy or relief granted. In cases involving monetary awards, the decisions or orders of the Labor Arbiter shall contain the amount awarded.

In case the decision of the Labor Arbiter includes an order of reinstatement, it shall likewise contain: a) a statement that the reinstatement aspect is immediately executory; and b) a directive for the employer to submit a report of compliance within ten (10) calendar days from receipt of the said decision.

The complementing Sec. 6, Rule XI provides:

Section 6. Execution of Reinstatement Pending Appeal. — In case the decision includes an order of reinstatement, and the employer disobeys the directive under the second paragraph of Section 14 of Rule V or refuses to reinstate the dismissed employee, the Labor Arbiter shall immediately issue a writ of execution, even pending appeal, dissecting * the employer to immediately reinstate the dismissed employee either physically or in the payroll, and to pay the accrued salaries as a consequence of such reinstatement at the rate specified in the decision. DISTcH

The sheriff shall serve the writ of execution upon the employer or any other person required by law to obey the same. If he disobeys the writ, such employer or person may be cited for contempt in accordance with Rule IX. (Emphasis ours.)

Even the previous Sec. 3, Rule VIII of the NLRC Rules of Procedure, as amended by Resolution No. 01-02, Series of 2002, saw the need for such writ:

SEC. 3. Issuance of Partial Writ Pending Appeal. — In case the decision includes an order of reinstatement, the Labor Arbiter shall immediately issue a partial writ of execution even pending appeal directing the employer to immediately reinstate the dismissed employee either physically or through payroll and to pay the corresponding salaries as a consequence of the reinstatement. (Emphasis ours.)

It is abundantly clear from the above-quoted rules that an employer has to be compelled to reinstate the employee by means of a writ, and one who disobeys the writ of execution may be cited for contempt. The employer, as may be noted, can be coerced to actually reinstate the employees concerned to their former positions or agree to a payroll re-admission. Nowhere in the rules does it say that the employer shall contextually be liable for the payment of backwages in the event reinstatement is not effected. The only relief given under the rules is the remedy of compulsion via a citation for contempt.

(6) Pioneer did not rule that in the event of unjustifiable refusal to reinstate the employee, then the employer is liable for the wages which could have been earned during the appeal period. Neither did it rule that in case the employer refuses to reinstate the employee, then a writ of execution is no longer necessary. As a matter of fact, Pioneer cannot be considered a precedent to the case at bar considering that the Court subsequently affirmed the finding of illegal dismissal upon which the reinstatement on appeal was based. In the present case, the finding of illegal dismissal by the labor arbiter was overturned by the NLRC and the ruling that there was a valid dismissal eventually became final without the employees being reinstated during the appeal period, thus, the non-entitlement to the unearned wages. SEIDAC

Justice Brion, in his Concurring and Dissenting Opinion, opined that "the labor arbiter issues a writ of execution only when the employer disobeys the above directive or refuses to reinstate the dismissed employee" which is not the procedure prescribed in Rule XI, Sec. 6. This section requires the labor arbiter to immediately issue a writ of execution upon promulgation of the arbiter's decision. It is imprecise to say that a writ of execution is no longer necessary to effectuate a reinstatement pending appeal, as laid down in Pioneer. A writ of execution is needed after all. What is avoided by Art. 223 is the filing of a motion for reinstatement pending appeal and the presentation of evidence to justify reinstatement. Thus, reinstatement is self-executory only in that sense.

In the case at bar, PAL did not reinstate the petitioners due to corporate rehabilitation, doubtless a justifiable cause. Thus, it was incumbent for the employees to procure a writ of execution to compel reinstatement. If PAL disobeyed, then they could have asked the labor arbiter to cite the airline in contempt. They did not. They only got the writ after the NLRC decision annulling the arbiter's decision has become final. In this situation, they are not clearly entitled to the wages that could have been due to them during the appeal period.

(7) Air Philippines Corp. v. Zamora (Air Philippines) 13 likewise is not a precedent to the case at bar since it involved a reinstatement of a dismissed employee where the appeal of the higher court has not yet been finally resolved. Naturally, the employee in Air Philippines was still entitled to reinstatement because the legal basis therefor — the decision of the labor arbiter — was the prevailing ruling at that time although challenged on appeal. In the case at bench, the appeal has already been finally decided by the higher tribunal — the NLRC. There is, thus, to reiterate, no more legal basis for the reinstatement of the dismissed employees since it has been finally decreed that the dismissal is valid.

(8) If there is a justification for the refusal to reinstate, then the employer is not liable for the payment of salaries during the appeal period. 14 In PT&T v. NLRC 15 and Equitable Banking Corporation v. NLRC, 16 it was held that where the dismissed employee's reinstatement would lead to a strained employer-employee relationship or to an atmosphere of antipathy and antagonism, the exception to the twin remedies of reinstatement and payment of backwages can be invoked, and reinstatement, which might become anathema to industrial peace, could be held back pending appeal. 17 In the case at bar, considering that the dismissed employees committed a crime involving a breach of the Dangerous Drugs Act — sniffing shabu, which addiction might contaminate the other employees in the workplace thereby prejudicing the quality of work in a public service and utility company like PAL, then the denial of reinstatement is justified. ScAHTI

(9) The cases of Roquero, Intercontinental Container Terminal Services, Inc. (ICTSI), and Kimberly are not precedents to the case at bar.

In Roquero, the employees filed a motion for a writ of execution of the NLRC's order of reinstatement which was granted by the labor arbiter during the pendency of the appeal. In the case at bar, the writ was issued after the appeal was finally decided finding the dismissal valid.

In Roquero, the Court ruled that:

Hence, even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period.

Thus, the Roquero case is different in that the decision ordering reinstatement has not yet been reversed by the higher court when reinstatement was sought. Here, it was demanded after a final ruling of the legality of the dismissal.

In ICTSI, the employee filed a motion for writ of execution with the NLRC pending his appeal for reinstatement. In the instant case, petitioners obtained a writ of execution after the NLRC had disposed of the appeal by reversing the arbiter's decision reinstating them.

In Kimberly, the labor arbiter issued a writ of execution for the reinstatement of the employees pending appeal. Subsequently, he directed the company to pay the employees' back salaries, and the company's bank deposits were garnished. In the case at bar, the labor arbiter issued the writ of execution after the appeal has been resolved and the labor arbiter's decision was reversed by the NLRC. EHCDSI

Thus, the cases of Roquero, ICTSI, and Kimberly cannot support the proposition that respondent PAL is still required to pay the wages of petitioners when they only claimed reinstatement after the issuance of a final ruling that their dismissal is valid.

The doctrine of stare decisis et non quieta movere means "to adhere to precedents and not to unsettle things which are established". Under said doctrine, when the Court has once 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, where facts are substantially the same regardless of whether the parties and property are the same. 18 Since the facts in the instant petition are not substantially the same as in Roquero and other cases cited in the Concurring and Dissenting Opinion of Justice Brion, then I submit that the principles of law enunciated in Roquero and other cases cannot be applied to the case at bar.

(10) If petitioners will be adjudged to receive the salaries they could have earned during the pendency of the appeal after the case has been resolved with finality that their dismissal is valid, then petitioners will unduly enrich themselves at the expense of PAL without any legal basis. Such award would violate the doctrine of unjust enrichment that "a person shall not be allowed to profit or enrich himself inequitably at another's expense." 19 Nemo cum alterius detrimento locupletari potest. No one shall enrich himself at the expense of another. 20

To sum up:

After the decision of the arbiter ordering reinstatement pending appeal is issued, the labor arbiter is tasked to immediately issue a writ of execution for the implementation of the reinstatement pursuant to Sec. 6, Rule XI of the 2005 NLRC Revised Rules of Procedure. Despite the duty of the labor arbiter to issue such writ, the employee must exert effort and follow up to see to it that the said writ is actually issued by the labor arbiter. After issuance of the partial writ, the Sheriff shall serve the writ upon the employer. The employee must follow up with the sheriff the actual and immediate service of the writ upon the employer. If the employer disobeys the writ, the employer may be cited for contempt. The employee must file a motion for contempt with the labor arbiter.

If the employee obtains the writ of execution prior to reversal of the labor arbiter's decision, but the employer refuses without just cause to obey the reinstating writ, the latter is liable for the wages of the employee even if the decision of the labor arbiter is eventually reversed. 21 DHETIS

If the refusal of the employer to reinstate the employee pending appeal is justified, then reinstatement pending appeal cannot be compelled nor is the employer liable for backwages.

If the actually-reinstated employee worked in his former position pending appeal up to the date of reversal of the decision of the labor arbiter, then he is not obliged to reimburse the wages he earned, anchored on the principle that employees are entitled to fair wages for their day's work.

If the reinstating decision is reversed on appeal, then the employee placed on payroll reinstatement is required to reimburse the employer the wages he received during the payroll reinstatement since he is not legally entitled thereto after all as the order of reinstatement has no more legal basis as a result of the finding of a valid dismissal. Without reimbursement, the employee would unduly be enriched at the expense of the employer, contrary to the provision of Art. 22 of the Civil Code which states that every person who, through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.

If, as in this case, the employees fail to effectuate the release of the writ of execution and seek the enforcement of the reinstatement order during the pendency of the appeal and such order is subsequently reversed on appeal, the employer shall not be liable for the backwages corresponding to the period of the failed reinstatement.

I, therefore, vote to DISMISS the petition and concur in the result.

BRION, J., concurring and dissenting:

The present case involves two issues touching on different areas of law. The first issue relates to labor law — the effect on a reinstatement pending appeal of the reversal by the National Labor Relations Commission (NLRC) of the labor arbiter's reinstatement decision. The second is a corporate rehabilitation issue. ACIESH

I concur with the ponencia on the first issue, but dissent from the conclusion on the corporate rehabilitation issue. Thus, I vote to GRANT the petition and order the respondent Philippine Airlines, Inc. (PAL) to pay the petitioners the salaries due them prior to the NLRC's reversal of the labor arbiter's decision.

The Reinstatement Pending Appeal Issue

The labor law provision at the center of the present dispute is Article 223 of the Labor Code which provides:

xxx xxx xxx

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

xxx xxx xxx

Under the terms of this provision, the existence of the right to reinstatement itself, either actually or by payroll, presents no controversial point. Its implementation, however, may result in complications arising from the nature of the granted right, as the pendency of an appeal necessarily recognizes that the reinstatement which the labor arbiter ordered may still be reversed by the NLRC. Thus, the question arises: what happens to the reinstatement made when a reversal intervenes? More specifically, what happens to the salaries already paid pending appeal to the worker whose dismissal the NLRC declares to be legal?

The law provides the employer two alternatives in effecting reinstatement pending appeal. The first is actual reinstatement, i.e., the worker returns to work and earns his pay while waiting for the result of the employer's appeal. The second is payroll reinstatement where, in lieu of actual reinstatement, the employer complies with the obligation to reinstate by merely keeping the worker in the payroll but out of the workplace — a privilege that Article 223 of the Labor Code itself grants. TCAHES

Either case poses no patent legal complication and has been amply covered by our rulings in their implementation. 1 In the first case, no refund or reimbursement of salaries paid is necessary, as the worker earned his or her salaries through actual services rendered. In the second case, the worker would have worked, but the employer waived his right to exact services for the salaries he had paid. Thus, even if a reversal subsequently occurs, the employer is estopped from claiming any reimbursement or refund of salaries paid since they were paid for services deemed rendered.

The present case escapes the clear and easy application of Article 223 because neither actual nor payroll reinstatement took place during the period of appeal; instead, the labor arbiter issued a writ of execution for the salaries corresponding to the period of appeal after the NLRC had issued its order of reversal. Thus, the question that arises and the one directly posed by this case is: is the right to a reinstatement pending appeal enforceable even after the reversal of the order that gave rise to the right?

The Reinstatement Provision Examined

The immediately executory character of a labor arbiter's reinstatement order is not an original provision of the Labor Code as framed in 1974. It only came in 1989 by way of an amendment to the Labor Code under R.A. No. 6715. The obvious intent of the Legislature — as this Court ascertained in Aris (Phil.), Inc. v. NLRC 2 — is to lay down a compassionate policy towards the workingman in recognition of his role in the social and economic life of the nation.

In more practical terms, the provision came because of the need to level the playing field between labor and management; a worker deprived of his or her means of livelihood during the pendency of the employer's appeal in a dismissal case is at an extreme disadvantage because of lack of funds for his or her basic survival needs. This realization, coupled with the undisputed delay that attends litigation, is enough to discourage workers from seeking redress or from pursuing cases already filed, to their gross disadvantage. This situation can be an oft-repeating reality unless the State intervenes. cECTaD

R.A. No. 6715 is such intervention made pursuant to the constitutional mandate for the protection of labor. We recognized this State obligation in Fuentes v. NLPC 3 when we ruled:

The State is bound under the Constitution to afford full protection to labor and when conflicting interests of labor and capital are to be weighed on the scales of social justice, the heavier influence of the latter should be counterbalanced with the sympathy and compassion the law accords the less privileged workingman.

The mandatory execution pending appeal contemplated is both novel and unique as the executions we have known before R.A. No. 6715 were executions of final and executory judgments 4 and discretionary executions pending appeal. 5 In the latter case, the Rules of Court only allow executions pending appeal upon a finding of good justificatory reasons. In a way, Article 223 is still consistent with this concept under the view that Congress thereby effectively "pre-determined" the good reason to justify execution pending appeal: the proceeds shall be the employee's source of livelihood and means of support while the employer's appeal is pending.

The word "immediately" has been understood to mean without delay or lapse or interval of time. 6 Based on this definition, the Court has ruled that Article 223 does not need an application for and the issuance of a writ of execution as prerequisite for the execution of a reinstatement award. 7 In other words, the reinstatement order is self-executory. 8 This is the basis for the current NLRC Rules of Procedure that leaves the enforcement of the reinstatement order to the employer who is given the duty to submit a compliance report within 10 days from receipt of the decision. 9 The labor arbiter issues a writ of execution only when the employer disobeys the above directive or refuses to reinstate the dismissed employee. 10

Since Article 223 is self-executory, the dismissed worker in effect becomes a passive beneficiary of the labor arbiter's order. He does not need to actively move to secure his reinstatement; thus, his failure to move for the implementation of the labor arbiter's order in no way prejudices his right to an immediate reinstatement and to its proceeds. If at all, only his refusal to be reinstated or a waiver of this right on his part can disentitle him to what the law grants. CAaSHI

The cases of Roquero v. Philippine Airlines, 11 International Container Terminal Services, Inc. (ICTSI) v. NLRC, 12 and Kimberly Clark (Phil.), Inc. v. Facundo 13 are authorities for the position that notwithstanding the reversal by the NLRC of the labor arbiter's order of reinstatement, the dismissed employee is still entitled to the wages accruing during the pendency of the appeal.

Justice Velasco in his Separate Opinion posits that there is no more legal ground to grant the dismissed employees the wages that accrued during the pendency of the appeal once the order of reinstatement is reversed. As basis, he relies on: the case of Genuino v. NLRC, 14 the rule on reimbursement under Section 5, Rule 39 of the Rules of Court; and the principle of unjust enrichment under the Civil Code.

The Genuino case declared that if the decision of the labor arbiter is later reversed on appeal upon finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries he received while the case was pending appeal. This reimbursement doctrine, according to Justice Velasco, finds further support in Section 5 of Rule 39 of the Rules of Court where the prevailing party is obliged to make restitution or reparation in case the executed judgment is reversed on appeal. Since reinstatement pending appeal in illegal dismissal cases is by nature an execution pending appeal, he reasons out that the Rules of Court should be applied suppletorily. From this take off point, Justice Velasco opines that the employee, who is not reinstated while the appeal is pending, is overtaken by events when the reinstatement order is reversed on appeal and cannot now be reinstated. At this point, he is also not entitled to the salaries he would have earned had he been reinstated pending appeal. A contrary view would allegedly violate the civil law principle of unjust enrichment.

Aside from the paucity of authorities supporting the Genuino view, I do not find Justice Velasco's arguments sufficiently persuasive to justify a deviation from the Court's persuasive interpretation of Article 223 in Roquero, ICTSI, and Kimberly Clark.

In the first place, Section 5 of Rule 39 refers specifically to discretionary executions pending appeal as provided under Section 2 of that Rule. It finds no application to the mandatory executions pending appeal provided under Article 223, as the special reasons behind the immediate execution under Article 223 — discussed above — are outside the contemplation of Section 5, Rule 39. To be exact, Section 5, Rule 39 does not take into account the special labor relations setting that justifies Article 223, and disregards too the constitutional mandate that compels Congress to provide remedies — substantive and procedural — to situations where labor may be at a disadvantage. HEcTAI

Second, Article 223, viewed from the prism of its intent, is not a mere procedural rule governing appeals from decisions of labor arbiters. Understood fully and properly, it embodies and grants a substantive right to dismissed employees whose cases are brought to the NLRC on appeal. Source of livelihood and support — a worker's basic means for survival — cannot be matters of procedure that can be undone and taken back when conditions change. A State intervention to address the specific and identified need to level the playing field in the course of an employer's appeal to the NLRC (i.e., from a finding that a worker has been illegally dismissed) cannot likewise simply be a matter of procedure; it is a State declaration that, after a first-level finding of an illegal dismissal, the worker must be protected by immediately affording him or her the right to the work and the wages previously denied by the employer. In this sense, Article 223 cannot but embody a substantive grant that passes the test of legality even from the point of view of constitutional law. It does not violate due process as it is a reasonable measure supported by a prior finding of illegality made after the employer had been duly heard. It is also not a confiscatory grant as the law requires the worker to render services to earn his salary, subject only to the payroll reinstatement that is recognized for the benefit of the employer.

In the context of this case, Article 223 embodies a substantive grant that must be given to the dismissed employees, irrespective of the presence of fault or lack of it on the part of the employer. For this reason (separately from the reason more fully discussed below), I do not agree with the ponencia's position that PAL's corporate rehabilitation excused it from complying with Article 223. The corporate rehabilitation merely suspended the implementation of Article 223, but did not totally excuse PAL from the obligation to reinstate, or in lieu thereof, to pay the wages due during the appeal period. Thus, the reinstatement should be implemented upon the lifting of the suspension or stay order. The intervening reversal by the NLRC of the labor arbiter's reinstatement decision cannot and should not affect that part of the grant that had already been vested prior to the reversal. With the suspension lifted, PAL should therefore be held liable for the wages due during the appeal period all the way up to the time of reversal. TSIaAc

Third, contrary to Justice Velasco's opinion, the silence of Article 223 on the worker's entitlement to wages pending appeal cannot lead to the conclusion that no such entitlement exists. To so conclude is to close our eyes to the clear intent of the amended Article 223. Assuming arguendo that no such intent is patent, the silence of Article 223 cannot also lead to the conclusion that the worker — who has been declared illegally dismissed — is not entitled to the wages he or she should have earned had not the illegal dismissal taken place. The only logical conclusion that can be made, and one that can hardly be disputed, is that the silence of Article 223 leads to a situation of doubt. Any doubt, however, in the interpretation or implementation of the Labor Code should be resolved in favour of labor pursuant to the Labor Code's own Article 4.

Justice Velasco's last argument — unjust enrichment under Article 22 of the Civil Code — must similarly fall when read together with Article 223 of the Labor Code.

Established jurisprudence teaches us that there can be no unjust enrichment pursuant to Article 22 of the Civil Code if there is a legal basis for the situation complained of as unjust. 15 In the present case, what is complained of as unjust is the payment to the petitioners of the salaries they would have earned during the pendency of the employer's appeal had the employer reinstated them. Justice Velasco labels the situation as unjust because the NLRC subsequently reversed the labor arbiter's decision and declared the dismissal legal. This situation, however, is precisely what Article 223 of the Labor Code addresses; the State saw it fit to provide the dismissed worker a substantive right during the pendency of the employer's appeal to level the playing field in an employee dismissal situation. Thus, there is legal basis for the situation complained of as unjust so that Article 22 of the Civil Code cannot apply.

The Corporate Rehabilitation Issue

The ponencia's conclusion on this issue is embodied in the statement: "The Court sustains the appellate court's finding that the peculiar predicament of a corporate rehabilitation rendered it impossible for the respondent to exercise its option under the circumstances". In other words, the ponencia believes that the onset of the corporate rehabilitation automatically and absolutely barred the respondent from reinstating the petitioners; reinstatement was a legal impossibility so that the respondent should be exempt from the application of Article 223 of the Labor Code. aHIDAE

As a general proposition, the ponencia's conclusion is correct because the law 16 indeed speaks of the suspension of all claims or actions against a corporation once a rehabilitation receiver or management committee has been appointed. 17 Care, however, should be taken in considering when and how the suspension of claims or actions against a distressed corporation is triggered. For one, the law on corporate rehabilitation is an evolving law that has seen a lot of changes in the course of its development. Care must be observed to ensure that the appropriate law and rules at the material time of the case are applied. The suspension — imposed for the benefit of the distressed corporation — is also not a remedy impervious to and isolated from its surrounding circumstances. The suspension can be affected by how the petitioning corporation avails of the benefit, and by how its actions affect third parties. These observations are mentioned because they are critical in reading the effects of the suspension that PAL belatedly claimed in the present case.

Jurisdiction over corporate rehabilitation has not been static. Starting with the Securities and Exchange Commission (SEC) under PD No. 902-A, jurisdiction shifted to the Regional Trial Courts (RTC) effective July 19, 2000 pursuant to Section 5.1 of RA No. 8799 (the Securities Regulation Code); this Court did not issue the Interim Rules of Procedure on Corporate Rehabilitation until December 15, 2000. 18 Prior to this shift, both the law and the SEC Rules 19 did not clearly state that corporate rehabilitation proceedings are in rem, while this characteristic is clearly spelled out under the Court's Interim Rules of Procedure on Corporate Rehabilitation. 20 These seemingly minor evolutionary developments assume a great significance in the present case because all the material developments under discussion transpired under the SEC rules, not under the Court's Interim Rules of Procedure on Corporate Rehabilitation. 21 To illustrate this point, the records show that the petitioners filed their complaint for illegal dismissal only on October 30, 1997. PAL filed its petition for approval of corporate rehabilitation plan on June 19, 1998, and the SEC issued its Order 22 appointing an interim rehabilitation receiver on June 23, 1998. It was not till a week later or on July 1, 1998 that the SEC issued a Stay Order of all claims against PAL. CSDcTA

An intriguing aspect of this Stay Order is that it does not appear to have been invoked by PAL to secure the suspension of the petitioners' claim against it. Thus, the claim for illegal dismissal before the labor arbiter proceeded until his decision on January 11, 1999 reinstating the petitioners. The dispositive portion of this decision states:

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

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

 34,125.00 for 13th month pay

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

 107,562.00 for 13th month pay

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

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

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

SO ORDERED. 23 [Emphasis supplied.]

This portion is quoted because of its terms; it did not only declare the petitioners to have been illegally dismissed, but also directly ordered PAL to immediately reinstate them to their positions. Thus, as early as January 1999, PAL was on notice that the petitioners should be reinstated.

PAL interestingly saw no need to notify the NLRC on appeal of the ongoing corporate rehabilitation and its suspensive effects. Thus, PAL appealed to the NLRC on February 26, 1999 purely on the merits of its case against the petitioners. Not a word was said about the suspension of the proceedings pursuant to the SEC Order of July 1, 1998.

In the interim, the counsel for the petitioners wrote PAL (on June 14, 1999) to claim the reinstatement that the labor arbiter ordered to be immediately made. To quote from this letter:

Considering that PAL, Inc. failed to reinstate our clients immediately upon its receipt of the Decision on February 24, 1999, our clients are entitled to the payment of their salaries computed from that date and which, as of June 24, 1999 amounts to P42,000.00 for complainant Alberto J. Dumago, and P132,384.00 for complainant Juanito Garcia. 24

On November 11, 1999, the petitioners continued their quest for immediate reinstatement by filing a "Motion for Issuance of Writ of Execution and to Cite the Respondents in Contempt". It does not appear from the records before us that PAL ever opposed this motion. Within three months from the filing of this motion, the NLRC rendered its decision reversing the labor arbiter in a decision dated January 31, 2000. ESTaHC

Again, not one word appeared in the NLRC decision showing that the NLRC took official notice of the SEC's order of suspension dated July 11, 1999. The same is true with the NLRC's Resolution dated April 28, 2000 denying the petitioners' motion for reconsideration.

On October 5, 2000, the labor arbiter issued a writ of execution to enforce the reinstatement pending appeal aspect of his decision, and on October 20, 2000 issued a notice of garnishment. 25 It was only at that point that PAL, citing P.D. No. 902-A and Rubberworld (Phils.), Inc. v. NLRC, 26 invoked the appointment of a receiver as basis to resist the writ of execution.

Rubberworld, while seemingly a similar case, presents a situation far different from the circumstances of the present case. Although it was a labor case that was suspended due to the pendency of corporate rehabilitation proceedings, PAL failed to note that the employer in Rubberworld filed a motion for the suspension of the labor proceedings pursuant to the SEC's stay order. 27 This, the respondent PAL failed to seasonably do, resulting in the legal consequences discussed below.

As the corporation accorded with the suspension of claims and actions for or against it in the course of corporate rehabilitation, PAL had the burden to actively assert the suspension that the law allows. This is particularly true under the then prevailing SEC rules which were not clear and categorical about the in rem nature of the corporate rehabilitation proceedings.

By failing to ask for the suspension of the labor proceedings, PAL clearly slept on its right. At the very least, PAL's failure to seasonably assert its right to the suspension of proceedings raised the presumption that it had abandoned or declined to assert this right. 28

PAL did not merely sleep on its rights; worse than this omission, PAL even actively represented that no suspension was called for when it appealed to the NLRC the decision of the labor arbiter. Thus, while PAL could have put its appeal on hold without affecting its right to appeal, it showed both the petitioners and the labor tribunals that its preference was to pursue the case. This active and express representation by PAL brings into play the concept of estoppel under Article 1431 of the Civil Code which provides:

Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. CaEIST

On the authority of this provision, respondent PAL — who by its actions showed that it wanted to pursue its appeal — should not now be heard to say that the reinstatement that should accompany the appeal has now been rendered impossible because of the on-going corporate rehabilitation. To state it another way, PAL was the corporate rehabilitation petitioner in whose behalf the suspension of claims and actions was granted by law, and who knew that a suspension was in place; yet PAL itself disregarded the supposed suspension by appealing to the NLRC. From the point of view of fairness, it is the height of inequity to recognize the efficacy of PAL's appeal and the NLRC's consequent reversal of the labor arbiter's decision, while not recognizing the reinstatement pending appeal that should have been in place while PAL's appeal was pending. If indeed the suspension should have automatically set in, then such suspension should apply to all proceedings from and after the SEC's suspension order, i.e., from the labor arbiter's to the NLRC's proceedings. Unfortunately, this levelling of the playing field is far from what would happen if the ponencia prevails.

Even by the terms of the ponencia itself which provides:

After the labor arbiter's decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer.

The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal and (2) the delay must not be due to the employer's unjustified act or omission. If the delay is due to the employer's unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiter's decision.

it is interesting to note that PAL's claim of lack of fault cannot be justified, as the failure to implement the petitioners' reinstatement pending appeal is directly traceable to it, not to the petitioners. To go back to the developments in this case, the labor arbiter's decision contained a direct order for immediate reinstatement, and PAL openly and unjustifiably disregarded this order. PAL did not have to wait for a writ of execution because the order to immediately reinstate was in the decision itself. The petitioners, for their part, seasonably demanded through their letter of June 14, 1999 that they be reinstated; they subsequently filed a motion for the issuance of a writ of execution. All these efforts failed to draw any response, either from PAL or from the labor arbiter. If PAL responded at all, it was only after it won at the NLRC level. It was also at this time that it cited for the first time the SEC order for suspension of proceedings. The labor arbiter, on the other hand, likewise responded through the issuance of a writ of execution only after the NLRC had ruled. Under these facts, the failure to effect reinstatement cannot be imputed to the petitioners, and they should not be made to suffer for a fault not attributable to them. Thus, the ponencia's own standards belie the correctness of its conclusion to deny the petition. ISCaDH

For all these reasons, dictated both by the law and by fairness, I vote to GRANT the petition.

 

Footnotes

1. Justices Marina L. Buzon, Sergio L. Pestaño (ponente) and Jose C. Mendoza comprised the [Former] Fourteenth Division of the appellate court. STcaDI

2. Rollo, pp. 47-48.

3. Juanito A. Garcia and Alberto J. Dumago were employed as aircraft inspector and aircraft furnisher master, respectively.

4. Particularly, Chapter II, Section 6, Articles 46 (Violation of Law/Government Regulations) and 48 (Prohibited Drugs).

5. Records, Vol. 1, p. 167. The dispositive portion of the Decision penned by Labor Arbiter Ramon Valentin Reyes reads:

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

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

34,125.00 for 13th month pay

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

107,562.00 for 13th month pay

[t]he amounts of P100,000.00 and P50,000.00 to each complainant as and by way of moral and exemplary damages; and

[t]he sum equivalent to ten percent (10%) of the total award as and for attorney's fees.

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

SO ORDERED. (Emphasis and underscoring supplied) 2005jur

6. Records, Vol. 1. pp. 174-186.

7. Id., at 209. A second look at the antecedents of the main case reveals that petitioners went on certiorari to the Court of Appeals to challenge the finding of the validity of their dismissal. By Resolutions of August 10, 2000 and November 5, 2003, the appellate court dismissed the petition docketed as CA-G.R. SP No. 59826 and denied reconsideration thereof on technical grounds. By Decision of June 8, 2005, the Court reversed the two resolutions and remanded the case to the appellate court for further proceedings.vide rollo, pp. 218-219; Garcia v. Philippine Airlines, Inc., G.R. No. 160798, June 8, 2005, 459 SCRA 768. The appellate court, by Decision of March 28, 2008 and Resolution of July 11, 2008, dismissed the petition.

8. Garcia v. Philippine Airlines, Inc., G.R. No. 164856, August 29, 2007, 531 SCRA 574, 582-583. Penned by Justice Leonardo A. Quisumbing.

9. Rollo, pp. 250-257.

10. G.R. No. 148247, August 7, 2006, 498 SCRA 59.

11. G.R. Nos. 142732-33, December 4, 2007, 539 SCRA 342.

12. Supra note 10 at 72-73.

13. Roquero v. Philippine Airlines, 449 Phil. 437, 446 (2003).

14. Supra note 11 at 363-364. The Court therein sustained the NLRC's reversal of the Labor Arbiter's decision but cancelled the NLRC's award of salaries accruing from the Labor Arbiter's order of reinstatement pending appeal.

15. Composite Enterprises, Inc. v. Caparoso, G.R. No. 159919, August 8, 2007, 529 SCRA 470; Kimberly Clark (Phils.), Inc. v. Facundo, G.R. No. 144885, July 26, 2006 (Unsigned Resolution); Sanchez v. NLRC, G.R. No. 124348, February 7, 2001 Unsigned Resolution; International Container Terminal Services, Inc. v. NLRC, 360 Phil. 527 (1998). THADEI

16. Roquero v. Philippine Airlines, supra at 445 citing Aris (Phil.), Inc. v. NLRC, 200 SCRA 246 (1991).

17. LABOR CODE,Article 223, par. 3.

18. 345 Phil. 1057 (1997) which established the doctrine that an order or award for reinstatement is self-executory, meaning that it does not require a writ of execution, much less a motion for its issuance.

19. G.R. No. 161305, February 9, 2007, 515 SCRA 323.

20. Supra note 18 at 1075-1076.

21. Supra note 12.

22. Kimberly Clark (Phils.), Inc. v. Facundo, supra.

23. Supra, where the 3 months salary was delayed because the employer filed another baseless motion to quash writ of execution.

24. Supra, where the employer did not release the salaries despite agreeing on payroll reinstatement, awaiting the resolution of its unmeritorious Motion to be Allowed to pay Separation Pay in lieu of Reinstatement.

25. Supra, where the employer did not at all comply with the standing writ of execution. cTDaEH

26. Supra, where the employer refused to comply with the writ of execution, arguing that it filed a petition for review before the Court.

27. Supra.

28. International Container Terminal Services, Inc. v. NLRC, supra.

29. REVISED RULES OF PROCEDURE OF THE NLRC (2005), Rule V, Sec. 14 and Rule XI, Sec. 6. DaScHC

30. Petitioners state that respondent ignored their letter of June 14, 1999, prompting them to file a "Motion for Issuance of Writ of Execution [of the Labor Arbiter's January 11, 1999] and to Cite the Respondents in Contempt" of November 11, 1999, rollo, pp. 78-85, 169.

31. Garcia v. Philippine Airlines, Inc., supra note 8.

32. Roquero v. Philippine Airlines, supra note 13.

33. PRES. DECREE NO. 902-A, Sec. 6 (c), as amended.

QUISUMBING, J.:

1. Garcia v. Philippine Airlines, Inc., G.R. No. 164856, August 29, 2007, 531 SCRA 574.

2. Rollo, pp. 250-251.

3. Id. at 252-257.

4. Id. at 254.

5. Id. at 254-256. DSacAE

6. Id. at 257.

7. Records, Vol. I, pp. 32-33.

8. Id. at 160-167.

9. Id. at 167.

10. Id. at 174-186.

11. Id. at 209-210.

12. CA rollo, pp. 57-61.

13. Id. at 60-61.

14. Id. at 71.

15. Id. at 21.

16. Rollo, pp. 38-48. Penned by Associate Justice Sergio L. Pestaño, with Associate Justices Marina L. Buzon and Jose C. Mendoza concurring. CAHaST

17. Id. at 47-48.

18. Id. at 49.

19. Id.

20. Id. at 219.

21. G.R. No. 115452, December 21, 1998, 300 SCRA 335.

22. Id. at 343.

23. Kimberly Clark (Phils.), Inc. v. Ernesto Facundo, et al., G.R. No. 144885, July 12, 2006, p. 8 (Unsigned Resolution); Roquero v. Philippine Airlines, Inc., G.R. No. 152329, April 22, 2003, 401 SCRA 424, 430-431; See International Container Terminal Services, Inc. v. NLRC, G.R. No. 115452, December 21, 1998, 300 SCRA 335, 343. ICESTA

24. Genuino v. National Labor Relations Commission, G.R. Nos. 142732-33 & 142753-54, December 4, 2007, 539 SCRA 342, 363-364.

25. G.R. No. 90501, August 5, 1991, 200 SCRA 246; See Composite Enterprises, Inc. v. Caparoso, G.R. No. 159919, August 8, 2007, 529 SCRA 470, 482; Air Philippines Corporation v. Zamora, G.R. No. 148247, August 7, 2006, 498 SCRA 59, 73; Roquero v. Philippine Airlines, Inc., supra note 23 at 429-430.

26. Aris (Phil.), Inc. v. NLRC, id. at 253.

27. Id. at 255.

28. Id.

29. G.R. No. 118651, October 16, 1997, 280 SCRA 806; See International Container Terminal Services, Inc. v. NLRC, supra note 21 at 341.

30. Pioneer Texturizing Corp. v. NLRC, id. at 824-825.

31. G.R. No. 128003, July 26, 2000, 336 SCRA 433, 437.

32. G.R. No. 178083, July 22, 2008.

33. Id. at 17.

34. Id. at 21.

35. Kimberly Clark (Phils.), Inc. v. Ernesto Facundo, et al., supra note 23 at 9; International Container Terminal Services, Inc. v. NLRC, supra note 21 at 343; See Composite Enterprises, Inc. v. Caparoso, supra note 25 at 483. HcSETI

VELASCO, JR., J.:

1. R.E. Agpalo, STATUTORY CONSTRUCTION 295 (3rd ed., 1995); cited in Agpalo, LEGAL WORKS AND PHRASES 581 (1997). CcAITa

2. Tirona v. Alejo, G.R. No. 129313, October 10, 2001, 367 SCRA 17, 32.

3. G.R. No. 118651, October 16, 1997, 280 SCRA 806.

4. Medina v. Consolidated Broadcasting System (CBS)-DZWX, G.R. Nos. 99054-56, May 28, 1993, 222 SCRA 707, 711.

5. G.R. No. 90501, August 5, 1991, 200 SCRA 246, 253.

6. Id. at 255.

7. RULES OF COURT, Rule 39, Sec. 5. See Legaspi v. Ong, G.R. No. 141311, May 26, 2005, 459 SCRA 122; Pilipinas Bank v. Court of Appeals, G.R. No. 97873, August 12, 1993, 225 SCRA 268.

8. Genuino v. NLRC, G.R. Nos. 142732-33 & 142753-54, December 4, 2007, 539 SCRA 342. HSDCTA

9. Rule I, Sec. 3.

10. Supra note 3.

11. Bustamante v. NLRC, G.R. No. 111651, November 28, 1996, 265 SCRA 61, 71; citing R.E. Agpalo, STATUTORY CONSTRUCTION 94 (1990).

12. Baranda v. Gustilo, No. L-81163, September 26, 1988, 165 SCRA 757, 770; citing R.E. Agpalo, STATUTORY CONSTRUCTION 125 (2003).

13. G.R. No. 148247, August 7, 2006, 498 SCRA 59.

14. Philippine Rabbit Bus Lines, Inc. v. NLRC, G.R. No. 122078, April 21, 1999, 306 SCRA 151, 155; citing Medina, supra note 4.

15. G.R. No. 109281, December 7, 1995, 251 SCRA 21.

16. G.R. No. 102467, June 13, 1997, 273 SCRA 352.

17. Id.; PT&T, supra note 15.

18. Confederation of Sugar Producers Association, Inc. v. DAR, G.R. No. 169514, March 30, 2007, 519 SCRA 582, 618. ADHaTC

19. Soriano v. Court of Appeals, G.R. No. 78975, September 7, 1989, 177 SCRA 330.

20. Santos v. Court of Appeals, G.R. No. 100963, April 6, 1993, 221 SCRA 42.

21. Medina, supra note 4.

BRION, J., concurring and dissenting:

1. Triad Security and Allied Service, Inc., et al. v. Ortega, Jr., et al., G.R. No. 160871, February 6, 2006, 481 SCRA 591; Medina, et al. v. Consolidated Broadcasting System, et al., G.R. No. 99054, May 28, 1993, 222 SCRA 707.

2. G.R. No. 90501, August 5, 1991, 200 SCRA 246. ATcaID

3. G.R. No. 110017, January 2, 1997, 266 SCRA 24.

4. RULES OF COURT, Rule 39, Section 1.

5. Id., Section 2 (a).

6. Black's Law Dictionary, 5th ed., p. 675.

7. Panuncillo v. CAP Philippines, Inc., G.R. No. 161305, February 9, 2007, 515 SCRA 323.

8. Pioneer Texturizing Corp. v. National Labor Relations Commission, G.R. No. 118651, October 16, 1997, 280 SCRA 807.

9. Rule V, Section 14.

10. Rule IX, Section 6. HIaTDS

11. G.R. No. 152329, April 22, 2003, 401 SCRA 424.

12. G.R. No. 115452, December 21, 1998, 300 SCRA 335.

13. G.R. No. 144885, July 26, 2006.

14. G.R. Nos. 142732-33 & 142753-54, December 4, 2007, 539 SCRA 342.

15. Baje, et al. v. Court of Appeals, G.R. No. L-18783, May 25, 1964, 11 SCRA 34; Commissioner of Internal Revenue v. Fireman's Fund Insurance Co., et al., G.R. No. 30644, March 9, 1987, 148 SCRA 315.

16. P.D. No. 902-A, originally issued on March 11, 1976, which covered petitions for suspension of payments and the appointment of management committees or rehabilitation receivers.

17. P.D. 902-A, as amended by P.D. Nos. 1653, s. 1979; 1758, s. 1981; and 1799, s. 1981, provides: ". . . Provided, further, That the Commission may appoint a rehabilitation receiver of corporations, partnerships or other associations supervised or regulated by other government agencies, such as banks and insurance companies, upon request of the government agency concerned: Provided, finally, That upon appointment of a management committee, rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims against corporations, partnerships or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly." [Emphasis supplied.]

18. A.M. No. 00-8-10-SC.

19. SEC Revised Rules of Procedures dated August 1, 1989 and July 15, 1999. [The SEC rules applicable during the pendency of petitioners' appeal.] aESHDA

20. Rule 3, Section 1.

21. Supra note 18.

22. Rollo, p. 196; a permanent rehabilitation receiver was not appointed until June 7, 1999.

23. Rollo, p. 59.

24. Id., pp. 78-80.

25. By this time, jurisdiction over corporate rehabilitation proceedings has been transferred to RTCs per Section 5.1 of RA No. 8799.

26. G.R. No. 126773, April 14, 1999, 305 SCRA 721.

27. Id., p. 725.

28. Lopez v. David, Jr., G.R. No. 152145, March 30, 2004, 305 SCRA 721; Pilipinas Shell v. John Bordman, Ltd., G.R. No. 159831, October 14, 2005, 473 SCRA 151, Tim Tay v. Court of Appeals, G.R. No. 126891, August 5, 1998, 293 SCRA 634. DHTECc