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Case Name: Garcia vs. PAL By: Tangonan

GR No. 164856 Topic: Consequences of Dismissal
Date: 20 January 2009
FACTS:
Philippine Airlines (PAL) filed a case against its EEs, petitioners Juanito Garcia and Alberto Dumago, for allegedly
being caught in the act of sniffing shabu when a team of company security personnel and law enforcers raided the PAL
Technical Centers Toolroom Section.
After due notice, PAL dismissed the petitioner for transgressing companys Code of Discipline, which then prompted
the latter to file a suit for illegal dismissal with the LA.
The LA ruled in their favor and ordered PAL to immediately comply with the reinstatement aspect of the decision.
Prior to the judgment, the SEC placed PAL under an Interim Rehabilitation Receiver, who was subsequently replaced
by a Permanent Rehabilitation Receiver.
Subsequently, the LA issued a writ of execution respecting the reinstatement aspect of his decision. Respondent filed
an urgent petition for injunction with the NLRC. The NLRC affirmed the validity of the Writ and the Notice issued by
LA but suspended and referred the action to the Rehabilitation Receiver for appropriate action.
On appeal, the NLRC reversed said decision and dismissed petitioners complaint for lack of merit.
On appeal, the CA partially granted the petition and effectively reinstated the NLRC resolution insofar as it suspended
the proceedings. By manifestation, PAL informed the court that SEC issued an order granting its request to exit from
rehabilitation proceedings.

ISSUE/S: W/N the petitioners herein may collect their wages during the period between the LAs Order of reinstatement
pending appeal and the NLRC decision overturning that of the LA.

RULING: NO
issue on the payment of salaries
A dismissed employee, whose case was favorably decided by the LA, is entitled to receive wages pending appeal upon
reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial upon the LA to implement
the order of reinstatement and it is mandatory on the employer to comply therewith.

The SC reaffirms the prevailing principle that even if the order of reinstatement of the LA 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. This settles the view that the LAs 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 filing to exercise the either of the 2 options in the alternative, employer must pay the employees salaries.
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issue on reinstatement
However after the labor arbiters 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 herein 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 employers unjustified act or omission. If the
delay is due to the employers unjustified refusal, the ER may still be required to pay the salaries notwithstanding the reversal of
the LAs decision.

Although it was shown that the petitioners exerted efforts to have the LAs order of reinstatement be executed, the fact that PAL
was still under receivership during said period lead to the non-attachment of its obligation to pay the salaries pending appeal.
Thus, 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. In sum, the obligation to pay the employees salaries upon
the employers 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.