Appeal from an order issued by a Labor Arbiter in the course of execution proceedings is a prohibited pleading under Rule 5, Section 5 of the 2011 Rules of Procedure of the National Labor Relations Commission explicitly provides that an appeal from an order issued by a Labor Arbiter in the course of execution proceedings is a prohibited pleading.

This is subject to exception as held in the following case:

Lino A. Fernandez, Jr. vs. Manila Electric Company (MERALCO)
G.R. No. 226002, June 25, 2018

Appeal; No appeal from the Order of LA during execution; Liberal application of the rules to prevent injustice and grave or irreparable damage or injury; Reinstatement; Strained relations; Strained relations must be demonstrated as a fact; Strained relationship may be invoked only against employees whose positions demand trust and confidence; Retirement benefits; Separation pay in lieu of reinstatement; Retirement and separation pay are not mutually exclusive; Attorney’s fees; Dispositive portion of Decision; Writ of Execution; The decision where the dispositive portion does not grant attorney’s fees and became final and executory is immutable and unalterable;


Petitioner Lino A. Fernandez (Fernandez) was an employee of respondent Manila Electric Company (MERALCO) from October 3, 1978 until his termination on September 14, 2000 for allegedly participating in an illegal strike.

As a result, Fernandez filed a case for illegal dismissal. Contrary to the conclusion reached by the Labor Arbiter (LA) and the NLRC, the Court of Appeals (CA), declared that Fernandez was illegally dismissed. The CA ordered the reinstatement of Fernandez.

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The CA ruling was sustained by the Supreme Court (SC). With the denial of the motion for reconsideration, the judgment became final and executory on May 26, 2008.

During the execution proceedings, both parties filed several motions regarding the inclusions to, and computation of, the monetary awards due to Fernandez.

LA Ruling:

On the bases of which, LA Marie Josephine C. Suarez denied the motions of Fernandez for reinstatement recomputation of backwages and computation of 14th & 15th Month Pay and Attorney’s Fees, collecttion of P490,104 out of the P2,123,277.

Fernandez was also declared legally separated from employment. Fernandez received a copy of the June 27, 2014 Order. Prior to the expiration of the 10-day reglementary period, he filed a Notice of Appeal and Memorandum on Appeal challenging the findings of the Labor Arbiter that he was deemed separated from employment effective January 31, 2009, he was not entitled to any retirement pay/benefits and he was not entitled to 14th month pay, 15th month pay, rice and clothing allowance pursuant to the CBA and attorney’s fee.

Thereafter however, Fernandez filed a Motion to Treat Remedy Previously Filed As Verified Petition With Motion To Admit Original Copy Of The Assailed Order As Part Thereof alleging that he entitled and treated his challenges on the findings of the LA as an Appeal (i.e., Notice of Appeal and Memorandum of Appeal) instead of a Verified Petition.

Despite Fernandez’s submissions, the appeal and motion were merely “NOTED WITHOUT ACTION” in the Order of the LA, who opined that these are prohibited pleadings under Section 5 (i) and G), Rule V of the NLRC Rules. After Fernandez received a copy of the Order on August 14, 2014, he filed a Verified Petition.

NLRC Ruling:

The NLRC resolved to deny Fernandez’s Verified Petition. His motion for reconsideration was also denied.

Fernandez elevated the case to the CA via a petition for certiorari,

CA Ruling:

The SC denied the petition for lack of merit. Fernndez’s motion for reconsideration suffered the same fate.

Hence, the petition before the SC.


Whether or not the rules prohibiting appeal from the order of the LA in the execution proceedings should be liberally applied to prevent injustice and grave or irreparable damage to an illegally dismissed employee

Whether or not there is strained relation when the employee who filed the case was not handling a sensitive position as would require complete trust or confidence

Whether or not an employee who was found to be illegally dismissed and reached 60 years of age during reinstatement is entitled to retirement benefit although he was already paid separation pay

Whether or not attorney’s fees should be awarded although not contained in the dispositive portion of the decision which became final and executory

SC Ruling:

The SC granted the petition and reversed and set aside the CA resolution. The SC also ruled that the appeal of Fernandez be considered as a Verified Petition. The SC then remanded the case to the NLRC to resolve the petition.

The SC held that Rule 5, Section 5 of the 2011 Rules of Procedure of the National Labor Relations Commission explicitly provides that an appeal from an order issued by a Labor Arbiter in the course of execution proceedings is a prohibited pleading. Further, Rule 12, Section 1 provides that, instead of an appeal, the proper remedy is a verified petition to annul or modify the assailed order or resolution.

Citing the case of Velasco vs. Matsushita Electric Philippines Corp., the SC held that while it was an error to seek relief from the National Labor Relations Commission through an appeal, it is in the better interest of justice that employee be afforded the opportunity to avail of the reliefs that the Court found to be due to employee. It is a basic principle that the National Labor Relations Commission is not bound by strict rules of evidence and of procedure. Between two modes of action -first, one that entails a liberal application of rules but affords full relief to an illegally dismissed employee; and second, one that entails the strict application of procedural rules but the possible loss of reliefs properly due to an illegally dismissed employee -the second must be preferred. Thus, it is more appropriate for the National Labor Relations Commission to have instead considered the appeal filed before it as a petition to modify or annul.

The NLRC Rules of Procedure must be liberally applied so as to prevent injustice and grave or irreparable damage or injury to an illegally dismissed employee. The matter should be remanded to the NLRC for determination of the inclusions to, and the computation of, the monetary awards due to Fernandez.

Further, an illegally dismissed employee is entitled to reinstatement as a matter of right. The award of separation pay is a mere exception to the rule. It is made an alternative relief in lieu of reinstatement in certain circumstances, like: (a) when reinstatement can no longer be effected in view of the passage of a long period of time or because of the realities of the situation; (b) reinstatement is inimical to the employer’s interest; (c) reinstatement is no longer feasible; ( d) reinstatement does not serve the best interests of the parties involved; ( e) the employer is prejudiced by the workers’ continued employment; (f) facts that make execution unjust or inequitable have supervened; or (g) strained relations between the employer and employee.

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.

The SC ruled that the doctrine of strained relations should not be used recklessly or applied loosely nor be based on impression alone. It cannot be applied indiscriminately since every labor dispute almost invariably results in “strained relations;” otherwise, reinstatement can never be possible simply because some hostility is engendered between the parties as a result of their disagreement. Strained relations must be demonstrated as a fact. It must be adequately supported by substantial evidence showing that the relationship between the employer and the employee is indeed strained as a necessary consequence of the judicial controversy.

Reinstatement cannot be barred especially when the employee has not indicated an aversion to returning to work, or does not occupy a position of trust and confidence in, or has no say in the operation of, the employer’s business. Here, Fernandez’s intent and willingness to be reinstated to his former position is evident as early as July 10, 2008 when he filed his Comment with Motion for Re-computation of Monetary Award. He reiterated this on December 17, 2008 in his Urgent Motion to require MERALCO to reinstate him and on January 21, 2009 in his Comment/Opposition to MERALCO’s motion to declare full satisfaction of his monetary awards.

MERALCO conveniently claimed that the filing of the case, which had dragged for a long period of time, severed the employee-employer relationship; hence, Fernandez’s reinstatement was no longer feasible. Later, it echoed the reasoning of LA Suarez by contending that his alleged participation in the illegal strike definitely tainted the relations of the parties.

The bare allegations of MERALCO, which later on became the basis of a mere presumption on the part of LA Suarez, appear to be without any factual basis. To stress, strained relationship may be invoked only against employees whose positions demand trust and confidence, or whose differences with their employer are of such nature or degree as to preclude reinstatement. Here, the confidential relationship between Fernandez, as a supervisory employee, and MERALCO has not been established. For lack of evidence on record, it appears that his designation as a Leadman was not a sensitive position as would require complete trust and confidence, and where personal ill will would foreclose his reinstatement.

In addition, subject to proof of entitlement, Fernandez must receive the retirement benefits he should have received if he was not illegally dismissed. Even if he receives a separation pay in lieu of reinstatement, he is not precluded to obtain retirement benefits because both are not mutually exclusive

The SC held that retirement benefits are a form of reward for an employee’s loyalty and service to an employer and are earned under existing laws, CBAs, employment contracts and company policies. On the other hand, separation pay is that amount which an employee receives at the time of his severance from employment, designed to provide the employee with the wherewithal during the period that he is looking for another employment and is recoverable only in instances enumerated under Articles 283 and 284 [now 298 and 299] of the Labor Code or in illegal dismissal cases when reinstatement is not feasible.

The Labor Code of the Philippines 2018 Edition (re-numbered and updated)

On the issue of attorney’s fees, the SC held that Fernandez is not entitled thereto. It is an elementary principle of procedure that the resolution of the court in a given issue, as embodied in the dispositive part of a decision or order, is the controlling factor as to settlement of rights of the parties. The dispositive portion or the fallo is the decisive resolution and is the subject of execution. Therefore, the writ of execution must conform to the judgment to be executed, particularly with that which is ordained or decreed in the dispositive portion of the decision, and adhere strictly to the very essential particulars.

The Decision of the CA, which does not grant attorney’s fees to Fernandez, already became final and executory. As such, it is immutable and unalterable. Generally, it may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of law or fact. In opting not to file a petition before the Supreme Court assailing the CA Decision, Fernandez is deemed to have acquiesced to the entirety of the ruling. It cannot be convincingly argued that the petition filed by MERALCO also inured to his benefit, for not only are their interests separate and distinct, but they are completely in conflict with each other.

Considering that the judgment on the issue of attorney’s fees is already final and executory against Fernandez who did not appeal, then MERALCO already acquired a vested right by virtue thereof. Indeed, just as the losing party has the privilege to file an appeal (or petition) within the prescribed period, so does the winner also have the correlative right to enjoy the finality of the decision.

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