G.R. No.

107225 June 2, 1995

ARCHILLES MANUFACTURING CORPORATION, ALBERTO YU and ADRIAN YU, petitioners, 

vs.
NATIONAL LABOR RELATIONS COMMISSION, GERONIMO MANUEL, ARNULFO DIAZ, JAIME
CARUNUNGAN and BENJAMIN RINDON, respondents.

BELLOSILLO, J.:

There are three issues to be resolved in this special civil action for certiorari under Rule 65 of the
Revised Rules of Court, namely: (a) whether a writ of execution is still necessary to enforce the
Labor Arbiter's order of immediate reinstatement pending appeal; (b) whether dismissal for cause
results in the forfeiture of the employee's right to a 13th month pay; and, (c) whether the award of
attorney's fees is proper in the instant case.

Archilles Manufacturing Corporation (ARCHILLES for brevity), Alberto Yu and Adrian Yu are the
petitioners, the latter two (2) being the Chairman and the Vice-President of ARCHILLES,
respectively. Private respondents Geronimo Manuel, Arnulfo Diaz, Jaime Carunungan and Benjamin
Rindon were employed by ARCHILLES as laborers in its steel factory located in Barangay
Pandayan, Meycauayan, Bulacan, each receiving a daily wage of P96.00. 1

ARCHILLES was maintaining a bunkhouse in the work area which served as resting place for its
workers including private respondents. In 1988 a mauling incident nearly took place involving a
relative of an employee. As a result ARCHILLES prohibited its workers from bringing any member of
their family to the bunkhouse. But despite this prohibition, private respondents continued to bring
their respective families to the bunkhouse, causing annoyance and discomfort to the other
workers.   This was brought to the attention of ARCHILLES.
2

On 11 May 1990 the management ordered private respondent to remove their families from the
bunkhouse and to explain their violation of the company rule. Private respondents remove their
families from the premises but failed to report to the management as required; instead, they
absented themselves from 14 to 18 May 1990. Consequently, on 18 May 1990, ARCHILLES
terminated their employment for abandonment and for violation of the company rule regarding the
use of the bunkhouse.  3

Private respondents filed a complaint for illegal dismissal. On 10 July 1991 the Labor Arbiter found
the dismissal of private respondents illegal and ordered their reinstatement as well as the payment
to them the backwages, proportionate 13th month pay for the year 1990 and attorney's
fees.   ARCHILLES appealed.
4

On 10 September 1991 private respondent filed with public respondent National Labor Relations
Commission a motion for the issuance of a writ of execution for their immediate reinstatement,
pending appeal, either physically or in the company payroll. On 19 September 1991 ARCHILLES
opposed the motion.

Since no action was taken by NLRC on the motion of 10 September 1991, private respondents filed
a similar motion on 15 July 1992. Both motions however have remained unresolved.
On 11 August 1992 NLRC vacated and set aside the decision of the Labor Arbiter and ruled that the
dismissal of private respondents was valid since they wilfully disobeyed a lawful order of their
employer requiring them to explain their infraction of a company rule. In the dispute part of its
decision, however, NLRC ordered ARCHILLES to pay private respondents their "withheld" salaries
from 19 September 1991 when it filed its opposition to the motion for issuance of a writ of execution
until the promulgation of the NLRC Decision (11 August 1992) on the ground that the order of
reinstatement of the Labor Arbiter was immediately executory, even pending appeal. And since
ARCHILLES in its opposition alleged that actual reinstatement was no longer possible as it would
affect the peace and order situation in the steel factory, clearly, ARCHILLES had opted for payroll
reinstatement of private respondents. NLRC also ordered ARCHILLES to pay their proportionate
13th month pay for 1990 and P12,351.30 representing 10% of the total judgment award of
P123,513.00 as attorney's fees.  5

Their motion for partial reconsideration having been denied by public respondent in its resolution of 8
September 1992, petitioners filed the instant petition praying that the questioned NLRC decision of
11 August 1992 as well as its resolution of 8 September 1992 be partially annulled in connection
with the award of "withheld" salaries, proportionate 13th month pay and attorney's fees.

As regards the first issue, i.e., whether a writ of execution is still necessary to enforce the Labor
Arbiter's order of immediate reinstatement even when pending appeal, we agree with petitioners that
it is necessary. The third paragraph of Art. 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 be immediately
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 the
bond by the employer shall not stay the execution for reinstatement provided herein.

We have fully explained the legal basis for this conclusion in Maranaw Hotel Resort Corporation
(Century Park Sheraton Manila) v. NLRC and Gina G. Castro   thus —
6

It must be stressed, however, that although the reinstatement aspect of the decision
is immediately executory, it does not follow that it is self-executory. There must be a
writ of execution which may be issued motu proprio or on motion of an interested
party. Article 224 of the Labor Code provides:

Art. 224. Execution of decisions, orders or awards. — (a) The

Secretary of Labor and Employment or any Regional Director, the
Commission or any Labor Arbiter, or med-Arbiter or voluntary
arbitrator may, motu proprio or on motion of any interested party,
issue a writ of execution on a judgment within five (5) years from the
date it becomes final and executory . . . .

The second paragraph of Section 1, Rule XVIII of the New Rules of Procedure of the
NLRC also provides:

The Labor Arbiter, POEA Administrator, or the Regional Director, or his duly
authorized hearing officer of origin shall, motu proprio or upon motion of any
interested party, issue a writ of execution on a judgment only within five (5) years
from the date it becomes final and executory . . . . No motion for execution shall be
 entertained nor a writ be issued unless the Labor Arbiter is in possession of the
records of the case which shall include an entry of judgment.

In the absence . . . of an order for the issuance of a writ of execution on the

reinstatement aspect of the decision of the Labor Arbiter, the petitioner was under no
legal obligation to admit back to work the private respondent under the terms and
conditions prevailing prior to her dismissal or, at the petitioner's option, to merely
reinstate her in the payroll. An option is a right of election to exercise a privilege, and
the option in Article 223 of the Labor code is exclusively granted to the employer.
The event that gives rise for its exercise is not the reinstatement decree of the Labor
Arbiter, but the writ for its execution commanding the employer to reinstate the
employee, while the final act which compels the employer to exercise the option is
the service upon it of the writ of execution when, instead of admitting the employee
back to his work, the employee chooses to reinstate the employee in the payroll only.
If the employer does not exercise this option, it must forthwith admit the employee
back to work, otherwise it may be punished for contempt.

In the case at bench, there was no occasion for petitioners to exercise their option under Art. 223 of
the Labor Code in connection with the reinstatement aspect of the decision of the Labor Arbiter. The
motions of private respondents for the issuance of a writ of execution were not acted upon by NLRC.
It was not shown that respondent exerted efforts to have their motions resolved. They are deemed to
have abandoned their motions for execution pending appeal. They cannot now ask that the writ of
execution be issued since their dismissal was found to be for cause.

On the second issue, which refers to the propriety of the award of a 13th month pay, paragraph 6 of
the Revised Guidelines on the Implementation of the 13th Month Pay Law (P. D. 851) provides that
"(a)n employee who has resigned or whose services were terminated at any time before the
payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time
he worked during the year, reckoned from the time he started working during the calendar year up to
the time of his resignation or termination from the
service . . . The payment of the 13th month pay may be demanded by the employee upon the
cessation of employer-employee relationship. This is consistent with the principle of equity that as
the employer can require the employee to clear himself of all liabilities and property accountability,
so can the employee demand the payment of all benefits due him upon the termination of the
relationship."

Furthermore, Sec. 4 of the original Implementing Rules of P.D. 851 mandates employers to pay their
employees a 13th month pay not later than the 24th of December every year provided that they have
worked for at least one (1) month during a calendar year. In effect, this statutory benefit is
automatically vested in the employee who has at least worked for one month during the calendar
year. As correctly stated by the Solicitor General, such benefit may not be lost or forfeited even in
the event of the employee's subsequent dismissal for cause without violating his property rights.

With respect to the third issue, the disputed attorney's fees can only be assessed in cases of
unlawful withholding of wages.   It cannot be said that petitioners were guilty of unlawfully
7

withholding private respondents' salaries since, as earlier discussed, the occasion never arose for
them to exercise that option under Art. 223 of the Labor Code. Clearly, the award of attorney's fees
is baseless.

WHEREFORE, the instant petition is partly granted. The challenged Decision of the National Labor
Relations Commission dated 11 August 1992 is MODIFIED by deleting that portion ordering
petitioners to pay private respondents their salaries from 19 September 1991 to 20 September 1992
as well as that portion awarding 10% of the total judgment award as attorney's fees for lack of legal
and factual basis. In other respects, the Decision is AFFIRMED.

SO ORDERED.

Padilla, Davide, Jr. and Kapunan, JJ., concur.

Quiason, J., is on leave.

Footnotes

1 Rollo, pp. 3-4 and 29.

2 Reportedly the corridors of the bunkhouse were littered with children's bowels and
urine, and that children often cried at night and in the early hours of the morning.

3 Rollo, pp. 30-31 and 33.

4 Annex "A", Petition; Rollo, pp. 80-88.

5 Rollo, pp. 27-38.

6 G.R. No. 110027, 16 November 1994.

7 Art. 111. Attorney's fees. — (a) In cases of unlawful withholding of wages the

culpable party may be assessed attorney's fees equivalent to 10% of the amount of
wages recovered . . . . (Labor Code).