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Sofia was terminated by Psalm Corporation (Psalm) from her employment. The Labor Arbiter (LA) rendered a Decision declaring Sofia’s dismissal to be…

2026 Bar Exam · Labor Law & Social Legislation · Question 20 · Essay

The question

Sofia was terminated by Psalm Corporation (Psalm) from her employment. The Labor Arbiter (LA) rendered a Decision declaring Sofia’s dismissal to be illegal and ordering Psalm to reinstate her with full backwages. However, on appeal, the National Labor Relations Commission (NLRC) reversed the LA’s ruling and declared Sofia’s dismissal as valid. Despite the finding that Sofia was validly terminated, the NLRC still ordered Psalm to pay Sofia’s wages during the pendency of the appeal. Was the NLRC correct in ordering Psalm to pay Sofia’s wages during the pendency of the appeal? Explain.

Held

Whether the NLRC was correct in ordering Psalm Corporation to pay Sofia’s wages during the pendency of the appeal cannot be categorically answered without knowing whether Psalm unjustifiably refused to reinstate Sofia pending appeal. The law and jurisprudence require payment of wages during appeal only if the employer unjustifiably refuses reinstatement.

Explanation

The law provides that a Labor Arbiter’s decision ordering reinstatement is immediately executory even if appealed. The employee must be reinstated physically or at least on the payroll, and the employer’s posting of a bond does not delay this reinstatement. However, the execution of the decision, except for reinstatement, is stayed pending appeal. If the employer disobeys the reinstatement order, the Labor Arbiter must issue a writ of execution to enforce reinstatement and payment of accrued salaries.

The Supreme Court clarified that the employee is entitled to wages during the pendency of the appeal if the employer unjustifiably refuses reinstatement. However, if the delay in reinstatement is not the employer’s fault, such as due to corporate rehabilitation or other valid reasons, the employee may be barred from collecting wages during the appeal. When the Labor Arbiter’s decision is reversed on appeal, the employer is no longer obligated to pay wages for the appeal period unless the delay was unjustified.

Application to the facts

In Sofia’s case, the NLRC reversed the Labor Arbiter’s decision and declared her dismissal valid. Since the reinstatement order was overturned, Sofia’s entitlement to wages during the appeal period depends on whether Psalm Corporation unjustifiably refused to reinstate her pending appeal. The available facts do not establish whether Psalm reinstated Sofia or unjustifiably refused to do so. Therefore, it cannot be categorically determined from the given information whether the NLRC’s order to pay wages during the appeal was correct.

This is general legal information, not legal advice.