Continuation of Backwages During NLRC Appeal in the Philippines

I. Legal Framework and Policy Considerations

Philippine labor law is constitutionally mandated to afford full protection to labor (Article XIII, Section 3, 1987 Constitution). In illegal dismissal cases, the remedies of reinstatement and full backwages are designed not only as indemnification but as a deterrent against employer abuse of the right to terminate.

The rule that backwages continue to accrue even during the pendency of an employer’s appeal to the National Labor Relations Commission (NLRC) is one of the strongest expressions of this pro-labor policy. It is rooted in the principle that the dismissed employee should not be made to suffer further financial hardship while the employer exercises its right to appeal.

II. Governing Provisions of the Labor Code

1. Article 294 (formerly Article 279), Labor Code
   “An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.”

   The phrase “up to the time of his actual reinstatement” is crucial. Because reinstatement orders are immediately executory even pending appeal, “actual reinstatement” is interpreted to mean the date the employee is actually or constructively (payroll) reinstated, or, if the employer refuses, the date the decision ordering reinstatement becomes final and executory.

2. Article 229 (formerly Article 223), paragraph 3, Labor Code
   “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. Upon the issuance of an order of reinstatement, the employer shall have two options:
   (a) actual reinstatement of the employee to his former position, or
   (b) payroll reinstatement.”

   The same article explicitly states that the posting of a bond shall not stay the execution of reinstatement.

III. Meaning of “Continuation of Backwages” During NLRC Appeal

When a Labor Arbiter finds illegal dismissal and orders reinstatement plus backwages:

• Backwages from date of dismissal up to date of the Labor Arbiter’s decision = fixed amount (computed at the time of the decision).
• Wages from date of Labor Arbiter’s decision up to actual reinstatement or finality of judgment = accruing or continuing backwages/salaries.

These continuing wages are technically the salaries of a reinstated employee, but jurisprudence uniformly treats them as part of “full backwages” under Article 294.

Thus, as long as the reinstatement order is not complied with, backwages continue to run during the entire period of the NLRC appeal.

IV. Supreme Court Doctrines on Accrual During Appeal

1. Pioneer Texturizing Corp. v. NLRC (G.R. No. 118651, October 16, 1997)
   Established the rule that the employer’s refusal or failure to reinstate the employee after receipt of the Labor Arbiter’s reinstatement order renders the employer liable for accrued salaries from the date of the decision until actual compliance or reversal.

2. Aris (Philippines), Inc. v. NLRC (G.R. No. 90501, August 5, 1991)
   Explicitly held that backwages continue to accrue during the pendency of the appeal if the employer does not reinstate the employee.

3. Maranaw Hotels and Resort Corp. v. NLRC (G.R. No. 123880, February 23, 1999)
   Recognized payroll reinstatement as a valid alternative to actual reinstatement, but clarified that failure to exercise either option makes the employer liable for continuing backwages.

4. Roquero v. CA (G.R. No. 127891, August 15, 2000) and Equitable Banking Corp. v. Sadac (G.R. No. 164772, June 8, 2006)
   Reaffirmed that the liability for backwages during the appeal period attaches only if the finding of illegal dismissal is ultimately sustained. If the NLRC or the appellate courts eventually rule that the dismissal was valid, the employer is not liable for backwages accruing after the Labor Arbiter’s decision.

5. Genuino v. NLRC (G.R. Nos. 142732-33 & 142753-54, December 4, 2007)
   Landmark ruling: Employees who received salaries under payroll reinstatement pending appeal are not required to refund such amounts even if the employer is eventually absolved.
   Rationale: The employer who chooses to appeal does so at its own risk. The “no return, no refund” doctrine applies because the immediate execution of reinstatement is a statutory privilege accorded to the worker.

   This doctrine was reiterated in Garcia v. PAL (G.R. No. 164856, January 20, 2009) (distinguishing cases where the reinstatement order was void ab initio) and in subsequent cases such as Locsin v. PLDT (G.R. No. 185251, October 2, 2009) and Sesbreño v. CA (G.R. No. 161390, April 16, 2008).

V. Practical Application Before the NLRC

1. Motion for Writ of Execution of Reinstatement Aspect
   The employee may file a motion for issuance of a writ of execution solely for the reinstatement order (and accrued salaries from LA decision) even while the main appeal is pending before the NLRC. This is expressly allowed under Section 2(a), Rule VI of the 2011 NLRC Rules of Procedure (as amended).

2. Computation of Continuing Backwages
   NLRC Sheriffs or Labor Arbiters on execution routinely issue computation orders directing the employer to pay monthly salaries until actual/payroll reinstatement is effected. Failure to comply results in accumulation of liability that will be included in the final writ of execution.

3. Effect of NLRC Reversal
   If the NLRC reverses the Labor Arbiter and declares the dismissal valid, the employer is relieved of liability for backwages accruing after the Labor Arbiter’s decision. Any amounts already paid under payroll reinstatement or partial execution need not be refunded by the employee (Genuino doctrine).

4. Effect of NLRC Affirmance
   If the NLRC affirms the illegal dismissal, backwages continue to accrue even during further appeal to the Court of Appeals (unless the CA issues a TRO or injunction, which is rare and requires exceptional circumstances).

VI. Salary Rate to Be Used for Continuing Backwages

Jurisprudence is settled that the employee is entitled to the salary rate prevailing at the time of payment (i.e., including any salary increases granted company-wide during the appeal period).

• BPI Employees Union-Metro Manila v. BPI (G.R. No. 178699, September 21, 2011)
• Session Delights Ice Cream and Fast Foods v. CA (G.R. No. 172149, February 8, 2010)

VII. Exceptions and Qualifications

1. When the reinstatement order is void ab initio (e.g., Labor Arbiter had no jurisdiction, as in Garcia v. PAL).
2. When the employee has found substantially equivalent employment (may mitigate but does not totally bar continuing backwages unless the employer proves it).
3. When the employee refuses valid payroll reinstatement without justifiable reason (may be considered abandonment or waiver).

VIII. Conclusion

The continuation of backwages during NLRC appeal is one of the most potent weapons in the arsenal of Philippine labor law protection. It compels employers to seriously weigh the cost of appealing an adverse Labor Arbiter decision and ensures that illegally dismissed workers do not suffer prolonged financial distress while justice takes its course. The Genuino “no refund” doctrine further tilts the balance in favor of the employee, making the remedy of immediate executory reinstatement truly meaningful.

As consistently held by the Supreme Court, social justice considerations demand that the risk of delay brought about by the employer’s appeal should not be borne by the worker who has been illegally separated from employment.