The case of Jose Leni Solidum v. Smart Communications, Inc., G.R. No. 206985, February 28, 2024
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AT A GLANCE:
An illegally dismissed employee is not required to return the wages he received during his reinstatement prior to the reversal of the labor arbiter’s decision.
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. 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 a bond by the employer shall not stay the execution for reinstatement. (Article 229, Labor Code)
Doctrine:
An order of reinstatement issued by the labor arbiter is self-executory or immediately executory even pending appeal.
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. 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 a bond by the employer shall not stay the execution for reinstatement. (Article 229, Labor Code)
Facts of the Case:
Solidum was dismissed by Smart Communications, Inc. (Smart) on November 11, 2005. He filed a complaint for illegal dismissal against Smart Communications, Inc. (Smart). The Labor Arbiter ruled that Solidum was illegally dismissed by Smart. Smart was ordered to reinstate Solidum and pay him his full backwages, inclusive of all benefits, bonuses, privileges, incentives, allowances or their money equivalents from the date of dismissal until actual reinstatement.
Smart did not reinstate Solidum but appealed the decision of the Labor Arbiter before the NLRC. Pending resolution of the appeal filed by Smart, the Labor Arbiter issued a writ of execution commanding the sheriff to collect Solidum’s accrued reinstatement wages and benefits from July 21, 2006 to October 20, 2006.
Thereafter, the NLRC denied the appeal for being filed out of time. Pending resolution of Smart’s appeal, the Labor Arbiter issued seven (7) Alias Writs of Execution on the collection of the monetary awards and reinstatement aspect of the Labor Arbiter’s ruling. Such writs were not carried out.
Meanwhile, the NLRC issued a resolution granting Smart’s Motion for Reconsideration and dismissing Solidum’s complaint for illegal dismissal.
Smart filed a Motion for the Issuance of Writ of Preliminary Injunction with application for Temporary Restraining Order (TRO) to prevent Solidum’s reinstatement pending resolution of his Motion for Reconsideration.
Solidum filed for an Ex-Parte Motion for Issuance of Alias Writ of Execution on the reinstatement aspect of the Labor Arbiter’s Decision for the collection of his accrued benefits equivalent to three months for the period January 21, 2009 to April 20, 2009.
On August 10, 2009, the Decision of the NLRC became final and executory.
Smart filed a Petition for Certiorari before the Court of Appeals. It also filed a Motion to Suspend Proceedings and a Motion for Recomputation of Claimed Monetary Awards before the Labor Arbiter. Incidentally, an eight (8th) Alias Writ of Execution was issued by the Labor Arbiter for the same period. The Sheriff was able to collect the amount for the 8th Alias Writ and subsequently deposited the same to the NLRC cashier which was later released to Solidum. A ninth (9th) Alias Writ of Execution was issued in 2011, which was later on also released to Solidum.
Solidum filed a request with the NLRC for the computation of salaries and other benefits owed to him for the period from July 13, 2006 to January 26, 2009. The NLRC Computation Unit held that Solidum cannot be faulted, nor can he be barred from seeking his right over the past three years, considering that the additional computations were never included in its computation dating back to October 10, 2006.
On May 8, 2012, the Labor Arbiter issued a 10th Alias Writ of Execution for the payment of additional unpaid reinstatement salaries and other benefits to Solidum. This was satisfied and released to Solidum.
The Court of Appeals held that it cannot order the return of the amounts released by way of the 8th and 9th Alias Writs since the wages, allowances, incentives, benefits and bonuses received through these writs covered the period from January 21, 2009 to July 20, 2009 or before the July 3, 2006 Decision of the Labor Arbiter was reversed by the NLRC in its May 29, 2009 Decision which became final and executory on August 10, 2009.
However, the CA ordered Solidum to return the additional wages and benefits he received by virtue of the 10th Alias Writ in the amount of PhP15,889,871.04 after finding that Solidum only filed his claim over the additional benefits on June 6, 2011. The CA also barred Solidum from collecting accrued wages.
Thus, the instant Petition filed by Solidum.
Issue:
Should the amounts received by Solidum through the 10th Alias Writ be returned to Smart?
Ruling of the Court:
The immediately executory nature of the Labor Arbiter’s Decision mandates Smart to reinstate Solidum until reversal by the NLRC. Smart’s non-compliance thereof resulted in Solidum’s unpaid wages and benefits under the 10th Alias Writ.
Perfection of an appeal suspends the execution of the labor arbiter’s decision, with the exception of the reinstatement aspect pending appeal. Owing to the immediately executory nature of the decision, the employer is obligated to reinstate and compensate the dismissed employee throughout the appeal process until reversal by the higher court.
In carrying out the reinstatement provision outlined in the labor arbiter’s decision, the employer has two available options: Firstly, it may opt for actual reinstatement, requiring the employee to be restored to the position held prior to the illegal dismissal. this includes reinstating the employee under the same terms and conditions that existed before the dismissal. if the original position is no longer available, the employe must provide a substantially equivalent position.
Alternatively, the employer may choose payroll reinstatement, where the employee is reinstated in the employer’s payroll without necessitating his or her return to the workplace. This option allows the employee to resume his or her employment status without physically reporting back to work. It is well-settled that “in the case of payroll reinstatement, even if the employer’s appeal turns the tide in its favor, the reinstated employee has no duty to return or reimburse the salary he received during the period where the lower court’s governing decision was for the employee’s illegal dismissal. Otherwise, the situation would run counter to the immediately executory nature of an order of reinstatement.”
Should the employer fail to comply with the labor arbiter’s order of reinstatement, the employer becomes obligated to pay the accrued salaries of the reinstated employee as stipulated in the decision.
It bears emphasis that employees are entitled to their accrued salaries, allowances, benefits, incentives, and bonuses from the date they received the labor arbiter’s decision ordering reinstatement until the NLRC’s reversal of the labor arbiter’s order of reinstatement becomes final and executory.
It is worth noting that Solidum received his accrued salaries and benefits from Smart, totaling PhP2,881,335.86, only after the issuance of the 8th and 9th Alias Writs on October 22, 2010 and May 18, 2011, respectively. However, this payment covered only his accrued salaries and benefits for the period from January 21, 2009, to July 20, 2009. At this juncture, it is crucial to highlight that the CA appropriately disallowed the refund of Solidum’s salaries and benefits, totaling PhP2,881,335.86, pursuant to the 8th and 9th Alias Writs, as these amounts had accrued before August 10, 2009.
While Smart eventually complied with the 8th and 9th Alias Writs, Solidum’s accrued salaries and benefits for a significant period, particularly from July 3, 2006 to January 20, 2009, remained unpaid. Simply put, from July 2006 to January 2009, nearly three years of wages and benefits went unpaid. Smaii’s liability grew because the earlier seven (7) Alias Writs were never fulfilled, necessitating a complete recalculation of Solidum’s rightful compensation during that period.
To determine whether an employee is barred, two tests must be satisfied:
(1) Actual delay or the fact that the order or reinstatement pending appeal was not executed prior to its reversal; and
(2) The delay must not be due to the employer’s unjustified act or omission.
Here, the delay can be traced back to the unjustified actions of Smart. It is crucial to reiterate that Article 223, par. 3 of the Labor Code mandates the employer to promptly reinstate the dismissed employee, either by actual reinstatement under the conditions prevailing before the dismissal, or through his or her inclusion in the payroll.
Smart’s failure to exercise either option in a timely manner makes it accountable for Solidum’s accrued salaries and benefits until the Labor Arbiter’s Decision was overturned by the NLRC.
Notably, since the NLRC’s May 29, 2009 Decision attained finality on August 10, 2009, Solidum is entitled to the PhP15,889,871.04 claim under the 10th Alias Writ, representing his accrued earnings from before August 10, 2009, covering the period from July 13, 2006 to January 26, 2009.
Source:
Jose Leni Solidum v. Smart Communications, Inc. (G.R. No. 206985, February 28, 2024)
Related Article/s:
What is the effect if reinstatement is no longer practicable?
Is an employee who was illegally dismissed from employment automatically entitled to reinstatement?
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