CASE DIGEST: Wenphil v. Tuazon

G.R. No. 207983 : April 7, 2014




This case stemmed from a complaint for illegal dismissal filed by the respondents against Wenphil.

On December 8, 2000, LA Geobel A. Bartolabac ruled that the respondents had been illegally dismissed by Wenphil. According to the LA, the allegation of serious misconduct against the respondents had no factual and legal basis. Consequently, LA Bartolabac ordered Wenphil to immediately reinstate the respondents to their respective positions or to equivalent ones, whether actual or in the payroll. Also, the LA ordered Wenphil to pay the respondents their backwages from February 3, 2000 until the date of their actual reinstatement.

Because of the unfavorable LA decision, Wenphil appealed to the NLRC on April 16, 2001. In the meantime, the respondents moved for the immediate execution of the LAs December 8, 2000 decision.

On October 29, 2001, Wenphil and the respondents entered into a compromise agreement before LA Bartolabac. They agreed to the respondents payroll reinstatement while Wenphils appeal with the NLRC was ongoing. Wenphil also agreed to pay the accumulated salaries of the respondents for the payroll period from April 5, 2001 until October 15, 2001. As for the remaining payroll period starting October 16, 2001, Wenphil committed itself to credit the respective salaries of the respondents to their ATM payroll accounts until such time that the questioned decision of LA Bartolabac is either modified, amended or reversed by the Honorable National Labor Relations Commission.

On January 30, 2002, the NLRC issued a resolution affirming LA Bartolabacs decision with modifications. Instead of ordering the respondents reinstatement, the NLRC directed Wenphil to pay the respondents their respective separation pay at the rate of one (1) month salary for every year of service. Also, the NLRC found that while the respondents had been illegally dismissed, they had not been illegally suspended. Thus, the period from February 3 to February 28, 2000 during which the respondents were on preventive suspension was excluded by the NLRC in the computation of the respondents backwages.

Subsequently, Wenphil moved for the reconsideration of the NLRCs January 30, 2002 resolution, but the NLRC denied the motion in another resolution dated September 24, 2002.

Wenphil thereafter went up to the CA via a petition for certiorari to question the NLRCs January 30, 2002 and September 24, 2002 resolutions. On August 27, 2003, the CA rendered its decision reversing the NLRCs finding that the respondents had been illegally dismissed.

On appeal to the Supreme Court (SC) via Rule 45 (docketed as G.R. No. 16244725 and dated December 27, 2006), the SC denied the respondents petition for review on certiorari and affirmed the CAs August 27, 2003 decision and February 23, 2004 resolution. The respondents did not file any motion for reconsideration to question the SCs decision; thus, the decision became final and executory on February 15, 2007.

Sometime after the SCs decision in G.R. No. 162447 became final and executory, the respondents filed with LA Bartolabac a motion for computation and issuance of writ of execution. The respondents asserted in this motion that although the CAs ruling on the absence of illegal dismissal (as affirmed by the SC) was adverse to them, under the law and settled jurisprudence, they were still entitled to backwages from the time of their dismissal until the NLRCs decision finding them to be illegally dismissed was reversed with finality.

LA Bartolabac granted the respondents motion and directed Wenphil to pay each complainant their salaries on reinstatement covering the period from February 15, 2002 (the date Wenphil last paid the respondents respective salaries) to November 8, 2002 (since the NLRCs decision finding the respondents illegally dismissed became final and executory on February 28, 2002).

Both parties appealed to the NLRC to question LA Bartolabacs order. Wenphil argued that the respondents were no longer entitled to payment of backwages in view of the compromise agreement they executed on October 29, 2001. According to Wenphil, the compromise agreement provided that Wenphils obligation to pay the respondents backwages should cease as soon as LA Bartolabacs decision was modified, amended or reversed by the NLRC. Since the NLRC modified the LAs ruling by ordering the payment of separation pay in lieu of reinstatement, then the respondents, under the terms of the compromise agreement, were entitled to backwages only up to the finality of the NLRC decision.

The respondents questioned in their appeal the determined period for the computation of their backwages.

The NLRC denied the parties respective appeals in its decision dated March 26, 2010 and affirmed in toto the LAs order. Both parties moved for the reconsideration of the NLRCs decision but the NLRC denied their respective motions.

The CA reversed the NLRC rulings and prescribed a different computation period. The CA ruled that the NLRC committed grave abuse of discretion when it affirmed the LAs computed period which was from February 15, 2002 to November 8, 2002.

ISSUE: Whether the employees should be reinstated

HELD: We resolve to DENY the petition.

LABOR LAW: order of reinstatement

An order of reinstatement is immediately executory even pending appeal. The employer has the obligation to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court.

Under Article 223 of the Labor Code, 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.

The Court discussed reason behind this legal policy in Aris v. NLRC, where it explained:
In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a dismissed or separated employee, the law itself has laid down a compassionate policy which, once more, vivifies and enhances the provisions of the 1987 Constitution on labor and the working-man. These provisions are the quintessence of the aspirations of the workingman for recognition of his role in the social and economic life of the nation, for the protection of his rights, and the promotion of his welfare These duties and responsibilities of the State are imposed not so much to express sympathy for the workingman as to forcefully and meaningfully underscore labor as a primary social and economic force, which the Constitution also expressly affirms with equal intensity. Labor is an indispensable partner for the nation's progress and stability.
Since the decision is immediately executory, it is the duty of the employer to comply with the order of reinstatement, which can be done either actually or through payroll reinstatement. As provided under Article 223 of the Labor Code, this immediately executory nature of an order of reinstatement is not affected by the existence of an ongoing appeal. The employer has the duty to reinstate the employee in the interim period until a reversal is decreed by a higher court or tribunal.

In the case of payroll reinstatement, even if the employers appeal turns the tide in its favor, the reinstated employee has no duty to return or reimburse the salary he received during the period that the lower court or tribunals governing decision was for the employees illegal dismissal. Otherwise, the situation would run counter to the immediately executory nature of an order of reinstatement.

The case of Garcia v. Philippine Airlines is enlightening on this point:

Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the refund doctrine easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a dismissed employee. The employee, to make both ends meet, would necessarily have to use up the salaries received during the pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff of insolvency.

Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option of payroll reinstatement belongs to the employer, even if the employee is able and raring to return to work.

We see the situation discussed above to be present in the case before us as Wenphil observed the mandate of Article 223 to immediately comply with the order of reinstatement by the LA. On October 29, 2001, while Wenphils appeal with the NLRC was pending, it entered into a compromise agreement with the respondents. In this agreement, Wenphil committed to reinstate the respondents in its payroll. However, the commitment came with a condition: Wenphil stipulated that its obligation to pay the wages due to the respondents would cease if the decision of the LA would be modified, amended or reversed by the NLRC.

Thus, when the NLRC rendered its decision on the appeal affirming the LAs finding that the respondents were illegally dismissed, but modifying the award of reinstatement to payment of separation pay, Wenphil stopped paying the respondents wages.

The reinstatement salaries due to the respondents were, by their nature, payment of unworked backwages. These were salaries due to the respondents because they had been prevented from working despite the LA and the NLRC findings that they had been illegally dismissed.

We point out that reinstatement and backwages are two separate reliefs available to an illegally dismissed employee. The normal consequences of a finding that an employee has been illegally dismissed are: first, that the employee becomes entitled to reinstatement to his former position without loss of seniority rights; and second, the payment of backwages covers the period running from his illegal dismissal up to his actual reinstatement. These two reliefs are not inconsistent with one another and the labor arbiter can award both simultaneously.

Moreover, the relief of separation pay may be granted in lieu of reinstatement but it cannot be a substitute for the payment of backwages. In instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay should be granted. In effect, an illegally dismissed employee should be entitled to either reinstatement if viable, or separation pay if reinstatement is no longer be viable, plus backwages in either instance.

WHEREFORE, in light of these considerations, we hereby DENY the petition.