SALARIES AND BENEFITS ACCRUE TO WORKER ORDERED REINSTATED UNTIL REVERSAL OF SUCH DECISION BY HIGHER TRIBUNAL

Salaries and benefits should be given to an employee who was ordered reinstated by the Labor Arbiter until reversal of the latter’s decision by the higher tribunal.

Thus, no refund can be given the employer who, in the first place, should have paid the employee during the period of reinstatement and prior to reversal of the illegal dismissal decision.

The author does not normally include the dates of decisions, judgments, and resolutions, in the digest of the case but since the dates here are material, the dates of decisions, resolutions, etc. are included.

The Supreme Court decided as follows in the following case:

Smart Communications, Inc., Napoleon L. Nazareno, and Ricardo P. Isla vs. Jose Leni Z. Solidum

G.R. No. 204646, April 15, 2015

Facts:

Smart hired respondent Jose Leni Z. Solidum (Solidum) as Department Head for Smart Buddy Activation. Smart Buddy Activation is under the Product Marketing Group which is headed by Isla.

Isla gave Solidum a memorandum informing him of alleged acts of dishonesty, directing him to explain why his employment should not be terminated, and placing him under preventive suspension without pay for 30 days. Solidum submitted his written explanation in response to the notice.

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Subsequently, Isla gave Solidum a memorandum informing him of a modified set of alleged acts of dishonesty, directing him to explain why his employment should not be terminated, extending his preventive suspension by 10 days, and inviting him to the administrative investigation.

Isla later gave Solidum a memorandum terminating his employment “for fraud or willful breach of trust, falsification, misrepresentation, conflict of interest, serious misconduct and dishonesty-related offenses.

Solidum filed against Smart a complaint for illegal dismissal, illegal suspension, non-payment of salaries, actual, moral and exemplary damages, and attorney’s fees. In his 3 July 2006 Decision, the Labor Arbiter found that Solidum’s preventive suspension and dismissal were illegal and that he was entitled to full back wages, moral and exemplary damages, and attorney’s fees. He also ordered the reinstatement of complainant.

Smart appealed to the NLRC. The Labor Arbiter issued a writ of execution ordering the sheriff to collect from Smart Communications, et al.   P1,440,667.93, representing Solidum’s accrued salaries, allowances, benefits, incentives and bonuses from 21 July to 20 October 2006. The Labor Arbiter issued seven other alias writs of execution ordering the sheriff to collect from Smart Communications, et al. Solidum’s accrued salaries, allowances, benefits, incentives and bonuses pertaining to different periods therafter until 22 January 2009.

In its 26 January 2009 Resolution, the NLRC reversed the Labor Arbiter’s 3 July 2006 Decision and dismissed for lack of merit Solidum’s complaint. Solidum filed a motion for reconsideration. Solidum filed with the Labor Arbiter an ex-parte motion praying that an alias writ of execution be issued directing the sheriff to collect from Smart Communications, et al. P1,440,667.93, representing Solidum’s accrued salaries, allowances, benefits, incentives and bonuses from 21January to 20 April 2009.

In its 29 May 2009 Decision, the NLRC denied for lack of merit Solidum’s motion for reconsideration.

LA Ruling:

In his 29 July 2009 Order, the Labor Arbiter denied for lack of merit Solidum’s ex-parte motion praying that an alias writ of execution be issued directing the sheriff to collect from Smart Communications, et al. P1,440,667.93, representing Solidum’s accrued salaries, allowances, benefits, incentives and bonuses from 21 January to 20 April 2009.

The LA held that the decision of the NLRC reversing the LA Decision prevents any future issuance of any writ of execution on the reinstatement aspect in line with Gracia, et al. vs. Philippine Airlines, Inc. and International Container Terminal Services vs. NLRC.

Solidum appealed to the NLRC.

NLRC Ruling:

The NLRC reversed the Labor Arbiter’s 29 July 2009 Order.

The NLRC held that pursuant to Article 223 of the Labor Code, as amended, relative to the reinstatement aspect of the Labor Arbiter’s Decision, respondents are obligated to pay complainant’s salaries and benefits, computed from July 13, 2006, when respondents received a copy of the Labor Arbiter’s Decision which, among others, ordered there instatement of complainant, up to the date of finality of the Commission’s resolution reversing the Labor Arbiter’s Decision, which, for the purpose, is reckoned on May 29, 2009, when the Commission denied complainant’s Motion for Reconsideration.

Further, the Labor Arbiter’s order of reinstatement dated July 3, 2006 was no longer enforceable as of May 29, 2009 when the Commission’s resolution reversing the Labor Arbiter’s order of reinstatement is deemed to have become final. Complainant is no longer entitled to reinstatement salaries/wages and benefits after May 29, 2009.

Finally, it held that the Labor Arbiter committed serious error in denying complainant’s motion with respect to his reinstatement salaries and benefits as he is entitled to the same for the period starting July 13, 2006 to May 29, 2009.

Solidum filed a motion for partial reconsideration. Smart Communications, et al. filed a motion for reconsideration.   The NLRC granted Solidum’s motion for partial reconsideration and denied for lack of merit Smart Communications, et al.’ motion for reconsideration.

Smart Communications, et al. appealed to the Court of Appeals. In his alias writ of execution dated 22 October 2010, the Labor Arbiter ordered the sheriff to collect from Smart Communications, et al.   P1,440,667.93, representing Solidum’s accrued salaries, allowances, benefits, incentives and bonuses from 21 January to 20 April 2009.

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CA Ruling:

The Court of Appeals granted Smart Communications, et al.’ petition for certiorari, prohibition and mandamus with prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order and set aside the NLRC’s 31 May 2010 Decision and 30 July 2010 Resolution.

The CA held that the order of the Labor Arbiter denying Private Respondent’s ex-parte motion for issuance of Alias Writ of Execution is not a final order as there was something else to be done, namely, the resolution of his Complaint for Illegal Dismissal against Smart Communications, et al. on the merits.   The subject Order of the Labor Arbiter did not put an end to the issues of illegal suspension and illegal dismissal, and, thus, partakes the nature of an interlocutory order. It is jurisprudential that an interlocutory order is not appealable until after the rendition of the judgment on the merits for a contrary rule would delay the administration of justice and unduly burden the courts. Being interlocutory in nature, the subject Order could not have been validly appealed.

Further, an appeal from an interlocutory order is a prohibited pleading. Consequently, the Labor Arbiter’s order being interlocutory and unappealable, Public Respondent NLRC has no jurisdiction to rule on the appeal except to dismiss the same. The assailed Decision and the Resolution, rendered in excess of the Public Respondent NLRC’s jurisdiction, are therefore null.

Besides and more importantly, records show that the Decision, dated May 29, 2009, of the NLRC in the Illegal Dismissal Case which effectively denied Private Respondent’s Complaint for Illegal Dismissal against Smart Communications, et al. already attained finality on June 1, 2010. Indeed, an Entry of Judgment was accordingly made. Clearly, Private Respondent can neither pray nor cause this Court to grant his Ex-parte Motion for Issuance of Writ of Execution to reinstate him since his dismissal by Smart Communications, et al. was finally ruled to be legal; hence, the denial of his complaint for lack of merit. Ruling on Private Respondent’s Ex-parte motion shall also have an effect of reviewing a final judgment which the law and the court abhor.   It bears to stress that when a final judgment becomes executory, it thereby becomes immutable and unalterable

Solidum filed a motion for reconsideration. In his alias writ of execution dated 18 May 2011, the Labor Arbiter ordered the sheriff to collect from Smart Communications, et al. P1,440,667.93, representing Solidum’s accrued salaries, allowances, benefits, incentives and bonuses from 21 April to 20 July 2009. Smart Communications, et al. filed with the Court of Appeals amotion to order Solidum to return P2,881,335.86, representing the total amount under the 22 October 2010 and 18 May 2011 alias writs of execution.

In its 3 July 2012 Amended Decision, the Court of Appeals partly granted Solidum’s motion for reconsideration and denied Smart Communications, et al.’ motion to order the return of P2,881,335.86.

The CA held that there was a wrong appreciation of fact relative to the date of finality of judgment. The true date when the May 29, 2009 NLRC decision became final and executory was on August 10, 2009 and not on June 1, 2010. The involved portion of its ruling was modified by changing the stated date therein from June 1, 2010 to August10, 2009.

Citing the Supreme Court ruling, the CA held that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court.

Smart Communications, et al. filed a motion for partial reconsideration with motion to order the return of P2,881,335.86. The Court of Appeals held that it cannot order the return of the amounts released by way of the 8th and 9th Alias Writ of Execution. The wages, allowances, incentives/benefits and bonuses received through the said writs covered the period from January 21, 2009 to July 20, 2009, thus, the latter is not required to reimburse the same due to the fact that one is entitled to such amounts until the day that the reinstatement order was reversed with finality on August 10, 2009.

Hence, the petition.

Issue/s:

Whether or not the employee is bound to return the amount received by virtue of alias writs of execution upon reversal of the decision of illegal dismissal despite entitlement to reinstatement wages and benefits from the LA Decision until such reversal.

SC Ruling:

The SC did not find merit in the petition.

The SC held that since the NLRC’s 29 May 2009 Decision became final and executor on 10 August 2009, Solidum is entitled to P2,881,335.86, representing his accrued salaries, allowances, benefits, incentives and bonuses for the period 21 January to 20 July 2009.

The SC cited the case of Bago vs. NLRC, in holding that employees are entitled to their accrued salaries, allowances, benefits, incentives and bonuses until the NLRC’s reversal of the labor arbiter’s order of reinstatement becomes final and executory, as shown on the entry of judgment.