Solidum v. Smart Communications
CLARIFICATIONFacts
The Antecedents: In 2005, Jose Leni Z. Solidum (Solidum) filed a Complaint for Illegal Dismissal, Illegal Suspension, Non-payment of Salaries, Damages, and Attorney's Fees against Smart Communications, Inc. (Smart), its President, and former Marketing Head. On July 3, 2006, the Labor Arbiter (LA) rendered a Decision finding Solidum illegally dismissed and ordering his immediate reinstatement, payment of salaries, benefits, and damages. Solidum received this decision on July 13, 2006. Smart appealed to the National Labor Relations Commission (NLRC). Pending appeal, the LA issued a writ of execution for accrued reinstatement wages. The NLRC initially denied Smart's appeal for being filed out of time but later granted its motion for reconsideration on January 26, 2009, dismissing Solidum's complaint for lack of merit. This NLRC Decision became final and executory on August 10, 2009. Despite the LA's order, Smart did not reinstate Solidum, leading to the issuance of seven unsatisfied Alias Writs of Execution between August 15, 2007, and January 22, 2009. Procedural History: Following the NLRC's reversal, Solidum filed an Ex-parte Motion for Issuance of Alias Writ of Execution on the Reinstatement Aspect for the period January 21, 2009, to April 20, 2009, which the LA denied on July 29, 2009, citing the NLRC's reversal. Solidum appealed this denial to the NLRC. On May 31, 2010, the NLRC partly granted Solidum's appeal, reversing the LA's order and remanding the case for the issuance of an alias writ to collect accrued reinstatement salaries and benefits from July 13, 2006, to May 29, 2009. The NLRC later modified this period to August 10, 2009, in its July 30, 2010 Resolution. Smart then filed a Petition for Certiorari with the Court of Appeals (CA). Meanwhile, the Eighth and Ninth Alias Writs were issued, leading to Solidum receiving PHP 2,881,335.86 for the period January 21, 2009, to July 20, 2009. Solidum also requested a re-computation for the period July 13, 2006, to January 26, 2009, which the LA approved on April 25, 2012, for PHP 15,889,871.04. The 10th Alias Writ was issued and satisfied, with Solidum receiving this amount. The CA, in its January 25, 2011 Decision, granted Smart's petition, nullified the NLRC's rulings, and reinstated the LA's July 29, 2009 Order. In an Amended Decision on July 3, 2012, the CA partly granted Solidum's motion for reconsideration, upholding the NLRC's grave abuse of discretion but disallowing the refund of amounts from the Eighth and Ninth Alias Writs. However, in its November 23, 2012 Resolution, the CA ordered Solidum to return the PHP 15,889,871.04 received via the 10th Alias Writ, attributing delay to Solidum in filing his claim for additional benefits. The Petition: Solidum filed a Petition for Partial Review on Certiorari under Rule 45, seeking to annul the CA Resolutions insofar as they ordered him to refund the additional wages and benefits received through the 10th Alias Writ. Solidum argued that the delay in enforcing his reinstatement was due to Smart's unjustified refusal to comply with the LA's writs of execution, not his own fault. He contended that he filed a motion for execution as early as September 1, 2006, and his later request for re-computation was a direct result of the NLRC's remand order. Solidum asserted that the "refund doctrine" as applied by the CA was contrary to law and jurisprudence, and that the delay contemplated by jurisprudence pertains to the employer, not the employee.
Issue(s)
Whether the Court of Appeals erred in ordering Solidum to return to Smart the amount he received through the 10th Alias Writ covering his accrued wages and benefits for the period from July 13, 2006, to January 26, 2009.
Ruling
The Petition for Partial Review on Certiorari is GRANTED. The November 23, 2012, and April 23, 2013, Resolutions of the Court of Appeals in CA-G.R. SP No. 115794, insofar as they ordered petitioner Jose Leni Z. Solidum to refund respondent Smart Communications, Inc. the additional wages and benefits he received by virtue of the 10th Alias Writ of Execution issued by the Labor Arbiter in NLRC Case No. NCR-00-11-09564-05, are REVERSED and SET ASIDE.
Ratio Decidendi
On Issue 1: The Supreme Court found that the Court of Appeals (CA) erred in ordering Solidum to return the amount received through the 10th Alias Writ. The Court reiterated the principle that an order of reinstatement issued by the Labor Arbiter (LA) is immediately executory, even pending appeal, as statutorily enshrined in Article 229 (formerly Article 223) of the Labor Code. This means the employer is obligated to reinstate the dismissed employee, either actually or in the payroll, and compensate them throughout the appeal process until the LA's decision is reversed by a higher court. The Court emphasized the "refund doctrine," as elaborated in Garcia v. Philippine Airlines, Inc., stating that an employee reinstated in the payroll has no duty to return or reimburse salaries received during the period when the lower court's decision was for illegal dismissal, even if the employer's appeal is eventually successful. This principle is also supported by Wenphil Corporation v. Abing and Roquero vs. Philippine Airlines, Inc. The Court applied the "Two-Fold Test" to determine if an employee is barred from collecting accrued wages, which requires (1) actual delay in executing the reinstatement order prior to its reversal, and (2) that the delay must not be due to the employer's unjustified act or omission, as established in Bergonio, Jr., v. South East Asian Airlines. In this case, there was actual delay in executing the reinstatement aspect of the LA's July 3, 2006 Decision, as Smart failed to comply with seven Alias Writs and did not submit a compliance report, clearly indicating a refusal to reinstate. The Court clarified that "delay" in the context of the Two-Fold Test refers to the employer's unjustified refusal to comply with the reinstatement order, not the employee's delay in requesting computation or payment of benefits. The NLRC Rules of Procedure do not require an employee to file a motion for execution, as the LA can issue the writ motu proprio, and the employer is mandated to submit a compliance report within 10 calendar days. Therefore, any perceived delay on Solidum's part in seeking the computation of his accrued wages and benefits was inconsequential and cannot be attributed to him, especially since his request for re-computation was a direct result of the NLRC's remand order. The Court concluded that the delay was attributable to Smart's unjustified acts, making Solidum rightfully entitled to the PHP 15,889,871.04 claimed under the 10th Alias Writ, representing his accrued earnings from July 13, 2006, to January 26, 2009, which was before the NLRC's May 29, 2009 Decision became final and executory on August 10, 2009. This entitlement was further supported by the final and executory April 25, 2012 Order of the Labor Arbiter approving the computation of these additional benefits, which Smart initially paid without challenging via a motion to quash.
Main Doctrine
An order of reinstatement issued by the Labor Arbiter is immediately executory, even pending appeal, obligating the employer to reinstate and compensate the dismissed employee throughout the appeal process until reversal by a higher court. The "refund doctrine" dictates that if the employer's appeal is successful, the reinstated employee has no duty to return or reimburse salaries received during the period when the lower court's decision favored illegal dismissal. An employee may only be barred from collecting accrued wages if the delay in enforcing the reinstatement was without fault on the part of the employer, as determined by the "Two-Fold Test," which focuses on the employer's unjustified act or omission, not the employee's delay in seeking computation.