Smart Communications v. Solidum
REITERATIONFacts
The Antecedents: On April 26, 2004, Smart Communications, Inc. (Smart) hired Jose Leni Z. Solidum (Solidum) as Department Head for Smart Buddy Activation. In September 2005, Ricardo P. Isla (Isla) issued a memorandum to Solidum alleging acts of dishonesty and placing him under preventive suspension. On November 11, 2005, Solidum's employment was terminated for fraud, willful breach of trust, falsification, misrepresentation, and serious misconduct. Solidum subsequently filed a complaint for illegal dismissal and illegal suspension against Smart, Napoleon L. Nazareno, and Isla. Procedural History: On July 3, 2006, the Labor Arbiter (LA) ruled that Solidum's dismissal was illegal and ordered his immediate reinstatement. Smart appealed to the National Labor Relations Commission (NLRC). On January 26, 2009, the NLRC reversed the LA's decision, finding the dismissal legal. Solidum moved for reconsideration, which the NLRC denied on May 29, 2009. An Entry of Judgment was later issued stating the NLRC decision became final on August 10, 2009. Meanwhile, Solidum sought an alias writ of execution for accrued salaries from January to April 2009. The LA initially denied this, but the NLRC reversed the denial, ruling Solidum was entitled to wages until the finality of the reversal on August 10, 2009. The Court of Appeals (CA) initially set aside the NLRC ruling but, in an Amended Decision, affirmed that Solidum was entitled to P2,881,335.86 in accrued salaries and benefits up to August 10, 2009. The Petition: Petitioners Smart, Nazareno, and Isla filed a petition for review on certiorari under Rule 45 of the Rules of Court. They argued that the CA erred in ruling that the NLRC's May 29, 2009 Decision only became final on August 10, 2009. They further contended that Solidum was not entitled to the P2,881,335.86 representing accrued salaries and benefits for the period of January 21 to July 20, 2009, as the NLRC had already reversed the finding of illegal dismissal in January 2009.
Issue(s)
Whether the NLRC's May 29, 2009 Decision became final and executory on August 10, 2009. Whether Solidum is entitled to accrued salaries, allowances, and benefits until the date the NLRC's reversal of the reinstatement order became final and executory.
Ruling
The petition is UNMERITORIOUS. The Supreme Court AFFIRMED the Court of Appeals' Amended Decision and Resolution.
Ratio Decidendi
On Issue 1: The Court ruled that the National Labor Relations Commission (NLRC) Decision dated May 29, 2009, indeed became final and executory on August 10, 2009. This determination was based on the official Entry of Judgment and a certification issued by the NLRC Acting Executive Clerk of Court. Under Rule VII, Section 14 of the 2005 Revised Rules of Procedure of the NLRC, a decision becomes final and executory after sixty calendar days from the date of mailing in the absence of return cards or other proof of service. In this case, the decision was mailed on June 11, 2009, and since there were no return cards, the 60-day period lapsed on August 10, 2009. The Court emphasized that the date of finality recorded in the Book of Entries of Judgments is controlling for determining the end of the employer's obligation. Consequently, the petitioners' argument that finality occurred earlier was contradicted by the official records of the commission. On Issue 2: The Court held that Solidum is entitled to his accrued salaries and benefits until the NLRC's reversal of the Labor Arbiter's (LA) reinstatement order became final and executory on August 10, 2009. Citing the landmark case of Garcia v. Philippine Airlines, Inc., the Court reiterated that the reinstatement aspect of the LA's decision is self-executory and remains enforceable during the appeal process. Even if the NLRC eventually finds the dismissal to be valid, the employer is still duty-bound to pay the employee's salaries if it failed to reinstate him during the pendency of the appeal. Applying Bago v. NLRC, the Court clarified that the 'payroll reinstatement' or the obligation to pay wages ends only when the higher court's reversal becomes final and executory. Since the finality in this case was August 10, 2009, the alias writs of execution covering the period from January 21 to July 20, 2009, were valid and the amounts released to Solidum need not be returned. The Court concluded that the employee's right to these wages is statutory and independent of the ultimate finding on the legality of the termination.
Main Doctrine
The Supreme Court reaffirms that under Article 223 of the Labor Code, the decision of the Labor Arbiter ordering the reinstatement of a dismissed employee is immediately executory, even pending appeal. The employer has the option of actual physical reinstatement or payroll reinstatement. If the employer fails to exercise either option, it is liable for the accrued salaries and benefits of the employee. This liability only terminates once the higher court's decision reversing the reinstatement order attains finality. The finality of such reversal is typically reckoned from the date indicated in the Entry of Judgment, and the employee is entitled to all wages and benefits accrued up to that specific date.