The Supreme Court has affirmed that an employee who is reinstated to their position following a Labor Arbiter’s decision is entitled to receive wages during the period of appeal, even if the reinstatement order is later reversed by a higher court. This ruling clarifies that employers cannot demand reimbursement of these wages, reinforcing the principle that reinstatement orders are immediately executory. The decision underscores the importance of protecting employees’ rights during legal proceedings and ensures they receive fair compensation while awaiting the final resolution of their case.

From Dean to Professor: Who Pays While the Case Decides?

This case arose from a dispute between the College of the Immaculate Conception and Atty. Marius F. Carlos, Ph.D., who was initially appointed as Dean of the Department of Business Administration and Accountancy. After his term as Dean expired, the college appointed him as a full-time professor, but later withheld his teaching load due to his alleged violation of school policies regarding teaching at other institutions. Atty. Carlos filed a complaint for unfair labor practice and illegal dismissal, leading to a legal battle that reached the Supreme Court. The central issue was whether the college could demand reimbursement of the salaries and benefits paid to Atty. Carlos during the period when he was reinstated following a Labor Arbiter’s decision, which was later reversed by the National Labor Relations Commission (NLRC).

The legal framework for this case rests on Article 223 of the Labor Code, which stipulates that a Labor Arbiter’s decision ordering reinstatement is immediately executory, even pending appeal. This means that the employer must either re-admit the employee to work or reinstate them in the payroll. The Supreme Court, in this case, emphasized the obligatory nature of this provision, stating:

Art. 223. – Appeal. – x x x

x x x x

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 provided therein.

Building on this principle, the Court addressed the question of whether the subsequent reversal of the Labor Arbiter’s decision entitled the employer to reimbursement of the wages paid during the reinstatement period. The Supreme Court relied on its previous rulings in Air Philippines Corporation v. Zamora and Roquero v. Philippine Airlines, Inc., which established that an employee is not required to reimburse the salary received if the reinstatement order is reversed, especially if the employee rendered services during that period. The Court emphasized that the law does not concern itself with the wisdom or propriety of the Labor Arbiter’s order of reinstatement. It highlights that if the intention was to halt the execution of reinstatement pending appeal, the law should have explicitly provided such a condition.

The College of the Immaculate Conception argued that Atty. Carlos was reinstated to a position different from that which he previously held, and that the case of International Container Terminal Services, Inc v. NLRC was inapplicable because Atty. Carlos was not dismissed but merely sanctioned. The Supreme Court dismissed these arguments, clarifying that the error in ordering Atty. Carlos’ reinstatement as Dean did not alter the fact that the order was immediately executory. The college’s obligation to reinstate Atty. Carlos, even if initially to the wrong position, remained in effect during the appeal period.

The Supreme Court also addressed the conflicting views on reinstatement pending appeal, particularly the “refund doctrine” espoused in Genuino v. National Labor Relations Commission. The Court distanced itself from Genuino, reaffirming the principle that an employee cannot be compelled to reimburse the salaries and wages received during the pendency of an appeal, even if the order of reinstatement is reversed. The Court underscored that the “refund doctrine” would render the rationale of reinstatement pending appeal ineffective. The Court noted that:

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.

The Supreme Court further clarified that the employee is entitled to payment of his salaries and allowances pending appeal, regardless of whether the employer immediately complies with the reinstatement order or reinstates the employee in the payroll. The timing and manner of reinstatement do not affect the employee’s right to receive compensation during the appeal period. This decision ensures that employees are not penalized for asserting their rights and that employers comply with the immediate execution of reinstatement orders.

Moreover, the College of the Immaculate Conception alleged that the Labor Arbiter’s decision was tainted with fraud and graft and corruption. The Supreme Court dismissed this allegation, stating that the college failed to provide clear and convincing evidence to overcome the presumption of regularity in the performance of the Labor Arbiter’s official duties. The Court emphasized that bad faith can never be presumed and must be proven by clear and convincing evidence.

FAQs

What was the key issue in this case?	The key issue was whether an employer can demand reimbursement of salaries and benefits paid to an employee during the period of reinstatement following a Labor Arbiter’s decision, if that decision is later reversed on appeal.
What did the Supreme Court rule?	The Supreme Court ruled that the employee is not required to reimburse the employer for the salaries and benefits received during the period of reinstatement, even if the reinstatement order is later reversed. This upholds the principle that reinstatement orders are immediately executory.
What is the basis for the ruling?	The ruling is based on Article 223 of the Labor Code, which mandates the immediate execution of reinstatement orders pending appeal. It also draws from previous Supreme Court decisions that support this principle.
What is the “refund doctrine” and how does it relate to this case?	The “refund doctrine,” as espoused in Genuino v. National Labor Relations Commission, suggests that an employee should refund salaries received during payroll reinstatement if the dismissal is later found valid. The Supreme Court distanced itself from this doctrine, reaffirming that employees are not required to reimburse such salaries.
What if the employee is reinstated to the wrong position?	Even if the employee is initially reinstated to the wrong position, as long as reinstatement was ordered, the employer is still obligated to pay wages during the appeal period, and the employee is not required to reimburse those wages if the reinstatement order is later modified.
What is the significance of the Labor Arbiter’s decision being “immediately executory”?	The fact that the Labor Arbiter’s decision is immediately executory means the employer must comply with the reinstatement order immediately, even while appealing the decision. The Court emphasized that the purpose of this provision is to provide immediate relief to the dismissed employee while their case is pending appeal.
What if the employer believes the Labor Arbiter’s decision was fraudulent?	The employer must present clear and convincing evidence to overcome the presumption of regularity in the Labor Arbiter’s performance of official duties. Mere allegations of fraud are insufficient to disregard the decision.
Does this ruling apply if the employee only receives payroll reinstatement?	Yes, the ruling applies regardless of whether the employee is actually readmitted to work or merely reinstated in the payroll. The obligation to pay wages during the appeal period remains the same.

In summary, the Supreme Court’s decision reinforces the protection afforded to employees during labor disputes, ensuring they receive fair compensation while awaiting the final resolution of their case. The ruling clarifies that employers cannot seek reimbursement of wages paid during reinstatement, underscoring the importance of adhering to the immediate execution of reinstatement orders.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: COLLEGE OF THE IMMACULATE CONCEPTION VS. NATIONAL LABOR RELATIONS COMMISSION AND ATTY. MARIUS F. CARLOS, PH.D., G.R. No. 167563, March 22, 2010