In Manila Doctors College vs. Olores, the Supreme Court clarified that employers have a duty to reinstate an employee immediately following a Labor Arbiter’s (LA) order, even if the decision is under appeal. This obligation includes either readmitting the employee to their previous position or, at the employer’s discretion, reinstating them on the payroll. Failure to comply with this reinstatement order obligates the employer to pay the employee’s accrued wages until the LA’s decision is reversed by a higher court. The ruling underscores the self-executory nature of reinstatement orders and protects employees from undue financial hardship during appeal processes.

The Case of the Defiant Grading System: Who Bears the Burden of Reinstatement?

Emmanuel M. Olores, a faculty member at Manila Doctors College (MDC), was terminated for allegedly deviating from the prescribed grading system. Subsequently, he filed an illegal dismissal case, and the Labor Arbiter (LA) ruled in his favor, ordering MDC to reinstate him. The LA, however, did not award backwages, citing Olores’s alleged disrespect towards his superiors. MDC appealed this decision, and while the appeal was pending, Olores sought a writ of execution to collect his wages from the reinstatement order. The central legal question was whether MDC was obligated to pay Olores’s wages during the appeal period, despite the eventual reversal of the LA’s decision, due to their failure to reinstate him.

The Supreme Court addressed the intricacies of Article 223 of the Labor Code, now Article 229, which stipulates the immediate executory nature of reinstatement orders. The Court emphasized that “the employer is duty-bound to reinstate the employee, failing which, the employer is liable instead to pay the dismissed employee’s salary.” This provision ensures that employees are not left without income while awaiting the resolution of appeals. The employer has the option to either allow the employee to return to work or simply keep them on the payroll; however, the responsibility to act rests solely on the employer.

The Court clarified that while a reversal by a higher tribunal effectively terminates the employer’s duty to reinstate, it does not automatically absolve them of liability for accrued wages. The decision explicitly states: “Notwithstanding the reversal of the finding of illegal dismissal, an employer, who, despite the LA’s order of reinstatement, did not reinstate the employee during the pendency of the appeal up to the reversal by a higher tribunal may still be held liable for the accrued wages of the employee, i.e., the unpaid salary accruing up to the time of the reversal.” This means that unless the employer can demonstrate that the delay in reinstatement was not their fault, they remain responsible for the wages during the appeal period.

Petitioners argued that the LA’s decision gave Olores the option of choosing between reinstatement and separation pay, implying that their failure to reinstate him was due to his inaction. However, the Court rejected this argument, asserting that the “reinstatement aspect of the LA’s Decision is immediately executory and, hence, the active duty to reinstate the employee – either actually or in payroll – devolves upon no other than the employer, even pending appeal.” The Court cited Pfizer, Inc. v. Velasco, where the employer was criticized for failing to immediately admit the employee back to work following the LA’s reinstatement order. Furthermore, the Court referenced Bergonio, Jr., v. South East Asian Airlines, underscoring that “an order of reinstatement issued by the LA is self-executory, i.e., the dismissed employee need not even apply for and the LA need not even issue a writ of execution to trigger the employer’s duty to reinstate the dismissed employee.”

The Court also addressed the unique circumstances of educational institutions, where faculty assignments are typically made at the beginning of each semester. While acknowledging that actual reinstatement might be impractical mid-semester, the Court referenced University of Santo Tomas v. NLRC (UST), stating that MDC should have assigned Olores his teaching load for the succeeding semester, regardless of his presence. “Had petitioners done so despite the absence of respondent, it would have indicated their sincere willingness to comply with the reinstatement order. But they did not. There was even no proof that petitioners required respondent to report for assignment of teaching load and schedules. Besides, respondent’s alleged failure to secure teaching load assignments did not prevent petitioners from simply reinstating him in the payroll as an alternative. Sadly, petitioners also failed to employ the same.” By failing to take any action to reinstate Olores, MDC failed to meet its legal obligations.

Finally, the Court dismissed MDC’s claims that Olores’s pursuit of separation pay during execution proceedings and allegations of strained relations indicated his preference for separation over reinstatement. Citing Pfizer, Inc., the Court reiterated that the employee’s preference for separation pay has no legal effect if the employer has not genuinely complied with the reinstatement order. The Court noted an “apparent apathy” on MDC’s part toward the reinstatement order, further solidifying their liability for Olores’s accrued salaries. By upholding the CA’s decision, the Supreme Court reinforced the importance of employers’ compliance with reinstatement orders and protected employees’ rights during appeal processes. This decision emphasizes that employers must take proactive steps to reinstate employees or face the financial consequences of non-compliance.

FAQs

What was the key issue in this case?	The key issue was whether Manila Doctors College was obligated to pay Emmanuel Olores’s wages during the appeal period after an LA ordered his reinstatement, despite the order later being reversed. This hinged on whether the employer fulfilled their duty to reinstate him pending the appeal.
What does ‘immediately executory’ mean in the context of a reinstatement order?	‘Immediately executory’ means the employer must promptly reinstate the employee upon the LA’s order, even if they intend to appeal. This can be done by either readmitting the employee to work or placing them back on the payroll.
What options does an employer have when faced with a reinstatement order?	An employer has two options: (1) reinstate the employee to their former position with the same terms and conditions, or (2) reinstate the employee on the payroll, continuing to pay their salary. The choice is at the employer’s discretion, but they must act in good faith.
If a reinstatement order is later reversed, does the employer have to pay backwages?	Generally, an employer is liable for the employee’s wages from the time the reinstatement order was issued until it was reversed, provided the employer did not reinstate the employee. However, if the employer can prove the delay was not their fault, they may not be liable.
What is the significance of the Pfizer, Inc. v. Velasco case in this context?	The Pfizer, Inc. case reinforces that employers must actively comply with reinstatement orders. The employee’s preference for separation pay does not negate the employer’s initial duty to reinstate, and failure to act on the reinstatement order can result in liability for backwages.
How does this ruling apply to educational institutions with semester-based employment?	Even if immediate physical reinstatement is impractical during a semester, educational institutions must offer teaching load assignments at the beginning of the next semester or reinstate the employee on the payroll. Failure to do so indicates a lack of intent to comply with the reinstatement order.
Can an employee’s request for separation pay waive their right to reinstatement wages?	No, an employee’s request for separation pay does not automatically waive their right to reinstatement wages if the employer has not genuinely complied with the reinstatement order. The employer must first demonstrate a good-faith effort to reinstate the employee.
What should an employer do if they are unsure how to comply with a reinstatement order?	Employers should seek legal counsel immediately to understand their obligations and ensure compliance with labor laws. Documenting all efforts to comply with the reinstatement order is also crucial in case of future disputes.

The Supreme Court’s decision in Manila Doctors College vs. Olores serves as a crucial reminder of the obligations employers face when a reinstatement order is issued. Employers must proactively reinstate employees, either physically or on the payroll, to avoid liability for accrued wages during appeal processes. This ruling provides critical protection for employees and underscores the self-executory nature of reinstatement orders in Philippine labor law.

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: MANILA DOCTORS COLLEGE VS. EMMANUEL M. OLORES, G.R. No. 225044, October 03, 2016