G.R. No. 164856 -
JUANITO A. GARCIA and ALBERTO J.
DUMAGO, petitioners versus PHILIPPINE AIRLINES, INC., respondent.
Promulgated:
January
20, 2009
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QUISUMBING,
J.:
From this Court’s Decision[1] dated August 29,
2007, which ordered the suspension of the proceedings in this case, respondent
Philippine Airlines, Inc. (PAL) filed a Manifestation and Compliance[2] on November 13, 2007 containing an
Order[3] dated September
28, 2007, from the Securities and Exchange Commission (SEC) granting its
request to exit from the rehabilitation proceedings.
In a letter dated
Based on these recommendations, the SEC found the termination
of the rehabilitation proceedings, on the ground of successful rehabilitation,
in order, thus:
WHEREFORE,
in the light of the foregoing, and considering PAL’s firm commitment to settle its outstanding obligations as well as
the fact that its operations and its financial condition have been normalized and stabilized in conformity with the Amended and Restated
Rehabilitation Plan, exemplifying a successful corporate rehabilitation, the PAL’s
request to exit from rehabilitation is hereby GRANTED.
The PRR is likewise directed to furnish all
creditors and parties concerned with copies of this Order at the expense of the
Petitioner and submit proof of service thereof to the Commission, within
fifteen (15) days from date of receipt of this Order.
SO ORDERED.[6]
In view of the foregoing development, the instant case may
now be resolved. But first, a brief
summation of the antecedent proceedings.
Petitioners
Alberto J. Dumago and Juanito A. Garcia were Aircraft Furnishers Master “C” and
Aircraft Inspector, respectively, assigned in the
On
WHEREFORE, conformably with the foregoing, judgment is
hereby rendered finding the respondents guilty of illegal suspension and
illegal dismissal and ordering them to reinstate complainants to their former
position without loss of seniority rights and other privileges. Respondents are hereby further ordered to pay
jointly and severally unto the complainants the following:
Alberto J.
Dumago – P409,500.00 backwages as of
34,125.00
for 13th month pay
Juanito A.
Garcia – P1,290,744.00 backwages as of
The amounts of P100,000.00
and P50,000.00 to each complainant as and by way of moral and exemplary
damages; and
The sum equivalent to ten percent (10%) of the total award
as and for attorneys fees.
Respondents are directed to
immediately comply with the reinstatement aspect of this Decision. However, in the event that reinstatement is no
longer feasible, respondent[s] are hereby ordered, in lieu thereof, to pay unto
the complainants their separation pay computed at one month for [e]very year of
service.
SO ORDERED.[9]
On appeal, the National
Labor Relations Commission (NLRC) reversed the Labor Arbiter’s decision and
dismissed the case for lack of merit.[10]
Reconsideration having been denied, an
Entry of Judgment[11]
was issued on
On
x x x x
1. To the Office of respondent PAL Building I,
Legaspi St., Legaspi Village, Makati City or to any of its Offices in the
Philippines and cause reinstatement of complainants to their former position
and to cause the collection of the amount of [P]549,309.60 from
respondent PAL representing the backwages of said complainants on the
reinstatement aspect;
2. In case you cannot collect from respondent PAL for any reason, you
shall levy on the office equipment and other movables and garnish its deposits
with any bank in the P]549,309.60.
If still insufficient, levy against immovable properties of PAL not otherwise
exempt from execution.
x x x x[13]
Although PAL filed
an Urgent Motion to Quash Writ of Execution, the Labor Arbiter issued a Notice
of Garnishment[14]
addressed to the President/Manager of the Allied Bank Head Office in P549,309.60.
PAL moved to lift
the Notice of Garnishment while petitioners moved for the release of the
garnished amount. PAL opposed petitioners’ motion. It also filed an Urgent Petition for
Injunction which the NLRC resolved as follows:
WHEREFORE, premises considered, the Petition is partially
GRANTED. Accordingly, the Writ of
Execution dated
SO ORDERED.[15]
PAL appealed to the
Court of Appeals on the grounds that: (1)
by declaring the writ of execution and the notice of garnishment valid, the
NLRC gave petitioners undue advantage and preference over PAL’s other creditors
and hampered the task of the PRR; and (2) there was no longer any legal or
factual basis to reinstate petitioners as a result of the reversal by the NLRC
of the Labor Arbiter’s decision.
On
WHEREFORE, premises considered and in
view of the foregoing, the instant petition is hereby GIVEN DUE COURSE. The assailed November 26, 2001 Resolution, as
well as the January 28, 2002 Resolution of public respondent National Labor
Relations Commission is hereby ANNULLED and SET ASIDE for
having been issued with grave abuse of discretion amounting to lack or excess
of jurisdiction. Consequently, the Writ
of Execution and the Notice of Garnishment issued by the Labor Arbiter are
hereby likewise ANNULLED and SET ASIDE.
SO ORDERED.[17]
Petitioners moved
for reconsideration which the appellate court denied on
Considering the Motion for
Reconsideration filed by private respondents dated [January] 6, 2004 of this
Court’s Decision promulgated on December 5, 2003, as well as the Comment filed
by petitioner dated February 20, 2003, the Court, finding no sufficient and
compelling reason which will merit a reconsideration of the Decision rendered
in this case as the issues raised therein had already been carefully considered
and passed upon in the Decision sought to be reconsidered, hereby resolves to
DENY the instant motion for reconsideration for lack of merit.
SO ORDERED.[19]
Hence, the instant
petition raising a single issue as follows:
WHETHER
OR NOT THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE PETITIONERS ARE
ENTITLED TO THEIR ACCRUED WAGES DURING THE PENDENCY OF PAL’S APPEAL.[20]
Simply put, the
issue is: Are petitioners entitled to
their wages during the pendency of PAL’s appeal to the NLRC?
Petitioners
argue that pursuant to this Court’s ruling in International Container Terminal Services, Inc. v. NLRC,[21] the reinstatement aspect of the Labor Arbiter’s
decision, albeit under appeal, is immediately enforceable as a consequence of
which, the employer is duty-bound to choose forthwith whether to re-admit the
employee or to reinstate him in the payroll.
Failing to exercise the options in the alternative, the employer must
pay the salary of the employee which automatically accrued from notice of the
Labor Arbiter’s order of reinstatement until its ultimate reversal by the NLRC.[22] Petitioners
add that PAL should not be excused from complying with the order of
reinstatement on the ground that it was under receivership. At the time PAL
received a copy of the Labor Arbiter’s decision, PAL was not yet under
receivership.
Respondent counters
that PAL was already under an Interim Rehabilitation Receiver at the time it
received a copy of the Labor Arbiter’s decision. It also contends that it
cannot be compelled to reinstate petitioners pending appeal to the NLRC since
retrenchment and cash flow constraints rendered it impossible to exercise its
option under Article 223 of the Labor Code.
At the crux of the
controversy is the application of Article 223 of the Labor Code which provides
that:
ART. 223. Appeal.— …
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 herein.
x x x x
To be sure, the
Court has divergent views on the immediately executory nature of reinstatement
pending appeal particularly where the reinstatement order is reversed on appeal.
On one hand, the Court has ruled that even if the Labor Arbiter’s reinstatement order is reversed
on appeal, it is the employer’s obligation to reinstate and pay the wages of
the dismissed employee during the period of appeal until reversal by the NLRC. However,
if the employee has been reinstated during the period of appeal and such
reinstatement order is reversed with finality, the employee is not required to
reimburse whatever salary he received for he is entitled to such, more so if he
actually rendered services during the period.[23]
On the other hand, the Court has held
that if the decision of the Labor Arbiter is later reversed on appeal upon the
finding that the ground for dismissal is valid, then the employer has the right
to require the dismissed employee on payroll reinstatement to refund the
salaries s/he received while the case was pending appeal, or it can be deducted
from the accrued benefits that the dismissed employee was entitled to receive
from his/her employer under existing laws, collective bargaining agreement
provisions, and company practices. However, if the employee was reinstated to
work during the pendency of the appeal, then the employee is entitled to the
compensation received for actual services rendered without need of refund.[24]
In his dissenting opinion, Justice Presbitero J. Velasco, Jr.
adopts the second interpretation and explains that since no actual or payroll
reinstatement pending appeal transpired, petitioners are no longer entitled to
their salaries for the period in question with the reversal of the Labor
Arbiter’s reinstatement order. There is no more legal basis for the payment of
their salaries since their right to reinstatement pending appeal has been lost
and extinguished. To release their salaries for the period in question would
constitute unjust enrichment.
The rationale for execution pending appeal has been explained
by this Court in Aris (Phil.) Inc. v.
NLRC,[25] thus:
In authorizing
execution pending appeal of the reinstatement aspect of a decision of the Labor
Arbiter reinstating a dismissed or separated employee, the law itself has laid
down a compassionate policy which, once more, vivifies and enhances the
provisions of the 1987 Constitution on labor and the working-man.[26]
x x x x
If in ordinary
civil actions execution of judgment pending appeal is authorized for reasons
the determination of which is merely left to the discretion of the judge, We
find no plausible reason to withhold it in cases of decisions reinstating
dismissed or separated employees. In such cases, the poor employees had been
deprived of their only source of livelihood, their only means of support for
their family — their very lifeblood. To Us, this special circumstance is far
better than any other which a judge, in his sound discretion, may determine. In
short, with respect to decisions reinstating employees, the law itself has
determined a sufficiently overwhelming reason for its execution pending appeal.[27]
Clearly, the principle of unjust
enrichment does not apply. First, the
provision on reinstatement pending appeal is in accord with the social justice
philosophy of our Constitution. It is meant to afford full protection to labor
as it aims to stop (albeit
temporarily, since the appeal may be decided in favor of the employer) a
continuing threat or danger to the survival or even the life of the dismissed
employee and his family.[28] Second, the provision on reinstatement
pending appeal partakes of a special law that must govern the instant case. The
provision of the Civil Code on unjust enrichment, being of general application,
must give way.
In any case, Justice Velasco points
out that the writ of execution in the instant case was issued after the
promulgation of the NLRC resolution. As petitioners failed to act on their
rights and seek enforcement of the reinstatement pending appeal, PAL is not
liable to pay their accrued salaries for the period in question.
In Pioneer
Texturizing Corp. v. NLRC,[29] this Court
clarified that an award or order for reinstatement is self-executory, to wit:
A closer examination, however, shows that the necessity
for a writ of execution under Article 224 applies only to final and executory
decisions which are not within the coverage of Article 223. ...
x x x x
… It can not
relate to an award or order of reinstatement still to be appealed or pending
appeal which Article 223 contemplates. The provision of Article 223 is clear
that an award for reinstatement shall be
immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for
reinstatement. The legislative intent is quite obvious, i.e., to make an
award of reinstatement immediately enforceable, even pending appeal. To require
the application for and issuance of a writ of execution as prerequisites for
the execution of a reinstatement award would certainly betray and run counter
to the very object and intent of Article 223, i.e., the immediate execution of
a reinstatement order. …[30] (Italics in the original.)
Since the reinstatement order is self-executory, it is inaccurate to say
that its non-implementation was due to petitioners’ fault who failed to enforce
their rights at the proper and opportune time. To reiterate, the reinstatement
order does not require a writ of execution, much less a motion for its
issuance. To require petitioners to move for the enforcement of the
reinstatement order and blame them for its belated enforcement, as Justice
Velasco does, would render nugatory the self-executory nature of the award.
Justice Velasco also posits that Article 223 of the Labor Code does not
automatically make the employer liable for accrued salaries during the
reinstatement pending appeal where no reinstatement took place. He stresses
that the only relief given under the NLRC Rules of Procedure is the remedy of
compulsion via a citation for
contempt, thus:
RULE V. SEC.
14. Contents of Decisions. --- …
In case the
decision of the Labor Arbiter includes an order of reinstatement, it shall
likewise contain: a) a statement that the reinstatement aspect is immediately
executory; and b) a directive for the employer to submit a report of compliance
within ten (10) calendar days from receipt of the said decision.
RULE IX. SEC.
6. EXECUTION OF REINSTATEMENT PENDING APPEAL. --- In case the decision includes an order of reinstatement, and the
employer disobeys the directive under the second paragraph of Section 14 of
Rule V or refuses to reinstate the
dismissed employee, the Labor Arbiter shall immediately issue a writ of
execution, even pending appeal, directing the employer to immediately reinstate
the dismissed employee either physically or in the payroll, and to pay
the accrued salaries as a consequence of such reinstatement at the rate
specified in the decision.
The Sheriff
shall serve the writ of execution upon the employer or any other person
required by law to obey the same. If he
disobeys the writ, such employer or person may be cited for contempt
in accordance with Rule IX. (Emphasis and underscoring supplied.)
Contrary to the position of Justice Velasco, there are actually two reliefs
given in the foregoing provisions: (1) the payment of accrued salaries, and (2)
a citation for contempt.
If the Labor Arbiter’s decision includes a reinstatement order, the
decision should state that the reinstatement aspect is immediately executory
and direct the employer to submit a compliance report within ten calendar days
from receipt of the said decision. Should the employer disobey the directive of
the Labor Arbiter or refuse to reinstate the dismissed employee, the Labor
Arbiter shall immediately issue a writ of execution, even pending appeal,
directing the employer to immediately reinstate the dismissed employee either
physically or in the payroll, and to pay the accrued salaries as a consequence
of such reinstatement. If the employer still disobeys the writ of execution,
then he may be cited for contempt.
Finally, the majority put forth the view that after the Labor Arbiter’s
reinstatement order is reversed by the NLRC, the employee may be barred from
collecting his accrued salaries if it is shown that the non-implementation of
the reinstatement order was not due to the fault of the employer. In the
instant case, the corporate rehabilitation of PAL had the effect of suspending
all actions or claims against it. It partakes of the nature of a restraining
order that constitutes a legal justification for PAL’s non-compliance with the
reinstatement order. The writer adds that reinstatement pending appeal does not
contemplate the period when the employer is similarly in a state of being
resuscitated in order to survive.
In Rubberworld (Phils.), Inc. v.
NLRC,[31] we recognized
that the automatic stay of all pending actions for claims is intended to enable
the management committee or the rehabilitation receiver to effectively exercise
its/his powers free from any judicial or extra judicial interference that might
unduly hinder or prevent the ‘rescue’ of the distressed corporation. To allow
such other actions to continue would only add to the burden of the management
committee or rehabilitation receiver, whose time, effort and resources would be
wasted in defending claims against the corporation instead of being directed
toward its restructuring and rehabilitation.
Indeed, rehabilitation merely provides for the automatic stay of all
pending actions or the suspension of payments of the distressed corporation to
prevent the dissipation of its assets; it does not relieve the corporation of
its obligations. Upon its successful rehabilitation, it must settle in full all
claims previously suspended.
Applying the foregoing rule, we cannot adhere to the posture taken by the
majority. Just because PAL was under rehabilitation did not necessarily mean
that immediately executory orders such as reinstatement pending appeal will be
put to naught. That would in effect nullify the relief given to the employee
when all the law seeks to do is suspend it.
Furthermore, we do not agree that reinstatement
pending appeal is inapplicable in the instant case since, as the majority puts
it, PAL is similarly in a state of being resuscitated in order to survive. PAL
even argues that retrenchment and cash flow constraints rendered it impossible
to comply with the reinstatement order. In Flight
Attendants and Stewards Association of the Philippines (FASAP) v. Philippine
Airlines, Inc., et al.,[32]
we noted that PAL failed to substantiate its claim of actual and imminent
substantial losses which would justify the retrenchment of more than 1,400 of
its cabin crew personnel. Although the Philippine economy was gravely affected
by the Asian financial crisis, however, it cannot be assumed that it has
likewise brought PAL to the brink of bankruptcy.[33]
In effect, we held that the mere fact that PAL underwent corporate
rehabilitation does not automatically mean that it suffered specific and
substantial losses that would necessitate retrenchment. In fact, PAL was on the
road to recovery as early as February 1999 and was declaring profits in
millions in the succeeding years.[34]
Given the circumstances in this case, delay on the
employee’s part was not an issue. But we
cannot agree that the petitioners could be barred from collecting accrued
wages, merely on the ground of their delay in enforcing reinstatement pending
appeal. For it was the statutory duty of
the respondent as employer to comply with a self-executory order in favor of
the employees, herein petitioners.
Thus, while its rehabilitation may have prevented
PAL from exercising its option either to re-admit petitioners to work or to
reinstate them in the payroll, it did not defeat petitioners’ right to reinstatement
pending appeal which vested upon rendition of the Labor Arbiter’s decision;
more so when no actual and imminent substantial losses were proven by PAL.
To reiterate, there is no longer any legal impediment to hold
PAL liable for petitioners’ salaries which automatically accrued from notice of
the Labor Arbiter’s order of reinstatement until its ultimate reversal by the
NLRC.[35]
WHEREFORE, I would vote to GRANT the petition.
|
|
LEONARDO A. QUISUMBING Associate Justice |
[1] Garcia
v. Philippine Airlines, Inc., G.R. No. 164856,
[2] Rollo, pp. 250-251.
[3]
[4]
[5]
[6]
[7] Records, Vol. I, pp. 32-33.
[8]
[9]
[10]
[11]
[12] CA rollo, pp. 57-61.
[13]
[14]
[15]
[16] Rollo, pp. 38-48. Penned by Associate Justice Sergio L. Pestaño, with Associate Justices Marina L. Buzon and Jose C. Mendoza concurring.
[17]
[18]
[19]
[20]
[21] G.R. No. 115452,
[22]
[23] Kimberly Clark (Phils.), Inc. v. Ernesto Facundo, et al., G.R. No. 144885, July 12, 2006, p. 8 (Unsigned Resolution); Roquero v. Philippine Airlines, Inc., G.R. No. 152329, April 22, 2003, 401 SCRA 424, 430-431; See International Container Terminal Services, Inc. v. NLRC, G.R. No. 115452, December 21, 1998, 300 SCRA 335, 343.
[24] Genuino
v. National Labor Relations Commission, G.R. Nos. 142732-33 &
142753-54,
[25] G.R. No.
90501, August 5, 1991, 200 SCRA 246; See Composite
Enterprises, Inc. v. Caparoso, G.R. No. 159919, August 8, 2007, 529 SCRA
470, 482; Air Philippines Corporation v.
Zamora, G.R. No. 148247, August 7, 2006, 498 SCRA 59, 73; Roquero v. Philippine Airlines, Inc.,
supra note 23 at 429-430.
[26] Aris (Phil.) Inc. v. NLRC, id. at 253.
[27]
[28]
[29] G.R. No. 118651,
[30] Pioneer Texturizing Corp. v. NLRC, id. at 824-825.
[31] G.R. No. 128003,
[32] G.R. No. 178083,
[33]
[34]
[35] Kimberly Clark (Phils.), Inc. v. Ernesto Facundo, et al., supra note 23 at 9; International Container Terminal Services, Inc. v. NLRC, supra note 21 at 343; See Composite Enterprises, Inc. v. Caparoso, supra note 25 at 483.