Del Monte Land Transport Bus Company vs. Jaranilla

An employee's right to reinstatement wages during the period of appeal continues until the Labor Arbiter's decision is finally reversed by a higher court, and a reversal is considered "final" only when it is not subsequently set aside—whether by the same tribunal on reconsideration or by a superior court on review. Consequently, reinstatement wages accrue for the entire period from the LA's decision of illegal dismissal until the final, unreversed reversal by a higher court, including intervals where an intermediate appellate body temporarily reversed the LA ruling but later reinstated it.

Del Monte Land Transport Bus Company (DLTB) was the employer of respondents Romeo M. Jaranilla, Marlon H. Guantero, and Jesus B. Domanais, who were bus drivers or conductors. Don L. Morales and Eileen Flores were officers of DLTB. The dispute arose from consolidated complaints for illegal dismissal filed by the respondents against the petitioners before the National Labor Relations Commission. The case implicates Article 229 (formerly Article 223) of the Labor Code, which provides that the reinstatement aspect of a Labor Arbiter's decision is immediately executory even pending appeal.

Del Monte Land Transport Bus Company (DLTB) employed respondents Romeo M. Jaranilla, Marlon H. Guantero, and Jesus B. Domanais as bus drivers or conductors. Don L. Morales and Eileen Flores were officers of DLTB. The respondents filed consolidated complaints for illegal dismissal, full backwages, and reinstatement against the petitioners before the National Labor Relations Commission.

On November 25, 2013, Labor Arbiter Benedict G. Kato issued a Decision granting the complaints and ruling that all three respondents were illegally dismissed from their employment. DLTB appealed to the NLRC, which on April 23, 2014 reversed the LA Decision and dismissed the consolidated complaints. Aggrieved, respondents moved for reconsideration. On October 31, 2014, the NLRC granted the motion and reinstated the LA's November 25, 2013 Decision. Petitioners then filed a Petition for Certiorari with the Court of Appeals (CA-G.R. SP No. 138339) assailing the NLRC's October 31, 2014 Resolution.

Pending resolution of that petition, respondents moved for and secured a Writ of Execution of the LA's November 25, 2013 Order. Pursuant to the Writ, petitioners issued a check in the amount of PHP 1,189,364.42 as partial payment of the judgment award, with the balance to be sourced from a cash bond of PHP 247,080.29 posted by petitioners. On March 27, 2015, LA Kato issued an Order releasing the amounts to respondents: Jaranilla received PHP 397,541.02, Guantero received PHP 387,895.25, and Domanais received PHP 403,928.14, all exclusive of tax. On June 30, 2015, the CA in CA-G.R. SP No. 138339 granted petitioners' Petition for Certiorari, annulled the NLRC's October 31, 2014 Resolution, and declared respondents legally dismissed, finding that petitioners had complied with the two-notice rule. That CA Decision became final and executory on November 24, 2015.

Thereafter, respondents filed before the LA a Motion for Issuance of Alias Writ of Execution, asserting that the amounts previously released covered only their accrued backwages computed up to November 2014. They argued that because the NLRC had reinstated the LA ruling on reconsideration, they were entitled to reinstatement wages from December 2014 until the finality of the CA Decision reversing the LA ruling. LA Irene Castro De Quiroz, who had taken over after LA Kato inhibited, granted the motion on August 30, 2016, ruling that respondents were entitled to reinstatement wages from November 25, 2013 to April 23, 2014, and from October 31, 2014 to June 30, 2015. Petitioners appealed to the NLRC, which dismissed the appeal on January 30, 2017 and denied reconsideration. The CA affirmed the NLRC in toto on March 14, 2019, and denied petitioners' motion for reconsideration on January 17, 2020, prompting the instant Petition for Review on Certiorari.

• Entitlement to Reinstatement Wages After Finality: Petitioners averred that the LA erred in granting the Motion for Issuance of Alias Writ of Execution because at the time of filing, respondents were no longer entitled to accrued wages on account of the finality of the CA Decision in CA-G.R. SP No. 138339, which declared respondents legally dismissed.
• Cessation of Reinstatement Right Upon NLRC Reversal: Petitioners maintained that while the LA's November 25, 2013 Decision was immediately executory, respondents' right to reinstatement ceased when the NLRC reversed the LA Decision on April 23, 2014. They insisted that the NLRC's reinstatement of the LA Decision on reconsideration was no longer immediately executory, so respondents were not entitled to reinstatement wages from October 31, 2014 until the CA's reversal on June 30, 2015.
• Right to Restitution: Petitioners argued they were entitled to restitution, given the total nullification by the CA of the October 31, 2014 NLRC Resolution and the final declaration that respondents were legally dismissed for just cause.

• Full Satisfaction of Reinstatement Wages: Respondents averred that the amounts previously released to them corresponded only to accrued backwages computed up to November 2014. They claimed entitlement to reinstatement wages from December 2014 until the finality of the CA Decision, on the ground that the NLRC had reinstated the LA ruling on reconsideration, reviving it as a binding order that should be executed immediately.

• Entitlement to Reinstatement Wages During the Period of NLRC Reversal and Reinstatement: Whether the CA gravely erred in affirming the NLRC's conclusion that respondents are entitled to reinstatement wages from October 31, 2014 to June 30, 2015, when the NLRC reinstated LA Kato's Order on reconsideration until the CA reversed the NLRC Resolution.
• Right to Restitution Despite Final Reversal: Whether the CA gravely erred in disregarding petitioners' right to restitution, notwithstanding the total nullification by the CA of the October 31, 2014 NLRC Resolution.

• Entitlement to Reinstatement Wages During the Period of NLRC Reversal and Reinstatement: Yes, with modification. Respondents are entitled to reinstatement wages for the entire period from November 25, 2013 to June 30, 2015, including the interval from April 23, 2014 to October 31, 2014 during which the NLRC had temporarily reversed the LA Decision. The "final reversal" contemplated by jurisprudence occurs only when a higher court's reversal is not subsequently set aside.
• Right to Restitution Despite Final Reversal: No. Petitioners are not entitled to restitution. The reinstated employee is not required to return salary received during the period the lower tribunal declared illegal dismissal, even if the employer's appeal eventually succeeds. An employee may be barred from collecting accrued wages only if actual delay in execution occurred and such delay was without the employer's fault—conditions not present here, as the Writ of Execution was issued and amounts released before the CA's reversal.

• Entitlement to Reinstatement Wages During the Period of NLRC Reversal and Reinstatement: Article 229 (formerly Article 223) of the Labor Code mandates that the reinstatement aspect of a Labor Arbiter's decision is immediately executory even pending appeal. The employer must either physically reinstate the employee or reinstate him in the payroll until the decision is reversed by a higher court. Failure to comply renders the employer liable for the employee's salaries. The Court relied on Aboc vs. Metropolitan Bank and Trust Company, which declared that it is obligatory on the employer to reinstate and pay wages during the period of appeal until "final reversal" by the higher court. The term "final reversal" is critical: it prescribes that the employee's right to reinstatement ceases only when a higher court or tribunal reverses the LA's decision, and such reversal is not later set aside—whether by the same tribunal on reconsideration or by a superior court on review. Applying this principle, the NLRC's April 23, 2014 reversal of the LA Decision was not a "final reversal" because the NLRC itself set aside that reversal on October 31, 2014 and reinstated the LA Decision. The final reversal occurred only on June 30, 2015, when the CA declared respondents legally dismissed—a ruling that was not subsequently overturned and attained finality on November 24, 2015. Accordingly, respondents are entitled to reinstatement wages for the entire period from November 25, 2013 to June 30, 2015, including the interval from April 23, 2014 to October 31, 2014 that the lower tribunals had excluded.

• Right to Restitution Despite Final Reversal: It is settled that even if the LA's order of reinstatement is reversed on appeal, the employer is obligated to pay the dismissed employee's wages during the period of appeal until final reversal, and the reinstated employee is not required to return the salary received, even if the employer's appeal ultimately succeeds. The Court recognized an exception: an employee may be barred from collecting accrued wages only if (1) there was actual delay in the execution of the reinstatement order pending appeal, and (2) such delay was not due to the employer's unjustified act or omission. Here, the Writ of Execution was issued prior to June 30, 2015, and the judgment award was released to respondents on April 10, 2015, as evidenced by Disbursement Vouchers. There was therefore no delay in execution. Furthermore, respondents sought only the full satisfaction of the LA's order of reinstatement, as the earlier Writ covered only wages up to November 2014. The computation of reinstatement wages should end on June 30, 2015—the date of the CA's reversal—not on the date the CA Decision became final, pursuant to Wenphil Corporation vs. Abing. The Court also took judicial notice of a separate CA case (CA-G.R. SP No. 149493) involving the Updated Writ of Execution dated June 5, 2017, where the CA found that the amounts already released to respondents exceeded the awards in the Updated Writ. Accordingly, the Court directed the LA to re-compute reinstatement wages for the full period (November 25, 2013 to June 30, 2015) to determine whether petitioners still owe additional amounts or are entitled to restitution of any excess.

• Immediately Executory Nature of Labor Arbiter's Order of Reinstatement — Under Article 229 (formerly Article 223) of the Labor Code, the reinstatement aspect of a Labor Arbiter's decision reinstating a dismissed or separated employee is immediately executory even pending appeal. The employer must either admit the employee back to work under the same terms and conditions prevailing prior to dismissal, or at the employer's option, merely reinstate the employee in the payroll. The posting of a bond does not stay execution for reinstatement. Failure of the employer to comply renders the employer liable for the employee's salaries. The Court applied this doctrine to hold that respondents' right to reinstatement automatically attached upon rendition of the LA Decision on November 25, 2013.

• Final Reversal Doctrine in Reinstatement Wages — It is obligatory on the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until "final reversal" by the higher court. "Final reversal" means a reversal that is not subsequently set aside—whether by the same tribunal on reconsideration or by a superior court on review. If the LA Decision is reversed by the NLRC on appeal, but on reconsideration the NLRC reinstates the LA Decision, the NLRC's reversal is not a "final reversal." Similarly, if the LA Decision is affirmed by the NLRC but reversed by the CA, and such reversal is not later overturned, the CA's reversal is the "final reversal"—even if it is the Supreme Court's decision that attains finality. The Court applied this doctrine to include the period from April 23, 2014 to October 31, 2014 in the computation of reinstatement wages.

• Non-Return of Reinstatement Wages Despite Employer's Ultimate Success — The reinstated employee is not required to return the salary received during the period the lower court or tribunal declared illegal dismissal, even if the employer's appeal is eventually granted. An exception exists where (1) there was actual delay in the execution of the reinstatement order pending appeal, and (2) the delay was without the employer's fault. If the delay is due to the employer's unjustified refusal, the employer may still be required to pay salaries notwithstanding reversal of the LA's decision. The Court found no delay here, as the Writ of Execution was issued and amounts released before the CA's reversal.

• Termination of Reinstatement Wages on Date of Reversal, Not Date of Finality — The computation of reinstatement wages or accrued backwages due to employees during the period of appeal should end on the date that a higher court reversed the labor arbitration ruling of illegal dismissal, not on the date that the same became final and executory. The Court applied this rule to limit the computation period to June 30, 2015 (the date of the CA Decision), not November 24, 2015 (the date of finality).

• "The use of the words 'final reversal' is all important. It prescribes that the employee's right to reinstatement, either actual or in payroll, ceases only when a higher court or tribunal reverses the LA's decision favoring the employee, and such reversal was not later on set aside by itself, on reconsideration, or by a superior court or tribunal." — This passage articulates the core ratio decidendi defining the "final reversal" concept that determines the endpoint of an employee's entitlement to reinstatement wages during appeal.

• "In short, with respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its execution pending appeal." — Quoted from Aris (Phil.) Inc. vs. NLRC, this passage explains the constitutional and policy basis for the immediately executory nature of reinstatement orders, grounding the rule in the State's duty to protect labor as a primary social and economic force.

• "The reinstated employee is not required to return the salary he received during the period the lower court or tribunal declared that he was illegally dismissed, even if the employer's appeal would eventually be ruled in its favor." — This formulation states the doctrine that reinstatement wages received during the pendency of appeal need not be returned even when the employer ultimately prevails, subject only to the narrow exception of employer-faultless delay in execution.

• "if the LA Decision declaring the employees illegally dismissed is affirmed by the NLRC, but reversed by the CA, and such reversal is later affirmed by this Court in a Rule 45 petition, the final reversal contemplated by jurisprudence is not when this Court issues a decision affirming the ruling of the CA, but when the CA reversed the LA Decision. The CA's reversal is considered a final reversal as it was not later set aside or reversed." — This passage clarifies that the "final reversal" is pegged to the first unreversed reversal by a higher court, not necessarily to the last decision in the appellate chain.

• Roquero vs. Philippine Airlines, 449 Phil. 437 (2003) — Followed. The Court cited this case for the proposition that the order of reinstatement is immediately executory and that the employer's unjustified refusal to reinstate entitles the employee to payment of salaries from the time of non-reinstatement.
• Aris (Phil.) Inc. vs. NLRC, 277 Phil. 282 (1991) — Followed. Cited for the constitutional and policy basis underlying the immediately executory nature of reinstatement orders, rooted in the State's duty to protect labor under the 1987 Constitution.
• Aboc vs. Metropolitan Bank and Trust Company, 652 Phil. 311 (2010) — Followed and central to the ruling. The Court relied on this case's formulation that it is obligatory on the employer to reinstate and pay wages during the period of appeal until "final reversal" by the higher court, and used the term "final reversal" as the analytical key to resolving the issue.
• Wenphil Corporation vs. Abing, 731 Phil. 685 (2014) — Followed. Cited for the rule that computation of reinstatement wages should end on the date of the higher court's reversal, not the date of finality of that decision.
• Garcia vs. Philippine Airlines, Inc., 596 Phil. 510 (2009) — Followed. Cited for the exception that an employee may be barred from collecting accrued wages if delay in execution was without the employer's fault.
• Bergonio, Jr. vs. South East Asian Airlines, 733 Phil. 347 (2014) — Followed. Cited for the two-test framework determining whether an employee is barred from claiming reinstatement wages: (1) actual delay in execution, and (2) delay not due to employer's unjustified act or omission.
• Pioneer Texturizing Corp. vs. National Labor Relations Commission, 345 Phil. 1057 (1997) — Followed. Cited in support of the rule that failure of the employer to comply with the reinstatement order renders the employer liable to pay the employee's salaries.

• Article 229 (formerly Article 223), Labor Code of the Philippines — Governs appeals from and execution of the Labor Arbiter's decisions. Paragraph 3 provides that 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 dismissal or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay execution for reinstatement. The Court applied this provision to hold that respondents' right to reinstatement automatically attached upon the LA's November 25, 2013 Decision and persisted until the final reversal by the CA on June 30, 2015.

Caguioa (Chairperson), Inting, and Dimaampao, JJ., concurred. Singh, J., was on official business and did not participate.