Manila Doctors College and Turla vs. Olores

The reinstatement aspect of a Labor Arbiter's decision is immediately executory and self-executory even pending appeal, and an employer who fails to reinstate the employee — actually or in the payroll — is liable for the employee's accrued wages during the period of appeal until reversal, notwithstanding that the dismissal is eventually upheld on appeal.

Respondent Emmanuel M. Olores was a faculty member of petitioner Manila Doctors College (MDC), assigned at the Humanities Department of the College of Arts and Sciences. Petitioner Teresita O. Turla was the President of MDC. The Manual of Regulations for Private Higher Education (MORPHE) provides that a full academic teaching personnel who has satisfactorily completed probationary employment for six consecutive semesters, or nine consecutive trimesters, shall acquire regular or permanent status if re-hired immediately after the end of probation. The dispute arose from respondent's dismissal for employing a grading system that deviated from MDC's prescribed guidelines, and the subsequent question of whether petitioners were liable for accrued wages during the period when the Labor Arbiter's reinstatement order was in effect but was not complied with.

Respondent Emmanuel M. Olores was a faculty member of Manila Doctors College (MDC), assigned to the Humanities Department of the College of Arts and Sciences. On June 7, 2010, he was dismissed for Grave Misconduct, Gross Inefficiency, and Incompetence after a due investigation found him guilty of employing a grading system that was not in accordance with the guidelines set by MDC. He had been employed since June 2005, though he became a full-time faculty member with at least 18 units of teaching load only during the second semester of School Year 2008-2009.

Respondent filed a complaint for illegal dismissal, money claims, regularization, damages, and attorney's fees against MDC and its president, Teresita O. Turla, before the NLRC. He claimed there was no just cause for his dismissal and that he should be accorded a permanent appointment after having served as a full-time instructor for five consecutive years. Labor Arbiter Arthur L. Amansec declared respondent to have been illegally dismissed, finding that his liberal implementation of the grading guidelines did not constitute serious misconduct because it was not inspired by malice, bad faith, personal gain, or outright malevolence, and that his five-year continuous service without any derogatory record belied the charge of inefficiency and incompetence. However, the LA denied the regularization claim, holding that respondent fell short of the three consecutive years of full-time service required under MORPHE. The LA ordered petitioners to reinstate respondent without loss of seniority rights but without backwages, and gave respondent the option to receive separation pay of ₱100,000 in lieu of reinstatement.

Petitioners appealed to the NLRC, which initially dismissed the appeal for non-perfection but reinstated it upon reconsideration. The NLRC reversed the LA, finding respondent guilty of serious misconduct for defying the prescribed grading system and arbitrarily adjusting student grades, and dismissed the complaint. The NLRC separately ordered payment of service incentive leave pay for three years. While the case was pending appeal, respondent filed a Motion for Issuance of Writ of Execution seeking to collect the service incentive leave pay and the accrued wages from the date of the LA's reinstatement order until the finality of the NLRC's reversal. Labor Arbiter Romelita N. Rioflorido granted the motion and ordered the issuance of a writ of execution for ₱213,076.92, comprising reinstatement backwages of ₱201,538.46 and service incentive leave pay of ₱11,538.46. The NLRC subsequently deleted the reinstatement backwages award, reasoning that since respondent's dismissal was ultimately found legal, there was no basis for backwages or separation pay. The Court of Appeals reversed the NLRC, holding that the LA's reinstatement order was immediately executory and that the employer was obliged to pay the employee's wages during the appeal period until reversal by a higher tribunal.

• Option of Separation Pay Relieved Employer of Duty to Reinstate: Petitioners contended that they should not be faulted for failing to enforce the LA's December 8, 2010 Decision because that decision gave respondent the option to receive separation pay in lieu of reinstatement, and it was respondent who failed to choose either relief.
• Respondent's Own Conduct Barred Recovery: Petitioners submitted that respondent had claimed separation pay during the execution proceedings at the NLRC level and had alleged strained relations in his pleadings, intimating that he himself preferred separation pay over reinstatement.
• Impracticability of Mid-Semester Reinstatement: Petitioners argued that the presence of respondent during the assignment of teaching loads and schedules was necessary, and that the peculiarity of educational institutions — where faculty engagement and teaching load assignment occur at the commencement of each semester — made immediate reinstatement impracticable.

• Immediately Executory Reinstatement: Whether the CA correctly reversed the NLRC ruling deleting the award of reinstatement backwages in favor of respondent in the amount of ₱201,538.46, given that the LA's reinstatement order was immediately executory and the employer failed to comply with it during the pendency of the appeal.

• Immediately Executory Reinstatement: Yes. The CA correctly reversed the NLRC, the employer having failed to discharge its statutory duty to reinstate the employee — actually or in the payroll — during the appeal period, rendering it liable for accrued wages until the LA's decision was reversed, notwithstanding the eventual finding of legal dismissal.

• Immediately Executory Reinstatement: Under Article 223 (now Article 229) of the Labor Code, the reinstatement aspect of a Labor Arbiter's decision is immediately executory even pending appeal. The employer is duty-bound to reinstate the employee, either by admitting him back to work under the same terms and conditions prevailing prior to dismissal or by merely reinstating him in the payroll. If the LA's decision is reversed by a higher tribunal, the employer's duty to reinstate is terminated, and the employee is not required to return wages received prior to reversal. However, an employer who fails to reinstate despite the LA's order may still be held liable for accrued wages up to the time of reversal. By way of exception, an employee may be barred from collecting accrued wages if the delay in enforcing reinstatement was without fault on the part of the employer. Petitioners argued that the LA's decision gave respondent the option of separation pay in lieu of reinstatement and that respondent failed to exercise that option, thereby relieving them of the duty to reinstate. The Court rejected this contention, holding that the reinstatement aspect is immediately executory and self-executory — the active duty to reinstate devolves upon the employer from the time the LA renders its decision, and the employer need not wait for the employee to choose between reinstatement and separation pay. The LA's decision primarily directed MDC to reinstate respondent, with the separation pay option stated only secondarily. To adopt petitioners' theory would frustrate the immediate and self-executory nature of the reinstatement order. The Court acknowledged the peculiarity of educational institutions where faculty engagement occurs at the start of each semester, citing University of Santo Tomas vs. NLRC, but held that even if actual mid-semester reinstatement was impracticable, petitioners should have assigned respondent his teaching load at the beginning of the succeeding semester or, at the very least, reinstated him in the payroll. Petitioners did neither, and there was no proof they required respondent to report for assignment. Their "apparent apathy" toward the reinstatement order, as the CA observed, demonstrated non-compliance. The NLRC's deletion of the backwages award on the ground that the dismissal was ultimately found legal failed to account for the immediately executory nature of reinstatement and the consequences of non-compliance, constituting grave abuse of discretion.

• Immediately Executory Nature of Reinstatement Orders — The reinstatement aspect of a Labor Arbiter's decision 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 option of the employer, merely reinstate him in the payroll. The posting of a bond by the employer does not stay execution for reinstatement. In this case, the Court applied this doctrine to hold petitioners liable for accrued wages because they failed to reinstate respondent during the appeal period despite the LA's order.

• Self-Executing Nature of Reinstatement Orders — An order of reinstatement issued by the Labor Arbiter is self-executory; the dismissed employee need not apply for and the LA need not issue a writ of execution to trigger the employer's duty to reinstate. The Court relied on this principle to reject petitioners' argument that respondent's failure to choose between reinstatement and separation pay excused their non-compliance.

• Employer's Liability for Accrued Wages Despite Reversal on Appeal — 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. The employee is not required to return the wages received prior to reversal. The Court applied this rule to affirm the award of ₱201,538.46 in accrued wages.

• Exception: No-Fault Delay in Reinstatement — An employee may be barred from collecting accrued wages if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer. The Court found this exception inapplicable because petitioners' own inaction — their failure to reinstate actually or in the payroll — caused the delay.

• Peculiarity of Educational Institutions — In educational institutions where faculty engagement and teaching load assignment occur at the commencement of each semester, actual reinstatement mid-semester may be impracticable and detrimental to students. Following University of Santo Tomas vs. NLRC, actual reinstatement may be deferred to the start of the succeeding semester, but the employer must nonetheless assign teaching loads at that point or reinstate the employee in the payroll, and is liable for full wages during the interim.

• "the employer is duty-bound to reinstate the employee, failing which, the employer is liable instead to pay the dismissed employee's salary." — This passage states the core ratio decidendi: the employer's affirmative obligation to reinstate upon the LA's order and the consequence of non-compliance.

• "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 is the canonical formulation of the rule that accrued wages remain recoverable despite eventual reversal, a principle frequently cited in subsequent labor jurisprudence.

• "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." — This passage, drawn from Bergonio, Jr. vs. South East Asian Airlines, defines the self-executory character of reinstatement orders and was relied upon to defeat petitioners' argument that respondent's inaction excused their non-compliance.

• "there is 'grave abuse of discretion x x x when a lower court or tribunal patently violates x x x the law or existing jurisprudence.'" — This defines the standard for grave abuse of discretion applied to the NLRC's deletion of the backwages award, which patently violated the Labor Code and existing jurisprudence on the immediately executory nature of reinstatement.

• Pfizer, Inc. vs. Velasco, 660 Phil. 434 (2011) — Followed. The Court relied on this case for the propositions that the employer should immediately admit the employee back to work upon the LA's reinstatement order, that the employer's duty to reinstate is self-executory, and that the employee's election of separation pay in lieu of reinstatement has no legal effect where the employer failed to genuinely comply with the reinstatement order and chose not to act on the claim.

• Bergonio, Jr. vs. South East Asian Airlines, 733 Phil. 347 (2014) — Followed. Cited for the doctrine that an LA's reinstatement order is self-executory — the employee need not apply for and the LA need not issue a writ of execution to trigger the employer's duty to reinstate — and for the exception that an employee may be barred from collecting accrued wages if the delay in enforcing reinstatement was without fault on the part of the employer.

• University of Santo Tomas vs. NLRC, 268 Phil. 826 (1990) — Applied. The Court relied on this case to address the peculiarity of educational institutions, holding that while actual mid-semester reinstatement may be deferred to the start of the succeeding semester to avoid prejudice to students, the employer remains liable for full wages during the interim and must assign teaching loads or reinstate in the payroll at the next available opportunity.

• Wenphil Corporation vs. Abing, G.R. No. 207983, April 7, 2014, 721 SCRA 126 — Cited for the text of Article 223 (now Article 229) of the Labor Code on the immediately executory nature of the reinstatement aspect of a Labor Arbiter's decision.

• Tagolino vs. House of Representatives Electoral Tribunal, 706 Phil. 534 (2013) — Cited for the definition of grave abuse of discretion, which the Court applied to the NLRC's deletion of the backwages award.

• Article 223 (now Article 229), Labor Code of the Philippines — 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 petitioners liable for accrued wages for their failure to reinstate respondent during the appeal period.

• Manual of Regulations for Private Higher Education (MORPHE) — Provides that a full academic teaching personnel who has satisfactorily completed probationary employment for six consecutive semesters, or nine consecutive trimesters, shall acquire regular or permanent status if re-hired immediately after the end of probation. The LA applied this provision to deny respondent's regularization claim, finding that he fell short of the required three consecutive years of full-time service.

Leonardo-De Castro (Acting Chairperson, per Special Order No. 2383 dated September 27, 2016), Bersamin, and Caguioa, JJ., concurred. Sereno, C.J., was on official business.