Pfizer, Inc. vs. Velasco

An order of reinstatement by a Labor Arbiter is immediately executory even pending appeal; the employer must either actually reinstate the employee under the same terms and conditions prevailing prior to dismissal or place them on payroll reinstatement. If the employer fails to comply, the employee is entitled to backwages from the date of the reinstatement order until the date of reversal by a higher court, and the employee is not required to refund these wages even if the dismissal is ultimately upheld on appeal.

The case involves the dismissal of Geraldine Velasco, a Professional Health Care Representative employed by Pfizer, Inc., due to alleged violations of company rules regarding unauthorized deals, discounts, and printing of discount coupons. The dispute arose while Velasco was on medical leave for a high-risk pregnancy, and centers on the immediate executory nature of reinstatement orders and the consequences of an employer's delay in complying with such orders during the pendency of an appeal.

• Private respondent Geraldine L. Velasco was employed by petitioner PFIZER, INC. as a Professional Health Care Representative since August 1, 1992.
• In April 2003, Velasco underwent medical work-up for a high-risk pregnancy and was advised bed rest, leading to an extended leave of absence covering sick leave (March 26 to June 18, 2003), vacation leave (June 19 to 20, 2003), and leave without pay (June 23 to July 14, 2003).
• On June 26, 2003, while Velasco was still on leave, petitioner Ferdinand Cortez (Area Sales Manager) personally served Velasco a "Show-cause Notice" dated June 25, 2003, charging her with possible violations of company work rules regarding unauthorized deals, discounts, and pull-out of stocks.
• The June 25, 2003 notice also placed Velasco under preventive suspension for 30 days (June 26 to August 6, 2003) and ordered her to surrender company accountabilities including her company car, samples, forms, cash card, Caltex card, and revolving travel fund.
• On June 27, 2003, petitioner Cortez retrieved the aforementioned accountabilities from Velasco's residence.
• Velasco sent a letter dated June 28, 2003 denying the charges and explaining that the transaction with Mercury Drug was merely to accommodate patients of Dr. Renato Manalo, attaching supporting documents.
• On July 12, 2003, Velasco received a "Second Show-cause Notice" regarding additional findings that she had transacted with a printing shop to print PFIZER discount coupons, supported by an affidavit and text messages.
• On July 16, 2003, Velasco filed a complaint for illegal suspension with money claims before the Regional Arbitration Branch of the NLRC.
• On July 17, 2003, PFIZER sent Velasco a letter inviting her to a disciplinary hearing on July 22, 2003; Velasco received this under protest, stating that the issues could be tackled during the hearing of her case.
• On July 25, 2003, Velasco received a "Third Show-cause Notice" with copies of affidavits from Mercury Drug Branch Managers.
• On July 29, 2003, PFIZER informed Velasco of its "Management Decision" terminating her employment.
• The Labor Arbiter rendered a Decision on December 5, 2003 declaring the dismissal illegal and ordering reinstatement with backwages and damages.
• PFIZER only required Velasco to report for work on July 1, 2005 via a letter dated June 27, 2005—almost two years after the reinstatement order—directing her to report to the main office in Makati City instead of her former post in Baguio City where she resided.
• The June 27, 2005 letter mentioned "appropriate relocation benefits," implying a transfer from Baguio to Makati.
• Velasco, through counsel, sent a letter dated July 18, 2005 opting to receive separation pay and avail of PFIZER's early retirement program instead of returning to work.
• PFIZER paid Velasco P1,963,855.00 under a writ of execution dated May 26, 2005, representing wages from December 5, 2003 to May 5, 2005.

• The ruling in Roquero v. Philippine Airlines, Inc. is inapplicable because there was no "unjustified refusal" on PFIZER's part to reinstate Velasco; PFIZER was ready to reinstate her as of July 1, 2005, but it was Velasco who unjustifiably refused to report for work.
• Velasco's letter opting for separation pay and early retirement amounted to a resignation, divesting her of the right to reinstatement and backwages.
• The employer has the right to choose between actual reinstatement and payroll reinstatement, and PFIZER chose the former by inviting Velasco to return to work.
• The Court should not mechanically apply Roquero but should instead follow Genuino v. National Labor Relations Commission, which requires an employee on payroll reinstatement to refund salaries received if the dismissal is later upheld on appeal.
• Payment of wages to Velasco would constitute unjust enrichment since she was eventually found to have been dismissed for just cause, allowing her to profit from her dishonesty.
• PFIZER should be allowed to deduct the amount already paid under the writ of execution from any award, or Velasco should be required to refund it.

• PFIZER failed to comply with the immediately executory nature of the reinstatement order under Article 223 of the Labor Code, waiting almost two years before inviting her to return.
• The June 27, 2005 letter did not constitute a bona fide offer of reinstatement under the same terms and conditions because it required Velasco to report to the Makati main office instead of her former position in Baguio City, causing undue hardship for a married woman with family residing in Baguio.
• PFIZER's failure to exercise its option to reinstate in good faith entitles Velasco to backwages from the date of the reinstatement order until the date of reversal.
• The Genuino doctrine requiring refund of wages has been overruled by the en banc decision in Garcia v. Philippine Airlines, Inc., which established that employees are entitled to keep wages received during the pendency of appeal regardless of the final outcome.
• Velasco's request for separation pay was merely indicative of strained relations and was not accepted by PFIZER, thus not constituting a resignation or waiver of rights.

• Procedural Issues: N/A
• Substantive Issues:
  • Whether the employer is liable for wages from the date of the Labor Arbiter's reinstatement order until the reversal of said order by the Court of Appeals, despite the dismissal being ultimately upheld as valid.
  • Whether an employee who receives wages during the pendency of a reinstatement order must refund those wages if the dismissal is later found to be for just cause.

• Procedural: N/A
• Substantive:
  • The Court affirmed the Court of Appeals' Resolution ordering PFIZER to pay Velasco's wages from December 5, 2003 (date of Labor Arbiter's decision) until November 23, 2005 (date of Court of Appeals decision reversing the reinstatement order).
  • Under Article 223 of the Labor Code, an order of reinstatement by a Labor Arbiter is immediately executory even pending appeal without the need for a writ of execution; the posting of a bond by the employer does not stay execution for reinstatement.
  • PFIZER failed to comply with the reinstatement order in good faith; its June 27, 2005 letter requiring Velasco to report to the Makati main office instead of her former post in Baguio City did not constitute reinstatement under the "same terms and conditions" prevailing prior to dismissal.
  • The option to reinstate either actually or in the payroll belongs to the employer, but it must be exercised in good faith, without grave abuse of discretion, and with consideration for justice and fair play; a transfer without justification that causes hardship to the employee cannot be deemed faithful compliance.
  • The Court rejected the "refund doctrine" articulated in Genuino v. NLRC, which required employees on payroll reinstatement to refund salaries if the dismissal was later upheld; instead, the Court followed Garcia v. Philippine Airlines, Inc., holding that employees are entitled to keep wages received during the pendency of appeal regardless of the final outcome.
  • The payment of wages during the pendency of appeal serves as a stop-gap measure to support the employee and their family, and requiring a refund would render this protective measure nugatory and lead to potential employer abuse.
  • Velasco's letter opting for separation pay did not constitute a resignation or waiver because PFIZER never accepted it, and in any case, there was no valid reinstatement offer to which she could have responded.

• Immediate Executory Nature of Reinstatement Orders — Under Article 223 of the Labor Code, an award for reinstatement by a Labor Arbiter is immediately self-executory even pending appeal without requiring a writ of execution; the posting of a bond by the employer shall not stay the execution for reinstatement. This doctrine was applied to hold that PFIZER's delay of almost two years in requiring Velasco to report back constituted a failure to comply with the reinstatement order, entitling her to backwages.
• Option of the Employer to Choose Mode of Reinstatement — The employer has the option to either actually reinstate the employee under the same terms and conditions prevailing prior to dismissal or merely reinstate the employee in the payroll. This option must be exercised in good faith and without grave abuse of discretion; a return-to-work order that requires an unjustified transfer causing hardship to the employee does not satisfy this requirement.
• Non-Refund of Wages Received Pending Appeal — Even if the order of reinstatement is reversed on appeal upon a finding that the ground for dismissal is valid, the employee is not required to refund the salaries received during the pendency of the appeal. This doctrine rejects the "refund" posture in Genuino in favor of the rule in Garcia, recognizing that the wages serve as a stop-gap measure for the employee's survival while the appeal is pending.

• "The provision of Article 223 is clear that an award [by the Labor Arbiter] 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 Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court."
• "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."
• "In sum, the option of the employer to effect actual or payroll reinstatement must be exercised in good faith."

• Roquero v. Philippine Airlines, Inc. — Applied for the principle that an unjustified refusal of the employer to reinstate a dismissed employee entitles the employee to payment of salaries from the time the employer failed to reinstate despite the issuance of a writ of execution.
• Pioneer Texturizing Corporation v. National Labor Relations Commission — Cited for the established doctrine that an award or order of reinstatement is immediately self-executory without the need for the issuance of a writ of execution in accordance with Article 223 of the Labor Code.
• Garcia v. Philippine Airlines, Inc. — Followed to reject the "refund doctrine" in Genuino; established that employees are entitled to wages pending appeal and need not refund them even if the dismissal is ultimately upheld, as this serves the social justice purpose of the Labor Code.
• Genuino v. National Labor Relations Commission — Distinguished and rejected; its ruling requiring refund of salaries by employees on payroll reinstatement if dismissal is later upheld was overruled by the en banc decision in Garcia.
• F.F. Marine Corporation v. National Labor Relations Commission — Cited for the rule that if reinstatement is no longer viable or the employee decides not to be reinstated, separation pay is awarded in lieu of reinstatement, and for the principle that an employee's demand for separation pay may indicate strained relations.

• Article 223 of the Labor Code — Provides that the decision of the Labor Arbiter reinstating a dismissed employee shall be immediately executory even pending appeal, and that the employee shall either be admitted back to work under the same terms and conditions prevailing prior to dismissal or merely reinstated in the payroll at the option of the employer; the posting of a bond shall not stay execution for reinstatement.
• Article 224 of the Labor Code — Mentioned in the context of contrasting the requirements for writ of execution with the immediate executory nature of reinstatement orders under Article 223, noting that requiring a writ of execution would render Article 223 ineffectual.