When Can You Claim Accrued Wages During Reinstatement Pending Appeal in the Philippines?

JOSE LENI Z. SOLIDUM, PETITIONER, VS. SMART COMMUNICATIONS, INC., NAPOLEON L. NAZARENO AND RICARDO P. ISLA, RESPONDENTS. G.R. No. 206985, February 28, 2024

Imagine being wrongfully terminated from your job, only to be ordered reinstated by a labor arbiter. What happens if your employer appeals, delaying your return? Are you entitled to compensation during this appeal process, even if the higher court eventually rules against you? This scenario highlights the complexities of reinstatement pending appeal in Philippine labor law. A recent Supreme Court decision sheds light on these crucial employee rights and employer responsibilities.

The Immediately Executory Nature of Reinstatement Orders

In the Philippines, a labor arbiter’s decision ordering the reinstatement of a dismissed employee is immediately executory, even pending appeal. This means the employer must either:

• Actually reinstate the employee to their former position under the same terms and conditions, or
• Reinstate the employee on payroll, even if they don’t physically return to work.

This principle is enshrined in Article 229 of the Labor Code:

“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.”

The purpose of this immediate execution is to protect employees from prolonged unemployment and financial hardship while their case is being appealed. It ensures that employees receive wages and benefits during this period, regardless of the appeal’s outcome. For example, imagine a call center agent who wins a case for illegal dismissal. The company must reinstate her immediately, even if they plan to appeal the decision. She will continue to receive her salary while the appeal is pending.

The Case of Solidum vs. Smart Communications

Jose Leni Solidum filed a complaint against Smart Communications for illegal dismissal. The Labor Arbiter ruled in Solidum’s favor, ordering his reinstatement with backwages and benefits. Smart appealed the decision. During the appeal process, the Labor Arbiter issued several Alias Writs of Execution to collect Solidum’s accrued reinstatement wages and benefits.

The case unfolded as follows:

• 2006: Labor Arbiter rules in favor of Solidum, ordering reinstatement.
• 2007-2009: Several Alias Writs of Execution are issued to collect accrued wages, but Smart files motions to quash them.
• 2009: The NLRC reverses the Labor Arbiter’s decision, dismissing Solidum’s complaint.
• 2010-2012: Further legal battles ensue regarding the computation and payment of Solidum’s accrued wages, leading to the issuance of more Alias Writs.

The key issue before the Supreme Court was whether Solidum should refund the wages and benefits he received through the 10th Alias Writ, which covered a period before the NLRC reversed the Labor Arbiter’s decision. The Court emphasized the employer’s obligation to comply with the reinstatement order pending appeal. It cited the certification from the NLRC, showing that Smart never submitted a report of compliance regarding Solidum’s reinstatement. This failure indicated a clear refusal to reinstate him, either actually or on payroll.

“The records of the instant case reveal Smart’s blatant defiance to comply with the July 3, 2006 Decision of the arbiter mandating Solidum’s actual reinstatement. Despite seven alias writs, Smart failed to reinstate Solidum to his former position, neglected to place him on the payroll, or pay his salaries and benefits.”

“[D]elay’ in the context of the Two-Fold Test, refers to an unjustifiable and unreasonable period of time between the issuance of the labor arbiter’s reinstatement order and the actual or payroll reinstatement of the employee by the employer before the order is reversed. This delay must be directly attributable to the employer’s refusal to comply with the order, excluding any extenuating circumstances or delays caused by the employee.”

Practical Implications for Employers and Employees

This ruling reinforces the immediately executory nature of reinstatement orders and clarifies the employer’s responsibility to comply promptly. If an employer fails to reinstate an employee, either actually or on payroll, they are liable for accrued wages and benefits until the decision is reversed. The employee is generally not required to refund these wages, even if the appeal is successful.

Key Lessons:

• Employers must comply with reinstatement orders immediately, even pending appeal.
• Employers should submit a report of compliance to the NLRC within 10 calendar days of receiving the reinstatement order.
• Employees are generally entitled to wages and benefits during reinstatement pending appeal, even if the decision is later reversed.

For example, consider a construction worker who is illegally dismissed. The Labor Arbiter orders his reinstatement, but the construction company delays his return, citing ongoing appeals. Based on the Solidum case, the company remains liable for the worker’s wages and benefits until the NLRC or higher court reverses the initial decision, provided the delay is not due to the employee’s actions.

Frequently Asked Questions (FAQs)

Q: What does “reinstatement pending appeal” mean?

A: It means that a dismissed employee, who has won a case at the Labor Arbiter level, must be reinstated to their job (or put on payroll) while the employer’s appeal is being decided.

Q: What if the employer appeals and wins? Does the employee have to return the wages?

A: Generally, no. The employee is not required to return the wages received during the period of reinstatement pending appeal.

Q: What if the employer doesn’t want to reinstate the employee physically?

A: The employer can choose to reinstate the employee on payroll instead of having them physically return to work.

Q: What happens if the employer delays the reinstatement?

A: The employer will be liable for the accrued wages and benefits of the employee for the period of the delay, until the Labor Arbiter’s decision is reversed.

Q: What should an employee do if their employer refuses to comply with a reinstatement order?

A: The employee should immediately seek legal assistance to enforce the reinstatement order and collect accrued wages and benefits.

Q: What is the Two-Fold Test mentioned in the case?

A: The Two-Fold Test determines if an employee is barred from collecting accrued wages. It considers (1) actual delay in executing the reinstatement order and (2) whether the delay was due to the employer’s unjustified act or omission.

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