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593 Phil. 357


[ G.R. No. 172584, November 28, 2008 ]




Petitioners assail the Decision[1] of the Court of Appeals in CA-G.R. SP No. 77489 dated July 5, 2005, which affirmed the Decision[2] and Resolution[3] of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000593-2000, and its Resolution[4] dated April 11, 2006, denying reconsideration.

The undisputed facts are narrated by the Court of Appeals as follows:
The petitioners Edmundo Y. Torres and Manuel C. Castellano are former Regional Sales Manager and District Sales Supervisor, respectively, of private respondent San Miguel Corporation (SMC), Bacolod Beer Region, Sum-ag, Bacolod City.

The petitioners were among the many employees of the private respondent who retired from employment effective on April 15, 1984 pursuant to private respondent SMC's Retirement Plan.  Believing that they were constructively forced to retire from employment and that their separation from employment was illegal, on March 14, 1984, the petitioners, along with other separated employees, filed a complaint for illegal dismissal against SMC with the National Labor Relations Commission (NLRC), Regional Arbitration Branch No. VI, Bacolod City.  The case was docketed as RAB-VI Case No. 0372-84.  It was assigned to then Labor Arbiter Oscar S. Uy for the proper disposition thereof.  Proceedings were conducted by the said labor arbiter.

After the petitioners and private respondent SMC had presented their evidence and position papers, the case was considered as submitted for decision.

On September 16, 1988, Labor Arbiter Oscar S. Uy rendered a Decision in RAB-VI Case No. 0372-84 dismissing all the claims of the petitioners against the respondent SMC, ratiocinating as follows:

x x x
WHEREFORE, premises considered, judgment is hereby rendered DISMISSING all the claims of the complainants' against the respondent for lack of merit.

On October 21, 1988, petitioners (complainants in RAB-VI-Case No. 0372-84) appealed from the aforesaid Decision to public respondent NLRC, Fourth Division in Cebu City which, on August 21, 1992, handed down a Decision reversing in part that of the Labor Arbiter, disposing as follows:
WHEREFORE, in view of the foregoing, the appealed Decision is hereby SET ASIDE, and another one entered declaring the complainants Gabriel Z. Abad, George A. Teddy, Jr. and Manuel J. Chua to have been validly retired. Respondent San Miguel Corporation is hereby ordered to immediately reinstate complainants Manuel C. Castellano and Edmundo Y. Torres, Jr. to their former or equivalent positions without loss of seniority rights and to pay complainants Manuel C. Castellano the amount of P73,905.84 and Edmundo Y. Torres, Jr. the amount P108,915.00 representing their back salaries for three (3) years after deducting the sum of P47,954.16 and P75,255.00 they received as retirement pay.

Not satisfied with the above-quoted Decision of the NLRC, private respondent SMC filed a Motion for Reconsideration, but the same was denied by the NLRC in its Resolution dated October 19, 1992.  Consequently, it appealed from the same through a petition for certiorari to the Supreme Court which, on July 23, 1998, rendered a Decision affirming in toto that of the NLRC.  The dispositive portion of the Supreme Court Decision reads as follows:
WHEREFORE, for lack of merit, the petition is hereby DISMISSED and the assailed Decision of the NLRC dated August 21, 1992 is affirmed in its entirety.  No pronouncement as to cost.

Subsequently, the aforesaid Decision of the Supreme Court became final and executory on March 22, 1999, as evidenced by the Entry of Judgment issued by it.  So, on August 11, 1999, the petitioners filed a Motion for Execution of the Decision in their favor at the Regional Arbitration Branch VI, Bacolod City.

As a consequence, private respondent SMC partially complied with the Decision by paying the monetary awards in favor of the petitioners Torres and Castellano in the amounts of P108,915.00 and P73,905.84, respectively, representing their back salaries for three (3) years after deducting the sums of P75,255.00 and P47,954.16 that they received, respectively, from SMC as Retirement Pay.

Then, the petitioners, in an effort to cause the amendment of the 1992 NLRC Decision, filed a Motion for Computation and Satisfaction of Back Salaries, praying for the issuance of an Order directing the private respondent SMC to pay them the sums of P9,218,205.00 and P5,268,455.50 respectively, representing purportedly their back salaries and other benefits from September 9, 1992 up to November 1999 with the corresponding prayer for the issuance of a Writ of Execution for the satisfaction thereof,  invoking the Supreme Court ruling in  Pioner Texturizing Corporation v. NLRC, G.R. No. 118651, October 16, 1997, granting full back wages to illegally dismissed employees.

On November 23, 1999, the private respondent SMC filed its Opposition to petitioners' Motion for Computation and Satisfaction of Back Salaries by arguing, among others, that the petitioners' claim has no legal basis considering that, in the final and executory Decision of public respondent NLRC, dated August 21, 1992, which was already affirmed by the Supreme Court, petitioner Castellano was merely awarded the amount of P73,905.84, while petitioner Torres, Jr. was awarded the mount of P108,915.00, representing their back salaries for three (3) years after deducting the sums of P47,954.16 and P75,255.00 respectively, that they received as retirement pay from SMC.

Surprisingly, on December 27, 1999, the Executive Labor Arbiter Oscar S. Uy, thinking that he had the corresponding authority, issued an Order granting the petitioners' Motion for Computation of Back Salaries, the dispositive portion of which reads:
PREMISES CONSIDERED, respondent San Miguel Corporation thru its authorized agent/s and/or personnel is hereby ordered to pay complainants EDMUNDO Y. TORRES, JR. and MANUEL CASTELLANO the sum of P9,218,205.00 and P5,268,455.00 respectively within ten (10) days from receipt of this Order.

Aggrieved, private respondent SMC appealed from the aforesaid Order of the Executive Labor Arbiter to the public respondent NLRC, Fourth Division in Cebu City.

But again, on February 2, 2000, the petitioners filed another Motion to direct the private respondent SMC to comply strictly with the 1992 NLRC Decision relative to their reinstatement with the Executive Labor Arbiter granted in his Order dated March 15, 2000.  The dispositive portion of the said Order reads as follows:
PREMISES CONSIDERED, the respondent corporation is hereby ordered to pay Edmundo Y. Torres, Jr. and Manuel C. Castellano effective January 2000 their monthly basic salary of P60,000.00 and P45,000.00 respectively, within ten (10) days after receipt hereof.

Private respondent SMC again timely appealed from the aforecited Order to the public respondent NLRC.

On May 18, 2000, the petitioners filed with the Executive Labor Arbiter Oscar S. Uy a Motion for Execution to enforce or satisfy the latter's Order dated March 15, 2000 which the latter granted in his Order dated June 16, 2000, pursuant to which a Writ of Execution was issued at even date.

On September 12, 2001, public respondent NLRC promulgated a Decision in two appealed cases filed with it by the private respondent SMC relative to the 1999 and March 15, 2000.  The dispositive portion of the said Decision reads as follows:
WHEREFORE, the questioned Orders are SET ASIDE and a new one entered declaring that complainants are NOT entitled to backwages.

Aggrieved thereby, on October 29, 2001, the petitioners filed a Motion for Reconsideration of the said Decision.  On March 20, 2003, public respondent NLRC promulgated a Resolution denying the petitioners' Motion for Reconsideration.

Not satisfied with the foregoing Decision and Resolution promulgated by the respondent NLRC, the petitioners are assailing them for having been purportedly promulgated by the said respondent with grave abuse of discretion.[5]
The Court of Appeals upheld the decision and resolution of the NLRC. According to the appellate court, although the NLRC ordered the immediate reinstatement of petitioners in its August 21, 1992 decision, the order was not self-executory because the rule decreeing an order for reinstatement immediately executory was only enunciated by the Court in its decision in Pioneer Texturizing Corp. v. NLRC[6] dated October 16, 1997. Petitioners should have moved for the issuance of a writ of execution of the NLRC decision. However, petitioners only moved for the execution of the NLRC decision on August 11, 1999.

The appellate court further ruled that San Miguel Corporation's (SMC's) retirement plan, under which it has the prerogative to retire its employees after 20 years of service or upon reaching the age of 60, binds petitioners. Accordingly, petitioners may no longer be reinstated having already reached retirement age.

The appellate court denied reconsideration.

Unsurprisingly, petitioners filed the instant Petition for Review on Certiorari[7] dated June 1, 2006, arguing that the Pioneer case has a curative effect such that upon SMC's receipt of the August 21, 1992 NLRC decision on September 9, 1992, it should have informed petitioners whether it would re-admit them to work under the same terms and conditions prevailing prior to their dismissal or reinstate them in its payroll.  SMC's failure to so inform them allegedly entitled them to back salaries from September 9, 1992 until they are effectively reinstated to their previous employment without loss of seniority rights.  Petitioners thus came up with the amounts of P9,218,205.00 and P5,268,455.00 representing their back salaries from September 9, 1992 up to November 8, 1999 when they were reinstated in SMC's payroll.

Petitioners further aver that they have not been actually or effectively retired by SMC and are still entitled to reinstatement pursuant to the August 21, 1992 NLRC decision.

SMC, in its Comment[8] dated September 1, 2006, argues that petitioners are effectually seeking the amendment of the Court's final Decision in San Miguel Corporation v. NLRC[9] which effectively limited their backwages to three (3) years pursuant to the then prevailing law and jurisprudence.  It insists that Republic Act No. 6715 (R.A. No. 6715), which declared the reinstatement of illegally dismissed employees to be immediately executory, has no retroactive effect and cannot benefit petitioners who were dismissed on March 14, 1984, three years before R.A. No. 6715 took effect on March 21, 1989.

The company also asserts that its retirement plan was acknowledged by this Court as a valid management prerogative. Petitioners allegedly misled the Court by their assertion that the retirement plan does not apply to them as supervisory and sales employees.  What the Court clarified as applicable only to rank and file employees was the reduction of the length of service from 20 years to 15 years.

Petitioners' Reply[10] dated September 8, 2006 is a reiteration of their arguments.

Art. 223 of the Labor Code, as amended by R.A. No. 6715, provides:
Art. 223. Appeal.—Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds:


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.

In its assailed decision, the Court of Appeals ruled that at the time petitioners were dismissed in 1984, R.A. No. 6715 had not yet been enacted. Further, the Court's ruling in Maranaw Hotel Resort Corp. v. NLRC,[11] holding that in the absence of an order for the issuance of a writ of execution on the reinstatement aspect, the employer is under no legal obligation to admit its illegally dismissed employee back to work, was declared by the appellate court as still controlling.

The review of jurisprudence outlined in the Pioneer case easily bears out the appellate court's decision.  In Inciong v. NLRC,[12] the Court declared that in the absence of a provision giving it retroactive effect, the amendment introduced in the aforequoted provision cannot be applied to the decision of the labor arbiter rendered three (3) months before R.A. No. 6715 had become a law. It was under this jurisprudential setting that the August 21, 1992 decision of the NLRC ordering the reinstatement of petitioners was promulgated.

In the line of cases[13] following Inciong, the Court consistently held that immediate reinstatement is mandated and is not stayed by the fact that the employer has appealed or posted a cash or surety bond pending appeal. However, in the Maranaw case, the Court declared that although the reinstatement aspect of the (labor arbiter's) decision is immediately executory, it does not follow that it is self-executory. There must be a writ of execution which may be issued motu proprio or on motion of an interested party.

The Court made a complete turn-around in the Pioneer case and declared that henceforth, an award or order of reinstatement shall be considered self-executory, such that, after receipt of the decision or resolution ordering the employee's reinstatement, the employer has the right to choose whether to re-admit the employee to work under the same terms and conditions prevailing prior to his dismissal or to reinstate the employee in the payroll.

It is clear from the foregoing that at the time the August 21, 1992 NLRC decision was promulgated, the rule commonly adhered to was for a writ of execution to be issued, either motu proprio or on motion of an interested party, before the employer may be compelled to admit the employee back to work or to reinstate him in the payroll, on pain of being liable for the employee's salaries.  However, at the time the Court's Decision in San Miguel Corporation v. NLRC was promulgated on July 23, 1998, the Pioneer case was already the prevailing rule on the matter and should have been read into the case.   Thus, upon its receipt of our July 23, 1998 Decision affirming the NLRC decision, SMC should have immediately opted either to re-admit petitioners or merely reinstate them in the payroll.

Be that as it may, the retirement age of 60 years already attained by petitioners as early as 1989 for Edmundo Torres, Jr. and 1990 for Manuel Castellano had set in motion the provisions of SMC's Retirement Plan which, we acknowledge, is a valid management prerogative.  Ultimately, therefore, the Court of Appeals was correct in ruling that the reinstatement of petitioners is no longer feasible.  SMC should accordingly take formal steps, in accordance with its Retirement Plan, to effect petitioners' retirement.

Even so, petitioners should not be compelled to return the salaries and benefits already received by them on account of the order for reinstatement adjudged by the NLRC and affirmed by the Court. In Air Philippines Corporation v. Zamora,[14] we held that if an employee was reinstated during the appeal period but such reinstatement was reversed with finality, the employee is not required to reimburse whatever salary he received from the employer.  Justice and equity require that we apply the same doctrine to this case.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 77489 dated July 5, 2005 and its Resolution dated April 11, 2006 are AFFIRMED with the MODIFICATION that petitioners are not required to refund the amounts received by them from respondent San Miguel Corporation on account of the reinstatement order of the National Labor Relations Commission as affirmed by the Court in its Decision dated July 23, 1998.  No pronouncement as to costs.


Quisumbing, (Chairperson), Carpio-Morales, and Brion, JJ., concur.
Velasco, Jr., J., concur in the result.

[1] Rollo, pp. 41-52; Penned by Associate Justice Isaias P. Dicdican and concurred in by Associate Justices Sesinando E. Villon and Enrico A. Lanzanas.

[2] Dated September 12, 2001.

[3] Dated March 20, 2003.

[4] Rollo, pp. 53-54.

[5] Id. at 42-46.

[6] G.R. No. 118651, October 16, 1997, 280 SCRA 806.

[7] Rollo, pp. 11-40.

[8] Id. at 201-217.

[9] G.R. No. 107693, July 23, 1998, 292 SCRA 13.

[10] Id. at 219-221.

[11] G.R. No. 110027, November 16, 1994, 238 SCRA 190.

[12] G.R.. No.  88943, May 21, 1990, 185 SCRA 651, 655.

[13] Callanta v. NLRC, G.R. No. 105083, August 20, 1993, 225 SCRA 526; Zamboanga City Water District v. Buat, G.R. No. 104389, May 27, 1994, 232 SCRA 587; Medina v. Consolidated Broadcasting System-DZWX, G.R. Nos. 99054-56, May 28, 1993, 222 SCRA 707 all cited in Pioneer Texturing Corp. v. NLRC, G.R. No.  118651, October 16, 1997, 280 SCRA 806.

[14] G.R. No. 148247, August 7, 2006, 498 SCRA 59, citing Roquero v. Philippine Airlines, 449 Phil. 437.

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