EDMUNDO Y. TORRES, JR. AND MANUEL C. CASTELLANO, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, FOURTH DIVISION, AND SAN MIGUEL CORPORATION, RESPONDENTS.

Torres versus San Miguel Corporation

The Case

This is a petition for review on certiorari brought by Edmundo Torres, Junior and Manuel Castellano against the National Labor Relations Commission, Fourth Division, and San Miguel Corporation. The petitioners were former sales executives of San Miguel who had won a final judgment of reinstatement and three years of back salaries, and who now sought to collect far larger sums by extending their back salaries from the date of that judgment until their actual return to the payroll. The case matters because it fixes the rules on the self-executory character of a reinstatement order, the non-retroactivity of the immediate-execution amendment to the Labor Code, and the effect of a valid retirement plan on a judgment of reinstatement.

Procedural History

The petitioners, together with other separated employees, filed a complaint for illegal dismissal before the Regional Arbitration Branch in Bacolod City. The Labor Arbiter dismissed all claims for lack of merit. On appeal, the National Labor Relations Commission reversed in part, declaring three other complainants validly retired and ordering the reinstatement of Torres and Castellano without loss of seniority rights, with back salaries of three years each after deducting the retirement pay they had received. San Miguel's motion for reconsideration was denied, and its petition for certiorari to the Supreme Court was dismissed, the Commission's decision being affirmed in its entirety. That judgment became final and executory in March 1999.

When the petitioners moved for execution, San Miguel paid the monetary awards. The petitioners then moved for a recomputation of back salaries covering the period from September 1992 to November 1999, and the Executive Labor Arbiter granted the motion in an order directing payment of millions. He later issued another order directing payment of current monthly salaries, and a writ of execution followed. On appeal, the National Labor Relations Commission set aside both orders and declared that the complainants were not entitled to backwages. Reconsideration was denied. The Court of Appeals affirmed, and the petitioners came to the Supreme Court by petition for review on certiorari.

Facts

Torres was Regional Sales Manager and Castellano was District Sales Supervisor of San Miguel Corporation in the Bacolod Beer Region. Both retired from employment effective April 15, 1984 under the company's Retirement Plan. Believing they had been constructively forced to retire, they filed a complaint for illegal dismissal in March 1984.

The Labor Arbiter dismissed the complaint in September 1988. On appeal, the National Labor Relations Commission in August 1992 set aside that decision, declared three other complainants validly retired, and ordered the reinstatement of Torres and Castellano without loss of seniority rights, with back salaries of three years each after deducting the retirement pay they had received. The Supreme Court affirmed that decision in July 1998, and it became final in March 1999.

San Miguel paid the three-year back salaries. The petitioners then sought a recomputation covering the years from 1992 to 1999, invoking the Pioneer Texturizing ruling on full back wages, and the Executive Labor Arbiter granted them millions. He also ordered payment of their current monthly salaries beginning January 2000, and a writ of execution issued. The National Labor Relations Commission set aside these orders and declared them not entitled to backwages. By then, Torres had reached the retirement age of 60 in 1989 and Castellano in 1990.

Issues

• Whether or not the petitioners are entitled to back salaries from September 1992 until their actual reinstatement, on the theory that the reinstatement order was self-executory under the Pioneer Texturizing ruling.
• Whether or not the petitioners may still be reinstated, given that they had already reached the retirement age fixed in San Miguel's Retirement Plan.
• Whether or not the petitioners must refund the salaries and benefits they received on account of the reinstatement order.

Applicable Provisions

Article 223 of the Labor Code, as amended by Republic Act Number 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....

This provision supplies the rule on immediate execution of reinstatement, and the Court holds that it cannot be applied retroactively to a dismissal that occurred before the amendment took effect.

Ruling

On the first issue, the Court held that the petitioners were not entitled to the extended back salaries. At the time the Commission promulgated its 1992 decision, the prevailing rule, laid down in the Inciong case, was that the immediate-execution amendment could not be applied to a decision rendered before Republic Act Number 6715 became law, absent a provision giving it retroactive effect. Under the Maranaw Hotel ruling then in force, a reinstatement order was not self-executory; a writ of execution had to issue, either on the arbiter's own motion or on motion of an interested party, before the employer could be compelled to admit the employee or reinstate him in the payroll. The Court nevertheless observed that when its own 1998 decision affirming the Commission became final, the Pioneer Texturizing rule already prevailed, so San Miguel should then have opted either to re-admit the petitioners or to reinstate them in the payroll.

On the second issue, the Court held that reinstatement was no longer feasible. The retirement age of 60, attained by Torres in 1989 and Castellano in 1990, had set in motion the provisions of San Miguel's Retirement Plan, which the Court acknowledged as a valid management prerogative. San Miguel was directed to take formal steps under that plan to effect their retirement.

On the third issue, the Court held that the petitioners need not return the salaries and benefits already received. Citing the Air Philippines Corporation ruling, the Court ruled that where an employee is reinstated during the appeal period and the reinstatement is later reversed with finality, the employee is not required to reimburse whatever salary he received. Justice and equity required the same treatment here.

Doctrine

A reinstatement order is not self-executory under the law as it stood before Republic Act Number 6715; a writ of execution must issue, either on the labor arbiter's own motion or on motion of an interested party, before the employer may be compelled to admit the employee back to work or reinstate him in the payroll. The immediate-execution amendment introduced by Republic Act Number 6715 does not operate retroactively against a dismissal that preceded its effectivity. A valid retirement plan is a management prerogative, and an employee who has reached the retirement age under it may no longer be reinstated. Finally, an employee reinstated during the appeal period whose reinstatement is later reversed with finality is not obliged to refund the salaries he received, for justice and equity so require.

Disposition

The petition was denied, and the Court of Appeals decision and resolution were affirmed with the modification that the petitioners need not refund the amounts they received from San Miguel on account of the reinstatement order.

Remember This

Memorize this line: a reinstatement order is not self-executory under the old law, and the immediate-execution amendment cannot reach a dismissal that came before it. Examiners use this case to test non-retroactivity of labor amendments, the effect of a valid retirement plan on reinstatement, and the no-refund rule for salaries received during a reinstatement later reversed.