G.R. No. 167563 - College of the Immaculate Conception vs. National Labor Relations Commission

Case Summary (G.R. No. 167563)

Factual Background

The respondent, Atty. Marius F. Carlos, Ph.D., was appointed Acting Dean on June 1, 1995 and thereafter appointed Dean of the Department of Business, Economics and Accountancy effective June 1, 1996 for a fixed term ending May 31, 2000. Upon expiration of that term petitioner informed respondent by letter dated May 15, 2000 that he would be appointed as full-time professor of Law and Accounting without diminution of his teaching salary. On June 1, 2000 respondent was assigned eight teaching loads as a full-time professor. He then sought overload pay on the ground that the regular full-time load was six.

Administrative Correspondence and Sanctions

Petitioner denied the overload claim in a July 3, 2000 letter and instructed respondent to vacate the Dean’s office while also directing him to explain his practice of law and teaching at another university without prior written permission. Respondent admitted teaching at Araullo University and explained the legal case he handled was referred by petitioner’s Vice-President for Academic Affairs. In a July 17, 2000 letter petitioner offered respondent two options: remain a full-time professor but refrain from teaching outside without prior written approval, or become a part-time professor with an initial fifteen-unit load and lose tenure as a full-time faculty member. A September 20, 2000 letter repeated the options and cited Section 16.8, CHED Memorandum No. 19, S. 1998 concerning formal notice when faculty teach in more than one school.

Complaint and Labor Arbiter Proceedings

Respondent filed a complaint for unfair labor practice and illegal dismissal before Regional Arbitration Branch No. III on October 19, 2000. He alleged that the non-renewal of his appointment as Dean and subsequent deprivation of teaching load constituted constructive dismissal and culminated in actual dismissal. The Labor Arbiter found respondent illegally dismissed and ordered reinstatement to his former position without loss of seniority, payment of backwages computed as P54,567.00, representation allowance P7,092.00, 13th month pay P5,138.25, and moral and exemplary damages of P50,000.00 and P30,000.00 respectively. A writ of execution followed and petitioner reinstated respondent on the payroll only.

NLRC Ruling on Appeal

On appeal the NLRC set aside the Labor Arbiter’s decision and dismissed the complaint in a Decision dated August 13, 2003. The NLRC held that respondent’s appointment as Dean had been for a fixed four-year period and that he should have been reinstated as a full-time professor, not as Dean. The NLRC concluded that petitioner’s non-assignment of teaching load was a sanction under Section 16.8 of CHED Memorandum No. 19, S. 1998, and deleted the awards of moral and exemplary damages for lack of basis. The NLRC nonetheless ordered reinstatement as full-time professor without backwages.

Court of Appeals Proceedings

Petitioner sought certiorari relief in the Court of Appeals challenging the NLRC’s refusal to order respondent to return the monetary benefits he had received on account of payroll reinstatement as Dean. The CA dismissed the petition in its Decision dated August 31, 2004 and denied reconsideration, prompting petitioner’s appeal to the Supreme Court.

Issues Presented to the Supreme Court

The principal issue framed by petitioner before the Supreme Court was whether the subsequent reversal or modification of the Labor Arbiter’s order of reinstatement meant that respondent was obliged to reimburse petitioner the salaries and benefits he had received under immediate execution of the Labor Arbiter’s erroneous reinstatement order. Petitioner also alleged fraud and graft against the Labor Arbiter and respondent with respect to the Labor Arbiter’s computation of monetary awards.

Parties’ Contentions on Reimbursement and Reinstatement

Petitioner contended that the Labor Arbiter’s reinstatement as Dean was incorrect because respondent’s status at filing was that of a faculty member and thus any payroll reinstatement predicated on the Arbiter’s erroneous order should be refundable. Petitioner relied on the principle that unjust enrichment should allow recovery when the dismissal was found valid on appeal. Respondent and intervening jurisprudence urged that under Art. 223, Labor Code the reinstatement aspect of a Labor Arbiter’s decision is immediately executory pending appeal and that an employee who receives wages under payroll reinstatement need not reimburse them, particularly where the employee actually rendered services or was placed on the payroll.

Supreme Court Ruling

The Supreme Court denied the petition and affirmed the CA Decision and Resolution. The Court ruled that respondent was not required to reimburse the salaries and benefits received pursuant to execution of the Labor Arbiter’s reinstatement order. The Court held that the immediate executory nature of reinstatement under Art. 223, Labor Code compelled the employer either to readmit the employee or to reinstate him in the payroll, and that payment during the pendency of appeal remained the employee’s entitlement even if the reinstatement order was later corrected or reversed on appeal.

Legal Reasoning on Art. 223 and Precedent

The Court grounded its ruling in Art. 223, Labor Code, emphasizing the third paragraph’s directive that a Labor Arbiter’s decision reinstating a dismissed or separated employee shall be immediately executory as to reinstatement pending appeal. The Court reaffirmed the rule set forth in Air Philippines Corporation v. Zamora and earlier cases, as expounded in Garcia v. Philippine Airlines, Inc., that even if a reinstatement order is reversed on appeal, an employee who was reinstated or placed on payroll reinstatement need not reimburse wages received during the appeal period. The Court addressed the divergence represented by Genuino v. NLRC, which had suggested that salaries received on payroll reinstatement could be recovered if the dismissal was ultimately upheld, and explained the practical and equitable objections to that refund doctrine as undermining the social justice purpose of reinstatement pending appeal.

Application of Doctrine to the Present Case

The Court observed that the Labor Arbiter erred only in specifying the capacity for reinstatement as Dean, whereas the NLRC corrected the position to which respondent should be reinstated, namely, full-time professor. The Court hel

Case Syllabus (G.R. No. 167563)

Parties and Posture

College of the Immaculate Conception filed a petition for review on certiorari under Rule 45 seeking to set aside the Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 83321.
National Labor Relations Commission was respondent below and its Third Division rendered the administrative adjudication appealed to the Court of Appeals.
Atty. Marius F. Carlos, Ph.D. was the private respondent and complainant in the labor proceedings alleging unfair labor practice and illegal dismissal.

Key Facts

Atty. Marius F. Carlos, Ph.D. was appointed Acting Dean on June 1, 1995 and was appointed Dean effective June 1, 1996 until May 31, 2000.
College of the Immaculate Conception informed respondent by letter dated May 15, 2000 that respondent would revert to full-time professor on the expiration of his deanship without diminution of salary.
Respondent received eight teaching loads on June 1, 2000 and requested overload pay on the ground that a regular full-time load was six units.
College of the Immaculate Conception denied the overload claim and required respondent to vacate the Dean's office and to explain his part-time teaching at another university and his private law practice without prior permission.
Respondent admitted teaching at Araullo University without written permission and explained limited law practice activity referred by the College's Vice-President for Academic Affairs.
College of the Immaculate Conception offered two options on July 17, 2000: remain as a full-time professor with restrictions on outside teaching and practice, or become a part-time professor with freedom to teach and practice but without full-time tenure.
College of the Immaculate Conception cited Section 16.8, CHED Memorandum No. 19, S. 1998 to support non-assignment of teaching loads for failure to give formal notice of multiple teaching assignments.
Respondent was not assigned teaching loads for the succeeding semester and he filed a complaint for unfair labor practice and illegal dismissal before Regional Arbitration Branch No. III.

Procedural History

The Labor Arbiter rendered a Decision dated February 14, 2001 declaring the employment termination illegal and ordering reinstatement to the former position with awards of backwages and damages.
The Labor Arbiter issued a Writ of Execution on March 19, 2001 and the College reinstated respondent on the payroll only.
NLRC rendered a Decision dated August 13, 2003 setting aside the Labor Arbiter's decision, dismissing the complaint but ordering reinstatement as full-time professor without backwages.
NLRC denied petitioner's Motion for Clarification and/or Partial Reconsideration in a Resolution dated January 30, 2004.
Court of Appeals dismissed the petition for certiorari in CA-G.R. SP No. 83321 and affirmed the NLRC in its Decision dated August 31, 2004 and in a subsequent Resolution.
College of the Immaculate Conception brought the matter to the Supreme Court by petition