Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 167563               March 22, 2010

COLLEGE OF THE IMMACULATE CONCEPTION, Petitioner,

DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
set aside the Decision1 and Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 83321,
which affirmed the Resolution rendered by the National Labor Relations Commission (NLRC), Third
Division in NLRC NCR CA No. 028096-01.

Petitioner College of the Immaculate Conception, through its former President Rev. Fr. Antonio A.
Mangahas, Jr., appointed respondent Atty. Marius F. Carlos on June 1, 1995 as Acting Dean of the
Department of Business Administration and Accountancy. Thereafter, in a letter dated May 23, 1996,
petitioner informed respondent of his appointment as Dean of the Department of Business,
Economics and Accountancy effective June 1, 1996 until May 31, 2000. Respondent served as
Dean of said department for the designated term.

In a letter dated May 15, 2000, petitioner reminded respondent that upon the expiration of his term
as Dean, he will be appointed as full-time professor of Law and Accounting without diminution of his
teaching salary as Dean. As promised, on June 1, 2000, respondent was given eight (8) teaching
loads as full-time professor. Respondent then requested for the payment of overload pay, arguing
that the regular full time load of a faculty member is only six. Petitioner, in a letter dated July 3, 2000,
denied respondent's claim for overload pay and explained that pursuant to the Faculty Manual, a full
time faculty member, such as the respondent, is one who teaches at least twenty-four units or eight
(8) teaching loads per semester in the College Department. In the same letter, petitioner requested
the respondent to vacate the Dean's office. Petitioner also directed respondent to explain why no
disciplinary action should be taken against him for engaging in the practice of law and teaching law
in another law school without prior permission from the petitioner.

In his written reply, respondent admitted that he was teaching at Araullo University without written
permission because it was unnecessary. As to his law practice, he explained that the only case he
was handling was a petition for Declaration of Nullity of Marriage, which was referred to him by
petitioner's Vice-President for Academic Affairs. Respondent said that his demotion from Dean of the
Department to a Faculty member was without legal basis and that the non-renewal of his
appointment as Dean was arbitrary, capricious, unlawful, tainted with abuse of discretion, and
injurious to his integrity and reputation. Further, the subsequent appointment of other personnel as
acting Dean was violative of the law.
Petitioner replied that there was no demotion in position from Dean to Faculty member, because
respondent’s appointment as Dean was for a fixed period of four (4) years, from June 1, 1996 to May
31, 2000, as stated in petitioner's letter dated May 23, 1996.

Petitioner refused to accept respondent's explanation that securing petitioner's prior written
permission to teach elsewhere, or to engage in any other remunerative occupation, is unnecessary.
Thus, in its letter3 dated July 17, 2000, petitioner gave respondent two options, to wit:

1. Remain as a full-time professor, but without teaching loads outside; you may also continue
to practice your profession as a lawyer, provided that any additional cases you wish to
handle should be subject to the prior written approval of the College; or

2. Become a part-time professor with an initial teaching load of fifteen (15) units, and with
complete freedom to teach elsewhere and to practice your profession. This means that you
will lose your tenure as a full-time faculty member; moreover, your teaching loads in
subsequent semesters will depend upon the College's evaluation of your performance and
the teaching loads you will be carrying for that particular semester in other schools.

Since respondent failed to respond to the aforementioned letter, petitioner again sent a letter to
respondent on September 20, 2000 to give him another chance to choose between the two
foregoing options and to call his attention to Section 16.8, CHED Memorandum No. 19, S. 1998, of
which provides:

x x x faculty members teaching in more than one school must give formal notice in their teaching
assignment to all schools concerned; failure to give notices mean automatic withdrawal or
cancellation of his teaching assignment and non-assignment of teaching load for the succeeding
semester.4

Respondent requested for more time to reply, but failed to do so. Thus, petitioner informed
respondent that he will not be assigned any teaching load for the succeeding semester pursuant to
Section 16.8,5 CHED Memorandum No. 19, series of 1998.

In a letter6 dated October 15, 2000, respondent protested the imposition of sanction against him
arising from his part-time teaching of law in another university. He maintained that teaching in
another university is a benefit he enjoyed since July 1, 1999 as an administrator and Dean. He
further said that his part-time teaching benefit cannot be withheld despite his alleged demotion as a
faculty member. Even assuming that he violated Section 16.8, CHED Memorandum No. 19, series of
1998, respondent pointed out that under the College Faculty Manual, teaching in another school
without permission from the Department Head and the President is punishable at the first instance
by mere censure or oral reprimand.

On October 19, 2000, respondent filed a complaint 7 against petitioner before Regional Arbitration
Branch No. III of San Fernando, Pampanga, for unfair labor practice, illegal dismissal, with payment
of backwages and damages. Respondent argued that the non-renewal of his appointment as Dean
and his alleged demotion to a faculty member already constituted constructive dismissal and was but
a prelude to his actual dismissal. Thereafter, his dismissal materialized when he was deprived of his
teaching load.

Petitioner denied dismissing respondent and said it was only constrained to deprive respondent of
his teaching load because he refused to abide by the mandate of Section 16.8, CHED Memorandum
No. 19, series of 1998.
The Labor Arbiter (LA), in his Decision 8 dated February 14, 2001, ruled that respondent was illegally
dismissed. The dispositive portion of the decision reads:

WHEREFORE, in light of the foregoing, decision is hereby rendered declaring the employment
termination as illegal. Respondents are hereby ordered to reinstate the complainant to his former
position without loss of seniority rights and other privileges appurtenant thereto immediately upon
receipt of this decision. Further, respondents are hereby ordered to pay complainant's backwages
which as of the date of this decision has been computed in the amount of ₱54,567.00;
representation allowance in the amount of ₱7,092.00; 13th month pay in the amount of ₱5,138.25,
plus moral and exemplary damages in the amount of ₱50,000.00 and ₱30,000.00, respectively.

SO ORDERED.

On March 19, 2001, the LA then issued a Writ of Execution, 9 directing the Sheriff of the NLRC to
implement his Decision dated February 14, 2001. The Petitioner opted to reinstate respondent in its
payroll only.10

Dissatisfied with the Labor Arbiter's finding, petitioner appealed to the NLRC, which rendered a
Decision11 dated August 13, 2003, the dispositive portion of which reads:

WHEREFORE, premises considered, the Decision dated February 14, 2001 is hereby SET ASIDE
and a new one entered DISMISSING the complaint. However, respondents are hereby ordered to
reinstate complainant as full-time professor of Law and Accountancy without backwages.

SO ORDERED.

The NLRC ruled that petitioner's non-assignment of teaching load for the respondent was merely
resorted to as a sanction pursuant to Section 16.8 of CHED Memorandum No. 19, series of 1998. It
was clear that respondent's contract as Dean was only for a period of four years, from June 1, 1996
to May 31, 2000, afterwhich, he would be appointed as a full- time professor without diminution of
salary as a dean. Thus, the LA was incorrect when it directed the reinstatement of the respondent to
his former position as a Dean. The NLRC, likewise, deleted the award of moral and exemplary
damages for lack of factual and legal basis.

Petitioner filed a Motion for Clarification and/or Partial Reconsideration, 12 praying that since the
respondent was not illegally dismissed, then he should be directed to refund the petitioner all the
amounts he received by way of payroll reinstatement. The NLRC, in its Resolution 13 dated January
30, 2004, denied petitioner's motion for lack of merit.

Undaunted, petitioner filed a petition for certiorari14 with the CA alleging that the NLRC committed
grave abuse of discretion amounting to lack or excess of jurisdiction when it refused to order the
respondent to return all the monetary benefits he had received on account of his payroll
reinstatement as Dean. The CA, in its Decision dated August 31, 2004, dismissed the petition and
sustained the ruling of the NLRC. Petitioner filed a motion for reconsideration, which the CA denied.
Hence, the instant petition, which mainly poses the following issue:

Does the subsequent reversal of the LA's findings mean that respondent should reimburse petitioner
all the salaries and benefits he received pursuant to the immediate execution of the LA's erroneous
decision ordering his reinstatement as Department Dean?
We rule in the negative. In Air Philippines Corporation v. Zamora,15 citing Roquero v. Philippine
Airlines, Inc.,16 we held that:

x x x Hence, 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. On the other hand, if the employee
has been reinstated during the appeal period and such reinstatement order is reversed with
finality, the employee is not required to reimburse whatever salary he received for he is
entitled to such, more so if he actually rendered services during the period.

Petitioner, however, insists that Roquero finds no application to the case at bar, because here,
respondent was ordered reinstated to a position different from that which he previously held, i.e., the
LA wrongfully ordered his reinstatement as Dean, when he should have been reinstated only as a
full-time faculty member, because this was the position he held when he filed the complaint for illegal
dismissal. Further, petitioner takes a firm stand that the case of International Container Terminal
Services, Inc v. NLRC17 refers only to a case of a dismissed employee and is inapplicable here,
where it was correctly found on appeal that the employee was not dismissed at all, but was only
sanctioned for teaching in another university without petitioner's permission.

It is not disputed at this point that the LA erred in ordering respondent's reinstatement as Dean. The
NLRC ruled that respondent should have been merely reinstated as a full-time law professor,
because the term of his appointment as Dean had long expired. However, such mistake on the part
of the LA cannot, in any way, alter the fact that during the pendency of the appeal of his decision, his
order for respondent's reinstatement as Dean was immediately executory. Article 223 of the Labor
Code explicitly provides that:

Art. 223. - Appeal. – x x x

xxxx

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 therein. (Emphasis supplied)

Therefore, petitioner could not validly insist that it is entitled to reimbursement for the payment of the
salaries of respondent pursuant to the execution of the LA's decision by simply arguing that the LA's
order for reinstatement is incorrect. The pertinent law on the matter is not concerned with the
wisdom or propriety of the LA's order of reinstatement, for if it was, then it should have provided that
the pendency of an appeal should stay its execution. After all, a decision cannot be deemed
irrefragable unless it attains finality.

In Garcia v. Philippine Airlines, Inc.,18 the Court made a very enlightening discussion on the aspect of
reinstatement pending appeal:

On this score, the Court’s attention is drawn to seemingly divergent decisions concerning
reinstatement pending appeal or, particularly, the option of payroll reinstatement. On the one hand is
the jurisprudential trend as expounded in a line of cases including Air Philippines Corp. v. Zamora,
while on the other is the recent case of Genuino v. National Labor Relations Commission. At the
core of the seeming divergence is the application of paragraph 3 of Article 223 of the Labor Code x x
x

The view as maintained in a number of cases is that:

x x x [E]ven 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. On the other hand, if the employee has been reinstated
during the appeal period and such reinstatement order is reversed with finality, the employee is not
required to reimburse whatever salary he received for he is entitled to such, more so if he actually
rendered services during the period. (Emphasis in the original; italics and underscoring supplied)

In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is
entitled to receive wages pending appeal upon reinstatement, which is immediately executory.
Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement and it is mandatory on the employer to comply therewith.

The opposite view is articulated in Genuino which states:

If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for
dismissal is valid, then the employer has the right to require the dismissed employee on payroll
reinstatement to refund the salaries [he] received while the case was pending appeal, or it can be
deducted from the accrued benefits that the dismissed employee was entitled to receive from [his]
employer under existing laws, collective bargaining agreement provisions, and company practices.
However, if the employee was reinstated to work during the pendency of the appeal, then the
employee is entitled to the compensation received for actual services rendered without need of
refund.

Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her
dismissal is based on a just cause, then she is not entitled to be paid the salaries stated in item no. 3
of the fallo of the September 3, 1994 NLRC Decision. (Emphasis, italics and underscoring supplied)

It has thus been advanced that there is no point in releasing the wages to petitioners since their
dismissal was found to be valid, and to do so would constitute unjust enrichment.

Prior to Genuino, there had been no known similar case containing a dispositive portion where the
employee was required to refund the salaries received on payroll reinstatement. In fact, in a catena
of cases, the Court did not order the refund of salaries garnished or received by payroll-reinstated
employees despite a subsequent reversal of the reinstatement order.

The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise render
inutile the rationale of reinstatement pending appeal.

xxxx

x x x Then, by and pursuant to the same power (police power), the State may authorize an
immediate implementation, pending appeal, of a decision reinstating a dismissed or separated
employee since that saving act is designed to stop, although temporarily since the appeal may be
decided in favor of the appellant, a continuing threat or danger to the survival or even the life of the
dismissed or separated employee and his family.
In the same case, the Court went on to discuss the illogical and unjust effects of the "refund
doctrine" erroneously espoused in Genuino:

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.

Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to
refuse payroll reinstatement and simply find work elsewhere in the interim, if any is available.
Notably, the option of payroll reinstatement belongs to the employer, even if the employee is able
and raring to return to work. Prior to Genuino, it is unthinkable for one to refuse payroll
reinstatement. In the face of the grim possibilities, the rise of concerned employees declining payroll
reinstatement is on the horizon.

Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also
institutes a scheme unduly favorable to management. Under such scheme, the salaries dispensed
pendente lite merely serve as a bond posted in installment by the employer. For in the event of a
reversal of the Labor Arbiter’s decision ordering reinstatement, the employer gets back the same
amount without having to spend ordinarily for bond premiums. This circumvents, if not directly
contradicts, the proscription that the "posting of a bond [even a cash bond] by the employer shall not
stay the execution for reinstatement."

In playing down the stray posture in Genuino requiring the dismissed employee on payroll
reinstatement to refund the salaries in case a final decision upholds the validity of the dismissal, the
Court realigns the proper course of the prevailing doctrine on reinstatement pending appeal vis-à-vis
the effect of a reversal on appeal.

xxxx

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. x x x

Thus, the Court resolved the impasse by reaffirming the principle earlier enunciated in Air
Philippines Corporation, that an employee cannot be compelled to reimburse the salaries and wages
he received during the pendency of his appeal, notwithstanding the reversal by the NLRC of the LA's
order of reinstatement. In this case, there is even more reason to hold the employee entitled to the
salaries he received pending appeal, because the NLRC did not reverse the LA's order of
reinstatement, but merely declared the correct position to which respondent is to be reinstated, i.e.,
that of full-time professor, and not as Dean.

Petitioner alleged that due to the unreasonable demand of the respondent that he be reinstated as a
Dean, instead of a faculty member, petitioner was constrained to reinstate him in the payroll only.
Thus, petitioner argued that when the respondent imposed uncalled conditions for his reinstatement,
his claim for reinstatement pending appeal was effectively nullified. We rule that respondent did not
impose any unreasonable condition on his reinstatement as a Dean, because he was merely
demanding that he be reinstated in the manner set forth by the LA in the writ of execution. Moreover,
it bears stressing that the manner of immediate reinstatement, pending appeal, or the promptness
thereof is immaterial, as illustrated in the following two scenarios:
Situation No. 1. (As in the cases of Air Philippines Corporation and International Container Terminal
Services, Inc.) The LA ruled in favor of the dismissed employee and ordered his reinstatement.
However, the employer did not immediately comply with the LA's directive. On appeal, the NLRC
reversed the LA and found that there was no illegal dismissal. In this scenario, We ruled that the
employee is entitled to payment of his salaries and allowances pending appeal.

Situation No. 2. (As in the present case) The LA ruled in favor of the dismissed employee and
ordered the latter's reinstatement. This time, the employer complied by reinstating the employee in
the payroll. On appeal, the LA's ruling was reversed, finding that there was no case of illegal
dismissal but merely a temporary sanction, akin to a suspension. Here, We also must rule that the
employee cannot be required to reimburse the salaries he received because if he was not reinstated
in the payroll in the first place, the ruling in situation no. 1 will apply, i.e., the employee is entitled to
payment of his salaries and allowances pending appeal. 1avvphi1

Thus, either way we look at it, at the end of the day, the employee gets his salaries and allowances
pending appeal. The only difference lies as to the time when the employee gets it.

Lastly, petitioner alleged that the LA's decision was tainted with fraud and graft and corruption, as
the dispositive portion of the decision cites facts not found in the pleadings and documents
submitted by the parties. Allegedly, the LA's computation of respondent's basic salary,
representation allowance and 13th-month pay are not supported by the records of the case.
Petitioner even opined that the LA and the respondent connived in drafting the decision.

Aside from the fact that this Court is not the proper forum to consider the merits of petitioner's charge
of fraud and graft and corruption against the LA and the respondent, petitioner failed to overcome
the presumption of regularity in the performance of the LA's official duties 19 in rendering his decision.
Petitioner was not able to show clear and convincing proof to establish partiality, fraud and acts
constituting graft and corruption. Well-entrenched in jurisprudence is the time-honored principle that
the law bestows upon a public official the presumption of regularity in the discharge of one’s official
duties and functions.20 The Court held that:

x x x public respondents have in their favor the presumption of regularity in the performance of
official duties which petitioners failed to rebut when they did not present evidence to prove partiality,
malice and bad faith. Bad faith can never be presumed; it must be proved by clear and convincing
evidence. x x x21

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-
G.R. SP No. 83321, dated August 31, 2004 and March 11, 2005, respectively, are AFFIRMED.

SO ORDERED.