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[G.R. No. 144885. July 12, 2006]

KIMBERLY CLARK (PHILS.), INC., PETITIONER versus ERNESTO FACUNDO, et al., RESPONDENTS

Third Division

Sirs/Mesdames:

Quoted hereunder, for your information, is a resolution of this Court dated JULY 12, 2006 .

G.R. No. 144885 (Kimberly Clark (Phils.), Inc., Petitioner versus Ernesto Facundo, Arsenio Omambac, Zaldy Florano, Rolando Hernandez, Jesusa Mendiola, Arturo Remoquillo, Artemio Escudero, Rogelio Soquiat, Jessie Magbujos, Fausto Gapuz, Bienvenido Datuin, Nerio Tumacder, Mario Oliveros, Romeo Cruz, Antonio Guillermo, Randolfo Guerrero, Nicolas Apdan, Arsenio Izon, Arnulfo Natimdin, Armando Gonzales, Cirilo Manzano, Marcos Velasco, Doroteo Unada, Salvador Berog, David de Guzman, Dominador Estevez, Francisco Suena, Paquito Gilbuena, Ernesto Aquino, Benedicto de Ausen, Rizaldy Gapuz, Orlando Remolacio, Felixberto dela Cruz, Orlando delos Santos, Julio Ocreto, Carlito Pablo, Restituto Dearoz, Alberto Manahan, Leo Prudente, Almario Rominquit, Leonardo Cunanan, Teresito Nortez, Perlino Esperida, Efren Cua, Pacifico Ama, Azahari L. Abonita, Antonio Balanao, and Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor Association in Line Industries and Agriculture (Kilusan-Olalia), Cashier of the National Labor Relations Commission, Labor Arbiter Antonio R. Macam, Respondents.)

Petitioner seeks the annulment of the Decision [1] cralaw dated May 12, 2000, of the Court of Appeals in CA-GR SP No. 53188, denying its petition for certiorari against the National Labor Relations Commission (NLRC), as well as the Resolution [2] cralaw dated September 12, 2000, denying its motion for reconsideration.

Petitioner Kimberly Clark (Phils.), Inc. manufactures consumer paper products and cigarette paper. On May 4, 1987, private respondent Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor Association in Line Industries and Agriculture (KILUSAN-OLALIA) filed a notice of strike with the Bureau of Labor Relations charging Kimberly with unfair labor practices in refusing to bargain collectively and in dismissing the union's officers and members and staged a strike at Kimberly's mill premises. Kimberly filed a petition for a writ of preliminary injunction, which the NLRC issued.

Meanwhile, Kimberly filed a Complaint [3] cralaw for illegal strike with the NLRC alleging that the union went on strike without complying with the requirements of the Labor Code. It alleged that the union (1) is not the duly certified bargaining representative of the employees; (2) did not have a valid notice of strike; (3) failed to observe the 15-day cooling-off period; and (4) did not conduct a no strike vote. Thereafter, Kimberly dismissed private respondents for knowingly participating in an illegal strike and for committing unlawful acts.

The union asked for the dismissal of the complaint on the ground that the strike was legal and Kimberly was guilty of unfair labor practices.

The Labor Arbiter declared the strike illegal and said that Kimberly was in pari delicto since it provoked the illegal strike by prematurely concluding a collective bargaining agreement with another labor union. The Labor Arbiter decision stated:

WHEREFORE, premises considered, judgment is hereby rendered, as follows:

1.��� Declaring the parties to be in pari delicto;

2.��� Ordering the parties to cease and desist from committing the same or similar acts complained of;

3.��� Ordering Kimberly Clark (Phil[s].), Inc. to reinstate all respondents and counter-complainants fisted in Annex "A" hereof, except those who already died, to their former or equivalent positions, without loss of seniority rights and other privileges, either physically or in the payroll, at the option of the company;

4.��� Ordering Kimberly Clark (Phil[s].) Inc. to pay the respondents and counter-complainants whose names appear in Annex "A" hereof their respective backwages or separation pay in the total sum of P2,144,592.08;

5.��� Ordering Kimberly Clark (Phil[s].) Inc. to pay attorney's fees in the amount of P214,459.28[;]

6.��� All other claims are denied for lack of merit.

SO ORDERED. [4] cralaw

Both parties appealed. Pending appeal, the Labor Arbiter issued a writ of execution for the reinstatement of the private respondents pursuant to Article 223 of the Labor Code. [5] cralaw Petitioner moved to quash the writ averring that: (1) reinstatement was no longer possible due to strained relations or non-availability of positions; (2) reinstatement pending appeal under Article 223, which took effect on March 21, 1989, could not be given retroactive effect; and (3) the Labor Arbiter's application of the doctrine of in pari delicto was contrary to law and jurisprudence.

The Labor Arbiter denied the motion. Hence, Kimberly filed a petition for injunction with prayer for temporary restraining order/appeal with the NLRC.

Meanwhile, on February 15, 1999, the Labor Arbiter directed Kimberly to pay P2,207,775.98 representing private respondents' back salaries and other benefits from November 26, 1998 to January 31, 1999. Kimberly's bank deposits with the United Coconut Planters Bank were garnished and later released for further disposition.

On March 23, 1999, the NLRC dismissed the petition for injunction with prayer for temporary restraining order/appeal. [6] cralaw

On April 28, 1999, the NLRC resolved the appeal on the merits. [7] cralaw It affirmed the illegality of the strike but ruled that the doctrine of in pari delicto was inapplicable. The dispositive portion reads:

WHEREFORE, premises considered, the assailed decision is hereby, AFFIRMED in so far as declaring the strike illegal is concerned and the finding that the company is not guilty of unfair labor practice. The same is however modified with our finding: (1) that the in pari delicto doctrine is not applicable to the instant case; (2) that the officers of KILUSAN-OLALIA are hereby declared to have lost their employment status for staging an illegal strike; (3) that the union members (listed in Annex "A") are hereby ordered to be paid separation pay at the rate of one half (1/2) month pay for every year of service a fraction of six (6) months is considered one (1) year and in no case it should be less than one (1) month pay computed on the basis of their salary received at the time of dismissal up to and until the promulgation of this decision.

All other claims are hereby dismissed for lack of merit.

SO ORDERED. [8] cralaw

By May 14, 1999, the Labor Arbiter ordered the collection of P3,730,367.70 as private respondents' accrued salaries from February 1, 1999 to April 30, 1999. [9] cralaw Again, Kimberly's bank deposits with the United Coconut Planters Bank were garnished. After denying Kimberly's motion to quash, the Labor Arbiter ordered the release of this amount for further disposition.

Kimberly filed with the Court of Appeals a petition for certiorari with prayer for temporary restraining order/preliminary prohibitory injunction and preliminary mandatory injunction. It averred that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing its petition for injunction with prayer for a temporary restraining order/appeal. The appellate court rendered the following decision:

WHEREFORE, premises considered, the writ of preliminary prohibitory injunction is ordered LIFTED and the instant petition for certiorari is hereby DENIED for failure to clearly show grave abuse of discretion on the part of public respondent National Labor Relations Commission in issuing the Resolutions dated March 23, 1999 and the denial of the motion for reconsideration of the said resolution dated April 20, 1999. No costs.

SO ORDERED. [10] cralaw

Meanwhile, private respondents filed a motion for issuance of alias writ of execution with the Labor Arbiter. On June 13, 2001, the Labor Arbiter ordered Kimberly to pay P30,218,761.71 representing private respondents' accrued salaries from May 1, 1999 to March 15, 2001. [11] cralaw The Labor Arbiter later recalled the writ.

In the present petition, petitioner raises the following issues:

THE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS ERROR IN:

a) ruling for the retroactive application of Section 12 of R.A. 6715, which amended Article 223 of the Labor Code, providing for reinstatement pending appeal, particularly payroll reinstatement to the case at bar.

b) not ruling that reinstatement in the payroll of the private respondents was not legally feasible due to the strained relations of the parties, the non-availability of positions of the private respondents with the petitioner, and the finding of the NLRC that private respondents were legally dismissed and therefore, were not entitled to reinstatement.

c) not holding that the salaries due the private respondents, be based on their salary rate at the time of their dismissal, assuming the private respondents were entitled to reinstatement in the payroll pending appeal. [12] cralaw

The principal issues are: (1) Is the rule on reinstatement pending appeal retroactive? (2) Is private respondents' payroll reinstatement feasible despite the parties' strained relations, the non-availability of positions, and the NLRC finding that private respondents were legally dismissed? (3) Should private respondents' salaries during their payroll reinstatement be based on their salary rate at the time of their dismissal?

On the first issue: Petitioner's reliance in Inciong v. National Labor Relations Commission, [13] cralaw where this Court declared that Article 223 of the Labor Code has no retroactive effect, is misplaced. In Inciong, the decision of the Labor Arbiter was rendered before the amendment of Article 223 on March 21, 1989. Hence, at the time the employer appealed the decision to the NLRC, the rule on execution pending appeal was not yet effective. In this case, the Labor Arbiter rendered his decision after the amendment of Article 223. Thus, at the time petitioner's appeal was taken to the NLRC on November 26, 1998, the rule on execution pending appeal was already effective.

Further, this Court already settled this issue in Aris (Phil.) Inc. v. NLRC. [14] cralaw In Aris, the employees were illegally dismissed on or about April 12, 1988, way before the amendment of Article 223 on March 21, 1989. However, the Labor Arbiter rendered a decision in favor of the employees only on June 22, 1989. Pending appeal by the employer, the employees moved for their reinstatement. In upholding the employees' reinstatement pending appeal, this Court declared that:

Execution pending appeal is interlinked with the right to appeal. One cannot be divorced from the other. The latter may be availed of by the losing party or a party who is not satisfied with a judgment, while the former may be applied for by the prevailing party during the pendency of the appeal. The right to appeal, however, is not a constitutional, natural or inherent right. It is a statutory privilege of statutory origin and, therefore, available only if granted or provided by statute. The law may then validly provide limitations or qualifications thereto or relief to the prevailing party in the event an appeal is interposed by the losing party. Execution pending appeal is one such relief long recognized in this jurisdiction. The Revised Rules of Court allows execution pending appeal and the grant thereof is left to the discretion of the court upon good reasons to be stated in a special order. [15] cralaw

x x x x

The issue concerning Section 17 of the NLRC Interim Rules does not deserve a measure of attention. The reference to it in the Order of the Labor Arbiter of 5 October 1989 was unnecessary since the procedure of the appeal proper is not involved in this case. Moreover, the questioned interim rules of the NLRC, promulgated on 8 August 1989, can validly be given retroactive effect. They are procedural or remedial in character, promulgated pursuant to the authority vested upon it under Article 218(a) of the Labor Code of the Philippines, as amended. Settled is the rule that procedural laws may be given retroactive effect. There are no vested rights in rules of procedure. A remedial statute may be made applicable to cases pending at the time of its enactment. [16] cralaw

Conformably then, the Labor Arbiter's order of reinstatement was immediately executory. After receipt of the Labor Arbiter's decision ordering private respondents' reinstatement, petitioner has to either re-admit them to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll. Failing to exercise the options in the alternative, petitioner must pay private respondents' salaries which automatically accrued from notice of the Labor Arbiter's order of reinstatement until its ultimate reversal by the NLRC. [17] cralaw

On the second issue: Labor disputes naturally involve strained relations between labor and management, and that in most strikes, the relations between the strikers and the non-strikers will similarly be tense. Bitter labor disputes always leave an aftermath of strong emotions and unpleasant situations. [18] cralaw Thus, the doctrine of strained relations should be strictly applied [19] cralaw and must be demonstrated as a fact. [20] cralaw This, petitioner failed to do. Nevertheless, in case of strained relations or the non�availability of positions, the employer is given the option to reinstate the employee merely in the payroll precisely to avoid the intolerable presence in the workplace by the unwanted employee. [21] cralaw

Also, the finding of the NLRC that private respondents were legally dismissed did not alter the fact that their reinstatement pending appeal was immediately executory. This Court has ruled that even if the Labor Arbiter's order of reinstatement is reversed on appeal, it is the employer's obligation to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the NLRC. 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. [22] cralaw

On the third issue: Article 223 of the Labor Code provides that in case of reinstatement pending appeal, the employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or merely reinstated in the payroll. [23] cralaw It appearing that petitioner never exercised either option, it became liable for private respondents' salaries during their supposed reinstatement pending appeal. However, when the Labor Arbiter ordered on January 22, 1999, the payment of private respondents' back salaries and other benefits, he stated that it should be ". . .based on current wages which they are supposed to receive if not illegally dismissed, including allowances, if any, and other benefits. . . ." [24] cralaw

To this extent, modification is called for. Although involving different facts and issues, we clarified in Sanchez v. National Labor Relations Commission, [25] cralaw the basis of the dismissed employee's salary. In Sanchez, the Labor Arbiter ordered the immediate actual or payroll reinstatement of the employee based on his last monthly salary and other appurtenant benefits. The NLRC, however, dismissed the complaint for illegal dismissal and on appeal, the Court of Appeals and this Court sustained the NLRC decision. Acting on the employee's motion for clarificatory decision, this Court explained that the Labor Arbiter's order of reinstatement was immediately executory even pending appeal. Accordingly, the employee should have been admitted back to work under the terms and conditions prevailing prior to his dismissal or, at the option of the employer, merely reinstated in the payroll. Since the employee was never reinstated, this Court declared that he was entitled to his former compensation and other benefits prior to his dismissal until the NLRC rendered its decision. [26] cralaw

As a final note, since private respondents' reinstatement pending appeal was effective only until its reversal by the NLRC on April 28, 1999, they are no longer entitled to salaries from May 1, 1999 to March 15, 2001, as ordered by the Labor Arbiter.

WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated May 12, 2000 of the Court of Appeals in CA-GR SP No. 53188, denying petitioner's petition for certiorari against the National Labor Relations Commission, as well as the Resolution dated September 12, 2000, denying its motion for reconsideration, are hereby MODIFIED.

Accordingly, private respondents' salaries during their payroll reinstatement should be based on their salary rate at the time of their dismissal. Let this case be remanded to the Labor Arbiter for the immediate re-computation of the salaries as above discussed.

No pronouncement as to the costs.

SO ORDERED.

Very truly yours,

(Sgd.) LUCITA ABJELINA-SORIANO
Clerk of Court


Endnotes:

[1] cralaw Rollo, pp. 70-92. Penned by Associate Justice Mercedes Gozo-Dadole, with Associate Justices Buenaventura J. Guerrero, and Hilarion L. Aquino concurring.

[2] cralaw Id. at 94-96.

[3] cralaw CA rollo, pp. 267-272.

[4] cralaw Id. at 121-122.

[5] cralaw Id. at 181-185.

ART. 223. Appeal

x x x x

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. x x x x

[6] cralaw Id. at 68.

[7] cralaw Rollo, pp. 425-450.

[8] cralaw Id. at 449-450.

[9] cralaw CA rollo, pp. 402-408.

[10] cralaw Rollo, p. 92.

[11] cralaw Id. at 411.

[12] cralaw Id. at 38.

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

[14] cralaw G.R. No. 90501, August 5, 1991, 200 SCRA 246.

[15] cralaw Id. at 253.

[16] cralaw Id. at 256-257.

[17] cralaw International Container Terminal Services, Inc. v. NLRC, G.R. No. 115452, December 21, 1998, 300 SCRA 335, 343.

[18] cralaw Manila Diamond Hotel Employees' Union v. Court of Appeals, G.R. No. 140518, December 16, 2004, 447 SCRA 97, 103.

[19] cralaw Philippine Long Distance Telephone Company v. Tolentino, G.R. No. 143171, September 21, 2004, 438 SCRA 555, 564.

[20] cralaw Paguio Transport Corporation v. NLRC, G.R. No. 119500, August 28, 1998, 294 SCRA 657, 670.

[21] cralaw Maranaw Hotel Resort Corporation v. NLRC, G.R. No. 110027, November 16, 1994, 238 SCRA 190, 199-200; See also LABOR CODE OF THE PHILIPPINES, Art. 223.

[22] cralaw Roquero v. Philippine Airlines, Inc., G.R. No. 152329, April 22, 2003, 401 SCRA 424, 430-431; See also International Container Terminal Services, Inc. v. NLRC, supra.

[23] cralaw Supra note 5.

[24] cralaw CA rollo, p. 317.

[25] cralaw G.R. No. 124348, August 19, 1999, 312 SCRA 727.

[26] cralaw See Sanchez v. National Labor Relations Commission, G.R. No. 124348, Court Resolution dated February 7, 2001.


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