By Atty. Julius Gregory B. Delgado
JOSE LENI Z. SOLIDUM VS. SMART COMMUNICATIONS, ET AL., G.R. NO. 206985 (FEBRUARY 28, 2024): RESTATEMENT OF THE REFUND DOCTRINE IN LABOR CASES
The case stems from the case for Illegal Dismissal filed by petitioner Jose Leni Z. Solidum (“Solidum”) against Smart Communications (“Smart”) and its Chief Executive Officer, Napoleon Nazareno, and former Marketing Head, Ricardo Isla, for Illegal Dismissal, Illegal Suspension, Non-payment of Salaries, Damages, and Attorney’s Fees. Solidum obtained a favorable Decision dated July 3, 2006, from the Labor Arbiter ordering his reinstatement and payment of backwages, among others. Smart appealed the ruling and pending appeal, the Labor Arbiter issued a Writ of Execution commanding the Sheriff to collect from Smart the accrued reinstatement wages and benefits of Solidum from July 21, 2006 to October 20, 2006. The National Labor Relations Commission denied Smart’s appeal for being filed out of time of which Smart filed a Motion for Reconsideration. During the pendency of Smart’s Motion for Reconsideration, particularly from August 15, 2007 to January 22, 2009, the Labor Arbiter issued seven (7) Alias Writs of Execution on the collection of the monetary awards and reinstatement aspect of the Labor Arbiter’s July 3, 2006 Decision. These Alias Writs of Execution were never carried out because of several motions seeking their quashal were filed by Smart.
In a Resolution dated January 26, 2009, NLRC granted Smart’s Motion for Reconsideration and dismissed Solidum’s Complaint. Solidum sought for reconsideration and meanwhile, Smart filed an Urgent Motion for Issuance of a Writ of Preliminary Injunction with application for Temporary Restraining Order to prevent Solidum’s reinstatement pending the resolution of his Motion for Reconsideration. Pending Solidum’s Motion for Reconsideration, he filed an Ex-Parte Motion for Issuance of Alias Writ of Execution on the Reinstatement Aspect of the Labor Arbiter’s July 3, 2006 Deicion for the collection of his accrued benefits equivalent to three (3) months, from January 21, 2009 to April 20, 2009.
NLRC denied both the Motion for Reconsideration filed by Solidum and the injunction filed by Smart for lack of merit. On August 10, 2009, the NLRC’s Decision in the Illegal Dismissal Case dated May 29, 2009 became final and executory as indicated in the Entry of Judgment dated June 1, 2010. In connection with the Alias Writ Case, the Labor Arbiter issued an Order in the Alias Writ Case denying Solidum’s Ex-Parte Motion for Issuance of Alias Writ of Execution on the Reinstatement Aspect of the Decision. The Labor Arbiter ruled that since the NLRC’s Decision dated January 26, 2009 reversed the July 3, 2006 Decision of the arbiter in the Illegal Dismissal Case, this effectively prevents the latter form issuing future writs of execution on the reinstatement aspect of the July 3, 2006 Decision.
Solidum filed an Appeal and the NLRC partially granted his appeal in the Alias Writ Case and eventually a subsequent Motion for Partial Reconsideration thereby awarding him accrued reinstatement salaries and benefits from July 13, 2006 to August 10, 2009. Dissatisfied, Smart filed a Petition for Certiorari. After the proceedings and issuance of Decision and Amended Decision, the Court of Appeals ordered Solidum to return the additional unpaid/other benefits released by virtue of the 10th Alias Writ of Execution amounting to Php15,889,871.04 to Smart. Hence, Solidum filed a Petition for Review on Certiorari before the Supreme Court resolving the issue whether the Court of Appeals erred in ordering Solidum to return to Smart the amount he received through the 10th Alias Writ covering his accrued wages and benefits for the period from July 13, 2006 to January 26, 2009.
The Supreme Court ruled in favor of Solidum ruling that during the time he obtained the favorable ruling from the Labor Arbiter, on July 13, 2006, until its reversal by the NLRC became final on August 10, 2009, Solidum is entitled to reinstatement wages and benefits which Smart did not comply despite issuance of several Alias Writs of Execution. The Court held:
“The records of the instant case reveal Smart’s blatant defiance to comply with the July 3, 2006 Decision of the arbiter mandating Solidum’s actual reinstatement. Despite seven alias writs, Smart failed to reinstate Solidum to his former position, neglected to place him on the payroll, or pay his salaries and benefits. This left Smart liable for Solidum’s salaries and benefits until the NLRC, through its May 29, 2009 Decision, reversed the labor arbiter’s ruling, which, eventually, became final and executory on August 10, 2009. At this point, Smart remained liable for Solidum’s accrued salaries and benefits for the period from July 13, 2006, to August 10, 2009.
It is worth noting that Solidum received his accrued salaries and benefits from Smart, totaling Php2,881,335.86, only after the Eighth and Ninth Alias Writs on October 22, 2010 and May 18, 2011, respectively. However, this payment covered only his accrued salaries and benefits for the period from January 21, 2009, to July 20, 2009.
At this juncture, it is crucial to highlight that the CA appropriately disallowed the refund of Solidum’s salaries and benefits, totaling Php2,881,335.86, pursuant to the Eighth and Ninth Alias Writs, as these amounts had accrued before August 10, 2009. This entitlement has, in fact, been affirmed by this Court in Smart Communications, Inc. In Smart Communications, Inc., We specifically held that ‘since NLRC’s [May 29, 2009] Decision became final and executory on [August 10, 2009], Solidum is entitled to [Php] 2,881,335,86, representing his accrued salaries, allowances, benefits, incentives, and bonuses for the period [January 21, 2009 to July 20, 2009].’
While Smart eventually complied with the Eight and Ninth Alias Writs, Solidum’s accrued salaries and benefits for a significant period, particularly from July 3, 2007 to January 20, 2009, remained unpaid. Simply put, from July 2007 to January 2009, nearly three years of wages and benefits went unpaid. Smart’s liability grew because the earlier Alias Writs (First to Seventh) were never fulfilled, necessitating a complete recalculation of Solidum’s rightful compensation during that period.
Crucially, it appears that the 10th Alias Writ covers the entire outstanding amount owed to Solidum, excluding the amounts he received previously from the Eight and Ninth Alias Writs. Because the earlier alias writs remained unfulfilled, the recomputation of his accrued salaries and wages was essential. Therefore, the amount of Php15,889,871.04 claimed in the 10th Alias Writ, representing his accrued earnings before August 10, 200i, rightfully belongs to Solidum.”
Citing Garcia vs. Philippine Airlines, G.R. No. 164856, January 20, 2009, the Court restated the impracticability of compelling the employee to reimburse the employer for the monetary award out of a ruling which would later be reversed, to wit: “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, would end up having to refund the sum in case a final unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff of insolvency.”