EN BANC
G.R. No. 204060, September 15, 2020
MORENO DUMAPIS, FRANCISCO LIAGAO AND ELMO TUNDAGUI, PETITIONERS, V. LEPANTO CONSOLIDATED MINING COMPANY, RESPONDENT.
D E C I S I O N
LAZARO-JAVIER, J.:
With all the foregoing, the claim of complainants that they were accused of highgrading based on hearsay is of no moment. Damoslog's declarations, corroborated by Daguio's are first hand [sic] account of the incident.On complainant's appeal, the National Labor Relations Commission (NLRC) reversed3 insofar as three (3) of the complainants, now petitioners, Moreno Dumapis, Francisco Liagao and Elmo Tundagui were concerned: ChanRoblesVirtualawlibrary
The fact that they were not immediately apprehended when they were seen doing highgrading activity does not change the fact that there were people doing the activity at that time. Management only had to take time to ascertain the identification of the culprits to make sure that they were pointing at the right people. Hence, the investigation after the incident and before the formal charge was made, Mr. Pablo Daguio positively identified the complainants as those who were directly under his supervision at that particular shift and who were likewise named by Damoslog as the same people who carried out the highgrading activity.xxx xxx xxx
Complainants as lead miners, muckers and LHD operators are given the proper equipment and tolls including machineries [sic] for use in the mining activity. Hence, they do not need to handle with their bare hands the ores they are mining. Admittedly, their only assigned task is to drill, bardown, rockbolt, blast and haul. Hence, the mere act of complainants in handling highgrading ores - i.e., washing, segregating, and the like, are acts contrary to their normal activity and against the Code of Conduct of respondent which was violated by complainants.
xxx xxx xxx
WHEREFORE, judgment is hereby rendered DISMISSING the instant complaint for lack of merit.
SO ORDERED.2cralawlawlibrary
WHEREFORE, premises considered, the Decision dated August 21, 2001 is hereby MODIFIED declaring the dismissal of complainants Moreno Dumapis, Elmo Tundagui and Francis [sic] Liagao illegal and ordering respondent to pay them backwages in the total amount of four hundred eighty thousand one hundred eighty two pesos and 63/100 (P480,182.63) and separation pay in the total amount of four hundred seventeen thousand two hundred thirty pesos and 32/100 (P417,230.32 as computed in the body of the Decision.Lepanto Consolidated Mining Company elevated the case to the Court of Appeals via CA-G.R. SP No. 75860 entitled, Lepanto Consolidated Mining Company v. The National Labor Relations Commission (Third Division), Moreno Dumapis, Elmo Tundagui and Francisco Liagao.
The dismissal of the nine (9) complainants, namely:
1. Joel Gumatin
2. Maxima Madao
3. Benedict Arocod
4. Brent Suyam
5. Daniel Fegsar
6. Thomas Garcia
7. Mariolito Cativo
8. John Kitoyan
9. Samson Damian
are hereby AFFIRMED.
SO ORDERED.4cralawlawlibrary
Apropos, the NLRC aptly made the following conclusion on the culpability of the twelve employees meted preventive suspensions: ChanRoblesVirtualawlibraryOn Lepanto's further petition for review on certiorari via G.R. No. 163210, this Court affirmed7 in the main, and in addition, required Lepanto to pay double costs. The decision became final and executory on November 25,2008.8"Thus, considering that only the above nine (9) complainants were identified as having committed highgrading then their dismissal from the service is affirmed, x x x"Bereft of any factual and legal bases as shown in the affidavits of Damoslog, and Daguio, private respondents' participation in highgrading activity was not proven by substantial evidence.
Security of tenure dictates that no worker shall be dismissed except for just cause provided by law and after due process. Although, there was no justifiable ground for private respondents' dismissal, they were afforded due process.
An illegally dismissed employee is entitled to either (1) reinstatement, if viable, or separation pay, if reinstatement is no longer viable and (2) backwages,
Due to the baseless accusation of the petitioner, private respondents cannot be expected to accept with open arms their previous positions. The strained relationship of the parties justified the award of separation pay to private respondents computed to one month pay per year of service.
Full backwages are computed from the time employee's compensation was withheld up to the time of his actual reinstatement. However, since reinstatement is no longer possible due to the strained relationship of the parties, backwages must be computed from the time of private respondents' illegal dismissal up to the decision of the Court, without qualification and deduction.
WHEREFORE premises considered, petition is hereby DISMISSED. Corollarily, the prayer for a writ of temporary restraining order is-likewise DENIED.
SO ORDERED.6cralawlawlibrary
- The Order granting the recomputation until November 7, 2003 sought to change a final and executoiy decision of the Supreme Court, which already affirmed the Court of Appeals' Decision in CA-G.R. SP No. 75860 upholding the original award of the NLRC in its Decision dated August 30, 2002. The "Court" being referred to by the Court of Appeals is no one else but the NLRC from whose ruling the cut-off date of the award shall be reckoned;
- Wage increases should not be included in the computation. The base figure for the award should be the wage rate at the time the employees got illegally dismissed.
The reason for this was explained in Bani Rural Bank, Inc. v. De Guzman. When there is an order of separation pay (in lieu of reinstatement or when the reinstatement aspect is waived or subsequently ordered in light of a supervening event making the award of reinstatement no longer possible), the employment relationship is terminated only upon the finality of the decision ordering the separation pay. The finality of the decision cuts-off the employment relationship and represents the final settlement of the rights and obligations of the parties against each other. Hence, backwages no longer accumulate upon the finality of the decision ordering the payment of separation pay because the employee is no longer entitled to any compensation from the employer by reason of the severance of his employment. One cannot, therefore, attribute patent error on the part of the CA when it merely affirmed the NLRC's conclusion, which was clearly based on jurisprudence.In accordance with CICM Mission Seminaries, petitioners' backwages and separation pay here should, therefore, be computed from September 22, 2000 when they got illegally dismissed until November 25, 2008, when this Court's Decision dated August 13, 2008 became final and executory.
Plainly, it does not matter if the delay caused by an appeal was brought about by the employer or by the employee. The rule is, if the LA's decision, which granted separation pay in lieu of reinstatement, is appealed by any party, the employer-employee relationship subsists and until such time when decision becomes final and executory, the employee is entitled to all the monetary awards awarded by the LA.
In this case, respondent remained an employee of the petitioners pending her partial appeal. Her employment was only severed when this Court, in G.R. No. 200490, affirmed with finality the rulings of the CA and the labor tribunals declaring her right to separation pay instead of actual reinstatement. Accordingly, she is entitled to have her backwages and separation pay computed until October 4, 2012, the date when the judgment of this Court became final and executory, as certified by the Clerk of Court, per the Entry of Judgment in G.R. No. 200490.
The Court would not have expected the CA and the NLRC to rule contrary to the above pronouncements. If it were otherwise, all employees who are similarly situated will be forced to relinquish early on their fight for reinstatement, a remedy, which the law prefers over severance of employment relation. Furthermore, to favor the petitioners' position is nothing short of a derogation of the State's policy to protect the rights of workers and their welfare under Article II, Section 8 of the 1987 Constitution. (Emphasis supplied)
A demarcation line between salary increases and backwages was drawn by the Court in Paguio v. Philippine Long Distance Telephone Co., Inc., where therein petitioner Paguio, on account of his illegal transfer sought backwages, including an amount equal to 16 percent (16%) of his monthly salary representing his salary increases during the period of his demotion, contending that he had been consistently granted salary increases because of his above average or outstanding performance, x x xOn the other hand, the second category delves on guaranteed salary increases and benefits. Their grant is either mandated by law, standard company policy, or Collective Bargaining Agreement (CBA). To this category belong BPI Employees Union - Metro Manila and Zenaida Uy v. Bank of the Philippine Islands,27Lim v. HMR Philippines, Inc.,28United Coconut Chemicals, Inc. v. Valmores,29Tangga-an v. Philippine Transmarine Carriers, Inc.30 and Ocean East Agency, Corporation v. Lopez31 In these cases though, the Court had opposing dispositions.xxx xxx xxx
Applying Paguio to the case at bar, we are not prepared to accept that this degree of assuredness applies to respondent Sadac's salary increases. There was no lawful decree or order supporting his claim, such that his salary increases can be made a component in the computation of backwages. What is evident is that salary increases arc a mere expectancy. They are, by its nature volatile and are dependent on numerous variables, including the company's fiscal situation and even the employee's future performance on the job, or the employee's continued stay in a position subject to management prerogative to transfer him to another position where his services are needed. In short, there is no vested right to salary increases. That respondent Sadac may have received salary increases in the past only proves fact of receipt but does not establish a degree of assuredness that is inherent in backwages. From the foregoing, the plain conclusion is that respondent Sadac's computation of his full backwages which includes his prospective salary increases cannot be permitted.26 (Emphasis supplied)
xxx But if, as in this case, reinstatement is no longer possible, this Court has consistently ruled that backwages shall be computed from the time of illegal dismissal until the date the decision becomes final.It turned out, however, that Sarona too was short lived. As in the case of BPI Employees Union - Metro Manila which Sarona overturned, the latter itself was also overturned just a few months after it got promulgated. The Court En Banc, no less, abandoned Sarona via Gonzales v. Solid Cement Corporation34 reverting to Equitable and BPI.
In case separation pay is awarded and reinstatement is no longer feasible, backwages shall be computed from the time of illegal dismissal up to the finality of the decision should separation pay not be paid in the meantime. It is the employee's actual receipt of the full amount of his separation pay that will effectively terminate the employment of an illegally dismissed employee. Otherwise, the employer-employee relationship subsists and the illegally dismissed employee is entitled to backwages, taking into account the increases and other benefits, including the 13th month pay, that were received by his co-employees who are not dismissed. It is the obligation of the employer to pay an illegally dismissed employee or worker the whole amount of the salaries or wages, plus all other benefits and bonuses and general increases, to which he would have been normally entitled had he not been dismissed and had not stopped working. (Emphasis supplied)
In the case of BPI Employees Union - Metro Manila and Zenaida Uy v. Bank of the Philippine Islands and Bank of the Philippine Islands v. BPI Employees Union - Metro Manila and Zenaida Uy, the Court ruled that in computing backwages, salary increases from the time of dismissal until actual reinstatement, and benefits not yet granted at the time of dismissal are excluded. Hence, we cannot fault the CA for finding that the NLRC committed grave abuse of discretion in awarding the salary differential amounting to P617,517.48 and the 13th month pay differentials amounting to P51,459.48 that accrued subsequent to Gonzales' dismissal.35 (Emphasis supplied)Then five (5) months later, Tangga-an v. Philippine Transmarine Carriers Inc.36 came about. There, the Court's Second Division, revived the rule that the award ought to include benefits which under the employment contract, were guaranteed and not contingent, viz.: ChanRoblesVirtualawlibrary
At this juncture, the courts, especially the CA, should be reminded to read and apply this Court's labor pronouncements with utmost care and caution, taking to mind that in the very heart of the judicial system, labor cases occupy a special place. More than the State guarantees of protection of labor and security of tenure, labor disputes involve the fundamental survival of the employees and their families, who depend upon the former for all the basic necessities in life.Still, in Lim v. HMR Philippines, Inc.37 the Court's Third Division recognized that the company policy of granting a guaranteed 10% annual salary increase was already in place even before the employee got illegally dismissed. In fact, prior to his illegal dismissal, Lim had already been regularly receiving these guaranteed 10% annual salary increases. The Court, nonetheless, decreed that the award of backwages to the employee should not include those guaranteed 10% annual salary increases which took effect only after he was already illegally dismissed. In the main, the Court followed Equitable.
Thus, petitioner must be awarded his salaries corresponding to the unexpired portion of his six-months employment contract, or equivalent to four months. This includes all his corresponding monthly vacation leave pay and tonnage bonuses which are expressly provided and guaranteed in his employment contract as part of his monthly salary and benefit package. These benefits were guaranteed to be paid on a monthly basis, and were not made contingent. In fact, their monetary equivalent was fixed under the contract: US$2,500.00 for vacation leave pay and US$700.00 for tonnage bonus each month. Thus, petitioner is entitled to back salaries of US$32,800 (or US$5,000 + US$2,500 + US$700 = US$8,200 x 4 months). "Article 279 of the Labor Code mandates that an employee's full backwages shall be inclusive of allowances and other benefits or their monetary equivalent." As we have time and again held, "[i]t is the obligation of the employer to pay an illegally dismissed employee or worker the whole amount of the salaries or wages, plus all other benefits and bonuses and general increases, to which he would have been normally entitled had he not been dismissed and had not stopped working." This well-defined principle has likewise been lost on the CA in the consideration of the case. (Emphasis supplied)
Settled is the rule that an employee who was illegally dismissed from work is entitled to reinstatement without loss of seniority rights, and other privileges, as well as to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Since reinstatement is no longer feasible as Lopez' former position no longer exists, his backwages shall be computed from the time of illegal dismissal up to the finality of the decision. Backwages include the whole amount of salaries plus all other benefits and bonuses and general increases to which he would have been normally entitled had he not been illegally dismissed, such as the legally mandated Emergency Cost of Living Allowance (ECOLA) and thirteenth (13th ) month pay, and the meal and transportation allowances prayed for by Lopez. (Emphasis supplied)But then again, in United Coconut Chemicals, Inc. v. Valmores,39 the same Third Division decreed that the award of backwages to an illegally dismissed employee should only correspond to the basic salary, inclusive of allowances and benefits actually received at the time of illegal dismissal, viz.: ChanRoblesVirtualawlibrary
The base figure to be used in reckoning full backwages is the salary rate of the employee at the time of his dismissal. The amount does not include the increases or benefits granted during the period of his dismissal because time stood still for him at the precise moment of his termination, and move forward only upon his reinstatement. Hence, the respondent should only receive backwages that included the amounts being received by him at the time of his illegal dismissal but not the benefits granted to his coemployees after his dismissal.In the same case, the Court explained that this salary rate ought to exclude CBA allowances and benefits that were received by the workforce only after employee Valmores was already illegally dismissed. For these allowances and benefits, according to the Court, were not automatically given to a worker as the grant thereof was subject to certain conditions.xxx xxx xxx
CBA allowances and benefits that the respondent was regularly receiving before his illegal dismissal on February 22, 1996 should be added to the base figure of P11,194.00. This is because Article 279 of the Labor Code decrees that the backwages shall be "inclusive of allowances, and to his other benefits or their monetary equivalent." Considering that the law does not distinguish between the benefits granted by the employer and those granted under the CBA, he should not be denied the latter benefits. (Emphasis supplied)
Components of Magno's and Ocampo'sGiven the Court's repetitive self-contradictions in the award of backwages or separation pay owing to illegally dismissed employees and the consequent instability they have caused to our labor law jurisprudence, the time has come to settle these contradictions, once and for all.
Accrued Backwages
The third paragraph of Article 229 of the Labor Code provides: "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."
Article 294 of the Labor Code further provides: "x x x An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement."
Our jurisprudence has been consistent as to what should constitute accrued backwages. In Paramount Vinyl Products Corp. v. NLRC, we ruled that "the base figure to be used in the computation of backwages due to the employee should include not just the basic salary, but also the regular allowances that he had been receiving, such as the emergency living allowances and the 13th month pay mandated under the law." In United Coconut Chemicals, Inc. v. Valmores, we ruled that "[t]he base figure to be used in reckoning full backwages is the salary rate of the employee at the time of his dismissal. The amount does not include the increases or benefits granted during the period of his dismissal because time stood still for him at the precise moment of his termination, and move forward only upon his reinstatement." Entitlement to such benefits must be proved by submission of proof of having received the same at the time of the illegal dismissal. Increases are thus excluded from backwages.
Subject to submission of proof of receipt of benefits at the time of their dismissal, Magno's and Ocampo's accrued backwages should include their basic salary as well as the allowances and benefits that they have been receiving at the time of their dismissal. In accordance with the claims previously put forward by Magno and Ocampo, accrued backwages may include, but are not limited to, allowances and benefits such as transportation benefits, cellphone allowance, 13th month pay, sick leave, and vacation leave in the amounts at the time of their dismissal. Magno and Ocampo should also prove that they have been receiving the amounts that correspond to merit or salary increases, incentive pay, and medicine at the time of their dismissal so that they may validly qualify for receipt of such as part of their accrued backwages. (Emphasis supplied)
Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.When the law does not distinguish, we should not distinguish.
In several cases, the Court had the opportunity to elucidate on the reason for the grant of backwages. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained, either by virtue of a lawful decree or order, as in the case of a wage increase under a wage order, or by rightful expectation, as in the case of one's salary or wage. The outstanding feature of backwages is thus the degree of assuredness to an employee that he would have had them as earnings had he not been illegally terminated from his employment.42 (Emphasis supplied)But in Equitable, the Court's First Division categorically declared that salary increases were not allowances or benefits within the definition of Article 279 of the Labor Code, as amended by Republic Act No. 6715 (RA 6715), thus: ChanRoblesVirtualawlibrary
Attention must be called to Article 279 of the Labor Code of the Philippines, as amended by Section 34 of Rep. Act No. 6715. The law provides as follows:The constricted interpretation of the Court in Equitable that a salary increase cannot be interpreted as either an allowance or a benefit because it is a mere increment to salary is devoid of any legal basis. Amounts given over and above the base pay are either allowances or benefits, which necessarily include salary increases the grant of which may be fixed or conditional. We are not saying though that all salary increases should be included in the award of backwages; but only those guaranteed or assured which the employees would have been entitled to had they not been illegally dismissed.
ART. 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
Article 279 mandates that an employee's full backwages shall be inclusive of allowances and other benefits or their monetary equivalent. Contrary to the ruling of the Court of Appeals, we do not see that a salary increase can be interpreted as either an allowance or a benefit. Salary increases are not akin to allowances or benefits, and cannot be confused with either. The term "allowances" is sometimes used synonymously with "emoluments," as indirect or contingent remuneration, which may or may not be earned, but which is sometimes in the nature of compensation, and sometimes in the nature of reimbursement. Allowances and benefits are granted to the employee apart or separate from, and in addition to the wage or salary. In contrast, salary increases are amounts which are added to the employee's salary as an increment thereto for varied reasons deemed appropriate by the employer. Salary increases are not separate grants by themselves but once granted, they are deemed part of the employee's salary. To extend the coverage of an allowance or a benefit to include salary increases would be to strain both the imagination of the Court and the language of law. As aptly observed by the NLRC, "to otherwise give the meaning other than what the law speaks for by itself, will open the floodgates to various interpretations." Indeed, if the intent were to include salary increases as basis in the computation of backwages, the same should have been explicitly stated in the same manner that the law used clear and unambiguous terms in expressly providing for the inclusion of allowances and other benefits.43cralawlawlibrary
Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. (Article XII)and the edict under Article 3, Chapter I of the New Labor Code, thus: ChanRoblesVirtualawlibrary
Art. 3. Declaration of Basic Policy. The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work.Most important, it conforms with the purpose to restore an illegally dismissed employees to the same status as if their employment was not illegally severed by allowing them to continuously enjoy the salary, benefits, and allowances they were assured to receive during the term of their employment.
Endnotes:
* On leave.
1 Rollo, pp. 42-49.
2Id. at 48-49.
3 Penned by Presiding Commissioner Lourdes C. Javier and concurred in by Commissioner lreneo B. Bernardo and Commissioner Tito F. Genilo, NLRC Decision dated August 30, 2002, id. at 50-63.
4Id. at 61-62.
5 Penned by Associate Justice Buenaventura J. Guerrero and concurred in by Retired Supreme Court Justice Andres B. Reyes, Jr. and Associate Justice Regalado E. Maambong, id. at 64-74.
6Id. at 72-74.
7 Penned by Associate Justice Ma. Alicia Austria-Martinez and concurred in by Associate Justices Consuelo Ynares-Santiago, Minita V. Chico-Nazario, Antonio Eduardo B. Nachura and Ruben T. Reyes, id. at 76-90.
8Id. at 92.
9Id. at 98-100.
10Id. at 104-105.
11Id. at 109.
12Id. at 110-125.
13 Should be November 25, 2008 per Entry of Judgment dated January 8, 2009.
14 353 Phil. 461 (1998).
15 558 Phil. 2009 (2007).
16 Penned by Presiding Commissioner Alex A. Lopez and concurred in by Commissioners Gregorio O. Bilog, III and Pablo C. Espiritu, Jr., id. at 154-168.
17Id at 187-188.
18 Penned by Associate Justice Vicente S.E. Veloso and concurred in by Associate Justices Francisco P. Acosta and Michael P. Elbinias, id. at 279-302.
19Id. at 341.
20Id. at 8-41.
21Id. at 348-360.
22 803 Phil. 596,606-607(2017).
23 721 Phil 84, 103(2013).
24 441 Phil. 679 (2002).
25 523 Phil. 781 (2006).
26Id at 818-819.
27 673 Phil. 599(2011).
28 740 Phil. 353(2014).
29 813 Phil. 685(2017).
30 706 Phil. 339(2013).
31 771 Phil. 179(2015).
32 Supra note 27.
33 679 Phil. 394, 422-423(2012)
34 697 Phil. 619(2012).
35Id. at 638.
36 Supra note 30, at 351 -352.
37 Supra note 28.
38 Supra note 31, at 197.
39 Supra note 29, at 698-699.
40 G.R. No. 226002, June 25,2018.
41 G.R. No. 212520, July 3, 2019.
42 Supra note 24, at 690-691.
43 Supra note 25, at 810-811.
44 716 Phil. 267(2013).
CAGUIOA, J.:
I concur with the ponencia to grant the Petition. The amount of backwages and separation pay awarded in cases of illegal dismissal should include the salary increases which the employee would have received had he not been illegally dismissed. However, the increases should be limited only to mandatory and unconditional increases such as those mandated under a collective bargaining agreement (CBA), established company policy and practice, and government mandated wage increases. Increases based on merit or contingency should not be included.
Article 294 of the Labor Code1 provides that an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalentcomputed from the time his compensation was withheld from him up to the time of his actual reinstatement.
Backwages are awarded as remuneration for the employee's lost income from the erring employer due to illegal dismissal. Applying the established doctrine enunciated in Article 4 of the Labor Code, that labor laws shall be constructed in favor of labor, I believe that the phrase "full backwages" in Article 294 should be interpreted to include guaranteed salary increases.
The inclusion of increases in backwages has jurisprudential basis. In Fernandez, Jr. v. Manila Electric Company (MERALCO),2 the Supreme Court upheld the decision of the Court of Appeals (CA) that Lino A. Fernandez, Jr. (Fernandez) was illegally dismissed. In the execution proceedings before the Labor Arbiter (LA), one of the issues was whether Fernandez was entitled to additional backwages consisting of CBA salary increases implemented after his dismissal. The LA ruled in favor of Fernandez and granted him the CBA salary increases. Both parties filed petitions questioning the writ of execution which were dismissed on procedural grounds. The case eventually reached the Supreme Court.
The Court held that the National Labor Relations Commission Rules of Procedure must be liberally applied to prevent injustice and grave irreparable injury to an illegally dismissed employee and remanded the case to the LA. Without prejudice to the findings of the labor tribunals, the Court discussed the relevant laws and jurisprudence applicable to the case for the guidance of the labor tribunals, the Court noted:
Backwages shall include the whole amount of salaries, plus all other benefits and bonuses, and general increases, to which Fernandez would have been normally entitled had he not been illegally dismissed.3 (Emphasis supplied)In Paguio v. Philippine Long Distance Telephone Co., Inc.,4 (Paguio) the Court explained the ratio for the award of backwages: ChanRoblesVirtualawlibrary
In several cases, the Court had the opportunity to elucidate on the reason for the grant of backwages. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained, either by virtue of a lawful decree or order, as in the case of a wage increase under a wage order, or by rightful expectation, as in the case of one's salary or wage. The outstanding feature of backwages is thus the degree of assuredness to an employee that he would have had them as earnings had he not been illegally terminated from his employment.5 (Emphasis supplied)However, in Paguio, the employee's claim for inclusion of salary increases was denied. The Court ruled that he was not able to prove entitlement to them as he anchored his claim on previous grants of increases based on consistent evaluations of good performance. In contrast to the present case, the employees' entitlement to salary increases has clear and concrete basis under the CBA and is not merely an expectation based on merit or contingency.
We emphasize that the basis for the payment of backwages is different from that of the award of separation pay. Separation pay is granted where reinstatement is no longer advisable because of strained relations between the employee and the employer. Backwages represent compensation that should have been earned but were not collected because of the unjust dismissal. The basis for computing separation pay is usually the length of the employee's past service, while that for backwages is the actual period when the employee was unlawfully prevented from working.10 (Emphasis in the original)The computation of separation pay in case of illegal dismissal is patterned after the computation in Article 298 for separation pay due to redundancy which is computed at one-month salary for every year of service.
xxx Separation pay, equivalent to one month's salary for every year of service, is awarded as an alternative to reinstatement when the latter is no longer an option. Separation pay is computed from the commencement of employment up to the time of termination, including the imputed service for which the employee is entitled to backwages, with the salary rate prevailing at the end of the period of putative service being the basis for computation.13 (Emphasis supplied)Hence, herein petitioners-employees are entitled to their backwages and separation pay including the mandatory salary increases guaranteed and established under the CBA. I join in the ponencia that the Court abandon the rulings which exclude increases from the computation of backwages and separation and adopt a more pro-labor stance, provided that the employees are able to sufficiently prove their entitlement to the increases under a CBA, established company policy, or government wage order.
Endnotes:
1 Department of Labor and Employment, Department Advisory No. 01, Series of 2015, entitled "RENUMBERING OF LABOR CODE OF THE PHILIPPINES, AS AMENDED" dated July 21, 2015.
2 G.R. No. 226002, June 25, 2018, 868 SCRA 156.
3 Id. at 171.
4 G.R. No. 154072, December 3, 2002, 393 SCRA 379.
5 Id. at 386-387.
6Lepanto Consolidated Mining Company v. Dumapis, August 13, 2008, 562 SCRA 103.
7 ART. 298. [283]Closure of Establishment and Reduction of Personnel. - The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
8 ART. 299. [284]Disease as Ground for Termination. - An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co- employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.
9 G.R. No. 207983, April 7, 2014, 721 SCRA 126.
10 Id. at 141.
11 When there is an order of separation pay (in lieu of reinstatement or when the reinstatement aspect is waived or subsequently ordered in light of a supervening event making the award of reinstatement no longer possible), the employment relationship is terminated only upon the finality of the decision ordering the separation pay. The finality of the decision cuts-off the employment relationship and represents the final settlement of the rights and obligations of the parties against each other. Hence, backwages no longer accumulate upon the finality of the decision ordering the payment of separation pay since the employee is no longer entitled to any compensation from the employer by reason of the severance of his employment. Bani Rural Bank, Inc. v. De Guzman, G.R. No. 170904, November 13 2013, 709 SCRA 330, 351-352.
12 G.R. No. 106916, Septembers, 1999,313 SCRA 576.
13 Id. at 596.chanRoblesvirtualLawlibrary