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E C I S I
Antonio Surima filed on
11 September 1990 a Complaint against private respondent Loreta
Lim for overtime pay, 13th month pay, service incentive leave pay,
pay for holidays and rest days, and underpayment of wages. He alleged
he started working with private respondent in 1983 as Cashier of Horace
P. Lim Construction Supply, named after her son Horace, located in San
Jose, Antique. In the same establishment, he was also tasked with
rice and rice husk. Still another job he held for her was as collector
of rentals for her three (3) buildings.
Sometime in 1989,
Surima was transferred to Sibalom, Antique, where he worked again as
but this time at private respondent's Caltex gasoline station. In
of the same year, he also became a salesman in a drugstore owned by her
although during harvest seasons he would be placed in charge of her
of buying and selling palay. He was earning at that time, a monthly
On 1 October 1990,
or almost three  weeks after he filed his Complaint, petitioner was
allegedly dismissed without just cause, hence his additional claim for
back wages, reinstatement and attorney's fees.
contended that petitioner was first employed by her son, Horace. In
1989, when the latter's business flaundered and eventually ceased to
she hired petitioner as domestic helper receiving an income of P250.00
per week with free board and lodging. He also worked in her drugstore
only occasionally. On 1 October 1990 he left his work.
The Labor Arbiter did
not sustain the claim of illegal dismissal for lack of evidence. On the
other hand, he upheld the contention of private respondent that she
petitioner only in July 1989 for which he was adequately compensated.
on 26 June 1991 the complaint was dismissed.
On appeal, the National
Labor Relations Commission [NLRC] viewed the case differently.
to public respondent, respondent Loreta Pediapco Lim had the burden of
producing the employment records of her business enterprise as proof
petitioner was not in any way connected with any of her businesses
1983. She failed to discharge this burden. Even granting that
initially worked with her son, Horace, the undisputed fact is that her
son's business did not have a separate personality of its own. Thus, it
is not difficult to conclude that the business enterprises where
worked belonged to one and the same owner, private respondent herself,
hence, the finding of the NLRC that petitioner had been her employee
Furthermore, the NLRC
took into account the fact that only a day after petitioner allegedly
his work his counsel sent private respondent a letter protesting his
from the service. This prompt recourse to legal assistance was
inconsistent with the claim of abandonment. Moreover, there was not
a compliance by private respondent with the legal requisite of notice
petitioner at his last known address.
As a consequence, the
NLRC concluded that petitioner was illegally dismissed so that he was
to reinstatement with backwages. However, due to the strain in the
of the parties and the lapse of time, separation pay in lieu of
was considered by the NLRC to be more feasible under the circumstances.
Petitioner was likewise declared entitled to wage differentials, 13th
pay, service incentive leave pay and attorney's fees, but his other
were denied for lack of basis. Thus on 12 January 1995 private
Loreta Pediapco Lim was ordered to pay petitioner the following amounts:
1. Back Wages [1
Oct. 1990 to 30 Sept. 1993]
yrs./length of service
3 yrs./1 Oct. 1990 to 30 Sept. 1993]
36 mos. [3 yrs.] P36,000.00
26 das./mo. x 3 yrs. P7,215.00
5 das./mo. x 3 yrs. P1,387.50
[1 Oct. to 96 Nov. 1990]
26 das./mo. x 11 yrs P26,455.00
4. 13th Month Pay
[Minimum Wage Rate]
[Actual Salary Rate]
P36.50 x 52
to 28 Dec. 1990]
[Minimum Wage Rate]
[Actual Salary Rate]
P44.04 x 27
to 30 Sept. 1993)
[Minimum Wage Rate]
[Actual Salary Rate]
das./33 mos. P46,528.44
x 26 das P1,950.00
x 26 das 2,405.00
x 26 das./mo. 2,405.00
x 26 das./mo.
x 9/12 mos.
P92.50 x 5
x 3 yrs P1,387.50
for reconsideration while petitioner moved for recomputation of the
However, both motions were denied on 19 May 1995.
The NLRC found private respondent's motion without merit while that of
petitioner was filed beyond the 10-day reglementary period. The records
showed that petitioner received copy of the decision on 23 January 1995
but moved for recomputation only on 13 February 1995 after the decision
became final and executory on 2 February 1995.
then resorted to this Court in G.R. No. 120404 but her petition was
for failure to show grave abuse of discretion on the part of the NLRC.
The dismissal became final and executory on 28 August 1995.
For his part,
filed the instant petition assailing the NLRC for its grave abuse of
in the computation of his monetary awards and prayed that it be
to make the necessary recomputation. Petitioner alleges that the NLRC
contravened settled jurisprudence when it limited the period of his
to back wages, separation pay, wage differentials, 13th month pay and
incentive leave pay to only three  years reckoned from the time of
illegal dismissal. He also asserts that additional awards of wage
13th month pay and service incentive leave pay should be granted to him
covering the three-year period prior to the filing of the complaint
money claims prescribe in three  years.
that inasmuch as petitioner failed to timely move for reconsideration
could no longer seek other reliefs, and that it is perfectly within the
discretion of the NLRC to limit the award of back wages to three 
since it is not her fault that it took approximately four  years for
the appeal to be resolved. However, in the event a recomputation of the
back wages be granted private respondent asks for an opportunity to
petitioner's earnings elsewhere pursuant to Pines City Educational
But first, the
error committed by petitioner.
copy of the assailed decision on 23 January 1995. Not having filed a
for reconsideration within the ten -day reglementary period, the
became final and executory as to him on 2 February 1995. Petitioner
for recomputation only on 13 February 1995. Along the same line did we
rule in Labudahon v. NLRC
and Orient Express Placement Philippines v. NLRC
that on the strength of Article 223 of the Labor Code and Sec. 14, Rule
VII, New Rules of Procedure of the NLRC, in the absence of a motion for
reconsideration timely filed within the ten -day reglementary
the assailed order, resolution or decision of the NLRC becomes final
executory after ten  calendar days from receipt thereof.
consideration of substantial justice persuades Us to decide the present
case on the merits rather than to dismiss it on a technicality. In so
We exercise our prerogative in labor cases that no undue sympathy is to
be accorded to any claim of procedural misstep, the idea being that our
power must be exercised according to justice and equity and substantial
merits of the controversy. As We shall discuss in the succeeding
the assailed ruling of the NLRC in the instant case is contrary to law
and jurisprudence, thus making certiorari still an available remedy in
We had allowed in the
past appeals from the decisions of the Labor Arbiter to the NLRC even
filed beyond the reglementary period in the interest of substantial
Among these were Ruga v. NLRC
where Our Decision relied upon by respondent NLRC was not applicable;
Fair Corporation v. NLRC
where there was insufficient evidence to justify the enormous amount of
damages awarded; Valderrama v. NLRC
where we preferred to give life to the constitutional mandate for the
of labor; and, Philippine Airlines, Inc. v. NLRC
where we considered as enough reasons the Labor Arbiter's lack of
and perpetuation of unjust enrichment. By the same token, the present
deserves liberal treatment.
Article 979 of the
Labor Code as amended by Sec. 34 of RA No. 6715
provides: "An employee who is unjustly dismissed from work shall be
to reinstatement without loss of seniority rights and other privileges
and to his full back wages, inclusive of allowances, and to his other
or their monetary equivalent computed from the time his compensation
withheld from him up to the time of his actual reinstatement." The
took effect on 21 March 1989 and was thus applicable at the time of
dismissal on 1 October 1990. Two vital aspects of the provision have
the subject of interpretation by this Court. First, as to the total
of back wages, although the law speaks of "full backwages," Pines City
enunciated the rule that in the ascertainment of the total amount of
wages the entire amount derived from employment elsewhere by the
from the date of dismissal up to the date of reinstatement, if any,
be deducted therefrom. We have however reconsidered Pines City in
by holding that conformably with the evident legislative intent as
in R.A. No. 6715 the back wages to be awarded to an illegally dismissed
employee should not be diminished or reduced by the earnings derived by
him elsewhere during the period of his illegal dismissal.
The rationale for the
new ruling is that the employee, while litigating the legality
of his dismissal, must still earn a living to support himself and his
while the employer has to pay full back wages as part of his penalty
illegally dismissing his employee. The clear legislative intent of R.A.
No. 6715 as conveyed in Bustamante is to give more benefits to
than what were previously given them under the Mercury Drug
or the "deductions of earnings elsewhere" rule. Second, as to the time
frame for the computation of back wages, the provision mentions the
from withholding of compensation up to actual reinstatement, which
can be established with facility. However, there may be an instance
reinstatement is considered no longer feasible, necessitating award of
separation pay instead. The question now arises: When is the period for
computation of back wages and separation pay supposed to end? Gaco v.
addressed the question squarely by holding that in such circumstance,
computation shall be up to the time of finality of this Court's
Apparently, the justification is that along with the finality of this
decision the issue on illegal dismissal is finally laid to rest.
We agree with
that the NLRC gravely abused its discretion in the computation of his
awards. It shortened the period thereof to three  years
without any basis at all and in the process ignored current law and
Taking into account that the NLRC awarded separation pay in lieu of
the period should be up to the finality of this Court's decision. We
clarify however that what we are referring to is the decision in G.R.
120404 which finally settled the dispute on illegal dismissal and other
claims of petitioner on 28 August 1995.
Under Article 291 of
the Labor Code, money claims arising from an employer-employee
must be filed within three  years from the time the cause of action
accrued. Again we agree with petitioner that his claims consisting of
differentials, 13th month pay and service incentive leave pay may be
from 11 September 1987, or three years before the date of the filing of
the complaint, up to 11 September 1990.
The amounts that may be awarded shall be in addition to those already
and which form part of the total monetary awards. It is beyond our
to determine whether the actual salary rate of petitioner was below the
minimum wage rate from 11 September 1987 up to 11 September 1990. The
is better equipped to perform this task. Within the same period,
has established that he did not receive payments for his 13th month and
service incentive leave and such amounts should be included in the
WHEREFORE, the petition
is granted. The decision of public respondent NLRC dated 12 January
granting monetary awards to petitioner Antonio Surima is modified. The
NLRC is directed to recompute the following: [a] backwages from 1
1990 to 28 August 1995; [b] separation pay from 1983 to 28 August 1995;
[c] wage differentials, from 11 September 1987 to 11 September 1990 if
entitled thereto, 13th month pay and service incentive leave pay
the same period; [d] wage differentials, 13th month pay and service
leave pay from 1 October 1990 to 28 August 1995; and [e] attorney's
of ten percent [10%] of the total monetary awards.
Davide, Jr., Vitug,
Panganiban and Quisumbing, JJ., concur.
Decision penned by Labor Arbiter Dennis D. Juanon; Rollo, p. 23.
Decision penned by Presiding Commissioner Irenea E. Ceniza with the
of Commissioners Bernabe S. Batuhan and Amorito V. Cañete;
Records, p. 224.
Rollo of G.R. No. 120404, p, 65.
Id., p. 70.
G.R. No. 96779, 10 November 1993, 227 SCRA 655.
G.R. No. 112206, 11 December 1995, 251 SCRA 129.
G.R. No. 124766, 30 January 1997, 267 SCRA 287.
G.R. Nos. 72654-61, 22 January 1990,181 SCRA 266.
G.R. No. 95711, 21 April 1995, 243 SCRA 572 citing Firestone Tire and
Co. v. Larosa, 148 SCRA 191 and Chong Guan Trading v. NLRC, 172 SCRA
G.R. No. 98239, 25 April 1996, 256 SCRA 466.
G.R. No. 120506, 28 October 1996, 263 SCRA 638.
The New Labor Relations Law.
G.R. No. 111651, 28 November 1996, 265 SCRA 61.
G.R. No. 104690, 23 February 1994, 230 SCRA 260.
Reiterated in Oscar Ledesma and Company v. NLRC, G.R. No. 110930, 13
1995, 246 SCRA 47; Labor v. NLRC, G.R. No. 110388, 14 September 1995,
SCRA 183; Rasonable v. NLRC, G.R. No. 117195, 20 February 1996, 253
815; Bustamante v. NLRC, see Note 14.
Where the illegal dismissal transpired before the effectivity of R.A.
6715, the award of back wages in favor of the dismissed employee is
to three (3) years without deduction or qualification.
Uy v. NLRC, G.R. No. 117983, 6 September 1996, 261 SCRA 505.