Republic
of the
Philippines
SUPREME
COURTEN
BANC
OSMALIK
S.
BUSTAMANTE,
PAULINO A. BANTAYAN,
FERNANDO
L.
BUSTAMANTE,
MARIO D. SUMONOD
AND SABU
J. LAMARAN,
Petitioner,
G.
R.
No. 111651
November
28, 1996
-versus-
NATIONAL
LABOR
RELATIONS
COMMISSION,
FIFTH
DIVISION AND
EVERGREEN FARMS, INC.,
Respondents.
R
E S O L U
T I O N
PADILLA,
J :
On 15 March 1996, the Court
[First Division] promulgated a decision in this case, the dispositive
part
of which states:
"WHEREFORE, the
Resolution
of the National Labor Relations Commission dated 3 May 1993 is modified
in that its deletion of the award for backwages in favor of
petitioners,
is SET ASIDE. The decision of the Labor Arbiter dated 26 April 1991 is
affirmed with the modification that backwages shall be paid to
petitioners
from the time of their illegal dismissal on 25 June 1990 up to the date
of their reinstatement. If reinstatement is no longer feasible, a
one-month
salary shall be paid the petitioners as ordered in the labor arbiter's
decision, in addition to the adjudged backwages."
Private respondent now
moves to reconsider the Decision on grounds that [a] petitioners are
not
entitled to recover backwages because they were not actually dismissed
but their probationary employment was not converted to permanent
employment;
and [b] assuming that petitioners are entitled to backwages,
computation
thereof should not start from cessation of work up to actual
reinstatement,
and that salary earned elsewhere [during the period of illegal
dismissal]
should be deducted from the award of such backwages.
There is no compelling
reason to reconsider the Decision of the Court [First Division] dated
15
March 1996. However, We here clarify the computation of backwages due
an
employee on account of his illegal dismissal from employment.
This Court has over
the years, applied different methods in the computation of backwages.
The
first labor relations law governing the award of backwages was Republic
Act No. 875, the Industrial Peace Act, approved on 17 June 1953.
Sections
5 and 15 thereof provided thus:cralaw:red
"Sec. 5. Unfair
Labor Practice Cases. -
[c] If, after
investigation,
the Court shall be of the opinion that any person named in the
complaint
has engaged in or is engaging in any unfair labor practice, then the
Court
shall state its findings of fact and shall issue and cause to be served
on such person an order requiring such person to cease and desist from
such unfair labor practice and take such affirmative action as will
effectuate
the policies of this Act, including (but not limited to) reinstatement
of employees with or without back-pay and including rights of the
employees
prior to dismissal including seniority. [Emphasis supplied].
Sec. 15. Violation
of Duty to Bargain Collectively. - Any employee whose work
has
stopped as a consequence of such lockout shall be entitled to back-pay.
[Emphasis supplied]."
In accordance with these
provisions, backpay [the same as backwages] could be awarded where, in
the opinion of the Court of Industrial Relations [CIR], such was
necessary
to effectuate the policies of the Industrial Peace Act.[1]
Only in one case was backpay a matter of right, and that was, when an
employer
had declared a lockout without having first bargained collectively with
his employees in accordance with the provisions of the Act.
As the CIR was given
wide discretion to grant or disallow payment of backpay [backwages] to
an employee, it also had the implied power of mitigating (reducing) the
backpay where backpay was allowed.[2]
Thus, in the exercise of its jurisdiction, the CIR increased or
diminished
the award of backpay, depending on several circumstances, among them,
the
good faith of the employer,[3]
the employee's employment in other establishments during the period of
illegal dismissal, or the probability that the employee could have
realized
net earnings from outside employment if he had exercised due diligence
to search for outside employment.[4]
In labor cases decided during the effectivity of R. A. No. 875, this
Court
acknowledged and upheld the CIR's authority to deduct any amount from
the
employee's backwages[5]
including the discretion to reduce such award of backwages by whatever
earnings were obtained by the employee elsewhere during the period of
his
illegal dismissal.[6]
In the case of Itogon-Suyoc Mines, Inc. v. Sañgilo-Itogon
Workers’
Union,[7]
this Court restated the guidelines for determination of total
backwages,
thus:
"First. To be
deducted from the backwages accruing to each of the laborers to be
reinstated
is the total amount of earnings obtained by him from other
employment[s]
from the date of dismissal to the date of reinstatement. Should the
laborer
decide that it is preferable not to return to work, the deduction
should
be made up to the time judgment becomes final. And these, for the
reason
that employees should not be permitted to enrich themselves at the
expense
of their employer. Besides, there is the law's abhorrence for double
compensation.
"Second. Likewise,
in mitigation of the damages that the dismissed respondents are
entitled
to, account should be taken of whether in the exercise of due diligence
respondents might have obtained income from suitable remunerative
employment.
We are prompted to give out this last reminder because it is really
unjust
that a discharged employee should, with folded arms, remain inactive in
the expectation that a windfall would come to him. A contrary view
would
breed idleness; it is conducive to lack of initiative on the part of a
laborer. Both bear the stamp of undesirability."
From this ruling came the
burden of disposing of an illegal dismissal case on its merits and of
determining
whether or not the computation of the award of backwages is correct. In
order not to unduly delay the disposition of illegal dismissal cases,
this
Court found occasion in the case of Mercury Drug Co., Inc., et al. v.
CIR,
et al.[8]
to rule that a fixed amount of backwages without further qualifications
should be awarded to an illegally dismissed employee [hereinafter the Mercury
Drug rule]. This ruling was grounded upon considerations of
expediency
in the execution of the Decision. Former Justice Claudio Teehankee
approved
of this formula expressing that such method of computation is a
"realistic,
reasonable and mutually beneficial solution" and "thus obviates the
twin
evils of idleness on the part of the employees and attrition and undue
delay in satisfying the award on the part of the employer."[9]
However, Justice Teehankee dissented from the majority view that the
employee
in said case should be awarded backwages only for a period of 1 year,
11
months and 15 days which represented the remainder of the prescriptive
period after deducting the period corresponding to the delay incurred
by
the employee in filing the complaint for unfair labor practice and
reinstatement.
Justice Teehankee opined that:
"An award of back
wages
equivalent to three years [where the case is not terminated sooner]
should
serve as the base figure for such awards without deduction, subject to
deduction where there are mitigating circumstances in favor of the
employer
but subject to increase by way of exemplary damages where there are
aggravating
circumstances [e.g., oppression or dilatory appeals] on the
employer's
part."[10]
The proposal on the three-year
backwages was subsequently adopted in later cases, among them, Feati
University
Faculty Club [PAFLU] v. Feati University [No. L-31503, 15 August 1974,
58 SCRA 395], Luzon Stevedoring Corporation v. CIR [No. L-34300, 22
November
1974, 61 SCRA 154], Danao Development Corporation v. NLRC [Nos. L-40706
and L-40707, 16 February 1978, 81 SCRA 487], Associated Anglo-American
Tobacco Corporation v. Lazaro [No. 63779, 27 October 1983, 125 SCRA
463),
Philippine National Oil Company — Energy Development Corporation v.
Leogardo
[G. R. No. 58494, 5 July 1989, 175 SCRA 26].
Then came Presidential
Decree No. 442 [the Labor Code of the Philippines] which was signed
into
law on 1 May 1974 and which took effect on 1 November 1974. Its posture
on the award of backwages, as amended, was expressed as follows:
“Art. 279. Security
of Tenure. — In case 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 to his
backwages
computed from the time his compensation was withheld from him up to the
time of his reinstatement. [Emphasis supplied]."
Under the abovequoted provision,
it became mandatory to award backwages to illegally dismissed regular
employees.
The law specifically declared that the award of backwages was to be
computed
from the time compensation was withheld from the employee up to the
time
of his reinstatement. This notwithstanding, the rule generally applied
by the Court after the promulgation of the Mercury Drug case,[11]
and during the effectivity of P.D. No. 442 was still the Mercury Drug
rule.
A survey of cases from 1974 until 1989 when the amendatory law to P.D.
No. 442, namely, R.A No. 6715 took effect, supports this conclusion.
In the case of New
Manila Candy Workers Union [Naconwa-Paflu] v. CIR [1978],[12]
or after the Labor Code [P.D. No. 442] had taken effect, the Court
still
followed the Mercury Drug rule to avoid the necessity of a
hearing
on earnings obtained elsewhere by the employee during the period of
illegal
dismissal In an even later case [1987][13]
the Court declared that the general principle is that an employee is
entitled
to receive as backwages all the amounts he may have received from the
date
of his dismissal up to the time of his reinstatement. However, in
compliance
with the jurisprudential policy of fixing the amount of backwages to a
just and reasonable level, the award of backwages equivalent to three
(3)
years, without qualification or deduction, was nonetheless followed in
said case.
In a more direct
approach
to the rule on the award of backwages this Court declared in the 1990
case
of Medado v. Court of Appeals[14]
that "any decision or order granting backwages in excess of three (3)
years
is null and void as to the excess."
In sum, during the
effectivity of P.D. 442, the Court enforced the Mercury Drug rule and,
in effect, qualified the provision under P.D. No. 442 by limiting the
award
of backwages to three (3) years.
On 21 March 1989,
Republic
Act No. 6715 took effect, amending the Labor Code. Article 279 thereof
states in part:
“Art. 279. Security
of Tenure. - 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 is withheld from him up to the time of his actual
reinstatement."
[Emphasis supplied].
In accordance with the
above provision, an illegally dismissed employee is entitled to his
full
backwages from the time his compensation was withheld from him (which
as
a rule is from the time of his illegal dismissal) up to the time of his
actual reinstatement. It is true that this Court had ruled in the case
of Pines City Educational Center vs. NLRC (G.R. No. 96779, 10 November
1993, 227 SCRA 655) that "in ascertaining the total amount of backwages
payable to them (employees), we go back to the rule prior to the
Mercury
Drug rule that the total amount derived from employment elsewhere by
the
employee from the date of dismissal up to the date of reinstatement, if
any, should be deducted therefrom."[15]
The rationale for such ruling was that the earnings derived elsewhere
by
the dismissed employee while litigating the legality of his dismissal,
should be deducted from the full amount of backwages which the law
grants
him upon reinstatement, so as not to unduly or unjustly enrich the
employee
at the expense of the employer.
The Court deems it
appropriate, however, to reconsider such earlier ruling on the
computation
of backwages as enunciated in said Pines City Educational Center case,
by now holding that comformably with the evident legislative intent as
expressed in Rep. Act No. 6715, abovequoted, backwages to be awarded to
an illegally dismissed employee, should not, as a general rule, be
diminished
or reduced by the earnings derived by him elsewhere during the period
of
his illegal dismissal. The underlying reason for this ruling is that
the
employee, while litigating the legality [illegality] of his dismissal,
must still earn a living to support himself and family, while full
backwages
have to be paid by the employer as part of the price or penalty he has
to pay for illegally dismissing his employee. The clear legislative
intent
of the amendment in Rep. Act No. 6715 is to give more benefits to
workers
than was previously given them under the Mercury Drug rule or the
"deduction
of earnings elsewhere" rule. Thus, a closer adherence to the
legislative
policy behind Rep. Act No. 6715 points to "full backwages" as meaning
exactly
that, i.e., without deducting from backwages the earnings
derived
elsewhere by the concerned employee during the period of his illegal
dismissal.[16]
In other words, the provision calling for "full backwages" to illegally
dismissed employees is clear, plain and free from ambiguity and,
therefore,
must be applied without attempted or strained interpretation. Index
animi sermo est.[17]
Therefore, in
accordance
with R.A. No. 6715, petitioners are entitled to their full backwages,
inclusive
of allowances and other benefits or their monetary equivalent, from the
time their actual compensation was withheld from them up to the time of
their actual reinstatement.
As to reinstatement
of petitioners, this Court has already ruled that since reinstatement
is
no longer feasible, because the company would be unjustly prejudiced by
the continued employment of petitioners who, at present, are overage, a
separation pay equal to one-month salary granted to them in the Labor
Arbiter's
Decision was in order and, therefore, affirmed in the Court's Decision
of 15 March 1996. Furthermore, since reinstatement in this case is no
longer
feasible, the amount of backwages shall be computed from the time of
their
illegal termination on 25 June 1990 up to the time of finality of this
Decision.[18]
ACCORDINGLY, private
respondent's Motion for Reconsideration dated 10 April 1996, is DENIED.
SO ORDERED.
Narvasa, C.J.,
Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan,
Mendoza, Francisco, Hermosisima, Jr., Panganiban, and Torres, Jr., JJ.,
concur.
________________________
Endnotes:
[1]
Perfecto V. Fernandez and Camilo D. Quiason, The Law of Labor Relations
477 (1963).
[2]
United Employees Welfare Association v. Isaac Peral Bowling Alleys, G.
R. No. L-16327, 30 September 1958, 104 Phil. 640.
[3]
Findlay Millar Timber Co., v. PLASLU, L-18217 and L-18222, 29 September
1962, 6 SCRA 227.
[4]
Republic Savings Bank v. CIR, L-20303, 31 October 1967, 21 SCRA 661.
[5]
Cromwell Commercial Employees and Laborers Union (PTUC) v. CIR,
L-19778,
26 February 1965, 13 SCRA 258; Industrial Commercial-Agricultural
Workers’
Organization v. CIR, et al. L-21645, 31 March 1966, 16 SCRA 562, 569;
East
Asiatic Company Ltd v. CIR, L-29068, 31 August 1971, 40 SCRA 521.
[6]
Mindanao Motor Line, Inc. v. CIR, L-18418, 29 November 1962, 65 SCRA
710;
Rizal Labor Union, et al., L-14779, 30 July 1966, 17 SCRA 858.
[7]
No. L-21489, 30 August 1968, 24 SCRA 873.
[8]
No. L-23357, 30 April 1974, 56 SCRA 694, 709.
[9]
Id at 711.
[10]
Id. at 712. Justice Teehankee’s formula for the award of backwages
equivalent
to three (3) years is based on the period for the trial of the case and
resolution of the appeal — one [1] year for trial and resolution in the
industrial court and two [2] years for briefs and decisions in this
Court.
[11]
It is noteworthy that the Mercury Drug case was promulgated on 30 April
1974, a day before P.D. No. 442 was signed into law. Hence, at the time
it was rendered, the law then effective was R.A. No. 275.
[12]
No. L-29728, 30 October 1978, 86 SCRA 36.
[13]
Durabuilt Recapping Plant & Co. vs. NLRC, No. 76746, 27 July 1987,
152 SCRA 328.
[14]
G.R. No. 84664, 7 May 1990, 185 SCRA 80.
[15]
The Pines City Educational Center case merely reiterated the doctrine
laid
down in Ferrer v. National Labor Relations Commission (G.R. No. 100898,
5 July 1993, 224 SCRA 410, 423) which adopted the rule applied prior to
the Mercury Drug Rule, "which is that the employer may, however, deduct
any amount which the employee may have earned during the period of his
illegal termination"
[16]
There is furthermore the practical consideration that a determination
of
the earnings derived by an employee during the period of his illegal
dismissal,
could unduly delay and complicate the proceedings for reinstatement
with
full backwages.
[17]
Agpalo, Ruben, Statutory Construction, p. 94.
[18]
Itogon-Suyoc Mines, Inc. v. Sañgilo-Itogon Workers' Union [No.
L-24189
30 August 1968, 26 SCRA 873, 887]; Labor v. NLRC, [G.R. No. 110388, 14
September 1995, 248 SCRA 183]; Gaco vs. NLRC, [G.R. No. 104690, 23
February
1994, 230 SCRA 260]; Oscar Ledesma and Company v. NLRC, [G.R. No.
110930,
13 July 1995, 246 SCRA 47]; Rasonable v. NLRC, et al., [G.R. No.
117195,
20 February 1996].
|