XX. Vega, Jeselle Ann R.

153. Sarona v. NLRC, G.R No. 185280, January 18, 2012

FACTS: In 2003, petitioner Timoteo Sarona , who was hired by Sceptre Security Agency as a security
guard sometime in April 1976, was asked by Sceptre’s Operation Manager to submit a resignation letter
and to fill up Royale’s employment application form as the same were supposedly required for applying
for a position at Royale Security Agency. After several weeks of being in floating status, Royale’s
Security assigned the petitioner at Highlight Metal Craft, Inc. (Highlight Metal) from July 29, 2003 to
August 8, 2003. Thereafter, the petitioner was transferred and assigned to Wide Wide World Express, Inc.
(WWWE, Inc.). The petitioner was then informed that his assignment at WWWE, Inc. had been
withdrawn because Royale had allegedly been replaced by another security agency. The petitioner,
however, shortly discovered that Royale was never replaced as WWWE, Inc.’s security agency. He
learned that his fellow security guard was not relieved from his post. On September 21, 2003, the
petitioner was once again assigned at Highlight Metal, albeit for a short period from September 22, 2003
to September 30, 2003. Subsequently, when the petitioner reported at Royale’s office on October 1, 2003,
he was informed that he would no longer be given any assignment per the instructions of the General
Manager of Sceptre. This prompted him to file a complaint for illegal dismissal on October 4, 2003.

Labor Arbiter Jose Gutierrez (LA Gutierrez) ruled in the petitioner’s favor and found him
illegally dismissed. The allegation of the petitioner’s abandonment was negated by his filing of a
complaint for illegal dismissal three (3) days after he was informed that he would no longer be given any
assignments. The respondents were ordered to pay the petitioner backwages, which LA Gutierrez
computed from the day he was dismissed, or on October 1, 2003, up to the promulgation of his Decision
on May 11, 2005.

On Appeal, the NLRC concurred with the Labor Arbiter’s finding that the petitioner was illegally
dismissed but modified the monetary award in the petitioner’s favor by reducing the amount of his
backwages from ₱95,600.00 to ₱15,600.00. The NLRC determined the petitioner’s backwages as limited
to three (3) months of his last monthly salary, considering that his employment with Royale was only for
a period for one (1) month and three (3) days.

ISSUE: Whether or not the petitioner’s backwages should be limited to his salary for three months?

RULING: No, petitioner’s backwages should not be limited to his salary for three months.

Backwages is a remedy affording the employee a way to recover what he has lost by reason of the
unlawful dismissal. In awarding backwages, the primordial consideration is the income that should have
accrued to the employee from the time that he was dismissed up to his reinstatement and the length of
service prior to his dismissal is definitely inconsequential. As early as 1996, this Court, in Bustamante, et
al. v. NLRC, et al., clarified in no uncertain terms that if reinstatement is no longer possible, backwages
should be computed from the time the employee was terminated until the finality of the decision finding
the dismissal unlawful.

The Court holds Royale liable to pay the petitioner backwages to be computed from his dismissal
on October 1, 2003 until the finality of this decision. Nonetheless, the amount received by the petitioner
from the respondents in satisfaction of the previous decision shall be deducted accordingly.

154. Lim v. HMR Philippines, Inc., G.R No. 201483, August 4, 2014
FACTS: On February 8, 200I, petitioner Conrado A. Lim filed a case for illegal dismissal and money
claims against respondent HMR Philippines, Inc. The Labor Arbiter (LA) dismissed the complaint for
lack of merit. On April 11, 2003, the National Labor Relations Commission reversed the LA and declared
Lim to have been illegally dismissed. It ordered respondent to pay the Lim his full backwages, reckoned
from his dismissal on February 3, 2001 up to the promulgation of the decision. It further order the
Computation and Research Unit (CRU) of the Commission to compute the backwages and the 10%
annual increase from 1998 to 2000.

Both Lim and HMR filed their respective petitions for certiorari before the CA. The CA,
however, affirmed the NLRC decision. On February 7, 2007, the Supreme Court, in G.R. No. 175950-51,
dismissed the petition for certiorari filed by HMR assailing the CA’s decision. Entry of judgment was
ordered on July 27, 2007.

Lim moved for execution. On November 28, 2007, the Computation and Research Unit (CRU) of
the NLRC computed the total award to amount to ₱2,020,053.46, which computed the backwages from
February 3, 2001, the date of the illegal dismissal, up to October 31, 2007, the date of actual
reinstatement. HMR opposed the computation arguing that the backwages should be computed until April
11, 2003 only, the date of promulgation of the NLRC decision, as stated in the dispositive portion of the
NLRC decision, which provided that backwages shall be "reckoned from his dismissal on February 3,
2001 up to the promulgation of this Decision”.

ISSUE: Whether the computation of backwages should be reckoned until the promulgation of the NLRC
Decision on April 11, 2003 or until actual reinstatement?

RULING: The computation of backwages should be reckoned until his actual reinstatement.

Article 279 of the Labor Code is clear in providing that an illegally dismissed employee is
entitled to his full backwages computed from the time his compensation was withheld up to the time of
his actual reinstatement.

The Supreme Court held that when the claim relates to a status, such as the legality of the
termination of the employment relationship and a decision related to such claim is executed, what is
primarily implemented is the declaratory finding on the status and the rights and obligations of the parties
therein; the arising monetary consequences from the declaration only follow as component of the parties’
rights and obligations.

By the nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction, as
expressed under Article 279 of the Labor Code. The re-computation of the consequences of illegal
dismissal upon execution of the decision does not constitute an alteration or amendment of the final
decision being implemented. The illegal dismissal ruling stands; only the computation of monetary
consequences of this dismissal is affected and this is not a violation of the principle of immutability of
final judgments.

155. C.I.C.M Mission Seminaries v. Perez, G.R No. 220506, January 18, 2017

FACTS: An illegal dismissal case was filed by respondent Maria Veronica Perez against the petitioners.
In its June 16, 2008 Decision, the Labor Arbiter (LA) recognized respondent's right to receive from the
petitioners backwages and separation pay in lieu of reinstatement. Such decision was affirmed by the
NLRC, the CA and the Supreme Court, and became final and executory on October 4, 2012.
 Petitioners moved for the issuance of a certificate of satisfaction of judgment, alleging that their
obligation has been satisfied by the release of the cash bond in the amount of P272,337.05 to the
respondent. The LA however ruled that the cash bond was insufficient. It ruled that based on a
recomputation of the backwages until October 4, 2012, the total award was P 1,847,088.89.

The petitioners challenged the order of the LA which recomputed respondent's award of
additional backwages and separation pay until October 4, 2012, the finality of the Supreme Court's
decision. They argue that the computation of backwages and separation pay of respondent should be only
up to June 16, 2008, the date when the LA rendered her decision in the main case and which was also the
date when reinstatement was refused.

ISSUE: Whether or not the computation of backwages and separation pay should only be up to June 16,
2008, the date when the LA rendered the decision?

RULING: No, the computation should be up to the date of the finality of the decision on October 4,
2012.

In Gaco v. NLRC, it was ruled that with respect to the payment of backwages and separation pay
in lieu of reinstatement of an illegally dismissed employee, the period shall be reckoned from the time
compensation was withheld up to the finality of the Supreme Court's decision. The reason for this is that
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. 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.

156. Session Delights Ice Cream and Fast Foods v. CA. 625 Phil 612 (2010)

FACTS: On February 8, 2001, in a complaint for illegal dismissal filed by private respondent Adonis
Flora against petitioner, the Labor Arbiter (LA) found that Flora was illegally dismissed and awarded him
backwages, separation pay in lieu of reinstatement, indemnity, and attorney’s fees in the total amount of P
67,771.00. The decision was affirmed by the NLRC and the CA, and became final and executory on July
29, 2003.

In the course of the execution of the judgment, the Finance Analyst of the Labor Arbiter’s Office
updated computation of the monetary awards due the private respondent in the total amount of
₱235,986.00.14. This updated computation included additional backwages and separation pay due the
private respondent computed from March 1, 2001 to the date of the finality of the decision.

Petitioner alleged that the recomputation was invalid. The petitioner argues that since the labor
arbiter’s February 8, 2001 decision did not provide in its dispositive portion for a computation of the
monetary award up to the finality of the judgment in the case, the CA should have enforced the decision
according to its express and literal terms. The private respondent, for his part, counters that the
computation of the monetary award until the finality of the CA decision is in accord with Article 279 of
the Labor Code.

ISSUE: Whether or not whether a re-computation in the course of execution of the labor arbiter’s original
computation of the awards made, pegged as of the time the decision was rendered and confirmed with
modification by a final CA decision, is legally proper?

RULING: Yes.

The final decision of the Labor Arbiter in a case for illegal dismissal is essentially composed of
two parts: first is the finding of the illegality of the dismissal and the awards of separation pay in lieu of
reinstatement, backwages, attorney’s fees, and legal interests, and second is the computation of the
awards made. When this type of decision is executed, what is primarily implemented is the declaratory
finding on the status and the rights and obligations of the parties therein; the arising monetary
consequences from the declaration only follow as component of the parties’ rights and obligations.

The basis for the computation of separation pay and backwages is Article 279 of the Labor Code
which 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 equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.

By the nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction, as
expressed under Article 279 of the Labor Code. The re-computation of the consequences of illegal
dismissal upon execution of the decision does not constitute an alteration or amendment of the final
decision being implemented. The illegal dismissal ruling stands; only the computation of monetary
consequences of this dismissal is affected and this is not a violation of the principle of immutability of
final judgments.

157. Equitable Banking Corp. v. Ricardo Sadac, G.R No. 164772, June 8, 2006

FACTS: Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank
and subsequently General Counsel. Nine lawyers of petitioner Bank’s Legal Department accused
respondent Sadac of abusive conduct and petitioned for a change in leadership of the department. On the
ground of lack of confidence, Sadac was removed from his office on August 10, 1989. In reaction thereto,
respondent Sadac requested for a full hearing and formal investigation but the same remained unheeded.
On 9 November 1989, respondent Sadac filed a complaint for illegal dismissal with damages against
petitioner Bank and individual members of the Board of Directors thereof.

With the finality of the decision of the Supreme Court holding that Sadac was illegally dismissed,
he filed with the Labor Arbiter a Motion for Execution. Per respondent Sadac’s computation, the total
amount of the monetary award is P6,030,456.59, representing his backwages and other benefits, including
the general increases which he should have earned during the period of his illegal termination. Petitioner
Bank disputed respondent Sadac’s computation. Per its computation, the amount of monetary award due
respondent Sadac is P2,981,442.98 only, to the exclusion of the latter’s general salary increases and other
claimed benefits.

ISSUE: Whether or not general salary increases should be included in the computation of full
backwages?

RULING: No, general salary increases are not included.

 Article 279 mandates that an employee’s full backwages shall be inclusive of allowances and
other benefits or their monetary equivalent. A salary increase, however, cannot 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. 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.

Furthermore, as previously held by the Court, an unqualified award of backwages means that the
employee is paid at the wage rate at the time of his dismissal. The base figure to be used in the
computation of backwages is pegged at the wage rate at the time of the employee’s dismissal, inclusive of
regular allowances that the employee had been receiving such as the emergency living allowances and the
13th month pay mandated under the law.

In the case, a cursory reading of the dispositive portion of the Court’s decision holding that Sadac
was illegally dismissed, awarding backwages, readily shows that the award of backwages therein is
unqualified, ergo, without qualification of the wage as thus fixed at the time of the dismissal and without
deduction.

158. Paguio v. PLDT, G.R No. 154072, December 3, 2002

FACTS: Because of his continued criticism of the company’s performance, Petitioner Alfredo S. Paguio
was reassigned to a position that was considered frozen or functionless effective February 1, 1997.
Because of this, petitioner filed a case for illegal transfer. The LA dismissed the case, but was reversed by
the NLRC. The NLRC order PLDT to reassign petitioner to his former position without loss of seniority
rights and other privileges and to pay him the amount of P384, 000.00 equivalent to sixteen percent (16%)
of his monthly salary representing wage increase starting January 1997.

On appeal to the CA, the appellate court upheld the NLRC decision that petitioner’s transfer was
not justified by the circumstances. It however found no basis for the award of salary increases and deleted
such award.

ISSUE: Whether or not petitioner is entitled to an amount equal to 16% of his monthly salary
representing his salary increase during the period of his demotion?

RULING: No.

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.
 Petitioner’s claim, however, is based simply on expectancy. The particular award which
petitioner is seeking is not based on any wage order or decree but on an employee’s performance during a
certain period, as evaluated according to specified criteria. He claims that because in the past he had been
consistently rated for his outstanding performance and his salary correspondingly increased, it is probable
that he would similarly have been given high ratings and salary increases if not for his transfer to another
position in the company. Clearly then, petitioner’s claim is only based on an assumption, thus should not
be included in the computation of backwages for lack of degree of assuredness.

159. Reyes v. NLRC, G.R No. 180551, February 10, 2009

FACTS: A complaint for illegal dismissal was filed by petitioner Reyes against Coca Cola Bottlers
Philippines (CCBP). Petitioner alleged that he was first employed by respondent CCBP, through
Interserve Manpower Agency (Interserve), as a Leadman and was initially assigned to the Mendiola Sales
Office. Petitioner’s employment contract was renewed every five months and he was assigned a different
task every time. Such an arrangement continued until petitioner was directly hired by respondent CCBP
as a Route Salesman on 15 September 2000. Exactly one year from the time of petitioner’s employment
as a Route Salesman, respondent CCBP terminated his services on 15 September 2001. Since he already
acquired the status of a regular employee, petitioner asserted that his dismissal from employment without
the benefit of due process was unlawful.

The Labor Arbiter promulgated his Decision favoring petitioner. Respondent CCBP appealed to
the NLRC. The NLRC promulgated its Decision dismissing the appeal and affirming with modification
the decision of the Labor Arbiter. The NLRC reduced the amount of backwages awarded to petitioner
underscoring the latter’s unexplained delay, or more than three years, in filing his Complaint for illegal
dismissal. Instead, the NLRC reckoned the computation of backwages only from the time petitioner filed
his Complaint for illegal dismissal before the Labor Arbiter. It also deleted the order for reinstatement
made by the Labor Arbiter and instead ordered the payment of separation pay.

ISSUES:
a. Whether or not the NLRC gravely abused its discretion in reducing the amount of backwages
awarded computed from the time the complaint for illegal dismissal was filed?
b. Whether or not the NLRC it was proper for the NLRC to delete the order for reinstatement?

RULING:
a. Yes.

Article 279 of the Labor Code provides that an illegally dismissed employee shall be entitled,
inter alia, to the payment of his full backwages, inclusive of allowances and to his other benefits or their
monetary equivalent computed from the time that his compensation was withheld from him, i.e., from the
time of his illegal dismissal, up to the time of his actual reinstatement.

The NLRC modified the Labor Arbiter’s award for backwages by computing the same only from
the time petitioner filed his Complaint for illegal dismissal before the Labor Arbiter, i.e., on 24 October
2004, up to the day when the Labor Arbiter promulgated his judgment, i.e., 30 April 2005. The NLRC
provided no other explanation for its modification except that it was just and equitable to reduce the
amount of backwages given to petitioner since, having been dismissed on 15 September 2001, it took him
more than three years to file his Complaint.

There is no justice or rationality in the distinction created by the NLRC; and when there is neither
justice nor rationality, the distinction transgresses the elementary principle of equal protection and must
be stricken out. Equal protection requires that all persons or things similarly situated should be treated
alike, as to both rights conferred and responsibilities imposed. There is no sufficient basis why petitioner
should not be placed in the same plane with other illegally dismissed employees who were awarded
backwages without qualification.

b. No.

To protect the employee’s security of tenure, the Court has emphasized that the doctrine of
"strained relations" should be strictly applied so as not to deprive an illegally dismissed employee of his
right to reinstatement. Every labor dispute almost always results in "strained relations," and the phrase
cannot be given an overarching interpretation; otherwise, an unjustly dismissed employee can never be
reinstated.

The assumption of strained relations was already debunked by the fact that as early as March
2006 petitioner returned to work for respondent CCBP, without any antagonism having been reported
thus far by any of the parties.

160. Aro v. NLRC, G.R No. 174792, March 7, 2012

FACTS: Several employees of private respondent Benthel Development Corporation, including the
petitioners, filed a complaint for illegal dismissal against the latter. The Labor Arbiter rendered a decision
finding private respondent guilty of illegal dismissal and ordering it to pay its thirty-six (36) employees
₱446,940.00 as separation pay. Such decision was affirmed by the NLRC, with the modification that
private respondent pay backwages computed from the respective dates of dismissal until finality of the
decision. This was later affirmed by the Supreme Court and became final and executory.

Upon motion, the Labor Arbiter ordered for the issuance of a writ of execution directing the
computation of the awards. Private respondent appealed to the NLRC arguing that since it has been found
by the Labor Arbiter and affirmed that the employees were project employees, the computation of
backwages should be limited to the date of the completion of the project and not to the finality of the
decision.

ISSUE: Whether or not the computation of backwages for project employess should be limited to the date
of the completion of the project and not to the finality of the decision?

RULING: Yes.

It is settled that, without a valid cause, the employment of project employees cannot be
terminated prior to expiration. Otherwise, they shall be entitled to reinstatement with full backwages.
However, if the project or work is completed during the pendency of the ensuing suit for illegal dismissal,
the employees shall be entitled only to full backwages from the date of the termination of their
employment until the actual completion of the work. If the project is not yet completed, illegally
dismissed workers are entitled to the payment of their salaries corresponding to the unexpired portion of
their employment where the employment is for a definite period.

In this case, as found by the CA, the Cordova Reef Village Resort project had been completed in
October 1996 and private respondent herein had signified its willingness, by way of concession to
petitioners, to set the date of completion of the project as March 18, 1997; hence, the latter date should be
considered as the date of completion of the project for purposes of computing the full backwages of
petitioners.