Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=82632:56480&catid=1576&Itemid=566
Timestamp: 2019-04-24 16:52:54+00:00

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G.R. No. 170904, November 13, 2013 - BANI RURAL BANK, INC., ENOC THEATER I AND II AND/OR RAFAEL DE GUZMAN, Petitioners, v. TERESA DE GUZMAN, EDGAR C. TAN AND TERESA G. TAN, Respondents.
BANI RURAL BANK, INC., ENOC THEATER I AND II AND/OR RAFAEL DE GUZMAN, Petitioners, v. TERESA DE GUZMAN, EDGAR C. TAN AND TERESA G. TAN, Respondents.
We pass upon the petition for review on certiorari1 under Rule 45 of the Rules of Court filed by petitioners Bani Rural Bank, Inc., ENOC Theater I and II, and Rafael de Guzman. They assail the decision2 dated September 1, 2005 and the resolution3 dated December 14, 2005 of the Court of Appeals (CA) in CA–G.R. SP No. 70085. The assailed CA rulings, in turn, affirmed the computation of the backwages due respondents Teresa de Guzman and Edgar C. Tan4 made by the National Labor Relations Commission (NLRC).
The parties did not file any motion for reconsideration or appeal. The March 17, 1995 resolution of the NLRC became final and executory and the computation of the awards was remanded to the labor arbiter for execution purposes.
The respondents filed a motion for reconsideration on whether the award of backwages was still included in the judgment. The NLRC dismissed the motion for having been filed out of time.
On January 29, 1999, the July 31, 1998 decision of the NLRC lapsed to finality and became executory.
The recomputation of the monetary awards of the respondents’ backwages and separation pay, according to the decision dated July 31, 1998 and the modified terms of the March 17, 1995 resolution of the NLRC, was referred to Labor Arbiter Gambito. In the course of the recomputation, the petitioners filed before Labor Arbiter Gambito a Motion to Quash Writ of Execution and Suspend Further Execution; they reiterated their position that the respondents’ backwages should be computed only up to August 25, 1995, citing the alleged manifestation made by the respondents, through Samuel de la Cruz, as their basis.
In an order11 dated July 12, 2000, Labor Arbiter Gambito computed the respondents’ backwages only up to August 25, 1995.
The NLRC emphasized that the issue relating to the computation of the respondents’ backwages had been settled in its July 31, 1998 decision. In a resolution dated January 23, 2002, the NLRC denied the motion for reconsideration filed by the petitioners.
(A) THE COMMISSION ACTED WITHOUT JURISDICTION AND WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT REVERSED AND SET ASIDE THE ORDER OF LABOR ARBITER ROLANDO D. GAMBITO DATED JULY 12, 2000 AND ORDERED THE COMPUTATION OF PRIVATE RESPONDENTS’ BACKWAGES TO COVER THE PERIOD AFTER AUGUST 25, 1995, OR UNTIL JANUARY 29, 1999, THE DATE OF FINALITY OF THE SECOND RESOLUTION OF THE COMMISSION.
Citing the case of Chronicle Securities Corp. v. NLRC,17 the CA held that backwages are granted to an employee or worker who had been illegally dismissed from employment. If reinstatement is no longer possible, the backwages shall be computed from the time of the illegal termination up to the finality of the decision.
(3) When it declared that only errors of judgment, and not jurisdiction, were committed by the NLRC.
In their Comment,18 the respondents contend that the computation of the backwages until January 29, 1999 was consistent with the tenor of the decision dated July 31, 1998 and the modified March 17, 1995 resolution of the NLRC.
As presented, the issue boils down to whether the respondents’ backwages had been correctly computed under the decision dated September 28, 2001 of the NLRC, as confirmed by the CA, in light of the circumstance that there were two final NLRC decisions affecting the computation of the backwages.
The first part of the decision stems from the March 17, 1995 NLRC resolution finding an illegal dismissal and defining the legal consequences of this dismissal. The second part involves the computation of the monetary award of backwages and the respondents’ reinstatement. Under the terms of the March 17, 1995 resolution, the respondents’ backwages were to be computed from the time of the illegal dismissal up to their reinstatement.
In the first computation of the backwages, Labor Arbiter Gambito confronted the following circumstances and the Sheriff’s Report dated November 8, 1995:23first, how to interpret the phrase “less earnings elsewhere” as stated in the dispositive portion of the March 17, 1995 resolution of the NLRC; second, the effect of the alleged manifestation (dated October 9, 1995) of Samuel that the respondents were only interested in the monetary award, not in their reinstatement; and third, the effect of the respondents’ counsel’s statement during the pre–execution proceedings that the respondents simply wanted to be reinstated.
The NLRC disregarded Labor Arbiter Gambito’s first computation. In the dispositive portion of its July 31, 1998 decision, the NLRC modified the final March 17, 1995 resolution. The first part of this decision – the original ruling of illegal dismissal – was left untouched while the second part of the decision – the monetary award and its computation – was altered to conform with the strained relations between the parties that became manifest during the execution phase of the March 17, 1995 resolution.
The effect of the modification of the March 17, 1995 resolution of the NLRC was two–fold: one, the reinstatement aspect of the March 17, 1995 resolution was expressly substituted by an order of payment of separation pay; and two, the July 31, 1998 decision of the NLRC now provided for two monetary awards (backwages and separation pay). The July 31, 1998 decision of the NLRC became final since neither parties appealed.
That there is already a final and executory March 17, 1995 resolution finding that respondents have been illegally dismissed, and awarding backwages and reinstatement, is not disputed. That there, too, is the existence of another final and executory July 31, 1998 decision modifying the reinstatement aspect of the March 17, 1995 resolution, by awarding separation pay, is likewise beyond dispute.
Under the circumstances of this case, the existence of the strained relations between the petitioners and the respondents was a supervening event that justified the NLRC’s modification of its final March 17, 1995 resolution. The NLRC, in its July 31, 1998 decision, based its conclusion that strained relations existed on the conduct of the parties during the first execution proceedings before Labor Arbiter Gambito. The NLRC considered the delay in the respondents’ reinstatement and the parties’ conflicting claims on whether the respondents wanted to be reinstated.29 The NLRC also observed that during the intervening period from the first computation (which was done in 1995) to the appeal and resolution of the correctness of the first computation (subject of the NLRC’s July 31, 1998 decision), neither party actually did anything to implement the respondents’ reinstatement. The NLRC considered these actions as indicative of the strained relations between the parties so that neither of them actually wanted to implement the reinstatement decree in the March 17, 1995 resolution. The NLRC concluded that the award of reinstatement was no longer possible; thus, it awarded separation pay, in lieu of reinstatement. Unless exceptional reasons are presented, these above findings and conclusion can no longer be disturbed after they lapsed to finality.
In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we have to view the CA decision in the same context that the petition for certiorari it ruled upon was presented to it; we have to examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the case was correct. In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it. This is the approach that should be basic in a Rule 45 review of a CA ruling in a labor case. In question form, the question to ask is: Did the CA correctly determine whether the NLRC committed grave abuse of discretion in ruling on the case?
This manner of review was reiterated in Holy Child Catholic School v. Hon. Patricia Sto. Tomas, etc., et al.,31 where the Court limited its review under Rule 45 of the CA’s decision in a labor case to the determination of whether the CA correctly resolved the presence or absence of grave abuse of discretion in the decision of the Secretary of Labor, and not on the basis of whether the latter’s decision on the merits of the case was strictly correct.
With this standard in mind, we find no reversible error committed by the CA when it found no grave abuse of discretion in the NLRC’s ruling. We find the computation of backwages and separation pay in the September 28, 2001 decision of the NLRC consistent with the provisions of law and jurisprudence. The computation conforms to the terms of the March 17, 1995 resolution (on illegal dismissal and payment of backwages) and the July 31, 1998 decision (on the computation of the backwages and the payment of separation pay).
Article 279. Security of Tenure. – 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.
Second, when separation pay is ordered in lieu of reinstatement (in the event that this aspect of the case is disputed) or reinstatement is waived by the employee (in the event that the payment of separation pay, in lieu, is not disputed), backwages is computed from the time of dismissal until the finality of the decision ordering separation pay.
Third, when separation pay is ordered after the finality of the decision ordering the reinstatement by reason of a supervening event that makes the award of reinstatement no longer possible (as in the case), backwages is computed from the time of dismissal until the finality of the decision ordering separation pay.
We may also view the proper computation of backwages (whether based on reinstatement or an order of separation pay) in terms of the life of the employment relationship itself.
When reinstatement is ordered, the employment relationship continues. Once the illegally dismissed employee is reinstated, any compensation and benefits thereafter received stem from the employee’s continued employment. In this instance, backwages are computed only up until the reinstatement of the employee since after the reinstatement, the employee begins to receive compensation from his resumed employment.
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.
As the records show, the contending parties did not dispute the NLRC’s order of separation pay that replaced the award of reinstatement on the ground of the supervening event arising from the newly–discovered strained relations between the parties. The parties allowed the NLRC’s July 31, 1998 decision to lapse into finality and recognized, by their active participation in the second computation of the awards, the validity and binding effect on them of the terms of the July 31, 1998 decision.
Under these circumstances, while there was no express modification on the period for computing backwages stated in the dispositive portion of the July 31, 1998 decision of the NLRC, it is nevertheless clear that the award of reinstatement under the March 17, 1995 resolution (to which the respondents’ backwages was initially supposed to have been computed) was substituted by an award of separation pay. As earlier stated, the awards of reinstatement and separation pay are exclusive remedies; the change of awards (from reinstatement to separation pay) under the NLRC’s July 31, 1998 not only modified the awards granted, but also changed the manner the respondents’ backwages is to be computed. The respondents’ backwages can no longer be computed up to the point of reinstatement as there is no longer any award of reinstatement to speak of.
We also emphasize that the payment of backwages and separation pay cannot be computed from the time the respondents allegedly expressed their wish to be paid separation pay. In the first place, the records show that the alleged manifestation by the respondents, through Samuel, was actually a mere expression of interest.44 More importantly, the alleged manifestation was disregarded in the NLRC’s July 31, 1998 decision where the NLRC declared that the award of separation pay was due to the supervening event arising from the strained relations (not a waiver of reinstatement) that justified the modification of the NLRC’s final March 17, 1995 resolution on the award of reinstatement. Simply put, insofar as the computation of the respondents’ backwages, we are guided by the award, modified to separation pay, under the NLRC’s July 31, 1998 decision.
Thus, the computation of the respondents’ backwages must be from the time of the illegal dismissal from employment until the finality of the decision ordering the payment of separation pay. It is only when the NLRC rendered its July 31, 1998 decision ordering the payment of separation pay (which both parties no longer questioned and which thereafter became final) that the issue of the respondents’ employment with the petitioners was decided with finality, effectively terminating it. The respondents’ backwages, therefore, must be computed from the time of their illegal dismissal until January 29, 1999, the date of finality of the NLRC’s July 31, 1998 Decision.
(c) Legal interest of six percent (6%) per annum of the total monetary awards computed from January 29, 1999 until their full satisfaction.
2 Id. at 36–46; penned by Associate Justice Celia C. Librea–Leagogo, and concurred in by Associate Justices Andres B. Reyes, Jr. and Lucas P. Bersamin.
4 In the consolidated cases of Teresa de Guzman Tan v. Bani Rural Bank, Inc. And/or Rafael de Guzman, docketed as NLRC CN. SUB–RAB–01–07–7–0136–93 CA No. L–001403, and Edgar C. Tan and Teresa G. Tan v. ENOC Theatre I and II and/or Rafael de Guzman, docketed as NLRC CN. SUB–RAB–01–07–7–0137–93 CA No. L–001405.
5Rollo, pp. 71–87; penned by Commissioner Ireneo Bernardo, and concurred in by Presiding Commissioner Lourdes C. Javier and Commissioner Joaquin A. Tanodra.
7 Id. at 88–98; order dated December 16, 1997.
8 Id. at 101–112; penned by Presiding Commissioner Lourdes Javier.
10 Id. at 109–110; emphasis ours, citations omitted.
15 Id. at 44; italics supplied.
17 486 Phil. 560, 569–570 (2004).
20 Id. at 176–177; Court Resolution dated November 22, 2006.
21 G.R. No. 172149, February 8, 2010, 612 SCRA 10.
22 Id. at 21; italics supplied.
26Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth Division), supra note 21, at 19–20; citation omitted, italics supplied.
27Natalia Realty, Inc. v. Court of Appeals, 440 Phil. 1, 23 (2002).
30 G.R. No. 183329, August 27, 2009, 597 SCRA 334, 342–343; emphases supplied, citations omitted.
31 G.R. No. 179146, July 23, 2013.
32Don Orestes Romualdez Electric Coop., Inc. v. NLRC, 377 Phil. 268, 273 (1999).
34 Republic Act No. 6715 or An Act to Extend Protection to Labor, Strengthen the Constitutional Rights of Workers to Self–Organization, Collective Bargaining and Peaceful Concerted Activities, Foster Industrial Peace and Harmony, Promote the Preferential Use of Voluntary Modes of Settling Labor Disputes, and Reorganize the National Labor Relations Commission, Amending for These Purposes Certain Provisions of Presidential Decree No. 442, as amended, Otherwise Known as the Labor Code of the Philippines, Appropriating Funds Therefore and For Other Purposes.
35Session Delights Ice Cream and Fast Foods v. Court Appeals (Sixth Division), supra note 21 at 25 citing Mt. Carmel College v. Resuena, G.R. No. 173076, October 10, 2007, 533 SCRA 518, 541.
37 Bombase v. NLRC, 315 Phil. 551, 556 (1995).
38Nissan North EDSA, Balintawak, Quezon City v. Serrano, Jr., G.R. No. 162538, June 4, 2009, 588 SCRA 238, 248.
39 G.R. No. 178524, January 30, 2009, 577 SCRA 500.
40 Id. at 506–507; emphases ours.
41Lim v. National Labor Relations Commission, 253 Phil. 318, 328 (1989).
42Javellana, Jr. v. Belen, G.R. No. 181913, March 5, 2010, 614 SCRA 342, 350–351.
43 Supra note 21 at 26.
45Session Delights Ice Cream and Fast Foods v. Court Appeals (Sixth Division), supra note 21, at 23, 26.
46Gonzales v. Solid Cement Corporation, G.R. No. 198423, October 20, 2012, 684 SCRA 344. See BSP Circular No. 799, Series of 2013.

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