Wednesday, May 23, 2012

When are backwages and separation pay in lieu of reinstatement awarded in illegal dismissal cases? - G.R. No. 185829

G.R. No. 185829

"x x x.

Aliling is entitled to backwages
and separation pay in lieu of reinstatement

As may be noted, the CA found Aliling’s dismissal as having been illegally effected, but nonetheless concluded that his employment ceased at the end of the probationary period. Thus, the appellate court merely affirmed the monetary award made by the NLRC, which consisted of the payment of that amount corresponding to the unserved portion of the contract of employment.

The case disposition on the award is erroneous.

As earlier explained, Aliling cannot be rightfully considered as a mere probationary employee. Accordingly, the probationary period set in the contract of employment dated June 11, 2004 was of no moment.  In net effect, as of that date June 11, 2004, Aliling became part of the WWWEC organization as a regular employee of the company without a fixed term of employment. Thus, he is entitled to backwages reckoned from the time he was illegally dismissed on October 6, 2004, with a PhP 17,300.00 monthly salary, until the finality of this Decision. This disposition hews with the Court’s ensuing holding in Javellana v. Belen:[40]

Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715 instructs:

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. (Emphasis supplied)

Clearly, the law intends the award of backwages and similar benefits to accumulate past the date of the Labor Arbiter’s decision until the dismissed employee is actually reinstated. 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. (Emphasis supplied.)

 Additionally, Aliling is entitled to separation pay in lieu of reinstatement on the ground of strained relationship.

In Golden Ace Builders v. Talde,[41] the Court ruled:

The basis for the payment of backwages is different from that for 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 backwages is usually the length of the employee's service while that for separation pay is the actual period when the employee was unlawfully prevented from working.

As to how both awards should be computed, Macasero v. Southern Industrial Gases Philippines instructs:

[T]he award of separation pay is inconsistent with a finding that there was no illegal dismissal, for under Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed without just cause and without due process is entitled to backwages and reinstatement or payment of separation pay in lieu thereof:

Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages.

The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of backwages computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to payment of backwages. x x x

Velasco v. National Labor Relations Commission emphasizes:
The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may likewise be awarded if the employee decides not to be reinstated. (emphasis in the original; italics supplied)

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.

Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence — substantial evidence to show that the relationship between the employer and the employee is indeed strained as a necessary consequence of the judicial controversy.

In the present case, the Labor Arbiter found that actual animosity existed between petitioner Azul and respondent as a result of the filing of the illegal dismissal case. Such finding, especially when affirmed by the appellate court as in the case at bar, is binding upon the Court, consistent with the prevailing rules that this Court will not try facts anew and that findings of facts of quasi-judicial bodies are accorded great respect, even finality. (Emphasis supplied.)

As the CA correctly observed, “To reinstate petitioner [Aliling] would only create an atmosphere of antagonism and distrust, more so that he had only a short stint with respondent company.”[42] The Court need not belabor the fact that the patent animosity that had developed between employer and employee generated what may be considered as the arbitrary dismissal of the petitioner.  

Following the pronouncements of this Court Sagales v. Rustan’s Commercial Corporation,[43] the computation of separation pay in lieu of reinstatement includes the period for which backwages were awarded:

Thus, in lieu of reinstatement, it is but proper to award petitioner separation pay computed at one-month salary for every year of service, a fraction of at least six (6) months considered as one whole year. In the computation of separation pay, the period where backwages are awarded must be included. (Emphasis supplied.)

Thus, Aliling is entitled to both backwages and separation pay (in lieu of reinstatement) in the amount of one (1) month’s salary for every year of service, that is, from June 11, 2004 (date of employment contract) until the finality of this decision with a fraction of a year of at least six (6) months to be considered as one (1) whole year. As determined by the labor arbiter, the basis for the computation of backwages and separation pay will be Aliling’s monthly salary at PhP 17,300.

Finally, Aliling is entitled to an award of PhP 30,000 as nominal damages in consonance with prevailing jurisprudence[44] for violation of due process.

x x x."