Separation pay, equivalent to one month's salary for every year of service, is awarded as an alternative to reinstatement when the latter is no longer an option, and is computed from the commencement of employment up to the time of termination, including the period of imputed service for which the employee is entitled to back wages. The salary rate prevailing at the end of the period of putative service should be the basis for computation.

REFORMIST UNION OF R. B. LINER, INC., HEVER DETROS, ET AL., vs. NATIONAL LABOR RELATIONS COMMISSION, R.B. LINER, INC., ET. AL., G.R. No. 120482. January 27, 1997.



“x x x.

As regards the illegal lockout-alleged by the petitioners, we agree with the NLRC's finding that the petitioners had sufficient basis to believe in good faith that the private respondents were culpable. The NLRC found this circumstance to justify the petitioners-employees' reinstatement; we add that since there was, in fact, no defiance of the Labor Secretary's return-to-work order, and no cause to decree the petitioners employees' dismissal in the first instance, reinstatement of the dismissed employees can be the only outcome in this case.

The possibility of reinstatement is a question of fact, and where a factual determination is indispensable to the complete resolution of the case, this Court usually remands the case to the NLRC. [44]In view, however, of both parties' assertion that reinstatement has become impossible because, as claimed by the petitioners, "the buses were already disposed of"; or as claimed by the private respondents, R.B. Liner, Inc., had "ceased operations" because "its Certificate of Public Convenience had expired and was denied renewal," and further, of "closure of the company" due to "lack of operational trucks and buses and high costs of units, " [45] there is no need to remand this case to the NLRC. Due to the infeasibility of reinstatement, the petitioners' prayer for separation pay must be granted. Separation pay, equivalent to one month's salary for every year of service, is awarded as an alternative to reinstatement when the latter is no longer an option, [46] and is computed from the commencement of employment up to the time of termination, including the period of imputed service for which the employee is entitled to back wages. The salary rate prevailing at the end of the period of putative service should be the basis for computation. [47]

The petitioners are also entitled to back wages. The payment of back wages "is a form of relief that restores the income that was lost by reason of unlawful dismissal." [48] The petitioners' dismissal being unwarranted as aforestated, with the employees dismissed after R.A. No. 6715 [49] took effect, then, pursuant to the said law and the latest rule on the matter laid down in the Resolution of 28 November 1996 of this Court, sitting en banc, in Bustamante vs. National Labor Relations Commission, [50] the petitioners-employees are entitled to payment of full back wages from the date of their dismissal up to the time when reinstatement was still possible, i.e., in this instance, up to the expiration of the franchise of R.B. Liner, Inc.

X x x.”