Almirante: Computation of the back wages

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By Dominador Almirante

Labor case Digest

Saturday, June 28, 2014

IN A complaint for illegal dismissal, the National Labor Relations Commission (NLRC) promulgated a resolution last March 17, 1995 awarding back wages to respondents from the time of their dismissal until actual reinstatement. The computation of back wages was remanded to the labor arbiter, who fixed the period of back wages from respondents’ illegal dismissal until August 25, 1995 or the date when they allegedly manifested that they no longer wanted to be reinstated.

In a decision dated July 31, 1998, the NLRC modified the labor arbiter’s decision by ordering among others, that due to strained relations, in lieu of reinstatement, respondents (now petitioners) pay complainants (now respondents) separation pay equivalent to one month’s pay per year of service, computed from their start of employment up to the finality of the decision.

On the award of back wages, the NLRC reversed the decision of the labor arbiter. It ruled that the computation of respondents’ back wages should be until Jan. 29, 1999, when the July 31, 1998 decision attained finality. The Court of Appeals (CA) affirmed the NLRC decision. Did the CA err?


The Supreme Court (Second Division) ruling: No.

The Court said: 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 back wages and separation pay in the Sept. 28, 2001 decision of the NLRC consistent with law and jurisprudence. The computation conforms to the terms of the March 17, 1995 resolution (on illegal dismissal and payment of back wages) and the July 31, 1998 decision (on the computation of the back wages and the payment of separation pay).

Under these circumstances, while there was no express modification on the period for computing back wages 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’ back wages 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 back wages is to be computed. The respondents’ back wages can no longer be computed up to the point of reinstatement as there is no longer any award of reinstatement to speak of.

Thus, the computation of the respondents’ back wages 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’ back wages, therefore, must be computed from the time of their illegal dismissal until Jan. 29, 1999, the date of finality of the NLRC’s July 31, 1998 Decision. x x x. (Bani Rural Bank Inc., et. al. vs. Teresa De Guzman, et. al., G.R. No. 170904, Nov. 13, 2013).

Published in the Sun.Star Cebu newspaper on June 29, 2014.


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