- Petitioner
- Equitable Banking Corporation
- Respondent
- Sadac
- Citation
- G.R. No. 164772
- Court
- Supreme Court
- Decided
- June 8, 2006
Computation of full backwages for illegally dismissed employee, specifically whether general salary increases, benefits, attorney's fees, and…
Summary
Ricardo Sadac, Vice President and General Counsel of Equitable Banking Corporation, was illegally dismissed in 1989 after nine lawyers complained about his conduct. The Supreme Court previously ruled the dismissal illegal in 1997. This case concerned the proper computation of backwages. Sadac claimed P6,030,456.59 including prospective salary increases and various benefits, while the bank claimed only P2,981,442.98 was due. The Supreme Court held that full backwages should be computed at the wage rate at time of dismissal, excluding prospective salary increases as these are mere expectancy without vested right. However, the Court affirmed the award of attorney's fees (10% of monetary award) and 12% annual interest from 1997. The decision clarifies that salary increases, unlike allowances and benefits explicitly mentioned in Article 279 of the Labor Code, cannot be included in backwages computation as they depend on various contingencies and represent no assured entitlement.
Focus of dispute
Computation of full backwages for illegally dismissed employee, specifically whether general salary increases, benefits, attorney's fees, and interest should be included in backwages computation
Legal facts
Ricardo Sadac was appointed Vice President of Legal Department of Equitable Banking Corporation on August 1, 1981, and later General Counsel on December 8, 1981. On June 26, 1989, nine lawyers petitioned for change in leadership citing abusive conduct. Bank instructed Sadac to deliver all materials and terminated his services on November 9, 1989, after he filed illegal dismissal complaint. Sadac was removed from office on August 10, 1989, and denied compensation and benefits.
Judgement and reasoning
Court of Appeals (CA): Reversed NLRC on April 6, 2004, ordering payment of P6,342,307.00 including annual general increases, benefits, and 12% interest from July 28, 1997. Supplemental Decision on October 26, 2004 added attorney's fees equal to 10% of monetary award.
Labor Arbiter (LA): Initially dismissed complaint for lack of merit on October 2, 1990. Later on August 2, 1999, adopted Sadac's computation awarding P6,030,456.59 in backwages including allowances, benefits, and 12% interest, totaling P7,398,047.48, minus P1,055,740.48 already received, ordering payment of P6,342,307.00 plus attorney's fees.
National Labor Relations Commission (NLRC): Reversed Labor Arbiter on September 24, 1991, declaring dismissal illegal and ordering reinstatement with full backwages, moral damages (P100,000), exemplary damages (P50,000), and attorney's fees (10% of monetary award). Later reversed again on March 28, 2001, limiting award to P2,981,442.98, excluding general increases and other benefits. Denied reconsideration on September 24, 2002.
Supreme Court (SC): Partially granted petition on June 8, 2006. Excluded prospective salary increases, check-up benefit, clothing allowance, and cash conversion of vacation leaves from backwages computation. Affirmed attorney's fees (10% of monetary award) and 12% interest from July 28, 1997. Held that unqualified award of backwages means employee is paid at wage rate at time of dismissal, and salary increases are mere expectancy without vested right.