- Petitioner
- Wenphil Corporation
- Respondent
- Abing
- Citation
- G.R. No. 207983
- Court
- Supreme Court
- Decided
- April 7, 2014
Whether dismissed employees are entitled to backwages during the period of appeal of a reinstatement order, even when their dismissal is ultimately…
Summary
This case involves the entitlement of dismissed employees to backwages during the appeal period of a labor arbiter's reinstatement order. Wenphil Corporation dismissed employees Abing and Tuazon in 2000. The Labor Arbiter found the dismissal illegal and ordered reinstatement with backwages. During Wenphil's appeal, the parties entered a compromise agreement providing that Wenphil's wage payment obligation would cease if the LA's decision was 'modified, amended or reversed' by the NLRC. When the NLRC affirmed the illegal dismissal but changed the remedy from reinstatement to separation pay, Wenphil stopped paying wages. The Court of Appeals later found the dismissal was valid, which the Supreme Court affirmed. The Supreme Court ruled that employees are entitled to backwages during the appeal period until a higher court reverses the illegal dismissal finding, regardless of compromise agreements that attempt to waive this statutory right. The Court clarified that separation pay cannot substitute for backwages as they serve different purposes - separation pay looks forward while backwages compensate for lost income during the illegal dismissal period.
Focus of dispute
Whether dismissed employees are entitled to backwages during the period of appeal of a reinstatement order, even when their dismissal is ultimately found to be valid
Legal facts
Respondents Abing and Tuazon were dismissed by Wenphil Corporation on February 3, 2000. LA Bartolabac ruled on December 8, 2000 that the dismissal was illegal and ordered reinstatement with backwages. While Wenphil's appeal was pending, parties entered a compromise agreement on October 29, 2001 for payroll reinstatement, providing that Wenphil's obligation to pay wages would cease if the LA's decision was 'modified, amended or reversed' by the NLRC. NLRC on January 30, 2002 affirmed illegal dismissal but modified the remedy from reinstatement to separation pay. Wenphil stopped paying wages on February 15, 2002. CA on August 27, 2003 reversed and found the dismissal was valid. SC on December 27, 2006 affirmed the CA decision. The dispute arose over the computation period for backwages during the appeal process.
Judgement and reasoning
Court of Appeals (CA): On August 27, 2003, reversed NLRC and found dismissal was valid due to sufficient evidence of serious misconduct. In August 31, 2012 decision, set aside NLRC rulings and prescribed different computation period, holding that backwages obligation should end when CA (as 'higher court') reversed the illegal dismissal finding, not when SC affirmed it.
Labor Arbiter (LA): Initially ruled December 8, 2000 that respondents were illegally dismissed due to lack of factual and legal basis for serious misconduct allegations. Ordered immediate reinstatement and backwages from February 3, 2000. Later in November 16, 2007, ordered payment of backwages for period February 15, 2002 to November 8, 2002 based on principle that employees are entitled to wages during appeal period until reversal by higher court.
National Labor Relations Commission (NLRC): On January 30, 2002, affirmed LA's illegal dismissal finding but modified remedy from reinstatement to separation pay due to strained relations. Excluded preventive suspension period from backwages computation. In March 26, 2010, affirmed LA's computation order, rejecting Wenphil's argument that compromise agreement terminated obligation to pay backwages when NLRC 'modified' the original decision.
Supreme Court (SC): On December 27, 2006, denied respondents' petition and affirmed CA's finding that dismissal was valid. In final April 7, 2014 decision, denied Wenphil's petition and affirmed CA's ruling with modification. Held that compromise agreement could not waive statutory right to backwages during appeal period. Clarified that separation pay cannot substitute for backwages - they serve different purposes. Modified computation period to run from February 16, 2002 to August 27, 2003.