- Petitioner
- Bani Rural Bank
- Respondent
- De Guzman
- Citation
- G.R. No. 170904
- Court
- Supreme Court
- Division
- Second Division
- Ponente
- Brion, J.
- Decided
- November 13, 2013
Computation of backwages for illegally dismissed employees, particularly the cut-off period when separation pay was awarded in lieu of reinstatement…
Summary
This Supreme Court case establishes the proper computation period for backwages when separation pay is awarded in lieu of reinstatement due to supervening events. Teresa de Guzman and Edgar Tan, illegally dismissed employees of Bani Rural Bank and ENOC Theatre, initially won reinstatement with backwages in 1995. However, strained relations developed during execution, prompting NLRC to award separation pay instead in 1998. The core dispute involved whether backwages should end when employees allegedly expressed disinterest in reinstatement (August 1995) or when the separation pay decision became final (January 1999). The Supreme Court ruled that when reinstatement becomes impossible due to supervening events, backwages must be computed until finality of the decision ordering separation pay, as this marks the definitive termination of the employment relationship. The decision clarifies that separation pay and reinstatement are mutually exclusive remedies, and the employment relationship continues until separation pay is finally ordered.