Title
Bani Rural Bank, Inc. vs. De Guzman
Case
G.R. No. 170904
Decision Date
Nov 13, 2013
Employees filed for illegal dismissal; NLRC ruled in their favor, awarding backwages until finality of separation pay decision due to strained relations, affirmed by SC with 6% interest.
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Case Digest (G.R. No. 170904)

Facts:

  1. Employment and Dismissal

    • Respondents Teresa de Guzman and Edgar C. Tan were employees of Bani Rural Bank, Inc. and ENOC Theatre I and II.
    • They filed a complaint for illegal dismissal against the petitioners (Bani Rural Bank, Inc., ENOC Theatre I and II, and Rafael de Guzman).
  2. Initial Labor Arbiter Decision

    • The Labor Arbiter initially dismissed the complaint on March 15, 1994.
    • On appeal, the National Labor Relations Commission (NLRC) reversed the decision, ruling that the respondents were illegally dismissed.
  3. NLRC Resolution (March 17, 1995)

    • The NLRC ordered the petitioners to reinstate the respondents to their former positions without loss of seniority rights and other benefits, with backwages from the time of dismissal until actual reinstatement, less earnings elsewhere.
    • This resolution became final and executory as no motion for reconsideration or appeal was filed.
  4. First Computation of Backwages

    • Labor Arbiter Rolando D. Gambito computed the backwages, deducting earnings from other sources and fixing the period of backwages until August 25, 1995, when the respondents allegedly no longer wanted reinstatement.
  5. NLRC Modification (July 31, 1998)

    • The NLRC modified its March 17, 1995 resolution, clarifying that "earnings elsewhere" excluded salaries from the Rural Bank of Mangatarem.
    • It also awarded separation pay in lieu of reinstatement due to strained relations between the parties.
  6. Second Computation of Backwages

    • Labor Arbiter Gambito recomputed the backwages up to August 25, 1995, based on the respondents' alleged manifestation.
    • The NLRC reversed this, ruling that backwages should be computed until January 29, 1999, the date of finality of the July 31, 1998 decision.
  7. Court of Appeals (CA) Ruling

    • The CA affirmed the NLRC's decision, holding that the computation of backwages should end on January 29, 1999, the date of finality of the decision ordering separation pay.

Issue:

  1. Whether the NLRC committed grave abuse of discretion in computing the respondents' backwages until January 29, 1999, instead of August 25, 1995.
  2. Whether the CA erred in affirming the NLRC's decision.

Ruling:

The Supreme Court denied the petition and affirmed the CA's decision with modification. The Court held that:

  1. The computation of backwages should be from the time of illegal dismissal until January 29, 1999, the date of finality of the NLRC's July 31, 1998 decision ordering separation pay.
  2. The strained relations between the parties justified the substitution of reinstatement with separation pay.
  3. Legal interest of 6% per annum on the monetary awards should be paid from January 29, 1999, until full satisfaction.

Ratio:

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