Dates of reckoning

This case is about the back-wages and separation pay of an illegally dismissed employee. The question raised here is from what date up to what date these monetary awards shall be computed. This is the case of Al.

On January 31, 1994, Al was hired as driver by Dan who owned and managed an agricultural and farming corporation (JFI). Aside from driving Dan and his family Al also did jobs that were needed in Dan’s business operations such as hauling and delivering live hogs, feeds and lime stones for the pig pens. He received his salary also from JFI as shown by the pay slips issued by the company.

On August 19, 1999, Dan gave Al instructions to pick up lime stones in Quezon Province, deliver hogs in Batangas, have the delivery truck repaired and pick up a boar in Bulacan. His long and arduous day finally ended at 4:30 a.m. the following day. But after just three hours of sleep, Dan summoned Al to his office. When he arrived at 8:20 a.m. Dan had left. After being told that Dan would be back at 4 p.m., Al decided to go home and get some more sleep.

Al promptly returned at the office by 4 p.m. but Dan suddenly blurted out that he was firing Al from work. Deeply worried, Al asked for separation pay. But Dan offered him P5,000 only so he refused and instead filed an action before the NLRC against Dan and JFI for illegal dismissal, underpayment or non-payment of salaries, overtime pay, holiday pay, service incentive leave pay, 13th month pay, premium pay for holiday and rest day as well as moral and exemplary damages and attorney’s fees.

Dan claimed that Al was hired not as company driver but as family driver and did not work on his farm on a regular basis. He also said that he fired Al for failure to report for work on August 20, 1999 which is a valid ground for dismissal.

On November 25, 2002, the Labor Arbiter found that Al was illegally dismissed and he was a company driver as evidenced by pay slips. He also did jobs that were necessary for KFI’s business operations. So the LA awarded him back-wages from August 20, 1999, the date of his dismissal up to November 19, 2002 totaling P265,983.75; separation pay computed from January 31, 1994 up November 19, 2002 amounting to P58,500.00; 13th month pay of P11,960.64 service incentive leave pay of P2,300.12; holiday pay of P4,158.00; salary differential of P66,664.26 and attorney’s fees of 40,956.68 or a total of P450,523.45.

Dan still questioned the finding of the illegality of Al’s dismissal but the said findings were affirmed with finality by the Supreme Court in a decision dated September 2, 2008. Al on the other hand also questioned the computation of the award for back-wages and separation pay. He contended that; (1) his back-wages should be computed from date he was fired on August 20,1999 up to the finality of the decision on September 2, 2008 and not up the date of the LA’s decision on November 25, 2002 (typographically written as November 19, 2002); (2) his separation pay should likewise be computed from date he was hired on January 31, 1994 up to the finality of the decision on September 2, 2008 and not only up to date of the LA’s decision November 25, 2002. Was Al correct?

Yes. Clearly the law (Aricle 279 of the Labor Code) intends the award of back-wages and similar benefits, to accumulate past the date of the LA’s decision until the dismissed employee is actually reinstated. But as in this case, reinstatement is no longer possible, back wages should be computed from the time of illegal dismissal until the date the decision becomes final, on September 2, 2008.

Separation pay on the other hand is equivalent to one month pay for every year of service, a fraction of six months to be considered as one whole year. Here, that would be from January 31, 1994 when Al began his serTechnically the computation of separation pay would end on the day of his dismissal on August 20, 1999 when he supposedly ceased to render service. But since Al was entitled to collect back wages until the judgment for illegal dismissal in his favor became final which was on September 2, 2008, the computation of his separation pay should also end on that date.

Further since the monetary awards remained unpaid even after the judgment became final on September 2, 2008, because of issues raised respecting the correct computation of such awards, it is but fair that Dan be required to pay 12% interest per annum on those awards from September 2, 2008 until they are paid. The 12% interest is proper because monetary claims in labor cases are considered as forbearance of credit. What is decisive here is that the issue of illegal dismissal from which the order to pay the monetary claims to Al stemmed, had been long terminated (Javellana, Jr. vs Belen G.R. 181913; Belen vs. Javellana Jr., and Javellana Farms Inc. G.R. 182158, March 5, 2010).

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call Tel. 7249445. –Jose C. Sison (The Philippine Star)