1) PANUNCILLO vs.

CAP
G.R. No.161305, February 9, 2007

FACTS:

Milagros Panuncillo was hired as Office Senior Clerk by CAP Philippines Inc. In order
to secure the education of her son, Panuncillo procured an educational plan which
she had fully paid but which she later sold to Josefina Pernes for P37,000. Before the
actual transfer of the plan, however, Panuncillo pledged it for P50,000 to John Chua
who sold it to Benito Bonghanoy. Bonghanoy in turn sold the plan to Gaudioso R. Uy
for P60,000.

Having gotten wind of the transactions subsequent to her purchase of the plan,
Josefina informed CAP Philippines Inc. that Panuncillo had "swindled" her but that
she was willing to settle the case amicably as long as Panuncillo will pay the amount
involved and the interest.

CAP Philippines Inc. terminated the services of Panuncillo. Panuncillo sought

reconsideration of her dismissal. Acting on Panuncillo’s motion for reconsideration,
CAP Philippines Inc. denied the same. Panuncillo thus filed a complaint for illegal
dismissal, 13th month pay, service incentive leave pay, damages and attorney’s fees
against CAP Philippines Inc.

The Labor Arbiter, while finding that the dismissal was for a valid cause, found the
same too harsh. He thus ordered the reinstatement of Panuncillo to a position one
rank lower than her previous position. On appeal, the National Labor Relations
Commission (NLRC) reversed the decision of the Labor Arbiter. It held that
Panuncillo’s dismissal was illegal and accordingly ordered her reinstatement to her
former position.

CAP Philippines Inc. challenged the NLRC Decision before the appellate court via
Petition for Certiorari. The appellate court reversed the NLRC Decision and held that
the dismissal was valid and that CAP Philippines Inc. complied with the procedural
requirements of due process. Hence, the present petition.

ISSUE:

Whether Milagros has been illegally dismissed.

RULING:
Panuncillo’s repeatedly violated Section 8.4 of CAP Philippines Inc’s Code of
Discipline. She violated the trust and confidence of CAP Philippines Inc. and its
customers. To allow her to continue with her employment puts CAP Philippines Inc.
under the risk of being embroiled in unnecessary lawsuits from customers similarly
situated as Josefina, et al. Clearly, CAP Philippines Inc. exercised its management
prerogative when it dismissed Panuncillo.

Under the Labor Code, the employer may terminate an employment on the ground of
serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work. Infractions of company rules
and regulations have been declared to belong to this category and thus are valid
causes for termination of employment by the employer.

The employer cannot be compelled to continue the employment of a person who was
found guilty of maliciously committing acts which are detrimental to his interests. It
will be highly prejudicial to the interests of the employer to impose on him the
charges that warranted his dismissal from employment. Indeed, it will demoralize the
rank and file if the undeserving, if not undesirable, remain in the service. It may
encourage him to do even worse and will render a mockery of the rules of discipline
that employees are required to observe. This Court was more emphatic in holding
that in protecting the rights of the laborer, it cannot authorize the oppression or self-
destruction of the employer.

There can be no doubt that Panuncillo was given ample opportunity to explain her
side. Parenthetically, when an employee admits the acts complained of, as in
Panuncillo’s case, no formal hearing is even necessary.

2) MT. CARMEL COLLEGE VS. RESUENA, ET AL.

G.R. No. 173076, October 10, 2007

FACTS:

Petitioner Mt. Carmel College is a private educational institution and respondents

were its employees. Respondents were dismissed for joining the protest action
against the school administration. The Labor Arbiter (LA) found that they were not
illegally dismissed but ordered that they be awarded 13 th month pay, separation pay
and attorney’s fees. The NLRC reversed the findings of the LA finding the termination
of the respondents as illegal and ordering the payment of backwages of
respondents.It further directed the reinstatement of respondents by way of payment
of separation pay, with backwages. This was affirmed by the Court of Appeals.
Petitioner is appealing not the judgment of the NLRC but the manner of execution of
the same. Petitioner argues that the CA erred in upholding the LA and the NLRC that
the award for backwages goes beyond the period May 15, 1998 to May 25, 1999 on
the supposition that reinstatement is self-executory and does not need a writ of
execution for its enforcement. Petitioner avers that the LA went beyond the terms of
the NLRC Decision, as affirmed by the CA, and erroneously used as bases
inapplicable law and jurisprudence in the execution of the same.Petitioner contends
that the award of backwages subject to execution is limited to the period prior to the
appeal and does not include the period during the pendency of the appeal, on the
contention that reinstatement during appeal is warranted only when the Labor Arbiter
rules that the dismissed employee should be reinstated.

ISSUES:

1.Whether reinstatement in the case is self-executory and does not need a writ of
execution for its enforcement.

2. Whether the continuing award of backwages is proper.

RULING:

1. No (though the court sees no cogent reason as to the relevance of a discussion of

this issue only that petitioner raised it as an issue).The court states that the above
findings will not affect the award of backwages for the period beyond May 25, 1999.

Article 224 applies in the given case since the order of reinstatement was first
decided upon appeal to the NLRC and affirmed with finality by the CA.

2. Yes. The court found out that there is a conflict between the dispositive portion of
the fallo and the body of the decision. The fallo stated that respondents were illegally
dismissed and must therefore be ordered reinstated with payment of backwages from
the time were illegally dismissed up to the time of their actual reinstatement. In view
thereof, the court declared that the fallo controls.

Applying Article 279 of the Labor Code, the court emphasized that backwages are to
be computed from the time of illegal dismissal until reinstatement or upon petitioner ’s
payment of separation pay to respondents if reinstatement is not longer feasible.

3) GARCIA ET AL vs. PAL

G.R. No. 164856, JANUARY 20, 2009

FACTS:
The case stemmed from the administrative charge filed by Philippine Airlines (PAL)
against its employees-herein petitioners after they were allegedly caught in the act of
sniffing shabu when a team of company security personnel and law enforcers raided
the PAL Technical Center’s Toolroom Section on July 24, 1995.

After due notice, PAL dismissed petitioners for transgressing the PAL Code of
Discipline, prompting them to file a complaint for illegal dismissal and damages which
was resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter alia,
immediately comply with the reinstatement aspect of the decision.

Subsequently, the Labor Arbiter issued a Writ of Execution respecting the

reinstatement decision and issued a Notice of Garnishment.

Respondent elevated the matter to the appellate court which issued the herein
challenged Decision and Resolution nullifying the NLRC Resolutions on two grounds,
essentially espousing that:

(1) a subsequent finding of a valid dismissal removes the basis for implementing the
reinstatement aspect of a labor arbiter’s decision; and

(2) the impossibility to comply with the reinstatement order due to corporate
rehabilitation provides a reasonable justification for the failure to exercise the options
under Article 223 of the Labor Code (the second ground).

RULING:

Amplification of the First Ground:

The Court reaffirms the prevailing principle that even if the order of reinstatement of
the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during the period of appeal
until reversal by the higher court.

It settles the view that the Labor Arbiter’s order of reinstatement is immediately
executory and the employer has to either re-admit them to work under the same
terms and conditions prevailing prior to their dismissal, or to reinstate them in the
payroll, and that failing to exercise the options in the alternative, employer must pay
the employee’s salaries.

Amplification of the Second Ground

The Court sustains the appellate court’s finding that the peculiar predicament of a
corporate rehabilitation rendered it impossible for respondent to exercise its option
under the circumstances.

The test is two-fold: (1) there must be actual delay or the fact that the order of
reinstatement pending appeal was not executed prior to its reversal; and (2) the
delay must not be due to the employer’s unjustified act or omission. If the delay is
due to the employer’s unjustified refusal, the employer may still be required to pay
the salaries notwithstanding the reversal of the Labor Arbiter’s decision.

WHEREFORE, the petition is PARTIALLY DENIED. Insofar as the Court of Appeals

Decision and Resolution annulling the NLRC Resolutions affirming the validity of the
Writ of Execution and the Notice of Garnishment are concerned, the Court finds no
reversible error.

4) SESSION DELIGHTS vs. CA

G.R. No. 172149, FEBRUARY 8, 2010

FACTS:

The private respondent filed against the petitioner a complaint for illegal dismissal,
entitled Adonis Armenio M. Flora, Complainant versus Session Delights Ice Cream &
Fast Foods, et. al, Private respondents.

The Labor Arbiter decided the complaint on February 8, 2001, finding that the
petitioner illegally dismissed the private respondent. The decision awarded the
private respondent backwages, separation pay in lieu of reinstatement, indemnity,
and attorneys fees, under a computation that the decision itself outlined in its
dispositive portion.

On the petitioners appeal, the NLRC affirmed the LA’s decision.

On July 4, 2003, the CA dismissed the petition and affirmed with modification the
NLRC decision by deleting the awards for a proportionate 13th month pay and for
indemnity.

In January 2004, and in the course of the execution of the above final judgment
pursuant to Section 3,Rule VIII of the then NLRC Rules of Procedure, the Finance
Analyst of the Labor Arbiters Office held a pre-execution conference with the
contending parties in attendance. The Finance Analyst submitted an updated
computation of the monetary awards due the private respondent in the total amount
of P235,986.00. This updated computation included additional backwages and
separation pay due the private respondent computed from March 1, 2001 to
September 17, 2003. The computation also included the proportionate amount of the
private respondents 13th month pay. On March 25, 2004, the labor arbiter approved
the updated computation.

The petitioner objected to the re-computation and appealed the labor arbiters order to
the NLRC. The NLRC disagreed with the petitioner and affirmed the labor arbiters
decision in a resolution dated October 25, 2004. The NLRC also denied the
petitioner's motion for reconsideration in its resolution dated January 31, 2005.

The petitioner sought recourse with the CA through a petition for certiorari on the
ground that the NLRC acted with grave abuse of discretion amounting to lack or
excess of jurisdiction. The CA partially granted the petition in its decision of
December 19, 2005 (now challenged before us) by deleting the awarded
proportionate 13th month pay.

The petitioner timely filed a motion for reconsideration which the CA denied in its
resolution of March 30, 2006, now similarly assailed before us.

ISSUES:

1. Was the computation of the awards proper?

2. Did it violate the principle of immutability of final judgments?

RULING:

We state at the outset that, as a rule, we frown upon any delay in the execution of
final and executory decisions, as the immediate enforcement of the parties rights,
confirmed by a final decision, is a major component of the ideal administration of
justice. We admit, however, that circumstances may transpire rendering delay
unavoidable. One such occasion is when the execution of the final judgment is not in
accord with what the final judgment decrees in its dispositive portion. Just as the
execution of a final judgment is a matter of right for the winning litigant who should
not be denied the fruits of his or her victory, the right of the losing party to give,
perform, pay, and deliver only what has been decreed in the final judgment should
also be respected.

That a judgment should be implemented according to the terms of its dispositive

portion is a long and well-established rule. Otherwise stated, it is the dispositive
portion that categorically states the rights and obligations of the parties to the dispute
as against each other. Thus, it is the dispositive portion which the entities charged
with the execution of a final judgment that must be enforced to ensure the validity of
the execution.

A companion to the above rule on the execution of a final judgment is the principle of
its immutability. Save for recognized exceptions, a final judgment may no longer be
altered, amended or modified, even if the alteration, amendment or modification is
meant to correct what is perceived to be an erroneous conclusion of fact or law and
regardless of what court, be it the highest Court of the land, renders it. Any attempt
on the part of the responsible entities charged with the execution of a final judgment
to insert, change or add matters not clearly contemplated in the dispositive portion
violates the rule on immutability of judgments.

In the present case, with the CAs deletion of the proportionate 13th month pay and
indemnity awards in the labor arbiter's February 8, 2001 decision, only the awards of
backwages, separation pay, and attorney's fees remain. These are the awards
subject to execution.

A distinct feature of the judgment under execution is that the February 8, 2001 labor
arbiter decision already provided for the computation of the payable separation pay
and backwages due, and did not literally order the computation of the monetary
awards up to the time of the finality of the judgment. The private respondent, too, did
not contest the decision through an appeal. The petitioners argument to confine the
awards to what the labor arbiter stated in the dispositive part of his decision is largely
based on these established features of the judgment.

We reject the petitioners view as a narrow and misplaced interpretation of an illegal

dismissal decision, particularly of the terms of the labor arbiters decision.

While the private respondent failed to appeal the February 8, 2001 decision of the
labor arbiter, the failure, at the most, had the effect of making the awards granted to
him final so that he could no longer seek any other affirmative relief, or pray for any
award additional to what the labor arbiter had given. Other than these, the illegal
dismissal case remained open for adjudication based on the appeal made for the
higher tribunals consideration. In other words, the higher tribunals, on appropriate
recourses made, may reverse the judgment and declare that no illegal dismissal took
place, or affirm the illegal dismissal already decreed with or without modifying the
monetary consequences flowing from the dismissal.

We see no error in the CA decision confirming that a re-computation is necessary as

it essentially considered the labor arbiters original decision in accordance with its
basic component parts as we discussed above. To reiterate, the first part contains
the finding of illegality and its monetary consequences; the second part is the
computation of the awards or monetary consequences of the illegal dismissal,
computed as of the time of the labor arbiters original decision.

To illustrate these points, had the case involved a pure money claim for a specific
sum (e.g. salary for a specific period) or a specific benefit (e.g. 13th month pay for a
specific year) made by a former employee, the labor arbiters computation would
admittedly have continuing currency because the sum is specific and any variation
may only be on the interests that may run from the finality of the decision ordering the
payment of the specific sum.

In contrast with a ruling on a specific pure money claim, is a claim that relates to
status (as in this case, where the claim is the legality of the termination of the
employment relationship). In this type of cases, the decision or ruling is essentially
declaratory of the status and of the rights, obligations and monetary consequences
that flow from the declared status (in this case, the payment of separation pay and
backwages and attorneys fees when illegal dismissal is found). When this type of
decision is executed, what is primarily implemented is the declaratory finding on the
status and the rights and obligations of the parties therein; the arising monetary
consequences from the declaration only follow as component of the parties rights
and obligations.

In the present case, the CA confirmed that indeed an illegal dismissal had taken
place, so that separation pay in lieu of reinstatement and backwages should be paid.
How much that separation pay would be, would ideally be stated in the final CA
decision; if not, the matter is for handling and computation by the labor arbiter of
origin as the labor official charged with the implementation of decisions before the
NLRC.

As the CA correctly pointed out, the basis for the computation of separation pay and
backwages is Article 279 of the Labor Code, as amended, which reads:

x x x An employee who is unjustly dismissed from work shall be entitled to

reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.

By jurisprudence derived from this provision, separation pay may be awarded to an

illegally dismissed employee in lieu of reinstatement. Recourse to the payment of
separation pay is made when continued employment is no longer possible, in cases
where the dismissed employees position is no longer available, or the continued
relationship between the employer and the employee is no longer viable due to the
strained relations between them, or when the dismissed employee opted not to be
reinstated, or payment of separation benefits will be for the best interest of the parties
involved.

This reading of Article 279, of course, does not appear to be disputed in the present
case as the petitioner admits that separation pay in lieu of reinstatement shall be
paid, computed up to the finality of the judgment finding that illegal dismissal had
taken place. What the petitioner simply disputes is the re-computation of the award
when the final CA decision did not order any re-computation while the NLRC decision
that the CA affirmed and the labor arbiter's decision the NLRC in turn affirmed,
already made a computation that on the basis of immutability of judgment and the
rule on execution of the dispositive portion of the decision should not now be
disturbed.

Consistent with what we discussed above, we hold that under the terms of the
decision under execution, no essential change is made by a re-computation as this
step is a necessary consequence that flows from the nature of the illegality of
dismissal declared in that decision. A re-computation (or an original computation, if
no previous computation has been made) is a part of the law specifically, Article 279
of the Labor Code and the established jurisprudence on this provision that is read
into the decision. By the nature of an illegal dismissal case, the reliefs continue to
add on until full satisfaction, as expressed under Article 279 of the Labor Code. The
re-computation of the consequences of illegal dismissal upon execution of the
decision does not constitute an alteration or amendment of the final decision being
implemented. The illegal dismissal ruling stands; only the computation of monetary
consequences of this dismissal is affected and this is not a violation of the principle of
immutability of final judgments.

We fully appreciate the petitioners efforts in trying to clarify how the standing
jurisprudence on the payment of separation pay in lieu of reinstatement and the
accompanying payment of backwages ought to be read and reconciled. Its attempt,
however, is out of place and, rather than clarify, may only confuse the
implementation of Article 279; the core issue in this case is not the payment of
separation pay and backwages but their re-computation in light of an original labor
arbiter ruling that already contained a dated computation of the monetary
consequences of illegal dismissal.

That the amount the petitioner shall now pay has greatly increased is a consequence
that it cannot avoid as it is the risk that it ran when it continued to seek recourses
against the labor arbiters decision. Article 279 provides for the consequences of
illegal dismissal in no uncertain terms, qualified only by jurisprudence in its
interpretation of when separation pay in lieu of reinstatement is allowed. When that
happens, the finality of the illegal dismissal decision becomes the reckoning point
instead of the reinstatement that the law decrees. In allowing separation pay, the final
decision effectively declares that the employment relationship ended so that
separation pay and backwages are to be computed up to that point. The decision
also becomes a judgment for money from which another consequence flows the
payment of interest in case of delay. This was what the CA correctly decreed when it
provided for the payment of the legal interest of 12% from the finality of the judgment,
in accordance with our ruling in Eastern Shipping Lines, Inc. v. Court of Appeals.
DENIED.

5) JAVELLANA/BELLEN vs. BELEN/JAVELLANA

G.R. No. 181913/182158, MARCH 5, 2010

FACTS:

On May 9, 2000 petitioner filed a complaint against respondents for illegal dismissal
and underpayment or non-payment of salaries, overtime pay, holiday pay, service
incentive leave pay (SILP), 13th month pay, premium pay for holiday, and rest day as
well as for moral and exemplary damages and attorneys fees.

Petitioner Belen alleged that respondent Javellana hired him as company driver on
January 31, 1994 and assigned him the tasks of picking up and delivering live hogs,
feeds, and lime stones used for cleaning the pigpens. On August 19, 1999 Javellana
gave him instructions to (a) pick up lime stones in Tayabas, Quezon; (b) deliver live
hogs at Barrio Quiling, Talisay, Batangas; (c) have the delivery truck repaired; and
(d) pick up a boar at Joliza Farms in Norzagaray, Bulacan.

Respondent Javellana claimed, on the other hand, that he hired petitioner Belen in
1995, not as a company driver, but as family driver.Belen did not do work for his farm
on a regular basis, but picked up feeds or delivered livestock only on rare occasions
when the farm driver and vehicle were unavailable.

Regarding petitioner Belen’s dismissal from work, respondent Javellana insisted that
he did it for a reason.Belen intentionally failed to report for work on August 20, 1999
and this warranted his dismissal.

On November 25, 2002, the LA found petitioner Belen to be a company driver as

evidenced by the pay slips that the farm issued to him and held that his abrupt
dismissal was illegal. The LA awarded him backwages, separation pay, 13th month
pay, SILP, holiday pay, salary differential, and attorneys fees.

On appeal, the NLRC modified the decision of the LA. The NLRC found Belen to
have been illegally dismissed.But since he was but a family driver, the NLRC deleted
the award of backwages and separation pay and instead ordered Javellana to pay
him 15 days salary by way of indemnity pursuant to Article 149 of the Labor
Code.Belen moved for reconsideration, but the NLRC denied his motion.

On appeal, the CA held that Javellana abrupt dismissal of Belen for an isolated case
of neglect of duty was unjustified. It however, modified the award of backwages and
separation pay.

Both respondent Javellana and petitioner Belen moved for reconsideration of the
decision but the CA denied them. The Court consolidated the two cases. Javellanas
petition was denied, hence he moved for reconsideration but the Court denied it with
finality on September 22, 2008.

Hence, this petition.

ISSUES:

Whether the Labor Arbiter correctly computed petitioner Belen’s backwages and
separation pay?

Whether the monetary award in his favor should run until the finality of the decision in
his case?

RULING:

The petition is granted.

Records show that the LA's approved computation gave the period as from August
20, 1999 to November 19,2000 when the proper period was from August 20, 1999,
the date he was dismissed from work, to November 25,2002, the date the Labor
Arbiter rendered his decision in the case.

It is obvious from a reading of the Labor Arbiters decision that the date November
19,2000 stated in the computation was mere typographical error.Somewhere in the
body of the decision is the categorical statement that petitioner Belen is entitled to
backwages from August 20, 1999 up to the date of this decision. Since the Labor
Arbiter actually rendered his decision on November 25,2002, it would be safe to
assume that he caused the computation of the amount of backwages close to that
date or on November 19, 2002.The same could be said of the computation of
petitioner Belens separation pay.

Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715
clearly intends that the award of backwages and similar benefits to accumulate past
the date of the LA's decision until the dismissed employee is actually reinstated.But
if, as in this case, reinstatement is no longer possible, this Court has consistently
ruled that backwages shall be computed from the time of illegal dismissal until the
date the decision becomes final.

As it happens, the parties filed separate petitions before this Court.The petition in
G.R. 181913, filed by respondent Javellana, questioned the CA's finding of illegality
of dismissal while the petition in G.R. 182158, filed by petitioner Belen, challenged
the amounts of money claims awarded to him.The Court denied the first with finality
in its resolution of September 22, 2008; the second is the subject of the present
case.Consequently, Belen should be entitled to backwages from August 20, 1999,
when he was dismissed, to September 22, 2008, when the judgment for unjust
dismissal in G.R. 181913 became final.

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
begin from January 31, 1994 when petitioner Belen began his service. Technically
the computation of his separation pay would end on the day he was dismissed on
August 20, 1999 when he supposedly ceased to render service and his wages
ended.But, since Belen was entitled to collect backwages until the judgment for
illegal dismissal in his favor became final, here on September 22, 2008, the
computation of his separation pay should also end on that date.

Further, since the monetary awards remained unpaid even after it became final on
September 22, 2008 because of issues raised respecting the correct computation of
such awards, it is but fair that respondent Javellana be required to pay 12%
interestper annum on those awards from September 22, 2008 until they are paid.The
12% interest is proper because the Court treats monetary claims in labor cases the
equivalent of a forbearance of credit.It matters not that the amounts of the claims
were still in question on September 22, 2008.What is decisive is that the issue of
illegal dismissal from which the order to pay monetary awards to petitioner Belen
stemmed had been long terminated.

CA SET ASIDE.
6) SARONA VS. NLRC, ET AL.
G.R. No. 185280, January 18, 2012

FACTS:

On June 20, 2003, the petitioner, who was hired by Sceptre as a security guard
sometime in April 1976, was asked by Karen Therese Tan (Karen), Sceptre’s
Operation Manager, to submit a resignation letter as the same was supposedly
required for applying for a position at Royale. The petitioner was also asked to fill up
Royale’s employment application form, which was handed to him by Royale’s
General Manager, respondent Cesar Antonio Tan II (Cesar).

After several weeks of being in floating status, Royale’s Security Officer, Martin Gono
(Martin), assigned the petitioner at Highlight Metal Craft, Inc. (Highlight Metal) from
July 29, 2003 to August 8, 2003. Thereafter, the petitioner was transferred and
assigned to Wide Wide World Express, Inc. (WWWE, Inc.).

On September 17, 2003, the petitioner was informed that his assignment at WWWE,
Inc. had been withdrawn because Royale had allegedly been replaced by another
security agency. The petitioner, however, shortly discovered thereafter that Royale
was never replaced as WWWE, Inc.’s security agency. When he placed a call at
WWWE, Inc., he learned that his fellow security guard was not relieved from his post.

On September 21, 2003, the petitioner was once again assigned at Highlight Metal,
albeit for a short period from September 22, 2003 to September 30, 2003.
Subsequently, when the petitioner reported at Royale’s office on October 1, 2003,
Martin informed him that he would no longer be given any assignment per the
instructions of Aida Sabalones-Tan (Aida), general manager of Sceptre. This
prompted him to file a complaint for illegal dismissal on October 4, 2003.

ISSUE:

Whether Royale’s corporate fiction should be pierced for the purpose of compelling it
to recognize the petitioner’s length of service with Sceptre and for holding it liable for
the benefits that have accrued to him arising from his employment with Sceptre?

RULING:

Yes.

The doctrine of piercing the corporate veil applies in alter ego cases, where a
corporation is merely a farce since it is a mere alter ego or business conduit of a
person, or where the corporation is so organized and controlled and its affairs are so
conducted as to make it merely an instrumentality, agency, conduit or adjunct of
another corporation.

The respondents’ scheme reeks of bad faith and fraud and compassionate justice
dictates that Royale and Sceptre be merged as a single entity, compelling Royale to
credit and recognize the petitioner’s length of service with Sceptre. The respondents
cannot use the legal fiction of a separate corporate personality for ends subversive of
the policy and purpose behind its creation53 or which could not have been intended
by law to which it owed its being.

Also, Sceptre and Royale have the same principal place of business. As early as
October 14, 1994, Aida and Wilfredo became the owners of the property used by
Sceptre as its principal place of business by virtue of a Deed of Absolute Sale they
executed with Roso.57 Royale, shortly after its incorporation, started to hold office in
the same property. These, the respondents failed to dispute.

Royale also claimed a right to the cash bond which the petitioner posted when he
was still with Sceptre. If Sceptre and Royale are indeed separate entities, Sceptre
should have released the petitioner’s cash bond when he resigned and Royale would
have required the petitioner to post a new cash bond in its favor.

However, the manner by which the petitioner was made to resign from Sceptre and
how he became an employee of Royale suggest the perverted use of the legal fiction
of the separate corporate personality.

Royale is a continuation or successor of Sceptre.

7) BANI RURAL BANK vs. DE GUZMAN ET AL

G.R. No. 170904, NOVEMBER 13, 2013

FACTS:

The respondents were employees of Bani Rural Bank, Inc. and ENOC Theatre I and
II who filed a complaint for illegal dismissal against the petitioners. The complaint
was initially dismissed by the LA but the NLRC reversed LAs decision. The NLRC, in
its resolution dated March 17, 1995, ordered that respondents be reinstated with
payment of backwages from the time of their dismissal until their actual
reinstatement. Such decision has become final and executory. Computation of
backwages was referred to Labor Arbiter Gambito.
Petitioners appealed the computation of the backwages with the NLRC. In a decision
dated July 31, 1998, the NLRC modified the terms of the March 17, 1995 resolution
insofar as it clarified the phrase less earnings elsewhere. The NLRC additionally
awarded the payment of separation pay, in lieu of reinstatement on account of the
strained relations between the parties.

As explained in the assailed Decision, what is controlling for purposes of the

backwages is the NLRC s Resolution dated 17 March 1995 which decreed that
private respondents are entitled to backwages from the time of their dismissal
(constructive) until their actual reinstatement; and considering that the award of
reinstatement was set aside by the NLRC in its final and executory Decision dated 3
July 1998 which ordered the payment of separation pay in lieu of reinstatement to be
computed up to the finality on 29 January 1999 of said Decision dated 3 July 1998,
then the computation of the backwages should also end on said date, which is 29
January 1999.

ISSUE:

Whether NLRC erred in ruling how the backwages are to be computed

RULING:

No. CA decision affirming NLRC ruling sustained.

Labor Law - The computation of backwages depends on the final awards adjudged
as a consequence of illegal dismissal.

First, when reinstatement is ordered, the general concept under Article 279 of the
Labor Code, as amended, computes the backwages from the time of dismissal until
the employees reinstatement. The computation of backwages (and similar benefits
considered part of the backwages) can even continue beyond the decision of the
labor arbiter or NLRC and ends only when the employee is actually reinstated.

Second, when separation pay is ordered in lieu of reinstatement (in the event that
this aspect of the case is disputed) or reinstatement is waived by the employee (in
the event that the payment of separation pay, in lieu, is not disputed), backwages is
computed from the time of dismissal until the finality of the decision ordering
separation pay.

Third, when separation pay is ordered after the finality of the decision ordering the
reinstatement by reason of a supervening event that makes the award of
reinstatement no longer possible (as in the case), backwages is computed from the
time of dismissal until the finality of the decision ordering separation pay.

As the records show, the contending parties did not dispute the NLRC s order of
separation pay that replaced the award of reinstatement on the ground of the
supervening event arising from the newly-discovered strained relations between the
parties. The parties allowed the NLRC s July 31, 1998 decision to lapse into finality
and recognized, by their active participation in the second computation of the awards,
the validity and binding effect on them of the terms of the July 31, 1998 decision.

Under these circumstances, while there was no express modification on the period
for computing backwages stated in the dispositive portion of the July 31, 1998
decision of the NLRC, it is nevertheless clear that the award of reinstatement under
the March 17, 1995 resolution (to which the respondents backwages was initially
supposed to have been computed) was substituted by an award of separation pay.
As earlier stated, the awards of reinstatement and separation pay are exclusive
remedies; the change of awards (from reinstatement to separation pay) under the
NLRC July 31, 1998 not only modified the awards granted, but also changed the
manner the respondents backwages is to be computed. The respondents backwages
can no longer be computed up to the point of reinstatement as there is no longer any
award of reinstatement to speak of.

Thus, the computation of the respondents' backwages must be from the time of the
illegal dismissal from employment until the finality of the decision ordering the
payment of separation pay. It is only when the NLRC rendered its July 31, 1998
decision ordering the payment of separation pay (which both parties no longer
questioned and which thereafter became final) that the issue of the respondents'
employment with the petitioners was decided with finality, effectively terminating it.
The respondents' backwages, therefore, must be computed from the time of their
illegal dismissal until January 29, 1999, the date of finality of the NLRC's July 31,
1998 Decision.