G.R. No. L-39889. March 29, 1984
UNION OF SUPERVISORS (RB) NATU, PETITIONER, VS. THE SECRETARY OF LABOR AND REPUBLIC BANK, RESPONDENTS.
MAKASIAR, Acting C.J.:
“Luna’s discharge was discriminaÂtory and constituted unfair labor
practice . . . . He is therefore entitled to reinstatement with back
wages. . .” (p. 223, rec.) and accordingly ordered respondent Republic
Bank (now Republic Planters Bank)
“. . . . TO IMMEDIATELY REINSTATE COMPLAINANT NORBERTO LUNA TO HIS
FORMER POSITION WITHOUT LOSS OF SENIORITY RIGHTS AND OTHER BENEFITS AND
INCREASES RECOGNIZED BY LAW OR GRANTED BY PRIVATE RESPONDENT DURING THE
PERIOD OF HIS ILLEGAL DISMISSAL, WITH BACK WAGES EQUIVALENT TO THREE
(3) YEARS WITHOUT QUALIFICATION . . .”WE even ordered that
“THIS DECISION IS HEREBY MADE IMMEDIATELY EXECUTORY.”
On November 17, 1981, upon receipt of a copy of the said decision,
complainant Luna presented himself to the Republic Planters Bank for
reinstatement to his former position as San Juan Branch Manager. The
Republic Planters Bank refused to take him back, claiming that the
decision was still under study by the counsel of the said bank (pp.
251-252, rec.).
On December 1, 1981, the Republic Planters Bank sought leave to file a
motion for reconsideration and/or clarification (pp. 225-228, rec.).
On January 15, 1982, the Republic Planters Bank begged leave to forego
the filing of a motion for reconÂsideration and/or clarification, and in
lieu thereof, submit manifestation and motion where the “immediate and
primary concern is to bring to the attention of this Honorable Court
certain facts and circumstances that occurred and transpired during the
pendency of this case the due consideration of which was not properly
brought to its attention”, summarized as follows:
“a) The complaint for unfair labor practice was filed as early
as 1974. The issues and personality involved were former employees and
officers of the old management team of the defunct Republic Bank. Some
have either resigned, retired and/or terminated when the new management
of respondent Bank took over its helm in 1978;“b) The Court’s findings that the management of Republic Bank
is guilty of unfair labor practice committed against complainant
Norberto Luna refers to the old management of the defunct Republic Bank
and admittedly whatever unfair labor practices committed by the old management to complainant Luna, the present management of Republic Planters Bank has nothing to do with them as they are facts and/or circumstances ante bellum;“c) Likewise, the substantial change in the corporate structure
of Republic Bank into Republic Planters Bank is not likewise reflected
in the records of the instant case. Undoubtedly, the records will show
that the defunct Republic Bank was one time under receivership by the
Central Bank of the Philippines and to save the bank from financial
collapse, an agreement was entered into between the old stockholders of
said bank, of course with the approval of the Central Bank that the
Philippine Sugar Commission will buy a substantial portion of the bank’s
equity and such other government entities will also inject fresh
capital therein to bail out the old Republic Bank from financial
collapse and ruin. x x x x;“d) As a necessary consequence of change of corporate
personality (i.e. controlling stockholders, corporate name, board
membership, etc.) of the old Republic Bank into the present Republic
Planters Bank, a restructuring and reorganization of the management team
of the Republic Planters Bank was effected to give the latter new image
and impetus as a rejuvenated and growing financial institution capable
of adequately meeting its banking commitÂment to the public in general
and the sugar industry in particular;“e) To top it all, the Republic Planters Bank was made and is
presently the financing arm of the Philippine Sugar Commission vis-a-vis
crop loans granted to sugar planters of the country and its financial
exposure thereto, truth to tell, save the sugar industry.“f) Parenthetically, the take over of the Philippine Sugar
Commission and other allied government agency of the ownership, control
and management of the defunct Republic Bank saved it from total collapse
and financial embarrassment; and“g) Sad to tell, the instant case came to surface only when the
present management of Republic Planters Bank was furnished a copy of
the decision of this Honorable Court. The old management did not advise
the present management of the pendency of the case. If it were
accordingly advised the new management of Republic Planters Bank could
have filed the necessary pleadings and manifestations to advise the
Honorable Court of the foregoing changes in the corporate and management
structure of the defunct Republic Bank” (pp. 239-241, rec.).
The following grounds were also interposed:
“xx xx xx.
“3. While it can be argued that there is continuity of the
corporate life of the defunct Republic Bank notwithstanding a change in
its corporate name into Republic Planters Bank; nevertheless it can be
said that in fairness and in equity to the present management of
Republic Planters Bank it should not be made to bear and be made to
suffer the consequence of the unfair labor practices committed by the
former management as found by this Honorable Court against complainant
Norberto Luna;“xx xx xx.
“5. The decision orders the reinstatement of Norberto Luna to his
former position as Branch Manager of San Juan. On this point, Republic
Planters would like to manifest that pursuant to the organizational set
up of the present management of Republic Planters Bank, they have to
inject new personality, talented and professional managers enjoying its
trust and confidence and to substitute Norberto Luna to the present
incumbent will necessarily cause an undue disturbance in the chain of
command under the present management vis-a-vis branch operation, and the
incumbent branch manager thereof will himself be dislocated if the
decision of this Honorable Court will be pursued without exception. A
new form of injustice and violation of security of tenure will thus be
committed by Republic Planters Bank;“6. Respondent Republic Planters Bank respectfully submits that
subject order be qualified by allowing respondent Republic Planters Bank
to reinstate Norberto Luna if still possible to his old position, and
if not, he be given an equivalent position. xxxx.“7. On the second portion of the decision which requires
respondent bank and I quote, “without loss of seniority rights and other
benefits or increases required by law or granted by respondent during
the period of his illegal dismissal with backwages of three years
without qualification.” Again, respondent Bank begs leave to manifest
that while it will not contest the payment of backwages equivalent to
three years without qualification, it will nonetheless appeal to the
kind indulgence of this Honorable Court to harmonize its decision with
equity and fairness. The new management of Republic Planters Bank
sincerely feels that to allow the grant of benefits and increases
granted during the period of illegal dismissal will again constitute an
undue imposition and punishment to the present management of the
Republic Planters Bank for an injustice they have no participation
whatsoever.“xx xx xx.
“Secondly, it will go against accepted management principle that
promotions and salary increases shall be based only on merit and fitness
of subject employee. Subject employee has to prove during his tenure
of office that his qualification for promotion and salary increase is
deserved. In other words, promotion and salary increases and other
increases cannot be presumed; it is earned by subject employee. To our
mind, complainant Norberto Luna does not deserve said benefits. The
records do not show” (pp. 241-243, rec.).
Consequently, the respondent Republic Planters Bank prayed that “the
resolution of the Honorable Supreme Court dated November 11, 1981 be
harmonized with the present circumstances obtaining in the instant case
as follows:
“1. That respondent Republic Planters Bank be allowed to
reinstate complainant Norberto Luna to an equivÂalent position without
loss of seniority from the time of his illegal dismissal up to actual
reinstatement;“2. That respondent Republic Planters Bank be exempted from the
payment of salary increases and other benefits granted by it or by law
from date of his illegal dismissal up to actual reinstatement;“3. That if paragraph 2 is not allowable, respondent Bank be
allowed to deduct the income derived by complaint from other sources
during his illegal dismissal until reinstatement. The deduction will
apply to both salary and wages;“4. And finally, respondent be allowed to pay only the three
years salary of complainant from date of dismissal without
qualification” (pp. 243-244, rec.).
On May 25, 1982, the Solicitor General, in behalf of the respondent
Secretary of Labor filed a manifestaÂtion and motion wherein it was
prayed that public respondent be excused from filing the corresponding
comment referred to in the resolution of this Court dated May 10, 1982
on the ground that “the issues being raised therein only affect the
private interest of said bank and hence it may not be proper for public
respondent to make a comment” (pp. 302-303, rec.).
On July 8, 1982, the respondent Republic Planters Bank submitted its
sur-rejoinder to petitioner’s rejoinder to private respondent’s reply to
petitioner’s comment (pp. 319-322, rec.). The Republic Planters Bank
in its sur-rejoinder has shown that it has already paid the comÂplainant
Norberto Luna his backwages equivalent to three (3) years without
qualification.
I
In its generally accepted sense, reinstatement is a restoration to a
state from which one has been removed or separated. It is the return to
the position from which he was removed (San Miguel Brewery, Inc. v.
Santos and CIR, 112 Phil. 986) and assuming again the functions of the
office already held (Abeto v. Rodas, 82 Phil. 67).
Reinstatement pre-supposes that the previous position from which one had
been removed still exists, or that there is an unfilled position more
or less of a similar nature as the one previously occupied by the
employee (Philippine Engineering Corporation v. CIR, L-27880, September
30, 1971, 41 SCRA 102). In this case, reinstatement was erroneously
ordered for the petitioner’s shop was already closed, the machineries
were dismantled and transferred to a bodega and some of the machineries
were sold. The Court held that “there being no more positions in the
machine shop to which the dismissed employee, mostly welders, drill
press operators, lathemen, tinsmith and carpenters, could be returned,
reinstatement is not possible . . .”
Here in the case before US, there was no closure of shop notwithstanding
that the respondent Republic Bank was almost at the brink of financial
ruin. Despite the widespread restructuring and reorganization following
the substantial change in the corporate structure of the former
Republic Bank into the present Republic Planters Bank, to offset the
impending financial collapse, the position previously held by the
complainant Norberto Luna was not abolished, but is now held by the
incumbent manager who replaced Luna. Although the position formerly
held by the herein complainant is now held by another, there is every
reason for the Republic Planters Bank to reinstate him because there is
an “unfilled position more or less of a similar nature as the one
previously occupied by the employee” (Philippine Engineering Corporation
v. CIR, supra). And, Section 4, Rule 1, Book VI of the implementing Rules and Regulations of the Labor Code states, to wit:
“An employee who is separated from work without just cause should be re-instated to his former position, unless
such position no longer exists, at the time of reinstatement, in which
case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights” (Italics supplied).
In Diwa ng Pagkakaisa-PAFLU v. Filtex International Corporation (L-23960
and L-23961, February 26, 1968, 22 SCRA 739), the Court held:
“Dismissal of strikers’ replacements, due to court’s reinstatement
order of strikers, is not only legal but their hiring was subject to
the outcome of the present suit or subject to the herein order. Said
workers must be deemed to have accepted their employment as replacements
with the knowledge that the same is subject to the consequences of the
labor dispute between the strikers and the company” (Norton and Harrison
Co. and Jackbilt Concrete Blocks Co., etc., et al., L-18461, February
10, 1967, 19 SCRA 310).
The respondent Republic Planters Bank contends that inasmuch as the
herein case involves managerial level, the ruling in the case of Diwa ng
Pagkakaisa – PAFLU v. Filtex International Corporation, supra,
which involves rank and file employees is not in point. The Bank
argues that such a distinction is significant in that “the position of a
Branch Manager relates to one of trust and confidence and therefore the
incumbent manager of San Juan Branch who has won the trust and
confidence of the management by reason of his capability and probity
should not be dismissed in favor of one whose competence and integrity
the management has not tested.”
WE find merit in said contention. Although there is no denying the fact
that the complainant Norberto Luna has served the respondent Republic
Bank for 22 years, as pointed out in the decision: “Forgotten were his
almost 22 years of service to the respondent Bank without any showing of
any irregularity in the performance of his duties”, the fact that he
served “without any showing of any irregularity in the performance of
his duties” does not prove that he has the trust and confidence of the
Republic Planters Bank which are requisites for the position of a
manager. And lack of irregularities in the service does not necessarily
prove superior competence, efficiency and integrity.
It must be remembered that the respondent Bank reached the point of
almost complete financial ruin were it not for the rehabilitation
progress initiated by the government necessitating widespread
restructuring and reorganization of the Bank. At that time of economic
crisis of the respondent Bank, the herein petitioner was the manager of
the San Juan Branch. It cannot be said that he did not contribute,
directly or indirectly, to the downhill economy of the respondent Bank.
Clearly, the respondent Bank, after surviving said crisis, and emerging
therefrom as Republic Planters Bank, should be given the best managers.
Managers who can contribute to its struggle to survive. Managers who
have not only the capacity and efficiency but likewise they must also
have the “proven” skill that is essential for the respondent Republic
Planters Bank to go on and weather these times of economic difficulties.
The Labor Code provision on reinstatement, to wit:
“Art. 280. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and to his
backwages computed from the time his compensation was withheld from him
up to the time of his reinstatement.”
is aimed to restore the situation as nearly as possible to status quo
ante the unfair labor practice. This requires that those deprived of a
recognized and protected interest by violations of the law should be
made whole so as to prevent the violator from profiting from his
misdeeds (N.L.R.B. v. Coats and Clark, Inc. 241 F2d 556; N.L.R.B. v. J.
H. Rutter-Rex Manufacturing Co., 245 F2d 594). Yet the reinstatement
remedy must always be adapted to economic-business conditions (N.L.R.B.
v. R.C. Can Co.,, 328 F2d 974, 980; N.L.R.B. v. American Aggregate Co.,
305 F2d 599, 563-565).
There is no question that the Republic Planters Bank is the successor of
the Republic Bank. This is not disputed by the respondent Republic
Planters Bank as can be shown in its reply to petitioner’s comment, as
follows:
“While respondent does not disÂpute the fact that the corporate
personality of the old Republic Bank is continued by the present
Republic Planters Bank, yet, as a matter of equity, it feels that it
should not be made to bear the consequences of an unfair labor practice
committed by the old management against complainant Luna.”
But, in order to keep the respondent Republic Planters Bank on its feet
once again, it had to undergo innovations to ensure recovery. The
respondent Republic Planters Bank actually changed its methods of
operation and this change was motivated by economic factors.
Considering these “economic-business conditions” together with the
economic crisis WE are in now, it is inevitable that these be reflected
in the desire for efficient and productive management. This honest
intention can only be effectuated if the complainant Norberto Luna is
reinstated to a substantially equivalent position without loss of
seniority rights and the incumbent manager who is now holding the
position formerly held by herein complainant be allowed to continue with
his “tested” competence and integrity in the management of the San Juan
Branch of the Republic Planters Bank.
II
Furthermore, the complainant Norberto Luna who is known to be “active
and militant in the defense of union rights” should have informed the
management of the Republic Planters Bank of the pendency of the herein
case. Aware as he is of the distressed condition of the then Republic
Bank being at that time a manager of the said Bank, it is most unlikely
that the complainant closed his eyes to whatever developments there
might be regarding the Republic Planters Bank. It cannot be said that
he was ignorant of the take-over by the government of the defunct
Republic Bank to “save it from total collapse and financial
embarrassment” in 1978.
From 1978 to November 17, 1981, the herein comÂplainant remained passive
and silent. He did not go to the Republic Planters Bank and inform
them of the herein case. Neither did he, through his counsel, inform
this Court of the take-over and change in the management of the Republic
Planters Bank. The complainant herein remained complacent and just
waited for this Court’s decision. It was only on November 17, 1981 that
the complainant Norberto Luna acted, upon receipt of this Court’s
decision. He must then face the consequences of his inactivity.
III
WE find meritorious the contention of the Republic Planters Bank that
“increases and benefits are to be earned; they do not attach
automatically to the length of service of subject employee.”
Although backwages are compensation to which an employee is entitled, by
reason of his continued status as an employee (N.L.R.B. v. Killoren
[CA8 Mo] 122 F2d 613, 137 ALR 510) since an illegally dismissed employee
is considered as not having left his office (Cristobal v. Melchor,
L-43203, December 29, 1980, 101 SCRA 857), mere continuance as an
employee does not qualify him for benefits and increases. Benefits and
increases are allowed because of outstanding performance of duties and
not solely because of length of service.
The rule that an employer cannot be heard to assert that wages are
ordered to be paid for services which were not performed, for it was the
employer’s own unlawful conduct which deprived the employee of his
opportunity to render service (Mitchell v. Robert De Mario Jewelry, Inc.
361 US 288, L ed. 2d 323, 80 SCt 332), does not apply in the herein
case for it was the management of the old Republic Bank which caused the
unlawful discharge of Norberto Luna and not the new management of the
successor and rehabilitated Republic Planters Bank. It would be
inequitable for this Court to order the Republic Planters Bank to grant
increases to herein complainant Norberto Luna for the Republic Planters
Bank had no hand in the illegal discharge of Norberto Luna. And, to do
so would unduly burden the newly rehabilitated Republic Planters Bank
which, were it not for the take-over by the government, there would be
no bank, Republic Bank or Republic Planters Bank to speak of. And there
would be no job for Norberto Luna to go back to.
However, WE cannot allow the Republic Planters Bank to make deductions
from the three (3) year backÂwages it has already paid to the
complainant Norberto Luna. Equity must operate in favor of the employee
equally as it favors the employer.
The Court may set fixed amounts of backwages without any reference to
deduction (Radio Communications of the Philippines v. Philippine
Communications Electronics and Electricity Workers Federation [FCWF],
L-37662, July 15, 1975, 65 SCRA 82). The rationale behind this has been
enunciated in a long line of cases, to reiterate:
“This formula of awarding reasonable net backwages without deduction or
qualification relieves the employee from proving or disproving their
earnings during their lay-off and the employers from submitting
counterproofs, and obviates the twin evils of idleness on the part of
the employee who would ‘with folded arms remain inactive to the
expectation that a windfall would come to him’ (Itogon Suyoc Mines, Inc.
v. SangiloÂ-Itogon Workers Union, 24 SCRA 873 [1968], cited in Diwa ng
Pagkakaisa v. Filtex International, 43 SCRA 287 [1972] per Makalintal,
now C.J.) and attrition and protracted delay in satisfying such award on
the part of unscrupulous employers who have seized upon the further
proceedings to determine the actual earnings of the wrongfully dismissed
or laid-off employees to hold unduly extended hearings for each and
every employee awarded backwages and thereby compel the employee to
agree to unconscionable settlements of their backwages award in order to
satisfy their dire need” (Feati University Faculty Club [PAFLU] v.
Feati University, L-31503, August 15, 1974, 53 SCRA 395, 418 cited in
Air Manila, Inc. v. CIR, L-39742, June 9, 1978, 83 SCRA 588; see also
Bachrach Motor Co., Inc. v. CIR, 86 SCRA 27, Visayan Stevedore
Transportation Co. v. CIR, 7 SCRA 271).
An employer is entitled to deduct from what the Court orders to be paid
as backwages, privileges, etc., whatever an employee has earned
elsewhere during the period for which backwages are supposed to be paid.
Such qualification must be considered implied in all judgments
ordering reinstatement, unless otherwise expressly ordered for reasons
the Court may deem justified (Cruz v. Philippine Association of Free
Labor Unions, [PAFLU], 42 SCRA 68; Philippine Fiber Processing Co., Inc.
v. CIR, 52 SCRA 110) as in the decision herein dated November 12, 1981,
where WE ordered:
“He is therefore entitled to reinstatement with back wages pursuant to
the policy to decree back wages not exceeding three (3) years without
requiring the parties to submit proof of compensation received from
other sources at the time of illegal dismissal until actual
reinstatement, in order that judgment in favor of an employee or laborer
can be executed without delay (Luzon Stevedoring Corp. v. CIR, 61 SCRA 162)” [Italics supplied, p. 223, rec.].
This policy must be decreed to ensure that the employee would be
protected, not merely in the exercise of their right of
self-organization, collective bargaining, security of tenure and just
and humane conditions of work, but likewise against the economic
consequences of a legitimate assertion of these rights.
WHEREFORE, INASMUCH AS THE REPUBLIC PLANTERS BANK HAS ALREADY PAID
THE COMPLAINANT NORBERTO LUNA HIS BACKWAGES EQUIVALENT TO THREE (3)
YEARS WITHOUT QUALIFICATION, RESPONDENT REPUBLIC PLANTERS BANK IS HEREBY
ORDERED:
1. TO IMMEDIATELY REINSTATE THE COMPLAINANT NORBERTO LUNA TO AN
EQUIVALENT POSITION WITHOUT LOSS OF SENIORITY RIGHTS FROM THE TIME OF
HIS ILLEGAL DISMISSAL UP TO ACTUAL REINSTATEMENT; AND2. NOT TO MAKE ANY DEDUCTIONS FROM THE THREE YEARS BACKWAGES ALREADY PAID TO NORBERTO LUNA.
THIS RESOLUTION IS HEREBY MADE IMMEDIATELY EXECUTORY.
SO ORDERED.
Concepcion, Jr., Guerrero, Abad Santos, De Castro and Escolin, JJ., concur.
Aquino, J., in the result.