LYDIA SANTOS, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND SECURITY BANK AND TRUST COMPANY, RESPONDENTS.

The present petition for certiorari is directed at:  (1) the decision of the National Labor
Relations Commission (NLRC) dated 29
August 1985 in NLRC Case No. RB-IV-20056-78-T, entitled “Lydia
Santos, complainant-appellee, versus Security Bank
and Trust Company, respondent-appellant”; and (2) the Resolution issued by
the NLRC on 7 November 1986 denying petitioner Lydia Santos’s Motion for
Reconsideration of the mentioned Decision.

The background facts are not disputed:

1.  Petitioner was employed
by the private respondent Bank from 10
December 1951 until 30 April
1976, when her services were terminated.  Her last position was that of Branch Manager,
with a monthly basic salary of P1,750.00 plus a monthly living allowance of
P650.00 and a monthly transportation allowance of P250.00, or a total of
P2,650.00 per month.  In addition, she
also enjoyed a mid-year bonus equivalent to one (1) month’s salary; a christmas bonus equivalent to two (2) months’ salary; and
vacation and sick leave with pay.

2.  On 10 January 1978, petitioner filed a Complaint for
illegal dismissal.  On 16 October 1978, Labor Arbiter Bienvenido S. Fernandez rendered a decision finding
petitioner’s dismissal to be illegal and ordering private respondent Bank to
reinstate her with backwages and other accrued
benefits.  The dispositive
portion of the Labor Arbiter’s decision reads as follows:

“IN VIEW OF ALL THE FOREGOING, respondent is ordered to
immediately reinstate complainant to her position as Branch Manager
without loss of rights and with backwages from
May 1976 at P2,650.00 per month, plus other accrued benefits.  The Socio-Economic Analyst of the Commission
is directed to make the proper computation for execution of this
decision.” (Underscoring supplied.)

3.  On appeal by private
respondent Bank from the Labor Arbiter’s decision, the First Division of the
NLRC promulgated a decision modifying the decision of the Labor Arbiter.  In its decision dated 28 December 1979, the NLRC (First Division)
said:

“After a close scrutiny of the record of this case and
consideration of the issues raised in the appeal, we find no sufficient
justification to disturb the appealed decision, except that portion which
orders the reinstatement of the complainant with full backwages.  The complainant, being a branch manager of
the respondent bank, is undisputedly a managerial employee as defined in
Article 212 of the Labor Code.  If the
complainant is to be reinstated, then this would mean forcing unto the
respondent a manager upon whom it has lost its trust and confidence.  Furthermore, considering that the relationship
between the complainant and the respondent bank has become strained as a
result of the filing of this case, the remedy of reinstatement with full backwages
would not be appropriate and conducive to smooth employee relationship within
the company.  Because of this, we
order the respondent to pay to the complainant her separation pay,
equivalent to one-half month pay for every year of service, in lieu
of reinstatement.

WHEREFORE, the appealed decision is hereby MODIFIED as explained
above.” (Underscoring supplied.)

4.  Dissatisfied with the
decision of the NLRC (First Division), private respondent Bank filed a Motion
for Reconsideration while petitioner Lydia Santos moved for the reinstatement
of the original decision of the Labor Arbiter or, in the alternative, for a
clarification as to how the separation pay should be computed.  The NLRC (First Division) denied both private
respondent Bank’s Motion for Reconsideration as well as petitioner’s
Motion.^[1]

Petitioner Lydia Santos then filed with the NLRC an Urgent Motion
seeking clarification of the meaning of the decision of the NLRC (First
Division) of 28 December 1979.  In a Resolution dated 18 February 1982, the
NLRC (First Division) declared that the modification of the decision of the
Labor Arbiter referred only to the reinstatement of the petitioner with full backwages, and that in lieu thereof, payment of separation
pay equivalent to one-half (1/2) month’s salary for every year of service was
ordered.  The same Resolution emphasized
that the award of “other accrued benefits” was not affected in any
way as that was a separate award.

5.  The decision of the
NLRC (First Division) became final and the petitioner moved for execution.  The Socio-Economic Analyst submitted a report
dated 15 July 1982
recommending payment to petitioner of the total amount of P353,295.89.  This amount included backwages
of P122,202.00 and provident fund benefits of P25,844.61.

6.  On 9 August 1982, private respondent Bank questioned
the correctness of the computation of the Analyst.  On 19
April 1983, the First Division of the NLRC issued a resolution
which held:

“In resumé, we rule that the
complainant is only entitled to separation pay, equivalent to one-half
month pay for every year of service computed on the basic pay of the employee.  While we ruled that complainant is entitled to ‘other accrued benefits’
it, however appears from the record that no such benefits are actually accruing
to the complainant at the time of her separation from the company.”
(Underscoring supplied.)

7.  Acting on a motion for
reconsideration filed by petitioner Lydia Santos, the NLRC, this time sitting en
banc, rendered the disputed decision on 29 August 1985, the dispositive
portion of which reads:

“WHEREFORE, let the Resolution of the First Division dated 19 April 1983 be, as it is hereby, SET
ASIDE.  The respondent is hereby ordered
to pay the complainant the total sum of One Hundred Fifteen Thousand Six
Hundred Eighty-Five Pesos and Fifty Centavos (P115,685.50), representing
the totality of the benefits to which she is entitled.”
(Underscoring supplied.)

Under the above decision, the NLRC would
limit the benefits recoverable by petitioner Lydia Santos to:  (1) her separation pay (i.e.,
P24,500.00), in lieu of reinstatement and backwages;
and (2) gratuities which accrued in her favor during the period from her
illegal dismissal on 30 April 1976 until 28 December 1979, when the NLRC (First
Division) declared that reinstatement with full backwages
would not be appropriate and ordered in lieu thereof payment of separation pay
(i.e., P91,185.50), making a total award of P115,685.50.

The only issue raised in the present petition is whether or not
petitioner is entitled to an award for backwages,
in addition to:  (1) her separation
pay; and (2) gratuities accruing before the Labor Arbiter’s order
for reinstatement was modified.  That
petitioner’s dismissal was unlawful, is not in issue.

The normal consequences of a finding that an employee has been illegally dismissed are, firstly, that
the employee becomes entitled to reinstatement to his former position without
loss of seniority rights and, secondly, the payment of backwages
corresponding to the period from his illegal dismissal up to actual
reinstatement.^[2]
The statutory intent on this matter is clearly discernible.  Reinstatement restores the employee who was
unjustly dismissed to the position from which he was removed, that is, to his status
quo ante dismissal; while the grant of backwages
allows the same employee to recover from the employer
that which he had lost by way of wages as a result of his dismissal.^[3]
These twin remedies — reinstatement and
payment of backwages — make the dismissed employee whole who can then
look forward to continued employment. 
Thus do these two remedies give meaning and substance to the
constitutional right of labor to security of tenure.^[4]
The two forms of relief are distinct and separate, one from the other.  Though the grant of reinstatement commonly
carries with it an award of backwages, the inappropriateness
or non-availability of one does not carry with it the inappropriateness or
non-availability of the other. 
Separation pay was awarded in favor of petitioner Lydia Santos because
the NLRC found that her reinstatement was no longer feasible or appropriate.  As the term suggests, separation pay is the
amount that an employee receives at the time of his severance from the service
and, as correctly noted by the Solicitor General in his Comment, is designed to
provide the employee with “the wherewithal during the period that he is
looking for another employment.”^[5]
In the instant case, the grant of separation pay was a substitute for immediate
and continued re-employment with the private respondent Bank.  The grant of separation pay did not redress
the injury that is intended to be relieved by the second remedy of backwages, that is, the loss of earnings that would have
accrued to the dismissed employee during the period between dismissal and
reinstatement.  Put a little differently,
payment of backwages is a form of relief that
restores the income that was lost by reason of unlawful dismissal; separation
pay, in contrast, is oriented towards the immediate future, the transitional
period the dismissed employee must undergo before locating a replacement job.  It was grievous error amounting to grave
abuse of discretion on the part of the NLRC to have considered an award of
separation pay as equivalent to the aggregate relief constituted by
reinstatement plus payment of backwages under
Article 280 of the Labor Code.  The grant
of separation pay was a proper substitute only for reinstatement; it could not
be an adequate substitute both for reinstatement and for backwages.  In effect, the NLRC in its assailed decision
failed to give to petitioner the full relief to which she was entitled under
the statute.

We conclude that petitioner Lydia Santos is entitled to receive,
and private respondent Bank is obligated to pay, (1) the benefits which had
accrued in petitioner’s favor during the
period from her illegal dismissal
and until reinstatement was declared non-available; (2) separation pay
equivalent to one-half (1/2) month’s pay for every year of service, in lieu of
reinstatement; and (3) backwages for three (3) years
without qualification and deduction.  The
monetary value of the above items is to be computed in accordance with the
following guidelines:  (a) in the computation of accrued benefits and separation pay, the appropriate cut-off
date is 28 December 1979, when the NLRC declared that reinstatement of petitioner
Lydia Santos had become non-feasible and inappropriate; and (b) in the
computation of backwages and separation pay, account
must be taken not only of the basic salary
of petitioner but also of her transportation and emergency living allowances,^[6]
as was correctly done by the Labor Arbiter.

Petitioner was unjustly dismissed in 1976.  Eleven years later, she has yet to receive a
single centavo.  In the interest of
expeditious justice and to avoid any further ambiguities, we hold that the
total amount due petitioner Lydia
Santos is P223,685.50, computed as follows:

A.   Accrued Benefits (1 May 1976 to 28 December 1979)

1.  Mid-year
and Christmas Bonuses:

1976  Mid-year bonus 1.0 mo.     – – – – –  P         1,750.00

Christmas bonus 2
mos.  – – – – –              3,500.00

1977  Mid-year bonus 1.0 mo.     – – – – –              1,750.00

Christmas bonus 2
mos.  – – – – –              3,500.00

1978  Mid-year bonus 1.0 mo.     – – – – –              1,750.00

Christmas bonus 2
mos.  – – – – –              3,500.00

1979  Mid-year bonus 1.0 mo.     – – – – –              1,750.00

Christmas bonus 2 mos.   – – –
– –             3,500.00

Sub-Total       – – – – –  P       21,000.00

2.  Vacation and Sick Leaves (15/15 days per
year):

a)    1 May to 31 December 1976 (2/3)

(20 days x P69.30)         – – – – –  P         1,386.00

b)    1977 (30 days x P69.30)         – – – – –              2,079.00

c)    1978 (30 days x P69.30)         – – – – –              2,079.00

d)    1979 (30 days x P69.30)         – – – – –              2,079.00

Sub-Total                    –
– – – –  P         7,623.00

3.  Gratuity pay:

a)    First 10 years

(10 December 1951 to

10 December 1961) x

1 mo. salary per year              – – – – –  P        17,500.00

b)    Next 5 yrs.

(11 December 1961 to

10 December 1966) x

1.25 mos. salary per year       – – – – –             10,937.50

c)    Next succeeding yrs.

(11 December 1966 to

28 December 1979)

1.5 mos. salary x 13
years     – – – – –              34,125.00

Sub-Total               P        62,562.50

Total Accrued Benefits  P       91,185.50

B.  Separation Pay (10 December 1951 to 28 December 1979)

Monthly salary                       P 1,750.00

Living allowance                         650.00

Transpo.
allowance                    250.00

Salary base            P 2,650.00

(1/2) P 2,650.00 x 28 years                                      P 37,100.00

C.  Backwages (3
years without qualification and deduction)

P 2,650.00 x 3
years                                                   P
95,400.00

GRAND TOTAL          P 223,685.50

WHEREFORE, the petition for certiorari is
granted.  The private respondent Bank is
ordered to pay petitioner the amount of P223,685.50, which represents the
totality of the accrued benefits petitioner is entitled to as a result of her
illegal dismissal.  The decision of
public respondent NLRC dated 29 August
1985 in NLRC Case No. RB-IV-20056-78-T is hereby modified
accordingly.  This decision is immediately
executory.  No
pronouncement as to costs.

SO ORDERED.

Fernan, (Chairman), Gutierrez, Jr., Bidin, and Cortes,
JJ., concur.

^[1]
Two petitions for certiorari assailing the decision of the NLRC were filed with
this Court — G.R. No. L-53618 filed on 17
April 1980 by petitioner, and G.R. No. L-53601 filed on 23 April 1980 by respondent Bank —
but were both dismissed on 29 October
1980 for lack of merit.  The
motion for reconsideration in G.R. No. L-53601 was denied by this Court on 17 December 1980.

^[2]
Article 280, Labor Code.  See also Alzosa v. National Labor Relations Commission, 120
SCRA 611 [1983].

^[3]
Union of Supervisors (RB) NATU v. Secretary of
Labor, 128 SCRA 442 [1984]; and Bachiller vs.
National Labor Relations Commission, 98 SCRA 393 [1980].

^[4]
Article II (9), 1973 Constitution; and Article XIII (3), second paragraph, 1987
Constitution.

^[5]
The Solicitor General here cited Fernandez. 
The Law of Employee Dismissal [1976 Rev. Ed.].

^[6]
See Pan-Philippine Life Insurance Corporation v. National Labor Relations
Commission, 114 SCRA 866 [1982] and General Bank and Trust Company v.
Court of Appeals, 135 SCRA 569 [1985).