GROLIER INTERNATIONAL, INC. PETITIONER, VS. EXECUTIVE LABOR ARBITER ARTHUR L. AMANSEC, THE NLRC SHERIFF AND MANUEL L. FERNANDEZ, RESPONDENTS.

In this Petition for Certiorari, Grolier International,
Inc. (“Grolier”), a corporation organized under Philippine law, seeks
to set aside two (2) Orders dated 19
May 1988 and 31 May 1988,
respectively, issued by the respondent Labor Arbiter in NLRC Case No. RB-IV-7533-76.  The dispositive portion of the 19 May 1988 Order reads as follows:

“WHEREFORE, the computation of the award dated May 10, 1988 due complainant should
be, as it is hereby APPROVED.  Respondent
is hereby directed to pay complainant his award based on said computation at
its Philippine peso equivalent on actual date of payment within five (5)
calendar days.  Failing at this, let
a Writ of Execution issue.

SO ORDERED.”^[1]
(Underscoring supplied)

The 31 May 1988 Order denied Grolier’s Motion for Recon­sideration.

The antecedents of the instant Petition relate to this Court’s
Resolution dated 29 December 1987 which resolved herein private respondent
Manuel L. Fernandez’s motion for reconsideration in the case entitled “Manuel L. Fernandez vs. Grolier
International, Inc., et al.,” G.R. No. 55312.

Private respondent Fernandez first entered the service of Grolier
on 1 July 1964.  On 27
July 1974, respondent Fernandez, then occupying the position of
Comptroller and Executive Administrator of Grolier with a basic monthly salary
of P4,000.00, left for Sydney,
Australia.  There, he worked for seven (7) months for the
Grolier Society, Ltd. of Australia
and received a salary of AUS$8,000.00 per
annum.  On
3 February 1975, Fernandez
returned to Manila to follow up his
application for immigration to Australia
at the Australian Embassy in Manila.  He needed immigrant status in Australia
to qualify for permanent employment there. 
However, on 19 February 1975,
his application for an immigrant visa was disapproved.  As a result, he sought reinstatement to his former position with petitioner
Grolier.  When he was refused
reinstatement, Fernandez brought a case for illegal dismissal before the Labor
Arbiter.  The Labor Arbiter dismissed his
complaint.  On Petition for Certiorari,
this Court upheld the Labor Arbiter and dismissed the Petition in a Decision
dated 15 December 1986.  Upon respondent Fernandez’s Motion for
Reconsideration, however, this Court, in a Resolution dated 29 December 1987, set aside its
earlier decision and rendered a decision
in favor of respondent Fernandez.

In this 29 December
1987 Resolution, the Court ordered petitioner Grolier to reinstate
respondent Fernandez, with full backwages from 3 February 1975 for a period of three
(3) years, without qualification or deduction. 
In case reinstatement was no longer possible, Grolier was required to pay instead separation pay
to respondent Fernandez, on the basis of applicable law or company practice,
whichever is higher, “effective as of the end of the aforementioned three
(3) year period.”^[2]
After denying petitioner Grolier’s
Motion for Reconsideration, the Court remanded the case to the Executive Labor
Arbiter, National Capital Region, Branch No. IV, Department of Labor and Employment.  There, respondent Fernandez moved for
immediate execution.

On 10 May 1988, the NLRC Research and Information Unit prepared a
computation of award which computed the backwages and
separation pay awarded to respondent Fernandez on the basis of the salary he
was earning in Sydney, Australia working for the Grolier Society, Ltd. of
Australia, which was AUS$8,000.00
per annum.  His separation pay was computed at one
month salary for every year of service from 1 July 1964 until 2 February 1978, resulting, per the NLRC computation, in a total separation pay of AUS$9,333.38. 
The total amount due as backwages, upon the
other hand, was computed on the
same basis as AUS$26,000.00, representing basic salary and bonus for three (3)
years.  The aggregate award to respondent
Fernandez accordingly amounted to AUS$35,333.38, plus P6,646.65
for refund of airfare from Sydney to Manila.^[3] In his order dated 19 May
1988, respondent
Labor Arbiter approved the foregoing computation of award.  Petitioner
Grolier moved for reconsideration of this order; respondent Labor
Arbiter denied the Motion for Reconsideration in an order dated 31 May
1988.

Petitioner Grolier is now
before us assailing the order of the public respondent Labor Arbiter which
approved the computation of award dated 10 May 1988, as constituting a grave abuse of discretion.  Grolier submits two (2) principal arguments
in its petition, to wit:

(1)    the award of backwages and separation pay should be based on private
respondent’s last salary with petitioner at P4,000.00 per month and not AUS$8,000.00 per annum; and

(2)    the award of
separation pay must cover only the period beginning 3 February 1978 to 19 May 1988, because the Resolution of this Court in
G.R. No. 55312 speaks of payment of separation pay “effective as of
the end of the above three (3) year period.”

We find substantive
merit in the first argument of petitioner. 
We believe that the Labor Arbiter had no factual or legal basis for
computing the award upon the basis of AUS$8,000.00 per annum salary
received by private respondent while he was working in Sydney,
Australia.  The backwages and
separation pay should have been computed on the basis of the P4,000.00 per month salary received by Fernandez while
employed in the Philippines
by petitioner Grolier.  Respondent
Fernandez sought reinstatement to
his old position with Grolier in the Philippines, from which he could expect to
receive only his old salary of P4,000.00.  He could not have reasonably expected
to receive as salary the Philippine peso equivalent of the number of Australian
dollars he was receiving as salary in Australia
had petitioner Grolier allowed him to
resume his former position in the Philippines.

Reinstatement means restoration to a state or condition from
which one had been removed or separated.^[4]
One who is reinstated assumes the position he had occupied prior to his dismissal and is, as an ordinary
rule, entitled only to his last salary in that position.  Had private respondent Fernandez been
reinstated either upon his initial request or as required by this Court, he
would have occupied his former position in
Grolier in the Philippines
as Comptroller and Executive
Administrator, and as such would have been entitled only to his previous salary
of P4,000.00 per month.

Further, it seems important to note that salary scales are based
upon or reflect, as economic facts, the standard of living prevailing in the
country and the purchasing power of the domestic currency.  The P4,000.00
monthly salary which respondent received from petitioner prior to his stay in Australia,
was presumably a reasonable and satisfactory remuneration for the work done by
him, taking into account the standard of living and the cost of living in the Philippines
at that time.  It cannot be supposed that
private respondent was promoted when he was sent to the Sydney
offices of the Grolier Society, Ltd. of Australia.  The Court in its Resolution in G.R. No. 55132
dated 27 December 1987 had
stated that respondent Fernandez went to Australia
on company business, which means that his trip to Australia
was related to the duties of the position he was then holding in Grolier in the
Philippines.  The apparently higher salary given to him
while working in Australia, must be viewed in the light of the fact that the cost of
living and the standard of living in Australia
are higher than those prevailing in the Philippines;
he was paid his salary in Australian dollars; but he had to pay for his
expenses in Australian dollars too. 
There was in reality no increase in respondent’s salary that was effected merely because he was in Australia;
what had in truth been effected was merely the adjustment of his salary on
account of the different, higher costs of living while in Australia.  Put a little differently, the AUS$8,000.00
per annum salary of private respondent while in Australia
was equivalent to his P4,000.00 per month salary he
had been receiving in the Philippines.  Respondent does not pretend that the
functions he was discharging in Australia (as an “accountant or financial
officer”^[5])
were qualitatively different from the work he was carrying out in the
Philippines (as comptroller and executive administrator) or that his Australian
job involved much greater responsibility or required much higher technical
capabilities than his job here.  In fact,
it would appear that his job in Sydney
was more modest and less important than his job in Manila.

The second point raised by petitioner Grolier is centered on the
interpretation of a phrase in our Resolution on the Motion for Reconsidering
ordering Grolier “to pay [Fernandez] separation pay based on the
applicable law or company practice, whichever is higher, effective as of the end of the above three (3) year period.”^[6] Petitioner contends that the
underscored phrase referred to the period beginning 3 February 1978 up to 19 May 1988, a period of ten (10) years and three
(3) months.  We cannot sustain this
reading of our Resolution, for it would collide with present law and
jurisprudence.  Section 4 (b), Rule 1,
Book VI of the Implementing Rules of the Labor Code provides that:

“Sec. 4 (b).  In case the establishment where the employee
is to be reinstated has closed or ceased operations or where his former
position no longer exists at the time of reinstatement for reasons not
attributable to the fault of the employer, the employee shall be entitled to separation
pay equivalent at least to one month salary or to one month salary for
every year of service whichever is higher, a fraction of at least six
months being considered as one whole year.”
(Underscoring supplied)

Respondent is entitled to separation pay equivalent to one (1)
month salary for every year of service since petitioner could no longer
reinstate him in his old
position.  The period to be considered,
therefore, is that from 1 July 1964 — when he commenced his employment with
the petitioner — until 2 February 1978, which is the terminal date of the
three (3) year period set by this Court in determining the backwages
he is entitled to.  In other words,
respondent Fernandez is deemed to have been in the employment of petitioner
Grolier until the expiry of the three (3) year period during which he was
entitled to backwages, or a total period of fourteen
(14) years and seven (7) months.  This
conclusion is in line with the rulings of this Court too numerous to list here,
where awards of separation pay were computed from the start of employment up to
the time of termination thereof,^[7]
including the period of imputed service for which he is entitled to backwages.

Thus, when the Court stated that private respondent was entitled
to “separation pay based on the applicable law or company practice,
whichever is higher, effective as of the end of the above three (3) year
period,” it meant only that in the computation of separation pay, the
three (3) year period in respect of which backwages
are awarded, must also be included (although private respondent had not
actually served during the last three [3] years), and that the salary rate
prevailing at the end of the three (3) year period of putative service should
be used in such computation.  There is no
showing that the monthly salary attached to the old position of respondent
Fernandez in petitioner Grolier had been upgraded to some amount higher than P4,000.00 per month.

We conclude that the public respondent Labor Arbiter acted in excess
of his jurisdiction in computing the backwages and
separation pay due to the private respondent on the basis of his pay in Sydney
of AUS$8,000.00 per annum.  Upon the other hand, public respondent
correctly determined that private
respondent is entitled to separation pay on the basis of his entire service to
petitioner Grolier, actual and putative: 
1 July 1964
to 2 February 1978.

WHEREFORE, we AFFIRM the Order of the respondent Labor
Arbiter dated 19 May 1988,
insofar as it found that respondent’s separation pay should be computed at the
rate of one (1) month’s salary for every year of service, from 1 July 1964 to 2 February 1978. 
We, however, MODIFY and SET ASIDE said order to the extent that it
approved the computation of respondent’s backwages
and separation pay on the basis of AUS$8,000.00 per annum and
hereby DIRECT that said backwages and separation pay
be computed on the basis of P4,000.00 per month.  No pronouncement as to costs.

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

^[1]
Order dated 19 May 1988, p.
3; Rollo, p. 20.

^[2]
Fernandez v. Grolier International, Inc., et al., 156
SCRA at 837-838 (1987).

^[3]
Rollo, p. 45.

^[4]
Union of
Supervisors (RB) NATU v. The Secretary of Labor
and Republic Bank, 128 SCRA 442 (1984).

^[5]
156 SCRA at p. 836.

^[6]
Id. at 838.

^[7]
See e.g. Soriano v. NLRC, 155 SCRA 124 (1987);
Santos v. NLRC, 154 SCRA 166
(1987); San Miguel Corporation v. Deputy Minister of Labor and
Employment, 145 SCRA 199 (1986); General Bank and Trust Co. v. Court of
Appeals, 135 SCRA 569 (1985).