FORTUNE TOBACCO CORPORATION, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION & EDGARDO DE LA CRUZ, ET AL., RESPONDENTS.

The computation of the backwages to be
paid to the herein private respondents is in issue in this petition for certiorari
and prohibition.

The record of the case discloses the following facts:

On January 29, 1986, the private respondents filed a complaint for
illegal dismissal against their employer, the herein petitioner Fortune Tobacco
Corporation before the National Labor Relations Commission (NLRC) praying that
they be reinstated in the company with full backwages
and without loss of seniority rights.  The
case was docketed as NLRC Case No. 1-381-86.

The parties submitted their respective position papers with
the petitioner maintaining that it had already sold its redrying
plant as of October 17, 1985.  In due time, the labor arbiter to whom the
case was assigned rendered a decision, the dispositive
portion of which reads as follows:

“WHEREFORE, respondent (herein petitioner) is hereby ordered
to reinstate the individual complainants (herein private respondents) to their
former position(s) with full backwages reckoned from
October 5, 1985 up to actual reinstatement, or, in the
alternative, to pay each of the complainants their separation pay equivalent at
least to one month salary for every year of service, whichever is higher a
fraction of six months being
considered as one whole year, and for purposes of computing said benefit, the usual or normal seasonal period of
one (1) calendar year shall be treated as one (1) whole year.

“xxx.”^[1]

The petitioner appealed the said decision of the labor arbiter to
the NLRC.  On July 31, 1989, the NLRC promulgated its
resolution modifying the decision appealed from, thus:

“And considering that as alleged by the respondent without any
contravention from the complainants that the plant had already been sold,
respondent-appellant must pay separation pay to all those who opt not to be
rehired by the new owner of the plant. 
Respondent?appellant must also pay the complainants’ backwages from October 5, 1985 up to the
date the plant was actually sold. 
Such backwages must be computed by taking into
consideration the nature of complainants work as seasonal period in one (1)
calendar year should be treated as one (1) whole year (sic).

“Wherefore, except for the above modification the decision
sought to be reversed should be as it is hereby AFFIRMED.

Costs against respondent-appellant.”
(Emphasis supplied.)^[2]

The petitioner went to this Court in G.R. No. 89477 by way of a
petition.  The same was, however,
dismissed in a resolution dated September
4, 1989 issued by the Second Division of this Court.^[3]
Thus, the decision of the NLRC became final and executory.

On August 21, 1990,
the Research and Information Unit of the NLRC came up with its
“Computation of Backwages and Separation
Pay” pursuant to the decision dated July 31, 1989.^[4]
The amount stated in the computation is P3,863,464.89.  The said amount was apparently reached by
reckoning the computation period to start from October 5, 1985
up to August 1990.  The research unit
also stated that it took into account this period because the date of the
actual sale of the plant is not ascertained.

On August 28, 1990,
in a hearing set up for the purpose, the petitioner was given ample time to
establish by way of competent proof the date of the actual sale of the plant
and its facilities cited in the final and
executory decision of the NLRC.  On September 7, 1990, the petitioner filed
its manifestation to which was attached a certified copy of the “Deed of
Conditional Sale” executed by and between the petitioner and Premium
Tobacco Redrying and Fluecuring
Company, Inc. (PTRFC) dated October 17, 1985. 
The petitioner also attached its own computation of the amounts which
should be paid the private respondents. 
In fine, the petitioner has taken the position that the date of the
actual sale of the plant and its facilities is October 17, 1985 and as such the amount stated in the
computation of the research unit of the NLRC should be substantially reduced.

On September 29, 1990, the private respondents filed their
“Opposition to Manifestation” with annexes showing a certification
from the Office of the Municipal Assessor of Marikina,
Metro Manila, a copy of a Declaration of Real Property and an affidavit of one
of the complainants in this case alleging that there was no actual sale of the
plant and its facilities to the alleged vendee. 
The opposition alleges, among others, that there was no actual transfer
or actual sale of the plant and its facilities in favor of the PTRFCI; that
only a change in name and form has been undertaken by the petitioner; that the
properties are still declared in the name of the petitioner; that the PTRFCI
representative, a certain Mr. Angelo Ang, is the
plant manager of the Vigan, Ilocos
Sur plant of the petitioner; that the control,
management, operation and funding of the plant are in the hands of the
petitioner notwithstanding the alleged sale; and that the computation made by
the NLRC is in order.

The petitioner filed its comment/rejoinder on September 27, 1990, alleging therein
that the sale on October 17, 1985 is valid and that
the property remains in the name of the petitioner pending the full payment of
the purchase price agreed upon by the vendor and the vendee.^[5]

On October 26, 1990, Labor Arbiter Ramon Reyes issued an order
holding, among others, that there was no actual sale between the petitioner and
the PTRFCI; that the Deed of Conditional Sale entered into by the said parties
does not state any consideration; and that no actual sale has taken place.  With this observations, the labor arbiter went on to declare that the computation
of the research unit of the NLRC in the amount of P3,863,464.89 is in accord with the resolution of the said
Commission.

On October 30, 1990,
the labor arbiter issued a writ of execution directing the Acting Sheriff of
the NLRC to collect the aforestated amount of
P3,863,464.89 from the petitioner in satisfaction of its obligation or to cause
the full satisfaction of the same out of the chattels of the immovable
properties of the petitioner.^[6]

The petitioner elevated the case to this Court by way of the
instant petition with the same arguments raised before the NLRC recited
therein.  The petitioner prays for the
issuance of a temporary
restraining order and/or writ of preliminary injunction.  The thrust of the petition is that the
computation made by the NLRC is attended with grave abuse of discretion and
thus, the writ of execution should not be enforced.  The petitioner also argues that the award of
damages should be limited to cover a three?year period only, in
accordance with prevailing jurisprudence.

On November 21, 1990,
this Court resolved to issue a temporary restraining order enjoining the
private respondents from enforcing the challenged writ of execution.  The petitioner filed a bond in the amount of
P100,000.00.

The Office of the Solicitor General, as counsel for the NLRC,
filed its comment praying therein for the dismissal of the petition on the
ground that no jurisdictional infirmity attended the issuance of the challenged
writ of execution because there is no actual sale of the plant and its
facilities up to the present
time.^[7]

The Court eventually resolved to give due course to the
petition.  After the parties filed the
required pleadings, the case was deemed submitted for decision.

Pursuant to the resolution of the NLRC dated July 31, 1989, which was for all intents and
purposes sustained by this Court as explained earlier, the petitioner is
required to, among others, pay the backwages of the
private respondents for the period covering October 5, 1985 up to the time the plant and its
facilities are actually sold.

The petitioner maintains that the plant and its facilities were
sold on October 17, 1985
by virtue of the Deed of Conditional Sale, bearing the same date, executed by
the petitioner and the PTRFCI.  Thus put,
the petitioner contends that the amount of backwages
to be paid to the private respondents should be based on the period covering October 5 to 17, 1985.  On the other hand, the private respondents
maintain that there has been no actual sale of the plant and its facilities up
to the present time and as such the backwages to be
paid should be computed accordingly.  The
NLRC shares the view of the private respondents.

The Court finds that there is
no actual sale of the
plant and its facilities up to the present time.

While the Deed of Conditional Sale was executed on October 17, 1985, it does not
necessarily follow that the plant and its facilities were, ipso facto, sold on that very day.  The pertinent
portions of the said document are as follows:

“1.  Upon execution of this Deed the PROPERTIES shall be deemed transferred to the
possession of the VENDEE.  Ownership,
however, over the PROPERTIES shall be retained by the VENDOR until the VENDEE
shall have paid in full the purchase price stipulated in Article I hereof.  The VENDEE shall not, in the meantime, sell,
lease, let or otherwise encumber or dispose of the PROPERTIES or assign its
rights under this Agreement without the prior written consent of the
VENDOR.  Any disposition made in
violation of this article shall be void ab initio.

“2.  The VENDOR, upon full payment by the VENDEE
of the unpaid balance of the purchase price inclusive of interest charges above
specified will execute and deliver to the VENDEE a final or absolute deed of
sale over the PROPERTIES.

“II.  DEFAULT AND FORFEITURE

“1.  That in case the VENDEE fails to make timely
payment as specified above, or fails to perform any of the covenants or
agreements hereof, this contract shall, at the exclusive option the VENDOR, be
annulled and in such event, all payments made by the VENDEE by virtue of this
contract shall be automatically forfeited and retained by the VENDOR as rental
payments for the use of said PROPERTIES and/or
liquidated damages sustained by it as a result of the VENDEE’s
default; and the VENDEE shall forthwith surrender the possession and custody of
the PROPERTIES to the VENDOR.”^[8]

A careful evaluation of the stipulations of the said agreement
will readily show that the petitioner has no intention to transfer ownership
over the plant and its facilities to the vendee unless there is full payment of
the purchase price on the part of the latter. 
In fact, it is clearly stipulated that ownership over the plant and its
facilities will be transferred to the vendee by way of “a final and
absolute deed of sale” only after such full payment, inclusive of interest
charges.  The terms and conditions of the
agreement speak for themselves.  At any
rate, even accepting that the plant and its facilities have been sold on a conditional
basis, there can be no actual sale thereof unless the plant and its
facilities are unconditionally conveyed to the PTRFCI by virtue of
“a final or absolute deed of sale” in accordance with the terms and
conditions stated in the agreement between the parties.

The Solicitor General manifests that the tax records of the
petitioner as well as the certification issued by the Municipal Assessor of Marikina reveal that the plant is still registered in the
name of the petitioner.^[9]
The Solicitor General points out that under these circumstances, the petitioner
may not validly contend that there has been an actual sale of the plant and its facilities to the PTRFCI.  These observations are well-taken.

The petitioner, however, correctly asserts that the award of backwages should be limited to cover a three-year period,
and, a fortiori, any award in excess of such period
is null and void.  The contention finds
support in prevailing jurisprudence.^[10]
A modification is, therefore, in
order.  The backwages
to be paid to the private respondents should not exceed a period covering three
years, computed from October 5, 1985.

WHEREFORE, the instant petition is hereby DISMISSED.  The backwages to be
paid to the private respondents should, however, not exceed a period covering
three (3) years, computed from October
5, 1985.  No pronouncement as
to costs.

SO ORDERED.

Narvasa, (Chairman), Cruz, Griño-Aquino, and Medialdea, JJ., concur.

* The complete list of petitioners
is not disclosed in the record.

^[1]
Page 32, rollo.

^[2]
Pages 5 and 6, NLRC resolution.

^[3]
Page 44, rollo.

^[4]
Pages 46 to 49, rollo.

^[5]
Pages 52 to 55, rollo.

^[6]
Pages 97 to 99, rollo.

^[7]
Pages 5 to 6, NLRC resolution.

^[8]
Pages 167 and 168, rollo.

^[9]
Pages 11 and 12, comment of the Solicitor General; pages 169 and 170, rollo.

^[10]
D.M. Consunji v. Pucan,
159 SCRA 107 (1988); Medado v. Court of
Appeals, 185 SCRA 80 (1990).