Durabuilt Recapping Plant & Company v. National Labor Relations Commission
MODIFICATIONFacts
The Antecedents: Respondent Reynaldo Bodegas filed a complaint for illegal dismissal against petitioner Durabuilt Recapping Plant & Company. Procedural History: The Labor Arbiter ordered the reinstatement of Bodegas with full backwages from termination to actual reinstatement, without loss of seniority. Petitioners failed to appeal seasonably, and entry of final judgment was made. A computation of backwages, ECOLA, 13th month pay, and leave benefits amounted to P24,316.38. Petitioners opposed this, arguing that the computation should exclude days of intermittent interruption due to brownouts and machine trouble, and days of absence, proposing P3,834.05 as the entitled amount. The Labor Arbiter denied the opposition, and the National Labor Relations Commission (NLRC) affirmed this denial. The Petition: Petitioners filed the instant petition, claiming grave abuse of discretion on the part of the public respondents.
Issue(s)
Whether the computation of backwages should be based on actual days of operation or on a straight monthly computation. Whether deductions for days of business interruption due to brownouts, machine trouble, or lack of raw materials are permissible in the computation of backwages.
Ruling
The petition is GRANTED. The order of the Labor Arbiter, as affirmed by the NLRC, is SET ASIDE. Petitioners are ordered to pay private respondent his backwages from the time he was terminated up to the time he was actually reinstated, computed on the basis of the number of days when petitioner's business was in actual operation. Days of shutdowns due to electrical power interruptions, machine repair, and lack of raw materials are not considered hours worked for computing backwages. The award shall not exceed three years' backpay.
Ratio Decidendi
On the computation of backwages: The Court held that backwages are granted for earnings lost due to dismissal. The general principle is that an employee is entitled to receive all amounts lost from dismissal to reinstatement. However, the Court clarified that the policy of fixing backwages without qualification or deduction means that the amount is fixed as of the time of dismissal or strike, without deduction for earnings elsewhere or qualification by benefits received by co-workers. This policy was not intended to establish an inflexible rule of computation. The age-old rule of "a fair day's wage for a fair day's labor" remains the basic factor; if no work is performed, no wage is earned, unless the employee was able, willing, and ready to work but was illegally prevented from doing so. The Court concluded that the computation should be based on daily pay schedules where it is more realistic and accurate, and that the private respondent could not be allowed to enrich himself at the expense of the petitioner company. On deductions for business interruptions: The Court found merit in the petitioners' argument that days of business interruption due to brownouts (under the Voluntary Loan Curtailment Plan or VLCP) and retrenchment due to economic crisis should be excluded from the computation of backwages. The Court noted that during electrical power interruptions, the business was not in operation, and Policy Instruction No. 36 of the Ministry of Labor and Employment allows brownouts exceeding twenty minutes not to be treated as hours worked under certain conditions. Similarly, retrenchment due to lack of raw materials meant reduced working days. The Court reasoned that where the failure to work was not due to the employer's fault, the burden of economic loss should not be shifted to the employer, and each party must bear their own loss. Allowing payment of full backwages for days of non-operation would be unconscionable and unfair to other employees.
Main Doctrine
Backwages should be computed based on the number of days the business was in actual operation, excluding days of shutdowns due to power interruptions, machine repair, or lack of raw materials, as employees cannot earn wages for days they were unable to work.