Espejo v. National Labor Relations Commission and Cooperative Insurance System of the Philippines
REITERATIONFacts
The Antecedents: Petitioner Eduardo M. Espejo was hired as General Manager of Cooperative Insurance System of the Philippines (CISP) on August 1, 1987. On September 11, 1989, CISP's Board of Directors passed Resolution No. 04 (S-1989) authorizing the sale of company properties, including the car assigned to petitioner, to meet capital requirements set by the Insurance Commission. Petitioner objected, but the Board overruled him and he tendered his resignation effective October 11, 1989. On September 22, 1989, the Board passed Resolution No. 06 (S-1989) affirming the sale and Resolution No. 07 (S-1989) authorizing the Chairman to act on petitioner's resignation. On September 26, 1989, petitioner orally revoked his resignation, stating he would continue as General Manager despite the car sale. The Chairman informed the Board of this revocation. However, on October 9, 1989, petitioner received a letter accepting his resignation effective October 11, 1989. Petitioner protested, stating he had verbally withdrawn his resignation and requested to speak before the Board. On November 14, 1989, CISP paid petitioner P14,839.00 for unused vacation leave and transportation expenses. On February 28, 1990, petitioner filed a case for illegal dismissal and damages. Procedural History: The Labor Arbiter ordered CISP to reinstate petitioner and pay him full back wages for three (3) years, limited to P108,000.00, plus attorney's fees. Both parties appealed to the National Labor Relations Commission (NLRC). The Petition: The NLRC affirmed the finding of illegal dismissal but deleted the reinstatement order, deeming it moot and academic as petitioner had reached 60 years old. It limited back wages to eighteen (18) months. Petitioner filed a petition for certiorari with the Supreme Court, assailing the NLRC's modification of the Labor Arbiter's decision and praying for reinstatement, full back wages, or separation/retirement pay, and damages for bad faith.
Issue(s)
Whether the NLRC committed grave abuse of discretion in modifying the Labor Arbiter's decision regarding reinstatement and back wages. Whether petitioner is entitled to reinstatement despite reaching the age of sixty (60) years. Whether petitioner is entitled to back wages and, if so, for what period. Whether petitioner is entitled to separation or retirement pay. Whether petitioner is entitled to moral and exemplary damages for bad faith.
Ruling
The Supreme Court affirmed the NLRC's decision in disallowing reinstatement, finding it moot and academic due to petitioner's age. It modified the award of back wages, ordering payment from the date of illegal dismissal (October 11, 1989) until the petitioner reached the statutory retirement age of sixty (60) years (January 31, 1990), inclusive of allowances and monetary equivalents of other benefits, less the amount already paid. The Court denied the claim for damages.
Ratio Decidendi
On the modification of the Labor Arbiter's decision: The Court found that the NLRC did not commit grave abuse of discretion in modifying the Labor Arbiter's decision. The deletion of reinstatement was justified by the petitioner's age, and the modification of the back wages period was based on established jurisprudence regarding the purpose and scope of back wages in relation to retirement age. The award of attorney's fees at ten percent (10%) of the back wages was affirmed. On the issue of reinstatement: The Court sustained the NLRC's denial of reinstatement, citing Section 13, Book IV of the Omnibus Rules Implementing the Labor Code, which allows retirement upon reaching sixty (60) years of age in the absence of a specific retirement plan. The Court reiterated its ruling in MAI Philippines, Inc. v. NLRC that an employee may be retired by the employer upon reaching sixty (60) years. Therefore, reinstatement was rendered moot and academic as petitioner had already reached the statutory retirement age. On the entitlement to back wages and their period: The Court agreed with the NLRC that petitioner was entitled only to back wages, not separation pay, because he had reached the statutory retirement age. Back wages are intended to restore lost income due to illegal dismissal, while separation pay is for the transitional period after dismissal. However, the Court modified the period for back wages. It held that back wages should only cover the period from the illegal dismissal until the employee reached sixty (60) years of age, based on the principle that back wages are granted for earnings lost due to illegal dismissal. Thus, the period was fixed from October 11, 1989, to January 31, 1990. On the entitlement to separation or retirement pay: The Court ruled that since petitioner had reached the statutory retirement age of sixty (60), he was entitled only to back wages, not separation pay. Separation pay is generally awarded when reinstatement is not feasible, but retirement pay is governed by age. The Court's reasoning implies that reaching retirement age supersedes the need for separation pay in cases of illegal dismissal, aligning with the principle of retirement benefits. On the claim for damages: The Court found no cogent reason to award moral and exemplary damages. It noted that the decision to sell company properties, including the car, was a collective decision of the Board of Directors made to meet mandatory requirements of the Insurance Commission. The Court reasoned that CISP's reliance on the term "irrevocable" in accepting the resignation, despite the oral revocation, was a misapprehension rather than an act of bad faith, fraud, or malice, especially in the absence of strong contrary evidence. The Board's actions were deemed to be in response to a financial exigency of the company.
Main Doctrine
An employee who has reached the statutory retirement age of sixty (60) years is not entitled to reinstatement, but only to back wages and separation pay, or back wages up to the point of reaching retirement age, depending on the circumstances and applicable rules.