United Coconut Chemicals v. Valmores
REITERATIONFacts
The Antecedents: Victoriano B. Valmores (Respondent) was employed by United Coconut Chemicals, Inc. (UCCI) as Senior Utilities Inspector with a monthly salary of ₱11,194.00. He was a member of the United Coconut Chemicals, Inc. Employees' Labor Organization (UELO). UELO demanded UCCI terminate the respondent's services pursuant to the union security clause of the CBA. UCCI dismissed the respondent on February 22, 1996. The respondent filed a complaint for illegal dismissal. Procedural History: The Labor Arbiter dismissed the complaint. The NLRC reversed the Labor Arbiter, finding respondents liable for illegal dismissal and ordering reinstatement with full backwages. The NLRC later partially granted UCCI's motion, exempting it from paying backwages. The Court of Appeals (CA) affirmed the NLRC's initial decision, deleting the exemption of UCCI from paying backwages. UCCI's appeal to the Supreme Court was denied. The respondent moved for execution. Labor Arbiter Lontoc denied UCCI's motion to hold UELO primarily liable and granted the execution. Labor Arbiter Lontoc computed backwages excluding CBA benefits. The NLRC remanded the case to the Labor Arbiter for recomputation of backwages inclusive of CBA benefits. UCCI assailed this resolution to the CA, which upheld the NLRC. UCCI now appeals to the Supreme Court. The Petition: UCCI argues that the computation for backwages should be based solely on the wage rate at the time of dismissal, excluding interim increases and CBA benefits. The respondent, represented by his parents due to his demise, agrees to the exclusion of interim increases but insists on the inclusion of CBA benefits received at the time of dismissal and a 12% interest rate. UCCI also argues it should not be solely liable for backwages.
Issue(s)
Whether the computation for the payment of backwages should include CBA-granted benefits and be pegged at the wage rate at the time of dismissal, unqualified by deductions, increases, and/or modifications granted in the interim. Whether UCCI is solely liable for the payment of backwages. What is the proper interest rate to be imposed on the judgment award.
Ruling
The Court DENIED the petition for review on certiorari, AFFIRMED the CA decision with modifications, REMANDED the case for recomputation of backwages, and DECLARED UCCI solely liable for backwages plus legal interest.
Ratio Decidendi
On the computation of backwages and inclusion of CBA benefits: The Court reiterated that full backwages, as provided under Article 279 (now 294) of the Labor Code, are inclusive of allowances and other benefits computed from the time of illegal dismissal up to actual reinstatement. The base figure for computation is the wage rate at the time of dismissal, unqualified by interim deductions or increases. However, this base figure must include regularly received allowances and benefits, including those granted under a CBA. The Court clarified that while interim increases should be excluded, CBA allowances and benefits regularly received before dismissal should be included. The respondent, however, must prove entitlement to these benefits by submitting evidence of having received them at the time of dismissal. The Court noted that the respondent was unable to discharge this burden due to UCCI's possession of the relevant documents, and the Labor Arbiter's failure to resolve the motion to compel production. The CA's observation that UCCI failed to submit documents detailing benefits was sustained, leading to the conclusion that the presumption of adverse evidence applies. Therefore, the case was remanded for proper determination of CBA benefits received by the respondent as of the dismissal date. On UCCI's sole liability for backwages: The Court found UCCI mistaken in claiming joint liability with UELO. While the NLRC's decision mentioned both respondents as liable, the dispositive portion (fallo) declared both liable for illegal dismissal and ordered reinstatement with full backwages. However, the Court clarified that the employer effecting the unlawful dismissal is solely liable for backwages. Citing General Milling Corporation v. Casio, the Court explained that even with a union security clause and expulsion from the union, the employer has the obligation to accord due process before complying with the dismissal demand. Failure to do so makes the employer liable for illegal dismissal. The Court held that the employer, UCCI, was solely liable for the backwages of the respondent. On the interest rate: The Court upheld the respondent's position that a 12% interest per annum should be imposed on the monetary award. This is in accordance with Article 2209 of the Civil Code and the ruling in Eastern Shipping Lines, Inc. v. Court of Appeals, as applied in BPI Employees' Union-Metro Manila v. Bank of the Philippine Islands. The interest is to be reckoned from the finality of the decision until full satisfaction, as UCCI incurred delay in discharging its legal obligations. The decision became final and executory on November 17, 2003, making the Eastern Shipping Lines, Inc. ruling on the legal rate of interest applicable.
Main Doctrine
Full backwages shall be computed based on the wage rate at the time of illegal dismissal, inclusive of regularly received allowances and benefits, including those granted under a Collective Bargaining Agreement (CBA), provided they are proven to have been received at the time of dismissal. The employer is solely liable for the payment of backwages.