Buenviaje vs. Court of Appeals

An employee's failure to immediately comply with a reinstatement order does not constitute abandonment where there is a reasonable explanation for the delay and no clear intent to sever the employer-employee relationship; a final and executory decision ordering reinstatement and full backwages may not be modified by a purported supervening termination that is itself invalid.

Petitioners were eight former employees of Cottonway Marketing Corporation, hired as promo girls for the company's garment products. Their employment was terminated in October 1994, allegedly due to the company's business losses. They filed a complaint for illegal dismissal, underpayment of salary, and non-payment of various benefits before the National Labor Relations Commission. The dispute centered on whether their retrenchment was valid and, after the NLRC ordered their reinstatement, whether their subsequent failure to immediately return to work constituted abandonment warranting a second termination and a corresponding limitation on the backwages award.

Petitioners were eight women hired as promo girls by Cottonway Marketing Corporation for its garment products. In October 1994, their services were terminated, the company citing business losses. They filed a complaint with the National Labor Relations Commission for illegal dismissal, underpayment of salary, and non-payment of premium pay for rest day, service incentive leave pay, and thirteenth month pay.

Labor Arbiter Romulus S. Protasio initially upheld the retrenchment as valid on December 19, 1995, ordering only separation pay and proportionate thirteenth month pay. On appeal, however, the NLRC reversed the Labor Arbiter on March 26, 1996, ordering reinstatement without loss of seniority rights and other privileges, plus full backwages inclusive of allowances and other benefits computed from the time their salaries were withheld up to the date of actual reinstatement, and proportionate thirteenth month pay. Cottonway's motion for reconsideration was denied on July 31, 1996. Cottonway then elevated the case to the Supreme Court via petition for certiorari, which was dismissed on October 14, 1996, with the motion for reconsideration denied with finality on January 13, 1997.

Three months after the NLRC rendered its decision, Cottonway sent individual notices to petitioners on June 5, 1996, mandating them to report for work within five days from receipt, warning that failure would be deemed lack of interest and considered abandonment. Petitioners did not immediately comply. Their counsel, Atty. Roberto LL. Peralta, sent a reply letter on June 20, 1996, explaining that the clients were not in a position to comply because the NLRC had not yet finally disposed of the case, while expressing willingness to meet with the company's representative regarding satisfaction of the NLRC decision. Cottonway did not give petitioners any opportunity to explain their failure to report. Instead, on August 1, 1996, the company sent individual notices of termination, declaring that each petitioner had lost her employment status effective that date for failure to report to work. The records did not bear proof that all petitioners received copies of the letters.

Cottonway thereafter filed a manifestation with the NLRC alleging that petitioners had found employment elsewhere and sought to introduce evidence on that point, but the Commission denied the prayer. On April 8, 1998, Labor Arbiter Protasio issued an Order limiting backwages to the period from illegal dismissal up to the time petitioners received the notice of termination, citing their failure to report without justifiable reason. The NLRC set aside this Order on September 21, 1998, ruling that its March 26, 1996 Decision had become final and executory and that it was the ministerial duty of the Labor Arbiter to issue the corresponding writ of execution. Cottonway then filed a petition for certiorari with the Court of Appeals, which granted the petition on March 13, 2000, holding that the employees' reinstatement was no longer possible due to a supervening event—their valid termination for refusal to return to work—and limiting backwages up to the time they received their notices of termination. The Court of Appeals denied petitioners' motion for reconsideration on February 13, 2001.

• Denial of Due Process: Petitioner argued that the Court of Appeals gravely abused its discretion by rendering the assailed decision without first performing its ministerial duty of taking initial judicial action, thereby unlawfully depriving petitioners of the opportunity to comment or file responsive pleadings and denying them a day in court.
• Reversal of Lawful NLRC Resolutions: Petitioner maintained that the Court of Appeals gravely abused its discretion in reversing the NLRC's September 21, 1998 and March 31, 1999 resolutions and reinstating the irregular and illegal April 8, 1998 Order of Labor Arbiter Protasio.
• Denial of Motion for Reconsideration Without Legal Basis: Petitioner argued that the Court of Appeals gravely abused its discretion in issuing the February 13, 2001 Resolution denying their motion for reconsideration without stating the legal basis therefor.
• Full Backwages Entitlement: Petitioner contended that backwages should be computed from the time of their illegal dismissal until their actual reinstatement, in accordance with the NLRC Decision dated March 26, 1996, which had become final and executory.

• Supervening Event of Valid Termination: Respondent argued that petitioners' reinstatement was no longer possible because petitioners deliberately refused to return to work despite due notice, constituting a valid supervening event that justified limiting backwages to the period up to receipt of the notice of termination.
• Abandonment: Respondent maintained that petitioners' failure to report for work after receiving the return-to-work notice constituted abandonment, warranting the severance of their employment.
• Immediate Executory Nature of Reinstatement Order: Respondent cited Article 223 of the Labor Code, arguing that because the reinstatement aspect of the NLRC decision was immediately executory, petitioners' failure to comply justified their termination.

• Finality and Immutability of the NLRC Decision: Whether the Court of Appeals erred in modifying the final and executory NLRC Decision dated March 26, 1996 by limiting the award of backwages based on a purported supervening event.
• Abandonment: Whether petitioners' failure to immediately report to work upon receipt of Cottonway's June 5, 1996 notice constituted abandonment justifying their termination.
• Computation of Backwages: Whether backwages should be computed from the time of illegal dismissal until actual reinstatement, or only until receipt of the notice of termination on August 1, 1996.

• Finality and Immutability of the NLRC Decision: Yes. The Court of Appeals erred in modifying the final and executory NLRC decision. A judgment that has become final and executory is immutable and unalterable, and any amendment or alteration which substantially affects it is void.
• Abandonment: No. Petitioners' failure to immediately report to work did not constitute abandonment, there being a reasonable explanation for the delay and no clear intent to sever the employer-employee relationship. The two elements of abandonment—absence without justifiable reason and clear intention to sever—were not satisfied.
• Computation of Backwages: Full backwages are due from the time compensation was withheld until actual reinstatement, or if reinstatement is no longer possible, until the finality of the decision, pursuant to R.A. 6715 and the final and executory NLRC Decision dated March 26, 1996.

• Finality and Immutability of the NLRC Decision: The NLRC Decision dated March 26, 1996 became final and executory upon the Supreme Court's dismissal of Cottonway's petition for certiorari and the denial of its motion for reconsideration with finality on January 13, 1997. A final and executory judgment may no longer be disturbed or modified by any court or tribunal. It becomes the law of the case regardless of any claim that it is erroneous. The writ of execution must conform to the judgment and adhere strictly to its essential particulars. The Court of Appeals' reliance on a supervening event to justify modification was therefore improper, as the final decision could not be altered by a purportedly valid second termination that was itself legally infirm.

• Abandonment: To warrant a valid dismissal on the ground of abandonment, the employer must prove the concurrence of two elements: (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship. The facts did not support Cottonway's claim. Petitioners' counsel explained in a reply letter that they could not comply because the NLRC had not yet finally disposed of the case, while expressing willingness to meet regarding satisfaction of the decision. Cottonway did not give petitioners any opportunity to explain their failure to report, did not prove that all petitioners received the notices, and merely claimed some had left the country or found other employment. Seeking other employment during litigation does not necessarily indicate loss of interest in resuming employment, as employees are expected to find means of income while their case is pending. Petitioners never abandoned their suit, continuing to file pleadings throughout the appellate process. The return-to-work notice was merely a scheme to remove petitioners, giving them only five days and then immediately terminating them upon non-compliance.

• Computation of Backwages: Under R.A. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld up to the time of their actual reinstatement. If reinstatement is no longer possible, backwages shall be computed from the time of illegal termination up to the finality of the decision. Full backwages means exactly that—without deducting earnings derived elsewhere during the period of illegal dismissal—because the employee must earn a living while litigating, and the employer must pay full backwages as the price or penalty for illegally dismissing the employee. Since the NLRC Decision of March 26, 1996 had attained finality and petitioners did not abandon their employment, they were entitled to full backwages in accordance with that decision.

• Doctrine of Finality and Immutability of Judgments — When a judgment becomes final and executory, it becomes immutable and unalterable. Any amendment or alteration which substantially affects a final and executory judgment is void, including the entire proceedings held for that purpose. Once a judgment becomes final, the prevailing party can have it executed as a matter of right, and the issuance of a writ of execution becomes a ministerial duty of the court. A decision that has attained finality becomes the law of the case regardless of any claim that it is erroneous. Applied here: the NLRC Decision of March 26, 1996 became final upon the Supreme Court's dismissal of Cottonway's petition, and the Court of Appeals could not modify it by citing a supervening event.

• Doctrine of Abandonment in Labor Law — To constitute abandonment as a valid ground for dismissal, two elements must concur: (1) the employee's failure to report for work or absence without valid or justifiable reason, and (2) a clear intention on the part of the employee to sever the employer-employee relationship. The burden of proof is on the employer. Applied here: Cottonway failed to prove either element; petitioners had a reasonable explanation for not immediately reporting, were never given an opportunity to explain, and continued prosecuting their case.

• Full Backwages Under R.A. 6715 — Employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld up to the time of their actual reinstatement. If reinstatement is no longer possible, backwages shall be computed from the time of illegal termination up to the finality of the decision. "Full backwages" means without deducting earnings derived elsewhere by the employee during the period of illegal dismissal, the legislative intent being to give more benefits to workers than under the prior "deduction of earnings elsewhere" rule.

• Immediately Executory Reinstatement Under Article 223 of the Labor Code — The reinstatement aspect of a Labor Arbiter's decision is immediately executory even pending appeal. The employer must either admit the employee back to work under the same terms and conditions prevailing prior to dismissal or reinstate the employee in the payroll. This provision is intended for the benefit of the employee and cannot be used to defeat the employee's own interest. An employer cannot use the employee's failure to immediately comply with a reinstatement order as a basis for termination, especially when there is a reasonable explanation for the failure.

• "The Court does not see any reason to depart from this rule in the case of herein petitioners. The decision of the NLRC dated March 26, 1996 has become final and executory upon the dismissal by this Court of Cottonway's petition for certiorari assailing said decision and the denial of its motion for reconsideration. Said judgment may no longer be disturbed or modified by any court or tribunal." — This passage states the ratio decidendi on the immutability of the final NLRC decision, anchoring the Court's refusal to allow modification based on a purported supervening event.

• "To warrant a valid dismissal on the ground of abandonment, the employer must prove the concurrence of two elements: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship." — This is the canonical formulation of the two-element test for abandonment, frequently cited in subsequent labor jurisprudence.

• "backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee." — This quotation from Bustamante vs. NLRC, adopted by the Court, defines the meaning of "full backwages" under R.A. 6715 and the legislative policy behind it.

• "The foregoing provision is intended for the benefit of the employee and cannot be used to defeat their own interest." — This passage articulates the principle that the immediately executory nature of reinstatement orders under Article 223 of the Labor Code is a protective measure for employees and may not be weaponized by employers to justify termination.

• Bustamante vs. NLRC, 265 SCRA 61 (1996) — Followed. The Court adopted its formulation that "full backwages" under R.A. 6715 means backwages without deduction of earnings derived elsewhere by the employee during the period of illegal dismissal, reflecting the clear legislative intent to give more benefits to workers.
• De Guzman vs. NLRC, 312 SCRA 266 (1999) — Cited for the principle that reinstatement restores the employee to the position from which he was removed, while backwages allow recovery of that which the employee lost by way of wages due to dismissal.
• Prudential Bank and Trust Co. vs. Reyes, 352 SCRA 316 (2001) — Cited for the rule under R.A. 6715 that illegally dismissed employees are entitled to full backwages computed from the time compensation was withheld up to actual reinstatement, or if reinstatement is no longer possible, up to the finality of the decision.
• Icawat vs. NLRC, 334 SCRA 75 (2000) — Cited for the two-element test of abandonment: (1) failure to report for work or absence without valid reason, and (2) clear intention to sever the employer-employee relationship.
• Buaya vs. Stronghold Insurance Co., Inc., 342 SCRA 576 (2000) — Cited for the doctrine of finality and immutability of judgments.
• Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc., 332 SCRA 139 (2000) — Cited for the doctrine of finality and immutability of judgments.
• Association of Independent Unions in the Philippines vs. NLRC, 305 SCRA 219 (1999) — Cited in support of the ruling on full backwages and reinstatement.

• Article 223, Labor Code — Governs appeals from Labor Arbiter decisions and provides that the reinstatement aspect of a decision is immediately executory even pending appeal. The Court held that this provision is intended for the benefit of the employee and cannot be used by the employer to defeat the employee's interest; it does not give the employer the right to terminate an employee who fails to immediately comply with a reinstatement order, especially when there is a reasonable explanation for the failure.
• Republic Act No. 6715 — Amended Article 279 of the Labor Code, entitling illegally dismissed employees to full backwages inclusive of allowances and other benefits or their monetary equivalent, computed from the time compensation was withheld up to actual reinstatement, or if reinstatement is no longer possible, up to the finality of the decision. The Court applied this to hold that petitioners were entitled to full backwages without deduction of earnings elsewhere.

Panganiban, Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concurred.