G.R. No. 111342 , June 19, 1995
PORFIRIO BALLADARES, JR. and FLORANTE S. DE LA PEÑA, petitioners, vs. THE NATIONAL LABOR RELATIONS COMMISSION (FIFTH DIVISION) and the RURAL BANK OF PAGADIAN INC., respondents.

FACTS

Petitioners Porfirio Balladares, Jr. and Florante de la Peña, president and vice-president of their newly formed union, were dismissed by the Rural Bank of Pagadian in April 1987 on the ground of retrenchment following a deadlock in collective bargaining negotiations and the union’s filing of a notice of strike. They filed complaints for illegal dismissal. The Labor Arbiter ruled in their favor in August 1988, declaring their dismissals illegal, ordering reinstatement, and awarding backwages computed for 15 months from dismissal until the decision date. The Bank appealed. The NLRC affirmed the Labor Arbiter’s decision in June 1992. Petitioners then moved for reconsideration, arguing they were entitled to full backwages from the time of dismissal until actual reinstatement, claiming the Bank’s appeal was not perfected due to its failure to post a supersedeas bond as required under the then-recent amendments. The NLRC denied their motion, prompting this petition.

ISSUE

Whether the NLRC committed grave abuse of discretion in not awarding petitioners full backwages from dismissal until actual reinstatement and in not recognizing their right to reinstatement pending appeal.

RULING

The Supreme Court granted the petition in part but clarified the applicable legal principles. The Court held that Republic Act No. 6715 , which amended the Labor Code to mandate full backwages until actual reinstatement and require a supersedeas bond for an employer’s appeal, took effect only on March 21, 1989. Since petitioners were dismissed in 1987 and the Bank’s appeal was perfected in August 1988, the new law’s provisions could not be applied retroactively. Therefore, petitioners had no right to reinstatement pending appeal, and the Bank’s appeal was validly perfected under the old rules without a bond. However, the NLRC erred in merely affirming the 15-month backwages award. Under the jurisprudence prevailing prior to R.A. No. 6715 , an illegally dismissed employee was entitled to backwages for three years, absent actual reinstatement. This three-year rule is deemed written into decisions due to the difficulty of predicting reinstatement dates. Consequently, the Court modified the NLRC resolutions and ordered the Bank to pay petitioners backwages for three years computed from their illegal dismissal in April 1987.