G.R. No. 112678 March 29, 1996
EDUARDO M. ESPEJO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION AND COOPERATIVE INSURANCE SYSTEM OF THE PHILIPPINES, respondents.

FACTS

Petitioner Eduardo Espejo was hired as General Manager by respondent Cooperative Insurance System of the Philippines (CISP). In September 1989, the CISP Board passed a resolution authorizing the sale of company properties, including the car assigned to Espejo, to meet capital requirements. Espejo objected and tendered his resignation effective October 11, 1989, stating, “I regret to tender my resignation.” In a subsequent Board meeting, he sought reconsideration, warning that without it, his resignation would be “irrevocable.” The Board affirmed the sale and passed a resolution to act on his resignation later.
Espejo then orally informed the Chairman he was withdrawing his resignation. Nevertheless, on October 9, 1989, the Board formally accepted his resignation. Espejo filed a complaint for illegal dismissal. The Labor Arbiter ruled in his favor, ordering reinstatement and back wages. The NLRC affirmed the illegal dismissal but deleted reinstatement as Espejo was already 60 years old, and limited back wages to 18 months.

ISSUE

Whether the NLRC committed grave abuse of discretion in: (1) denying reinstatement; (2) limiting back wages to 18 months; and (3) denying the award of damages.

RULING

The Supreme Court sustained the NLRC’s denial of reinstatement but modified the period for back wages. On reinstatement, the Court applied Sec. 13, Book IV of the Omnibus Rules Implementing the Labor Code, which provides that in the absence of a retirement plan, an employee may be retired upon reaching age 60. Since Espejo had reached 60, reinstatement was correctly denied. On back wages, the Court held the award is a form of relief for lost income due to illegal dismissal and should cover the period from dismissal until the employee reaches the statutory retirement age. Espejo was dismissed on October 11, 1989, and turned 60 on January 31, 1990. Therefore, back wages should be computed only for this period (about 3.5 months), not the 18 months awarded by the NLRC. The payment of separation pay was deemed unnecessary as back wages serve the purpose of compensating for lost earnings, while separation pay is for future transition, which is inapplicable upon reaching retirement age. Finally, the Court found no bad faith on CISP’s part to warrant damages, as the Board’s decision to sell assets was a business necessity and its acceptance of the resignation, though Espejo attempted to revoke it, was based on his own prior “irrevocable” declaration.