G.R. No. 175276 & G.R. No. 175282; May 31, 2011
ISABELO L. GALANG, Petitioner, vs. LAND BANK OF THE PHILIPPINES, Respondent. (Consolidated with) LAND BANK OF THE PHILIPPINES, Petitioner, vs. ISABELO L. GALANG, Respondent.

FACTS

Isabelo L. Galang, Branch Manager of Land Bank Baliuag, Bulacan, was administratively charged in 1988 for various offenses, including demanding money from borrowers in exchange for loan concessions. The Land Bank Board of Directors, in Resolution No. 90-043 dated April 26, 1990, imposed the penalty of forced resignation with forfeiture of all benefits. This penalty was sustained by the Merit Systems Protection Board and the Civil Service Commission (CSC). Galang filed a petition for certiorari with the Supreme Court, which was referred to the Court of Appeals (CA). On November 21, 1996, the CA rendered a Decision nullifying the CSC resolutions and finding no substantial evidence to hold Galang liable. The CA, in a Resolution dated September 5, 1997, granted Galang’s motion for clarification/reconsideration and directed Land Bank to reinstate him and pay back salaries not exceeding five years. Land Bank received notice on September 15, 1997, but did not appeal. Instead, it filed a Petition for Certiorari (G.R. No. 131186) with the Supreme Court, which was dismissed on January 17, 2001, for being the wrong remedy (a Rule 65 petition instead of a Rule 45 petition). An Entry of Judgment was issued on August 7, 2001. Galang was reinstated in the payroll on August 16, 2001.
Disputes arose regarding the computation of Galang’s back wages and allowances. Galang filed a Motion for Issuance of Writ of Execution with the CSC, which was denied, prompting him to file a Petition for Review with the CA. In its assailed Decision dated May 25, 2006, the CA declared Galang entitled to Personnel Economic Relief Allowance (PERA), Representation and Travel Allowance (RATA), and other benefits attached to his position, but upheld his reinstatement date as August 16, 2001, and sustained the computation of his back wages based on the salary rate at the time of his dismissal. Both parties filed motions for reconsideration, which were denied. Hence, these consolidated petitions: Galang assails the date of reinstatement and the basis for computing back wages, while Land Bank assails the inclusion of PERA, RATA, Meal Allowance, and Rice Subsidy in the back wages.

ISSUE

1. When should Galang be reinstated?
2. What should be the basis for computing his back salaries?
3. Is he entitled to PERA, RATA, Meal Allowance, and Rice Subsidy as part of his back wages?

RULING

1. Date of Reinstatement: Galang should be reinstated as of October 1, 1997. The CA’s Resolution dated September 5, 1997, became final and executory after the 15-day reglementary period to appeal lapsed, which was on September 30, 1997 (counting from Land Bank’s receipt on September 15, 1997). Land Bank’s subsequent filing of a Rule 65 petition with the Supreme Court did not toll the finality of the CA Resolution, as it was an improper remedy. Therefore, Galang is deemed to have been reinstated as of October 1, 1997, and is entitled to back wages from that date until his actual reinstatement in the payroll on August 16, 2001.
2. Basis for Computing Back Salaries: Galang’s back salaries must be computed based on the salary rate at the time of his reinstatement, not at the time of his dismissal. The Court, citing Cristobal v. Melchor, held that an illegally dismissed employee is entitled to the salary attached to the position from the time of illegal dismissal to reinstatement. Since reinstatement, as a legal concept, took effect on October 1, 1997, the salary rate for that period and any subsequent increases up to his actual payroll reinstatement should be used. The ruling in Bangalisan v. Court of Appeals (which computed back wages based on the salary rate at the time of dismissal) is inapplicable as it involved a different factual context where the employee was found guilty but the penalty was modified.
3. Entitlement to Allowances:
* PERA and RATA: Galang is entitled to these allowances as part of his back wages. PERA and RATA are considered integral components of compensation attached to his position as Branch Manager. His entitlement to these allowances accrues from the time his right to reinstatement became effective (October 1, 1997), provided these allowances were authorized and being given to employees in similar positions during the relevant period.
* Meal Allowance and Rice Subsidy: Galang is also entitled to these benefits. Land Bank had already expressed willingness to pay these in its letter dated February 8, 2002. These are considered fringe benefits that form part of an employee’s compensation package, and an illegally dismissed employee entitled to reinstatement and back wages should receive all the monetary benefits attached to the position.
The Court partially granted Galang’s petition ( G.R. No. 175276 ) by modifying the date of reinstatement to October 1, 1997, and ordering the recomputation of his back wages and allowances based on the salary rate at reinstatement. The Court denied Land Bank’s petition (G.R. No. 175282), affirming the CA’s ruling on Galang’s entitlement to the various allowances.