G.R. No. 187005, April 7, 2010
FERDINAND A. PANGILINAN, Petitioner, vs. WELLMADE MANUFACTURING CORPORATION, Respondent.

FACTS

Petitioner Ferdinand Pangilinan was employed by respondent Wellmade Manufacturing Corporation on July 2, 2001, as a Key Account Specialist. On October 31, 2003, he used his company service vehicle to travel to Naga City without approval. The vehicle broke down on the return trip, requiring repairs. Petitioner admitted the unauthorized use. Respondent subsequently charged him with several offenses, including unauthorized use of the vehicle, absence without leave, and “moonlighting,” and required him to explain. Petitioner explained and accepted potential sanctions. Later, respondent charged him with unauthorized absences from November 22 to December 15, 2003. Petitioner explained he did not report because his supervisors told him to resign and he was willing, provided he received his benefits. His letter was received late. On January 22, 2004, petitioner filed a complaint for constructive dismissal. Meanwhile, on February 9, 2004, respondent dismissed him, citing the charges and treating his absences as abandonment. The Labor Arbiter found the dismissal illegal, awarding separation pay (in lieu of reinstatement due to the serious offense of unauthorized vehicle use), 13th month pay, and service incentive leave pay. The NLRC affirmed the illegal dismissal but ordered reinstatement with full backwages and deleted the separation pay. The Court of Appeals modified this, ordering payment of separation pay (as reinstatement was no longer feasible due to respondent having hired a replacement) instead of reinstatement, along with 13th month pay, service incentive leave pay, and attorney’s fees, but deleted the award of backwages. Petitioner filed the present petition, contesting the deletion of backwages.

ISSUE

Whether petitioner is entitled to the payment of backwages in addition to separation pay, 13th month pay, service incentive leave pay, and attorney’s fees.

RULING

Yes. The Supreme Court ruled that petitioner is entitled to backwages. Article 279 of the Labor Code provides that an unjustly dismissed employee is entitled to reinstatement and full backwages. Where reinstatement is no longer viable, separation pay is awarded in lieu thereof. The payment of separation pay is in addition to, and not a substitute for, backwages. Since reinstatement was no longer feasible in this case, the award of separation pay in lieu of reinstatement was proper. Consequently, petitioner is entitled to both separation pay and backwages. The Court modified the Court of Appeals decision to include an award of backwages to petitioner in the amount of ₱470,305.77, in addition to separation pay of ₱18,600, 13th month pay of ₱8,339.00, service incentive leave pay of ₱3,576.92, and attorney’s fees equivalent to ten percent of the monetary award.