G.R. No. 55159 , December 22, 1989
Philippine Airlines, Inc. vs. National Labor Relations Commission and Armando Dolina

FACTS

Armando Dolina was a trainee pilot hired by Philippine Airlines (PAL) under an agreement for eventual permanent employment upon completing training and logging 500 flying hours. After meeting the flying hour requirement, his regularization was subjected to a standard evaluation by the Pilot Acceptance Qualifications Board. The Board found him “not qualified for regular employment” based on his past records, performance, and medical examination results, particularly an “unacceptable” Adaptability Rating from a psychological exam. Consequently, PAL filed an application for clearance to terminate his employment and placed him under preventive suspension.
Dolina filed a complaint for illegal dismissal. The parties later entered into an agreement before the Undersecretary of Labor, stipulating that Dolina would be considered on the payroll effective October 1, 1976, pending the final resolution of his case by arbitration. The Labor Arbiter eventually granted PAL’s application for clearance, upholding the termination as valid. Upon this decision, PAL removed Dolina from its payroll. Dolina appealed to the NLRC and moved for his restoration to the payroll, citing the pending appeal. The NLRC, while affirming the Labor Arbiter’s decision that the dismissal was for a just cause, nevertheless ordered PAL to restore Dolina to its payroll and pay his salaries from April 1, 1979, “until this case is finally resolved,” based on the earlier agreement.

ISSUE

Did the National Labor Relations Commission commit grave abuse of discretion in ordering PAL to continue paying Dolina’s salaries despite having affirmed the validity of his dismissal?

RULING

Yes. The Supreme Court ruled that the NLRC acted with grave abuse of discretion. The legal logic is clear: once a dismissal is found to be for a just and valid cause, the employer’s obligation to pay wages ceases. The NLRC’s order was internally inconsistent—it affirmed the legality of the termination yet compelled continued payment of salaries, effectively granting back wages without legal basis. The Court emphasized that back wages are a form of relief granted only when a dismissal is illegal, serving as restitution for lost income. Since Dolina’s dismissal was upheld as valid, he had no right to such compensation.
The Court further held that the parties’ agreement for payroll reinstatement “pending final resolution” was intended to govern the interim period during arbitration, not to supersede substantive labor law after a final determination on the merits. Enforcing the agreement beyond the point of a valid dismissal ruling would result in unjust enrichment for the employee and oppression of the employer, principles which labor law does not sanction. The NLRC’s order would have placed Dolina in a superior position compared to illegally dismissed workers, whose back wages are statutorily limited, thereby creating an absurd and inequitable situation. Consequently, the assailed portion of the NLRC decision was declared null and void.