G.R. No. 91501 , August 2, 1990
Bernito Morales, petitioner, vs. National Labor Relations Commission, Rosario Geroche, and/or Geroche School Bus, respondents.

FACTS

Petitioner Bernito Morales was hired as a conductor by private respondent Geroche School Bus on May 2, 1984. On February 12, 1987, he sustained a fractured thigh bone after being accidentally hit by a backward-moving bus within the garage compound. This injury incapacitated him for approximately eight months. Upon recuperating in early December 1987, Morales reported for work but was assigned heavy chores incompatible with his condition, leading him to request a leave of absence. When he reported back on December 31, 1987, he was informed of his dismissal effective January 3, 1988.
Consequently, Morales filed a complaint for illegal dismissal. The Labor Arbiter ruled in his favor, declaring the dismissal illegal and granting him the option of reinstatement as a Garage Helper with backwages or separation pay. On appeal, the National Labor Relations Commission (NLRC) affirmed the illegal dismissal finding but modified the remedy. The NLRC awarded separation pay and one year of backwages, deleting the reinstatement option. It based this modification on its observation that the proceedings had generated significant personal animosity between the parties, making reinstatement impractical.

ISSUE

Did the NLRC commit grave abuse of discretion in: (1) not ordering reinstatement and awarding only separation pay and one year of backwages, and (2) denying the award of Holiday Pay and Service Incentive Leave benefits?

RULING

The Supreme Court partially granted the petition. On the first issue, the Court upheld the NLRC’s denial of reinstatement. It affirmed the NLRC’s factual finding that the relationship between Morales and his employer was marked by deep-seated antagonism, a condition which jurisprudence recognizes as making reinstatement inappropriate or infeasible. The Court emphasized that it is not a trier of facts and must respect the NLRC’s conclusive findings on such matters.
However, the Court modified the NLRC’s award of backwages. It clarified that while reinstatement was properly withheld due to the strained relations, the award of backwages remains a separate and distinct remedy intended to compensate for lost earnings from the time of illegal dismissal. Citing Article 279 of the Labor Code, the Court held that backwages should be computed from the time compensation was withheld until actual reinstatement. In cases where reinstatement is not ordered, the Court has consistently capped backwages at three years as a matter of equity and to prevent indefinite liability. The Court found the NLRC’s grant of only one year of backwages insufficient and increased it to two years, deeming this period just and equitable under the circumstances.
Regarding the second issue, the Court found no grave abuse of discretion in the NLRC’s denial of the claims for Holiday Pay and Service Incentive Leave benefits. The petition did not successfully demonstrate that the NLRC’s factual conclusions on these monetary claims were rendered with caprice or arbitrariness. Thus, this portion of the NLRC decision was sustained.