G.R. No. L-64809, November 29, 1983
Philippine Airlines, Inc., Petitioner, v. National Labor Relations Commission & Rodolfo Salazar, Antonio and Clemente Basinillo, Jr., Respondents.

FACTS

Petitioner Philippine Airlines (PAL) administratively charged private respondents, employees Clemente Basinillo, Jr., Antonio Magno, and Rodolfo Salazar, with serious misconduct for the attempted pilferage of two cases of wine from the company’s bonded warehouse on June 12, 1978. After a formal investigation, PAL found them guilty and applied with the Ministry of Labor for clearance to terminate their services. The employees were subsequently dismissed, prompting them to file a case for illegal dismissal.
Labor Arbiter Francisco Jose, Jr., after the parties submitted their position papers, rendered a decision denying PAL’s application for clearance. The Arbiter ordered the reinstatement of the employees with full backwages from the date of their preventive suspension until actual reinstatement. The National Labor Relations Commission (NLRC) affirmed this decision in toto. PAL then filed this petition for certiorari, contesting the award of full backwages but no longer questioning the reinstatement order.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in affirming the Labor Arbiter’s award of full backwages from the date of preventive suspension until actual reinstatement.

RULING

The Supreme Court found the petition meritorious and modified the award of backwages. The Court recognized that while the dismissal was ultimately deemed illegal, PAL acted in good faith based on its honest belief that the employees committed misconduct. The Court also noted that the protracted litigation, lasting over five years, was not attributable to PAL’s fault.
Applying established jurisprudence, the Court held that the policy of fixing backwages to a just and reasonable level, without qualification or deduction, is intended to avoid delays from protracted hearings to prove interim earnings. Consistent with precedents such as Mercury Drug Co., Inc. v. Court of Industrial Relations and Capital Garment Corporation v. Ople, which limit backwages to a reasonable period, the Court deemed an award equivalent to two and a half years of backwages as just and equitable under the circumstances. This period was computed from the date of the application for termination clearance, July 25, 1978, based on the employees’ rates at that time. The decisions of the Labor Arbiter and NLRC were accordingly modified, and the temporary restraining order was lifted.