Backwages shall be pegged at the wage rate at the time of the employee’s dismissal, unqualified by any deductions and increases.

United Coconut Chemicals, Inc. vs. Victoriano B. Valmores
G.R. No. 201018, July 12, 201


UCCI hired the Victoriano Valmores (Valmores) as its Senior Utilities Inspector with a monthly salary of P11,194.00. He then became a member of the United Coconut Chemicals, Inc. Employees’ Labor Organization (UELO) until his expulsion sometime in 1995.

Due to the expulsion, UELO formally demanded that UCCI terminate the services of the Valmores pursuant to the union security clause of the CBA.

UCCI dismissed him on February 22, 1996 He then filed a complaint for illegal dismissal in the NLRC. The Labor Arbiter dismissed his complaint for lack of merit. Valmores appealed to the NLRC.

The NLRC reversed the Labor Arbiter finding UCCI liable for illegal dismissal and ordered them to reinstate complainant to his former position without loss of seniority rights and with full backwages from the date of dismissal on 22 February 1996 to the date of actual reinstatement.

The parties, including UELO, moved for reconsideration.

The NLRC denied the motions for reconsideration of the Valmores and UELO, but partially granted UCCI’ s motion by granting its prayer to be exempted from paying backwages.

Consequently, the Valmores and UELO separately elevated the matter to the CA on certiorari, insisting that the NLRC thereby committed grave abuse of discretion amounting to lack or excess of jurisdiction.

The CA affirmed the NLRC.

UCCI appealed to the Supreme Court, which denied the petition for review on certiorari. The denial became final and executory on February 26, 2004. Hence, the Valmores moved for the execution of the judgment in his favor.

LA Ruling:

The LA granted the motion for execution. The LA also denied UCCI’s motion to hold UELO primarily liable to pay complainant the monetary awards and/or direct Valmores UELO to reimburse UCCI of whatever amount it may be made to pay complainant, disguised as a motion for clarification for lack of legal basis.

The LA also opined that the backwages due to Valmores should be computed by excluding the benefits under the CBA.

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NLRC Ruling:

The NLRC issued its resolution remanding the case to the Labor Arbiter for the recomputation of the backwages inclusive of the benefits granted under the CBA.

The NLRC observed that there was a need to include the benefits granted under the CBA; that in the personnel action form submitted by UCCI, the reinstatement salary of the Valmores amounted to P26,614.00 as opposed to the P11,194.00 alleged salary at the time of his dismissal; and the disparity should have prompted the Labor Arbiter to probe into his claim of entitlement to the benefits under the CBA as part of his backwages.

Not satisfied, UCCI assailed the resolution by the NLRC on certiorari.

CA Ruling:

The CA upheld the NLRC, agreeing with the latter’s observation that UCCI had failed to submit the documents providing the details of the benefits granted to its employees from the time when the Valmores was illegally terminated until his reinstatement on July 1, 2008.

It cited Fulache v. ABS-CBN Broadcasting Corporation in holding that illegally dismissed employees were also entitled to the CBA benefits. Upon denial of its motion for reconsideration, UCCI appealed to the SC by petition for review on certiorari.

During the pendency of the appeal, the parents of Valmores substituted the latter due to his demise.


Whether or not increases in the benefits during pendency of the case should be included in the computation of backwages

Whether or not the CBA benefits should be included in the computation of backwages and if proof of receipt of benefits is required

Whether or not the union which removed the employee from membership which became the basis for dismissal can be adjudged liable for backwages

SC Ruling:

The settled rule is that full backwages shall be pegged at the wage rate at the time of the employee’s dismissal, unqualified by any deductions and increases.

The base figure for the computation of backwages should include not only the basic salary but also the regular allowances being received, such as the emergency living allowances and the 13th month pay mandated by the law. The purpose for this is to compensate the worker for what he has lost because of his dismissal, and to set the price or penalty on the employer for illegally dismissing his employee.

The SC held that the Labor Arbiter did not err in using P11,194.00 as the base figure because the sum represented the Valmores’s wage rate at the time of his dismissal. Also, the Labor Arbiter properly included in the computation the Valmores’s 13th month pay and service incentive leave.

Valmores insisted before the Labor Arbiter that the CBA-granted benefits should be included, but UCCI opposed, citing the 2011 ruling in BPI Employees’ Union-lvletro v. Bank of the Philippine Islands. It contended that any computation that reflected increases during the period of his dismissal would be incorrect for want of legal basis and for being contrary to prevailing jurisprudence. The SC agreed with UCCI.

The base figure to be used in reckoning full backwages is the salary rate of the employee at the time of his dismissal. The amount does not include the increases or benefits granted during the period of his dismissal because time stood still for him at the precise moment of his termination, and move forward only upon his reinstatement. Hence, the Valmores should only receive backwages that included the amounts being received by him at the time of his illegal dismissal but not the benefits granted to his co-employees after his dismissal.

CBA allowances and benefits that the Valmores was regularly receiving before his illegal dismissal should be added to the base figure of P11,194.00. This is because Article 279 of the Labor Code decrees that the backwages shall be “inclusive of allowances, and to his other benefits or their monetary equivalent.”

Considering that the law does not distinguish between the benefits granted by the employer and those granted under the CBA, he should not be denied the latter benefits.

Nonetheless, the Valmores still had to prove his entitlement to the benefits by submitting proof of his having received the same at the time of his illegal dismissal. In BPI Employees’ Union-Metro Manila, the claim for CBA benefits such as the signing bonus, medical and doctor’s allowance, and dental allowance was denied because the employee was unable to prove that he was receiving such benefits at the time of the illegal dismissal. To do so, therefore, the Valmores must have submitted before the Labor Arbiter sufficient evidence establishing his receiving meal subsidy, SOFA, financial grant, medical assistance, built-in overtime and night shift differential, rice subsidy, uniform allowance, Christmas package, vacation and sick leave at the time he was dismissed.

The SC considered as patent error on the part of the Labor Arbiter to declare that the Valmores had not proved his entitlement to the CBA benefits. Accordingly, the remand to enable the proper determination of the CBA benefits that the Valmores had been receiving as of February 22, 2006 was held proper and necessary.

UCCI, as the employer effecting the unlawful dismissal, was solely liable for the backwages of the Valmores, its employee. Citing the case of General Milling Corporation vs. Casio, the pointed out that despite a closed shop provision in the CBA and the expulsion from union, law and jurisprudence imposes upon the employer the obligation to accord the employee substantive and procedural due process before complying with the demand of the union to dismiss the expelled union members from service. The failure of employer to carry out this obligation makes it liable for illegal dismissal.

Citing the case of Malayang Samahan ng mga Manggagawa sa M Greenfield, the SC held that notwithstanding the fact that the dismissal was at the instance of the federation and that the federation undertook to hold the company free from any liability resulting from the dismissal of several employees, the company may still be held liable if it was remiss in its duty to accord the would-be dismissed employees their right to be heard on the matter.


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