Equitable Banking vs. Sadac, June 8, 2006

Facts:
Sadac was appointed VP of the legal department of the bank on Aug 1, 1981 and General Counsel on Dec 8 1981. On 26 June 1989, nine lawyers of petitioner Bank's Legal Department, in a letter-petition to the Chairman of the Board of Directors, accused respondent Sadac of abusive conduct, inter alia, and ultimately, petitioned for a change in leadership of the department. On the ground of lack of confidence in respondent Sadac, under the rules of client and lawyer relationship, petitioner Bank instructed respondent Sadac to deliver all materials in his custody in all cases in which the latter was appearing as its counsel of record. In reaction thereto, respondent Sadac requested for a full hearing and formal investigation but the same remained unheeded. On 9 November 1989, respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. After learning of the filing of the complaint, vetitioner Bank terminated the services of respondent Sadac. Finally, on 10 August 1989, respondent Sadac was removed from his office and ordered disentitled to any compensation and other benefits.
 
During the said case, it was already declared that the termination done was illegal thus now there is a challenge based upon the computation of the monetary award of backwages to be given to Sadac. Sadac states that Art 279 of the labor code holds that general increases of wage during the said period should be included. 
 
Bank however challenges such in that the wage rate that must be used is the wage rate at the time of dismissal only and that general increases therefore are not automatically applied.
 
​Issue:
1.)        Whether or not  the computation of backwages include the salary increases. No.
2.)        Whether or not CA erred in ruling that Sadac is entitled to checkup benefit clothing allowance and cash conversion of vacation leaves provided that there was no evidence given. Yes.
 
 Held:
No, the computation is based on the wage rate at the time of the dismissal.

1. Backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal. It is not private compensation or damages but is awarded in furtherance and effectuation of the public objective of the Labor Code.  The court also provided the evolution of the rules as to the computation but the rule we have today is the Bustamante Ruling. This ruling allowed full recovery of backwages without deduction and without qualification pursuant to the express provisions of Article 279 of the Labor Code, as amended by Rep. Act No. 6715, i.e., without any deduction of income the employee may have derived from employment elsewhere from the date of his dismissal up to his reinstatement, that is, covering the entirety of the period of the dismissal; and,

 
           2. Mere allegations by respondent Sadac does not suffice in the absence of proof supporting the same. Contained nowhere is an acknowledgment of herein claimed benefits, namely, check-up benefit, clothing allowance, and cash conversion of vacation leaves. Absent such acknowledgement, there can be no benefit.