The Supreme Court held that the National Labor Relations Commission (NLRC) should liberally apply its rules of procedure to prevent injustice and irreparable damage to illegally dismissed employees. In this case, the Court ruled that the NLRC should have treated the employee’s erroneously filed appeal as a verified petition, ensuring his claims for backwages, separation pay, and retirement benefits were properly considered. This decision reinforces the principle that labor laws must be interpreted in favor of workers’ rights and welfare.
From Appeal to Petition: Can a Technicality Derail Justice for an Illegally Dismissed Employee?
Lino A. Fernandez, Jr. was terminated from Manila Electric Company (MERALCO) in 2000. After a lengthy legal battle, the Court of Appeals (CA) declared his dismissal illegal, ordering MERALCO to reinstate him with full backwages or, if reinstatement was not feasible, to pay separation pay. During the execution proceedings, disputes arose regarding the computation of monetary awards. Fernandez filed a Notice of Appeal and Memorandum on Appeal, but realized this was procedurally incorrect, and then filed a motion to treat the filing as a verified petition. The Labor Arbiter (LA) “NOTED WITHOUT ACTION” both the appeal and the motion. This prompted Fernandez to file a Verified Petition before the NLRC. The NLRC denied his petition, and the CA affirmed the denial. This case hinges on whether the NLRC committed grave abuse of discretion by strictly adhering to procedural rules, thereby potentially depriving Fernandez of his rightful compensation.
The Supreme Court emphasized that the NLRC is not bound by strict rules of evidence and procedure. The court referenced Velasco v. Matsushita Electric Philippines Corp., where a similar procedural error occurred. In that case, the Supreme Court held that the NLRC should have considered the appeal filed before it as a petition to modify or annul the LA’s order, highlighting that labor laws should be liberally construed in favor of the working class.
It is a basic principle that the National Labor Relations Commission is “not bound by strict rules of evidence and of procedure.” Between two modes of action – first, one that entails a liberal application of rules but affords full relief to an illegally dismissed employee; and second, one that entails the strict application of procedural rules but the possible loss of reliefs properly due to an illegally dismissed employee – the second must be preferred. Thus, it is more appropriate for the National Labor Relations Commission to have instead considered the appeal filed before it as a petition to modify or annul.
Building on this principle, the Supreme Court underscored that the NLRC Rules of Procedure must be applied liberally to prevent injustice to illegally dismissed employees. This liberal application is rooted in the Constitution’s mandate to protect labor and promote social justice. The case was remanded to the NLRC for a proper determination of the monetary awards due to Fernandez.
The Court also provided guidance regarding reinstatement versus separation pay. Reinstatement is the general rule for illegally dismissed employees, and separation pay is a mere exception. The award of separation pay is an alternative when reinstatement is no longer feasible due to several circumstances, including a long period of time, the employer’s interest, strained relations, or other facts that make execution unjust. However, the doctrine of strained relations should not be used indiscriminately or based on mere impressions. It must be supported by substantial evidence demonstrating that the relationship between the employer and employee is indeed strained as a necessary consequence of the judicial controversy.
As we have held, “[s]trained relations must be demonstrated as a fact. The doctrine of strained relations should not be used recklessly or applied loosely nor be based on impression alone” so as to deprive an illegally dismissed employee of his means of livelihood and deny him reinstatement. Since the application of this doctrine will result in the deprivation of employment despite the absence of just cause, the implementation of the doctrine of strained relationship must be supplemented by the rule that the existence of a strained relationship is for the employer to clearly establish and prove in the manner it is called upon to prove the existence of a just cause; the degree of hostility attendantto a litigation is not, by itself, sufficient proof of the existence of strained relations that would rule out the possibility of reinstatement.
In this case, Fernandez consistently expressed his desire to be reinstated. MERALCO argued that the filing of the case itself had severed the employee-employer relationship. The Court found MERALCO’s allegations, which the LA later adopted, to be without factual basis. Strained relations may only be invoked against employees whose positions demand trust and confidence, or whose differences with their employer are of such a degree that reinstatement is not viable. Because it was not established that Fernandez’s position as a Leadman required such a degree of trust and confidence, MERALCO’s argument lacked merit.
The Court also addressed the issue of backwages, clarifying that they should include the whole amount of salaries, plus all other benefits, bonuses, and general increases. Unless there are valid grounds for separation pay, Fernandez’s backwages should be computed from the date of his illegal dismissal until his retirement in April 2009. The backwages will be subject to legal interest.
Furthermore, the Court addressed Fernandez’s entitlement to retirement benefits. Even if he receives separation pay in lieu of reinstatement, he is not precluded from obtaining retirement benefits, because both are not mutually exclusive. Retirement benefits are a reward for an employee’s loyalty and service, while separation pay is designed to provide the employee with the means to survive while seeking new employment.
Retirement benefits are a form of reward for an employee’s loyalty and service to an employer and are earned under existing laws, CBAs, employment contracts and company policies. On the other hand, separation pay is that amount which an employee receives at the time of his severance from employment, designed to provide the employee with the wherewithal during the period that he is looking for another employment and is recoverable only in instances enumerated under Articles 283 and 284 [now 298 and 299] of the Labor Code or in illegal dismissal cases when reinstatement is not feasible.
The Court upheld the LA’s decision that Fernandez was not entitled to attorney’s fees because the CA’s decision did not include them. The dispositive portion of a decision is the controlling factor and is the subject of execution. As the CA’s decision had become final and executory, it could not be modified. Finally, regarding Fernandez’s alleged entitlement to longevity pay, 14th and 15th-month pay, and other benefits and allowances, the Court stated that these are subject to evidentiary support based on the applicable CBAs, employment contract, and company policies and practice.
FAQs
What was the key issue in this case? | The key issue was whether the NLRC committed grave abuse of discretion by strictly adhering to procedural rules and not treating the employee’s erroneously filed appeal as a verified petition, potentially depriving him of his rightful compensation for illegal dismissal. The Supreme Court ruled in favor of a more liberal interpretation of the rules to protect the employee’s rights. |
What is the doctrine of strained relations? | The doctrine of strained relations allows separation pay as an alternative to reinstatement when the relationship between the employer and employee has become so damaged that reinstatement is not feasible. However, this doctrine must be proven with substantial evidence, not mere allegations. |
Is an illegally dismissed employee always entitled to reinstatement? | Yes, reinstatement is the general rule. Separation pay is only awarded if reinstatement is not feasible due to factors such as strained relations, the passage of time, or if it’s against the employer’s interests. |
Are separation pay and retirement benefits mutually exclusive? | No, separation pay and retirement benefits are not mutually exclusive. An employee may be entitled to both, as retirement benefits are a reward for service, while separation pay helps during unemployment. |
What should backwages include? | Backwages should include the full amount of salaries, plus all other benefits, bonuses, and general increases the employee would have received had they not been illegally dismissed. |
What was the basis of the Court’s decision to remand the case to the NLRC? | The Court remanded the case because the NLRC failed to liberally apply its rules of procedure and did not properly determine the inclusions to, and the computation of, the monetary awards due to the employee. |
What evidence is needed to claim benefits and allowances? | To claim benefits and allowances, the employee must provide evidentiary support based on the applicable Collective Bargaining Agreements (CBAs), employment contracts, and company policies and practices. |
Why was the claim for attorney’s fees denied? | The claim for attorney’s fees was denied because the Court of Appeals’ decision, which had become final and executory, did not grant attorney’s fees. The dispositive portion of a final decision cannot be modified. |
In conclusion, this case underscores the importance of liberally interpreting labor laws and procedural rules to protect the rights of illegally dismissed employees. The Supreme Court’s decision to remand the case to the NLRC ensures that Fernandez’s claims will be properly evaluated, upholding the constitutional mandate to protect labor and promote social justice.
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Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: LINO A. FERNANDEZ, JR. VS. MANILA ELECTRIC COMPANY (MERALCO), G.R. No. 226002, June 25, 2018