BANK OF LUBAO, INC.

,
Petitioner,

- versus -

ROMMEL J. MANABAT and the

NATIONAL LABOR RELATIONS
COMMISSION,
Respondents.
G.R. No. 188722 February 1, 2012

At the outset, it should be stressed that a determination of the applicability of the doctrine
of strained relations is essentially a factual question and, thus, not a proper subject in the instant
petition.[15]

The well-entrenched rule in our jurisdiction is that only questions of law may be
entertained by this Court in a petition for review on certiorari. This rule, however, is not ironclad
and admits certain exceptions, such as when, inter alia, the findings of fact are conflicting.[16]

Here, in view of the conflicting findings of the NLRC and the CA, this Court is constrained
to pass upon the propriety of the application of the doctrine of strained relations to justify the
award of separation pay to the respondent in lieu of reinstatement.

The law on reinstatement is provided for under Article 279 of the Labor Code of
the Philippines:

Article 279. Security of Tenure. - In cases of regular employment, the

employer shall not terminate the services of an employee except for a just cause
or when authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement. (emphasis
supplied)

Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to
reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension
and strained relations between the parties, or where the relationship between the employer and
the employee has been unduly strained by reason of their irreconcilable differences, particularly
where the illegally dismissed employee held a managerial or key position in the company, it would
be more prudent to order payment of separation pay instead of reinstatement.[17]

Under the doctrine of strained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On
one hand, such payment liberates the employee from what could be a highly oppressive work
environment. On the other hand, it releases the employer from the grossly unpalatable obligation
of maintaining in its employ a worker it could no longer trust.[18]

In such cases, it should be proved that the employee concerned occupies a position where
he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an
atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency
and productivity of the employee concerned.[19]

Here, we agree with the CA that the relations between the parties had been already
strained thereby justifying the grant of separation pay in lieu of reinstatement in favor of the
respondent.

First, it cannot be gainsaid that the petitioners reinstatement to his former position would
only serve to intensify the atmosphere of antipathy and antagonism between the parties.
Undoubtedly, the petitioners filing of various criminal complaints against the respondent for
qualified theft and the subsequent filing by the latter of the complaint for illegal dismissal against
the latter, taken together with the pendency of the instant case for more than six years, had
caused strained relations between the parties.

Second, considering that the respondents former position as bank encoder involves the
handling of accounts of the depositors of the Bank of Lubao, it would not be equitable on the part
of the petitioner to be ordered to maintain the former in its employ since it may only inspire
vindictiveness on the part of the respondent.

Third, the refusal of the respondent to be re-admitted to work is in itself indicative of the
existence of strained relations between him and the petitioner. In the case of Lagniton, Sr. v.
National Labor Relations Commission,[20] the Court held that the refusal of the dismissed employee
to be re-admitted is constitutive of strained relations:
 It appears that relations between the petitioner and the complainants have
been so strained that the complainants are no longer willing to be reinstated. As
such reinstatement would only exacerbate the animosities that have developed
between the parties, the public respondents were correct in ordering instead the
grant of separation pay to the dismissed employees in the interest of industrial
peace.[21]

Time and again, this Court has recognized that strained relations between the employer
and employee is an exception to the rule requiring actual reinstatement for illegally dismissed
employees for the practical reason that the already existing antagonism will only fester and
deteriorate, and will only worsen with possible adverse effects on the parties, if we shall compel
reinstatement; thus, the use of a viable substitute that protects the interests of both parties while
ensuring that the law is respected.

GOLDEN ACE BUILDERS and ARNOLD U. G.R. No. 187200

AZUL,
Petitioners,
May 5, 2010
- versus -
JOSE A. TALDE,
Respondent.

As to how both awards should be computed, Macasero v. Southern Industrial Gases

Philippines[14] instructs:

[T]he award of separation pay is inconsistent with a finding that there was
no illegal dismissal, for under Article 279 of the Labor Code and as held in a catena
of cases, an employee who is dismissed without just cause and without due
process is entitled to backwages and reinstatement or payment of separation pay
in lieu thereof:

Thus, an illegally dismissed employee is entitled to two

reliefs: backwages and reinstatement. The two reliefs provided are
separate and distinct. In instances where reinstatement is no longer
feasible because of strained relations between the employee and
the employer, separation pay is granted. In effect, an illegally
 dismissed employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and backwages.

The normal consequences of respondents illegal dismissal,

then, are reinstatement without loss of seniority rights, and payment
of backwages computed from the time compensation was withheld
up to the date of actual reinstatement. Where reinstatement is no
longer viable as an option, separation pay equivalent to one (1)
month salary for every year of service should be awarded as an
alternative. The payment of separation pay is in addition to payment
of backwages. (emphasis, italics and underscoring supplied)

Velasco v. National Labor Relations Commission emphasizes:

The accepted doctrine is that separation pay may avail in

lieu of reinstatement if reinstatement is no longer practical or in the best interest
of the parties. Separation pay in lieu of reinstatement may likewise be awarded if
the employee decides not to be reinstated. (emphasis in the original; italics
supplied)

Under the doctrine of strained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On
one hand, such payment liberates the employee from what could be a highly oppressive work
environment. On the other hand, it releases the employer from the grossly unpalatable obligation
of maintaining in its employ a worker it could no longer trust.[15]

Strained relations must be demonstrated as a fact, however, to be adequately supported by

evidence[16] substantial evidence to show that the relationship between the employer and the
employee is indeed strained as a necessary consequence of the judicial controversy.[17]

In the present case, the Labor Arbiter found that actual animosity existed between petitioner Azul
and respondent as a result of the filing of the illegal dismissal case. Such finding, especially when
affirmed by the appellate court as in the case at bar, is binding upon the Court, consistent with the
prevailing rules that this Court will not try facts anew and that findings of facts of quasi-
judicial bodies are accorded great respect, even finality.
Clearly then, respondent is entitled to backwages and separation pay as his reinstatement has
been rendered impossible due to strained relations. As correctly held by the appellate court, the
backwages due respondent must be computed from the time he was unjustly dismissed until his
actual reinstatement, or from February 1999 until June 30, 2005 when his reinstatement was
rendered impossible without fault on his part.

G.R. No. 82511 March 3, 1992

GLOBE-MACKAY CABLE AND RADIO CORPORATION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and IMELDA SALAZAR, respondents.

In lieu of reinstatement, the Court has variously ordered the payment of backwages and
separation pay 23 or solely separation pay. 24

In the case at bar, the law is on the side of private respondent. In the first place the wording of
the Labor Code is clear and unambiguous: "An employee who is unjustly dismissed from
work shall be entitled to reinstatement. . . . and to his full backwages. . . ." 25 Under the
principlesof statutory construction, if a statute is clears plain and free from ambiguity, it must be
given its literal meaning and applied without attempted interpretation. This plain-meaning rule
or verba legis derived from the maxim index animi sermo est (speech is the index of intention)
rests on the valid presumption that the words employed by, the legislature in a statute correctly
express its intent or will and preclude the court from construing it differently. 26 The legislature is
presumed to know the meaning of the words, to:have used words advisedly, and to have
expressed its intent by the use of such words as are found in the statute.27 Verba legis non est
recedendum, or from the words of a statute there should be no departure. Neither does the
provision admit of any qualification. If in the wisdom of the Court, there may be a ground or
grounds for non-application of the above-cited provision, this should be by way of exception,
such as when the reinstatement may be inadmissible due to ensuing strained relations between
the employer and the employee.

In such cases, it should be proved that the employee concerned occupies a position where he
enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an
atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency
and productivity of the employee concerned.

A few examples, will suffice to illustrate the Court's application of the above principles: where
the employee is a Vice-President for Marketing and as such, enjoys the full trust and confidence
of top management; 28 or is the Officer-In-Charge of the extension office of the bank where he
works; 29 or is an organizer of a union who was in a position to sabotage the union's efforts to
organize the workers in commercial and industrial establishments; 30 or is a warehouseman of a
non-profit organization whose primary purpose is to facilitate and maximize voluntary gifts. by
foreign individuals and organizations to the Philippines; 31 or is a manager of its Energy
Equipment Sales. 32

Obviously, the principle of "strained relations" cannot be applied indiscriminately. Otherwisey

reinstatement can never be possible simply because some hostility is invariably engendered
between the parties as a result of litigation. That is human nature. 33

Besides, no strained relations should arise from a valid and legal act of asserting one's right;
otherwise an employee who shall assert his right could be easily separated from the service, by
merely paying his separation pay on the pretext that his relationship with his employer had
already become strained. 34

Here, it has not been proved that the position of private respondent as systems analyst is one
that may be characterized as a position of trust and confidence such that if reinstated, it may
well lead to strained relations between employer and employee. Hence, this does not constitute
an exception to the general rule mandating reinstatement for an employee who has been
unlawfully dismissed.

On the other hand, has she betrayed any confidence reposed in her by engaging in transactions
that may have created conflict of interest situations? Petitioner GMCR points out that as a
matter of company policy, it prohibits its employees from involving themselves with any
company that has business dealings with GMCR. Consequently, when private respondent Salazar
signed as a witness to the partnership papers of Concave (a supplier of Ultra which in turn is also
a supplier of GMCR), she was deemed to have placed. herself in an untenable position as far as
petitioner was concerned.

However, on close scrutiny, we agree with public respondent that such a circumstance did not
create a conflict of interests situation. As a systems analyst, Salazar was very far removed from
operations involving the procurement of supplies. Salazar's duties revolved around the
development of systems and analysis of designs on a continuing basis. In other words, Salazar did
not occupy a position of trust relative to the approval and purchase of supplies and company
assets.

In the instant case, petitioner has predicated its dismissal of Salazar on loss of confidence. As we
have held countless times, while loss of confidence or breach of trust is a valid ground for
terminations it must rest an some basis which must be convincingly established. 35 An employee
who not be dismissed on mere presumptions and suppositions. Petitioner's allegation that since
Salazar and Saldivar lived together in the same apartment, it "presumed reasonably that
complainant's sympathy would be with Saldivar" and its averment that Saldivar's investigation
although unverified, was probably true, do not pass this Court's test. 36 While we should not
condone the acts of disloyalty of an employee, neither should we dismiss him on the basis of
suspicion derived from speculative inferences.