​Pentagon Steel Corp. vs. CA, June 26, 2009

Facts:
Respondent Perfecto Balogo filed a complaint with the Arbitration Branch of the NLRC against petitioner Pentagon Steel Corporation for illegal dismissal. He alleged that his illness prevented him from reporting for work for 10 days to which the petitioner considered him on Absence Without Official Leave (AWOL). When the respondent finally reported for work, the petitioner refused to take him back despite the medical certificate he submitted.
 
During the conciliation proceedings, the respondent presented a medical certificate issued by the company physician, as required by the petitioner to determine whether he was fit to return to work. According to the petitioner, the respondent refused to return to work and insisted that he be paid his separation pay which the petitioner refused.
 
The Labor Arbiter dismissed the illegal dismissal charge which was reversed by the NLRC. The CA affirmed the decision of the NLRC. The CA held that the respondent was constructively dismissed.
 
The petitioner imputes grave abuse of discretion against the CA. In basing its decision on the proceedings that transpired when the parties were negotiating for a compromise agreement during the preliminary conference of the case.
 
Issue:
Whether the respondent is not entitled to reinstatement due to strained relations from the dispute with his employer.

​Held:
NO. As the CA correctly ruled, the NLRC erred when it awarded separation pay instead of reinstatement. The circumstances in this case do not warrant an exception to the rule that reinstatement is the consequence of an illegal dismissal.
 
First, The existence of strained relations between the parties was not clearly established. We have consistently ruled that the doctrine of strained relations cannot be used recklessly or applied loosely 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 attendant to a litigation is not, by itself, sufficient proof of the existence of strained relations that would rule out the possibility of reinstatement.30 Indeed, labor disputes almost always result in “strained relations,” and the phrase cannot be given an overarching interpretation; otherwise, an unjustly dismissed employee can never be reinstated.
 
In the present case, we find no evidentiary support for the conclusion that strained relations existed between the parties. To be sure, the petitioner did not raise the defense of strained relationship with the respondent before the labor arbiter.
 
Consequently, this issue—factual in nature—was not the subject of evidence on the part of both the petitioner and the respondent. There thus exists no competent evidence on which to base the conclusion that the relationship between the petitioner and the respondent has reached the point where their relationship is now best severed. We agree with the CA’s specific finding that the conflict, if any, occasioned by the respondent’s filing of an illegal dismissal case, does not merit the severance of the employee-employer relationship between the parties.
 
Second. The records disclose that respondent has been in the petitioner’s employ for 23 years and has no previous record of inefficiency or infraction of company rules prior to his illegal dismissal from service. We significantly note that payment of separation pay in lieu of respondent’s reinstatement will work injustice to the latter when considered with his long and devoted years in the petitioner’s service. Separation pay may take into account the respondent’s past years of service, but will deprive the respondent of compensation for the future productive years that his security of tenure protects. We take note, too, that the respondent, after 23 years of service, shall in a few years retire; any separation pay paid at this point cannot equal the retirement pay due the respondent upon retirement.
 
For all these reasons, we uphold the CA ruling that the respondent should be reinstated to his former position or to a substantially equivalent position without loss of seniority rights.