Saturday, March 10, 2012

Hilario vs. NLRC (G.R. No. 119583)

Facts: Petitioner was hired by private respondent Reynolds Philippines, Inc. (Reynolds) through the Bob Garon Consultancy, Inc. as personnel manager of its Cavite plant on December 1, 1984. Sometime in June 1985 he was transferred to the Head Office to handle various legal matters. On November 29, 1985, petitioner was handed a letter by Reynolds personnel informing him that the company had been incurring financial losses and as a result, his employment would be terminated on the ground of retrenchment, effective January 1, 1986. On December 5, 1985 petitioner filed a complaint for illegal dismissal with prayer for reinstatement, back wages and damages with Labor Arbiter Nambi.

(1) Whether or not the petitioner is entitled to the payment of back wages for three (3) years from January 1, 1986 to January 1, 1989 without deduction and qualification.

(2) Whether or not the petitioner is entitled to reinstatement.

(1) Yes. We agree with petitioner that he is entitled to the payment of back wages for three (3) years from January 1, 1986 to January 1, 1989 without deduction and qualification. The payment of back wages is a normal consequence of a finding that an employee has been illegally dismissed. Prior to the amendment introduced by Section 34 of Republic Act No. 6715 to Article 279 of the Labor Code on March 21, 1989, the award of back wages to an illegally dismissed employee was limited to a three-year period, without modification or deduction, following the doctrine laid down in Mercury Drug Co. Inc. v. Court of Industrial Relations as refined by Feati University Faculty Club v. Feati University. Although Republic Act No. 6715 amended the Labor Code by providing that an illegally dismissed employee is entitled to full back wages, inclusive of allowance, 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, we have ruled that this amendment has no retroactive effect, such that the award of back wages to an employee whose illegal dismissal occurred before March 21, 1989, such as petitioner herein, is limited to three (3) years without deduction or qualification. Petitioner should likewise be paid his unpaid salary for December 1985, as well as his Christmas bonus. The rest of petitioner's money claims have no legal basis.

(2) No. To order the same at this juncture would no longer serve any logical purpose. As we have observed in previous cases, if the relationship between employer and employee has been unduly strained by reason of their respective imputations of bad faith to each other, as is quite evident from the vehement and consistent stand of private respondent in refusing to reinstate petitioner, it would be prudent not to order the same. This is particularly true in cases where the illegally dismissed employee holds a managerial or key position, such as petitioner used to hold, where he can only work effectively if he enjoys the full trust and confidence of top management.

Inasmuch as reinstatement is no longer feasible, respondent company is ordered to pay petitioner separation pay equivalent to one month's salary for his roughly one year's service.

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