Nippon Express Philippines Corporation vs. Daguiso

The doctrine of strained relations cannot justify non-reinstatement of an illegally dismissed employee where the employer itself caused the underlying altercation by bypassing the employee, and where the employer fails to prove with substantial evidence that reinstatement would generate an atmosphere of antipathy and antagonism adversely affecting the efficiency and productivity of the employee concerned.

NEPC is a domestic corporation located in Parañaque City, Metro Manila. On September 26, 2005, NEPC hired Daguiso as Corporate Human Resource Specialist; she was later promoted to Corporate Human Resource Supervisor with a monthly salary of P30,384.90 and an allowance of P3,000.00 per month. The case concerns her termination on June 1, 2012, following an altercation with a subordinate triggered by a senior manager's decision to bypass Daguiso in reassigning attendance-monitoring duties within her department.

On June 1, 2012, at about 8:22 a.m., Human Resource Specialist Diane Aguirre, a subordinate of Daguiso, sent an electronic mail to department heads informing them that "all attendance monitoring and other DTR concern shall be directed to Ms. Honeylet Suaiso effective June 01, 2012." Daguiso asked Aguirre why she sent the e-mail implementing the new assignment of Suaiso without furnishing her and Suaiso a copy. Aguirre replied that Senior Manager Yolanda G. De Vera ordered her to send the e-mail. According to NEPC, Daguiso lost her temper and shouted at Aguirre, leading to a shouting match that stopped only when General Manager Yoshitomo Omori intervened. At the time, De Vera was on a business trip in Subic, Zambales.

At around 10:00 a.m. of the same day, Daguiso sent an e-mail to De Vera apologizing for the incident but explaining that the conflict arose because she and Suaiso were not informed of the reassignment, and asserting her right as immediate superior to be consulted on matters affecting her section. De Vera, through Executive Assistant Eunice P. Nerez, sent an e-mail to all employees directing them to stop discussing the conflict and focus on their duties. Daguiso replied to Nerez, assuring management that her tasks were being handled without delay and that she was responding during her break time, while stressing the need to resolve the underlying issue.

At around 5:00 p.m. of the same day, De Vera called Daguiso for a meeting and informed her of NEPC's decision to terminate her employment. Daguiso was handed a termination letter signed by General Manager Omori and approved by President Yoshinori Kikuchi, citing repeated infractions of the Company's Policy on Conduct and Discipline — discourtesy towards others, use of coercion or intimidation, and refusal to carry out official instructions — and characterizing these as grave offenses constituting serious misconduct or willful disobedience under Article 282(a) of the Labor Code. The termination was effective at the close of business hours on June 1, 2012. Daguiso refused to sign the letter.

On June 4, 2012, Daguiso filed a complaint for illegal dismissal against NEPC and its officers, alleging she was dismissed without just cause and without due process — she was not served a written notice to explain, no formal hearing was conducted, and she was simply told of her dismissal at an informal meeting, stripped of her pass codes and company properties, and led out of the premises. NEPC countered that Daguiso was a constant source of discord in the workplace, had an attitude problem, and committed serious misconduct through the shouting match and her disregard of De Vera's order to cease e-mail discussions. NEPC also argued that a formal hearing was unnecessary because Daguiso was caught in the act, and that reinstatement was infeasible due to strained relations and loss of trust and confidence.

The Labor Arbiter found Daguiso illegally dismissed, noting that NEPC's allegations of discourtesy, coercion, and refusal to carry out instructions were unsupported by evidence, that no memorandum had ever been issued against Daguiso despite claims of repeated reprimands, and that she was totally denied procedural due process. NEPC did not appeal this decision. The NLRC affirmed the Labor Arbiter but sustained the award of separation pay in lieu of reinstatement, finding strained relations between the parties. The Court of Appeals reversed the NLRC on the reinstatement issue, ordering immediate reinstatement, a ruling ultimately affirmed by the Supreme Court.

• Finality of Administrative Findings: Petitioner contended that the Court of Appeals erred in disregarding the factual findings of the NLRC, which are accorded great respect, if not finality, by the courts.
• Reinstatement vs. Separation Pay: Petitioner argued that the Court of Appeals erred in ordering reinstatement, given that Daguiso filed a Motion for Partial Writ of Execution for the total sum of P394,362.20, which already included the award of separation pay — an act petitioner characterized as inconsistent with a prayer for reinstatement.
• Strained Relations: Petitioner maintained that the Court of Appeals erred in finding the absence of strained relations between its employees and Daguiso, contrary to the NLRC's ruling.
• Capacity to Assign Errors Despite Non-Appeal: Petitioner asserted that it may still assign errors and advance arguments to support the Labor Arbiter's decision despite its non-filing of an appeal to the NLRC.
• Insufficiency of Rule 65 Allegations: Petitioner contended that Daguiso's mere allegations of error in judgment in her Rule 65 petition were insufficient to cause reversal of the NLRC's resolution.

• Illegal Dismissal Without Just Cause or Due Process: Respondent argued that she was illegally terminated because she was dismissed without just cause and without due process — she was not served a written notice to explain, no formal hearing was conducted, and she was simply told of her dismissal at a sudden meeting.
• Entitlement to Reinstatement: Respondent maintained that as an illegally dismissed employee, she was entitled to reinstatement as a matter of right, and that the doctrine of strained relations was inapplicable because the altercation was caused by De Vera's act of bypassing her.
• Solidary Liability of De Vera: Respondent argued that De Vera should be held solidarily liable with NEPC for her illegal dismissal because De Vera directly committed the acts leading to the dismissal.
• Entitlement to Damages: Respondent prayed for moral and exemplary damages, claiming that the violation of her rights caused her mental anguish and wounded feelings.

• Finality of Factual Findings: Whether the findings of fact of administrative agencies like the NLRC are accorded great respect, if not finality, by the courts.
• Reinstatement vs. Separation Pay: Whether the Court of Appeals erred in ruling that the NLRC committed grave abuse of discretion in granting separation pay instead of reinstatement.
• Consistency of Prayer for Reinstatement with Motion for Writ of Execution: Whether the Court of Appeals erred in granting reinstatement given that Daguiso filed a motion for partial writ of execution that included separation pay.
• Sufficiency of Rule 65 Allegations: Whether Daguiso's mere allegations of error in judgment in her Rule 65 petition were sufficient to cause reversal of the NLRC's resolution.
• Main Issue — Reinstatement: Whether the Court of Appeals erred in ordering the reinstatement of Daguiso.

• Finality of Factual Findings: No. Where the factual findings of the NLRC and the Court of Appeals are contradictory, the Supreme Court reviews the records to determine which finding should be upheld as more in conformity with the evidentiary facts.
• Reinstatement vs. Separation Pay: No. The NLRC gravely abused its discretion in denying reinstatement based on strained relations, because the altercation arose from the employer's own act of bypassing Daguiso, and NEPC failed to prove strained relations with substantial evidence.
• Consistency of Prayer for Reinstatement with Motion for Writ of Execution: No. The motion for partial writ of execution was filed without prejudice to Daguiso's appeal, and NEPC itself manifested willingness to pay the monetary award, which Daguiso did not collect.
• Sufficiency of Rule 65 Allegations: No. The Court of Appeals correctly found grave abuse of discretion in the NLRC's application of the strained relations doctrine.
• Main Issue — Reinstatement: No. The Court of Appeals correctly ordered immediate reinstatement, as Daguiso was illegally dismissed and the doctrine of strained relations was inapplicable.

• Finality of Factual Findings: As a rule, the Supreme Court does not review questions of fact in a Rule 45 petition, and factual findings of labor agencies accorded great respect are binding where they conform with the Court of Appeals. However, where the findings of the NLRC and the appellate court are contradictory — as here, where the labor tribunals denied reinstatement while the Court of Appeals ordered it — the Court reviews the records to determine which finding is more in conformity with the evidentiary facts. The contradiction justified the Court's review.

• Reinstatement vs. Separation Pay: Reinstatement is the rule for an illegally dismissed employee, guaranteed by Article 279 of the Labor Code and Section 3, Article XIII of the Constitution. The doctrine of strained relations is an exception, applicable only where the employee occupies a position of trust and confidence and it is likely that reinstatement would generate an atmosphere of antipathy and antagonism adversely affecting efficiency and productivity. The doctrine must be proved as a fact, supported by evidence, and the burden is on the employer to clearly establish strained relations in the manner required to prove just cause. The NLRC based non-reinstatement on two grounds: (1) Daguiso's insistence that De Vera be held personally liable showed resentment, and (2) Daguiso did not deny the shouting match with Aguirre. Both were insufficient. Filing a complaint and praying for solidary liability is a valid legal act asserting one's right, from which no strained relations should arise. The shouting match originated from De Vera's bypass of Daguiso in the chain of command — De Vera directly ordered Aguirre, Daguiso's subordinate, to disseminate the reassignment without informing or consulting Daguiso. Denying reinstatement on this basis would reward NEPC for its own misdeeds and penalize Daguiso, the one bypassed. NEPC also failed to prove loss of trust and confidence with substantial evidence, as Daguiso was dismissed without just cause and without due process, a finding NEPC did not appeal.

• Consistency of Prayer for Reinstatement with Motion for Writ of Execution: The motion for partial writ of execution dated January 8, 2013 was filed without prejudice to Daguiso's appeal before the NLRC. Moreover, NEPC itself filed a motion dated April 5, 2013 manifesting willingness to pay the monetary award, but Daguiso did not collect. The filing of the motion was therefore not inconsistent with the prayer for reinstatement.

• Sufficiency of Rule 65 Allegations: The Court of Appeals correctly found grave abuse of discretion in the NLRC's application of the strained relations doctrine, as the NLRC's bases for denying reinstatement were legally insufficient and disregarded the origin of the altercation.

• Main Issue — Reinstatement: An employee's occupation is a means of livelihood, a precious economic right that should not be taken away by applying the strained relations exception without justification. The State guarantees security of tenure, and all efforts must be exerted to protect a worker from unjust deprivation of employment. The doctrine of strained relations should not be applied indiscriminately to cause non-reinstatement of a supervisory employee dismissed without just cause and without due process by an employer whose own senior officer caused the altercation by bypassing the dismissed employee.

• Doctrine of Strained Relations — Where reinstatement is not feasible, expedient, or practical, as where it would exacerbate tension between the parties or where the relationship has been unduly strained by irreconcilable differences — particularly where the illegally dismissed employee held a managerial or key position — separation pay may be ordered instead of reinstatement. The doctrine should not be used recklessly, applied loosely or indiscriminately, or based on impression alone. For the exception to apply, it must be proved that: (1) the employee occupies a position of trust and confidence; and (2) it is likely that if reinstated, an atmosphere of antipathy and antagonism would be generated as to adversely affect the efficiency and productivity of the employee concerned. Strained relations must be of such nature or degree as to preclude reinstatement, must be demonstrated as a fact, adequately supported by evidence on record, and the existence of strained relations is for the employer to clearly establish and prove. In this case, the doctrine was inapplicable because the employer caused the altercation by bypassing the employee, and NEPC failed to present substantial evidence of strained relations.

• Security of Tenure and Reinstatement as a Matter of Right — An illegally dismissed employee is entitled to reinstatement without loss of seniority rights and to full backwages, inclusive of allowances and other benefits, computed from the time compensation was withheld up to actual reinstatement, pursuant to Article 279 of the Labor Code. Reinstatement is the rule; separation pay in lieu of reinstatement is the exception. The Court applied this doctrine by affirming the Court of Appeals' order for immediate reinstatement, as Daguiso was illegally dismissed without just cause and without due process.

• Employer Should Not Profit from Its Own Misdeeds — An employer should not be allowed to profit from its own misdeeds. Applied here, the employer could not invoke strained relations to deny reinstatement where the strained relationship was caused by the employer's own act of bypassing the employee in the chain of command.

• "As reinstatement is the rule, for the exception of strained relations to apply, it should be proved that the employee concerned occupies a position where he/she enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism would be generated as to adversely affect the efficiency and productivity of the employee concerned." — This passage states the two-part test for applying the strained relations exception, the controlling standard for when reinstatement may be denied in favor of separation pay.

• "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 relations must be supplemented by the rule that the existence of strained relations is for the employer to clearly establish and prove in the manner it is called upon to prove the existence of a just cause." — This passage places the burden of proving strained relations squarely on the employer, at the same evidentiary standard required for just cause, preventing indiscriminate invocation of the doctrine.

• "The doctrine of strained relations should not be applied indiscriminately to cause the non-reinstatement of a supervisory employee who is dismissed without just cause and without due process by the employer due to an altercation caused by its senior officer who bypassed the dismissed employee." — This is the ratio decidendi of the case, articulating the principle that an employer cannot benefit from its own wrongful conduct to deny reinstatement.

• "An employee's occupation is his/her means of livelihood, which is a precious economic right; hence, it should not just be taken away from the employee by applying the exception of 'strained relations' that is not justified." — This passage underscores the constitutional and statutory policy of full protection to labor and security of tenure as the rationale for strictly limiting the strained relations exception.

• Tenazas vs. R. Villegas Taxi Transport, 731 Phil. 217 (2014) — Cited for the principle that the doctrine of strained relations should not be used recklessly or based on impression alone, and that no strained relations should arise from a valid and legal act asserting one's right. Followed.
• Cabigting vs. San Miguel Foods, Inc., 620 Phil. 14 (2009) — Cited for the principle that reinstatement can never be possible if some hostility invariably engendered by litigation were sufficient to invoke strained relations. Followed.
• Pentagon Steel Corporation vs. Court of Appeals, 608 Phil. 682 (2009) — Cited for the rule that the existence of strained relations is for the employer to clearly establish and prove, in the manner it is called upon to prove just cause. Followed.
• Globe-Mackay Cable and Radio Corp. vs. NLRC, 283 Phil. 649 (1992) — Cited for the principle that the doctrine of strained relations should not be applied indiscriminately. Followed.
• Agabon vs. NLRC, 485 Phil. 248 (2004) — Cited by the Court of Appeals for the rule that nominal damages are awarded only when termination is based on just or authorized cause but without observance of due process. Followed by the Court of Appeals.
• Falco vs. Mercury Freight International, Inc., 530 Phil. 42 (2006) — Cited for the rule that where factual findings of the Labor Arbiter and NLRC conform and are confirmed by the Court of Appeals, they are accorded respect and finality, and that the Supreme Court reviews only when findings are contradictory. Followed.

• Section 3, Article XIII, 1987 Constitution — Guarantees full protection to labor and security of tenure, the right to humane conditions of work, and a living wage. The Court invoked this provision as the constitutional basis for reinstatement of illegally dismissed employees and for strictly limiting the strained relations exception.
• Article 279, Labor Code (as amended by Section 34, Republic Act No. 6715) — Provides that an employee unjustly dismissed shall be entitled to reinstatement without loss of seniority rights and other privileges, and to full backwages inclusive of allowances and other benefits, computed from the time compensation was withheld up to actual reinstatement. Applied as the statutory basis for ordering Daguiso's immediate reinstatement and full backwages.
• Omnibus Rules Implementing the Labor Code, Book VI, Rule I, Sections 2 and 3 — Reflect the security of tenure and reinstatement provisions of the Labor Code. Cited to reinforce the rule that an unjustly dismissed employee is entitled to reinstatement without loss of seniority rights and to backwages.
• Article 282(a), Labor Code — Cited in the termination letter as the ground for dismissal (serious misconduct or willful disobedience). The Labor Arbiter found no substantial evidence supporting this ground, and NEPC did not appeal that finding.

Caguioa, Reyes, J. Jr., Lazaro-Javier, and Lopez, JJ., concurred.