Case Digest: Bank of Lubao v. Manabat

G.R. No. 188722 : February 1, 2012




Respondent Rommel Manabat was assigned as an encoder at the Bank of Lubaos Sta. Cruz Extension Office, which he manned together with two other employees, teller Susan P. Lingad (Lingad) and May O. Manasan. As an encoder, the respondents primary duty is to encode the clients deposits on the banks computer after the same are received by Lingad.

An initial audit on the Bank of Lubaos Sta. Cruz Extension Office conducted by the petitioner revealed that there was a misappropriation of funds in the amount of P3,000,000.00, more or less. Apparently, there were transactions entered and posted in the passbooks of the clients but were not entered in the banks book of accounts. Further audit showed that there were various deposits which were entered in the banks computer but were subsequently reversed and marked as "error in posting".

An administrative hearing was conducted by the banks investigating committee where the respondent was further made to explain his side. Subsequently, the investigating committee concluded that the respondent conspired with Lingad in making fraudulent entries disguised as error corrections in the banks computer.

Petitioner filed several criminal complaints for qualified theft against Lingad and the respondent with the Municipal Trial Court (MTC) of Lubao, Pampanga. Thereafter, citing serious misconduct tantamount to willful breach of trust as ground, it terminated the respondents employment.

Respondent filed a Complaint for illegal dismissal with the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) in San Fernando City, Pampanga. In the said complaint, the respondent, to bolster his claim that there was no valid ground for his dismissal, averred that the charge against him for qualified theft was dismissed for lack of sufficient basis to conclude that he conspired with Lingad.

The Labor Arbiter (LA) rendered a decision sustaining the respondents claim of illegal dismissal thus ordering the petitioner to reinstate the respondent to his former position and awarding the latter backwages. NLRC affirmed the LA decision. Subsequently, the petitioner filed a Petition for Certiorari with the CA but the same was denied. Undaunted, the petitioner instituted the instant petition for review on certiorari before this Court.

ISSUE: Whether or not the CA erred in ordering the petitioner to pay separation pay in lieu of reinstatement and awarding backwages

HELD: No. CA Decision Affirmed with Modification

Labor Law

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.

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.

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.

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.

However, the backwages that should be awarded to the respondent should be modified. Employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision.