G.R. No. 147142 ; February 14, 2005
ANGELITO CABATULAN, petitioner, vs. HON. MUSIB M. BUAT, Presiding Commissioner, OSCAR M. ABELLA and LEON G. GONZAGA, JR., (both Commissioners), NATIONAL LABOR RELATIONS COMMISSIONS (Fifth Division), Cagayan de Oro City, J.C. TRUCKING, JULIO COSMIANO, and CECILIA COSMIANO, respondents.

FACTS

Petitioner Angelito Cabatulan was employed as operations manager by respondent spouses Julio and Cecilia Cosmiano for their business, J.C. Trucking. On May 11, 1993, an altercation occurred between Cabatulan and Isidro Alaan, a security aide. Following this, Vincent Cosmiano, the employer’s brother, advised Cabatulan not to report for work and await the spouses’ return from abroad. Cabatulan complied. Upon the spouses’ return on May 25, 1993, Cabatulan reported for work but was summoned the next day and informed his services were terminated. He refused to sign a pre-drafted resignation letter and subsequently filed a complaint for illegal dismissal.
The respondents alleged Cabatulan abandoned his job after the altercation and cited various grounds for his dismissal, including abusive conduct and immoral acts. The Labor Arbiter ruled in favor of Cabatulan, declaring his dismissal illegal and awarding backwages, separation pay, and moral damages. The NLRC initially affirmed the illegal dismissal but deleted the moral damages. Upon the respondents’ motion for reconsideration, the NLRC reversed itself, dismissing the complaint for lack of merit and awarding only separation pay in lieu of reinstatement, citing strained relations. The Court of Appeals affirmed the NLRC’s modified resolution.

ISSUE

Whether the NLRC and the Court of Appeals erred in dismissing the complaint for illegal dismissal and in awarding only separation pay in lieu of reinstatement and backwages.

RULING

The Supreme Court partially granted the petition. It upheld the finding of illegal dismissal. The Court ruled that Cabatulan did not abandon his work; his absence from May 11 was in obedience to the advice of Vincent Cosmiano, who exercised moral ascendancy as the employer’s brother. His immediate attempt to report upon the employer’s return negated any intent to abandon. The grounds for dismissal cited by the respondents were unsubstantiated and constituted mere afterthoughts.
However, the Court agreed that reinstatement was no longer viable due to the severely strained relations between the parties, exacerbated by the respondents filing a qualified theft case against Cabatulan and coercing him to withdraw his labor complaint. Consequently, separation pay in lieu of reinstatement was proper. The legal logic is that while an illegally dismissed employee is generally entitled to reinstatement and full backwages, separation pay may be awarded in lieu of reinstatement when the employment relationship has been irreparably severed by antagonism. Furthermore, the grant of separation pay does not preclude an award of backwages, as they serve distinct purposes: backwages compensate for lost earnings due to the unlawful dismissal, while separation pay provides financial assistance during the transition to new employment. Thus, the Court modified the award, ordering the respondents to pay Cabatulan separation pay equivalent to one month’s salary for every year of service, plus full backwages from dismissal until the finality of the decision, and nominal damages for the violation of his due process rights.