G.R. No. L-33085. October 29, 1971.
PHILIPPINE RABBIT BUS LINES, INC., petitioner, vs. JUAN CALMA, respondent.

FACTS

The respondent, Juan Calma, was employed as a janitor by the petitioner, Philippine Rabbit Bus Lines, Inc., starting March 3, 1953. On August 19, 1964, the shop superintendent ordered Calma to clean a comfort room. Dissatisfied with the result, the superintendent told Calma to stop working. Calma protested and later apologized, but the company refused to let him return to work after August 22, 1964. Calma filed a case with the Court of Industrial Relations (CIR) for illegal dismissal, underpayment, and non-payment of overtime and holiday premiums.
The CIR, in its decision dated November 16, 1970, dismissed Calma’s claims for underpayment and overtime/holiday pay. However, it found his dismissal illegal, as the superintendent’s mere dissatisfaction with the cleaning—without inspection or investigation and despite Calma’s over ten years of service—was not a valid cause. The CIR ordered Calma’s reinstatement with full back wages. The company moved for reconsideration, arguing that under the Termination Pay Law (R.A. 1052, as amended), Calma, an employee without a definite period, was not entitled to reinstatement but only to separation pay equivalent to one-half month per year of service due to the lack of prior written notice.

ISSUE

Whether the Court of Industrial Relations erred in ordering the reinstatement of Juan Calma instead of awarding separation pay under the Termination Pay Law.

RULING

The Supreme Court reversed the CIR’s order of reinstatement. The legal logic is anchored on the application of the Termination Pay Law (R.A. 1052, as amended) to employment without a definite period. The Court agreed with the CIR’s factual finding that Calma’s dismissal was without just cause, as the stated reason was patently insufficient. However, the legal consequence of such a dismissal without just cause for an indefinite-term employee is governed by the Termination Pay Law, not automatic reinstatement.
The law provides that an employer may terminate such employment without just cause by serving a written notice at least one month in advance or one-half month for every year of service, whichever is longer. If no such notice is served, the employee is entitled to compensation equivalent to the salaries for the required notice period. Since Calma’s employment was without a definite period and he was dismissed without just cause and without the requisite notice, his remedy is separation pay, not reinstatement. Computing from his start date in 1953 to his dismissal in 1964, he was entitled to 5.5 months of pay. The Supreme Court thus modified the CIR decision, ordering the company to pay Calma separation pay of P1,033.20 (at his daily rate for 168 days), with legal interest from the filing of the complaint, plus attorney’s fees and costs.