G.R. No. 80998 . April 25, 1989.
LEONARDO B. LUCENA, petitioner, vs. PAN-TRADE, INC. and/or Mr. RAMON TY HOAN CHAY and NATIONAL LABOR RELATIONS COMMISSION, respondents.

FACTS

Petitioner Leonardo B. Lucena was employed as a salesman by Pan-Trade, Inc. In November 1983, following a disagreement with the company cashier, who was a niece of company president Ramon Ty Hoan Chay, Ty asked Lucena to resign. Lucena refused and continued reporting for work, making several sales thereafter. However, Ty disapproved all these sales, causing Lucena to lose his commissions. Ultimately, Lucena’s name was removed from the payroll effective January 1, 1984. About a year later, Lucena filed a complaint for illegal dismissal, seeking reinstatement with back wages and moral damages, alleging his dismissal led to financial ruin for his family.
The Labor Arbiter ruled in Lucena’s favor, ordering reinstatement with full back wages and awarding P50,000 as moral damages. On appeal, the National Labor Relations Commission (NLRC) modified the decision, deleting the award for reinstatement and moral damages, and instead ordering the payment of separation pay. Lucena filed a petition for certiorari with the Supreme Court, which initially dismissed it for failure to show grave abuse of discretion by the NLRC. Lucena then filed a motion for reconsideration.

ISSUE

The primary issue is whether the NLRC committed grave abuse of discretion in modifying the Labor Arbiter’s decision by awarding separation pay in lieu of reinstatement and deleting the award of moral damages.

RULING

The Supreme Court partially granted the motion for reconsideration. On the propriety of separation pay versus reinstatement, the Court upheld the NLRC. It ruled that reinstatement was not feasible due to the strained relations between Lucena and the employer, particularly Ty. The Court recognized the employer’s prerogative to maintain a proper office atmosphere and held that forcing an unwanted employee upon a reluctant employer would be detrimental to industrial peace. Thus, the award of separation pay was affirmed.
However, the Court reversed the NLRC on the issue of moral damages. It found that Ty acted oppressively by dismissing Lucena for a minor quarrel with a relative, constituting a clear abuse of rights. The Court held that such arbitrary dismissal warranted moral damages to compensate for the resulting financial and emotional distress. While the Court found Lucena’s claim for the full P50,000 not entirely credible due to insufficient proof of all alleged injuries, it exercised its discretion to award a reduced amount of P25,000 as reasonable moral damages. The rest of the NLRC decision was affirmed.