G.R. No. 82829 March 19, 1993
JAM TRANSPORTATION CO. INC., petitioner, vs. LUIS HERMOSA FLORES and NATIONAL LABOR RELATIONS COMMISSION, respondents.

FACTS

Private respondent Luis Hermosa Flores was employed as a conductor by petitioner Jam Transportation Co. Inc. since 1967, paid on a percentage basis earning about P40.00 to P50.00 daily. In 1985, he had an accident that partially burned his body, necessitating hospitalization. After hospitalization, he reported for work in compliance with a company letter dated May 20, 1986, ordering him to report immediately. He was told to wait and given promises of a route assignment that did not materialize. He was later told by company official Joselito Medrano that he would be accepted back only as a new employee, which he rejected as it would mean losing his 18 years of service. He was allegedly told, “Balik ka pa ng balik. Ang kapal naman ng mukha mo.” He filed a complaint for illegal dismissal, unfair labor practice, and non-payment of various benefits.
Petitioner contended that in 1986, private respondent failed to report for work for about a month without notice. On May 20, 1986, the company sent a letter advising him to report immediately, otherwise his absence would be grounds for dismissal. As he failed to respond, they filed a termination report on June 4, 1986, terminating his services for being “AWOL” (Absent Without Official Leave).
The Executive Labor Arbiter ruled in favor of private respondent, awarding separation pay computed as one-half of his average daily commission per year of service (P45.00 x 30 days = P1,350.00/2 = P675 x 18 years = P12,150.00). On appeal, the NLRC set aside the decision and ordered petitioner to pay limited backwages of six months and the same separation pay of P12,150.00.

ISSUE

1. Whether the Labor Arbiter and NLRC gravely abused their discretion in finding private respondent physically unfit to work and awarding separation pay on that basis, when the issue was illegal dismissal due to alleged abandonment.
2. Whether the Labor Arbiter and NLRC gravely abused their discretion in computing the separation pay based on a 30-day working month instead of the alleged actual 11 working days per month.

RULING

1. Yes. The Supreme Court held that the Labor Arbiter gravely abused his discretion. The matter of private respondent’s physical capacity was never an issue or controversy between the parties. The complaint was for illegal dismissal anchored on abandonment. The Labor Arbiter, motu proprio, ruled that private respondent was suffering from a heart ailment based on hearing postponements and the absence of a medical certificate of fitness, justifying termination under Article 285 of the Labor Code. This reasoning was “glaringly off-tangent to the issue posed before him.” The Labor Arbiter was bereft of judicial power to rule on a non-existent issue. However, reinstatement was not ordered due to strained relations after private respondent was humiliated by petitioner’s official.
2. Yes. The Supreme Court held that the computation of separation pay based on a 30-day working month lacked basis. The Labor Arbiter’s decision contained no reference or evidence for using 30 days. Petitioner presented a certification showing that for the period January 1984 to March 1986, the maximum SSS premium paid corresponded to a monthly salary bracket of P350.00 to P499.99. Given the average daily commission of P45.00, this implied a maximum of 11 working days per month (P499.99 / P45.00). The Court noted that under the Labor Code’s implementing rules, employers are required to maintain records of employees paid by results, including daily output and earnings. Petitioner’s failure to present such records to refute the 30-day assumption justified the computation adopted by the Labor Arbiter and NLRC. The Court found no grave abuse of discretion in this regard.
The petition was partly granted. The NLRC’s award of separation pay based on a 30-day month was sustained, but the finding of termination due to physical unfitness was set aside. The award of separation pay and backwages was upheld based on the finding of constructive dismissal.