G.R. No. L-63370 November 18, 1985
ALEJANDRO JONAS P. MAGTOTO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and WYETH-SUACO LABORATORIES, INC., respondents.

FACTS

Petitioner Alejandro Jonas P. Magtoto was employed by Wyeth-Suaco Laboratories, Inc. On September 3, 1980, he was arrested and detained on charges of conspiracy and proposal to commit rebellion and inciting to rebellion. He informed his employer and requested an indefinite leave of absence. The company denied his request, stating no rule allowed leave for detention, and gave him five days to secure release and report for work. Having failed to report, the company considered him resigned as of September 25, 1980. On April 10, 1981, the City Fiscal of Manila dismissed the charges for lack of evidence and ordered his release. On the same day, Magtoto informed Wyeth-Suaco of his release and expressed his intent to return to work on April 13, 1981. The company refused, citing the pending termination report with the Ministry of Labor.
The Labor Arbiter ruled in Magtoto’s favor, ordering reinstatement with full backwages. The National Labor Relations Commission (NLRC) modified this decision, declaring the termination valid but awarding separation pay. Magtoto filed this petition for certiorari.

ISSUE

May an employer validly dismiss an employee on the ground of prolonged absence due to detention when the criminal charges leading to such detention are subsequently dismissed for lack of evidence?

RULING

No. The Supreme Court reversed the NLRC and reinstated the Labor Arbiter’s decision, albeit with a modification on backwages. The legal logic is anchored on the principle that a dismissal based on a cause later proven to be non-existent is without just cause. Magtoto’s absence was not voluntary but was compelled by state action through detention. The subsequent dismissal of the charges for insufficiency of evidence established that the very basis for his prolonged absence—the detention—was without legal foundation. Therefore, the company’s act of terminating him for an absence arising from an unjustified detention constituted a dismissal without just cause.
However, the Court recognized practical exigencies. The company had already hired a replacement during Magtoto’s seven-month detention, making reinstatement to his exact former position inequitable. Applying the implementing rules of the Labor Code, the Court ordered his reinstatement to a substantially equivalent position without loss of seniority rights. On backwages, the Court ruled he was not entitled to wages during the period of detention itself. Entitlement commenced from his release and the company’s unjustified refusal to reinstate him on April 13, 1981. Following precedent, backwages were reduced to fifty percent (50%) of his latest basic monthly salary from that date until actual reinstatement, but not to exceed three years.