Name: Mansing, Fritzie Megan P.

Schedule: MTh 2:30 – 4:00 PM

Read the ff. cases involving consequences of illegal dismissal. Summarize the significant
antecedents to the following cases and explain the basis of the decision of the Court. Have your
answers Printed in a short bond paper. Final submission is on May 18, 2023 Thursday.

1. Full Backwages
Bani Rural Bank Inc. v. De Guzman (G.R. No. 170904)

ANTECEDENTS:
 Petitioners: Bani Rural Bank Inc., ENOC Theater I and II, and/or Rafael de Guzman
 Respondents: Employees - Teresa de Guzman, Edgar C. Tan, Teresa G. Tan
 Complaint: Illegal Dismissal Against the Petitioners
 March 15, 1994: initially dismissed by Labor Arbiter Roque B. de Guzman
 National Labor Relations Commission (NLRC) ruled that the respondents had been
illegally dismissed; in a resolution dated March 17, 1995 the NLRC ordered the petitioners
to:
o reinstate the two complainants to their former positions
 without loss on seniority rights and other benefits and privileges
 with backwages from the time on their dismissal (constructive) until their actual
reinstatement, less earnings elsewhere
o resolution of the NLRC became final and executory and the computation of the awards
was remanded to the labor arbiter for execution purposes
 July 31, 1998: NLRC modified the terms of the March 17, 1995 resolution insofar as it
clarified the phrase less earnings elsewhere and awarded the payment of separation pay,
in lieu of reinstatement
 January 29, 1999: July 31, 1998 decision of the NLRC lapsed to finality and became
executory - recomputation of the monetary awards of the respondents' backwages and
separation pay
 July 12, 2000: Labor Arbiter Gambito computed the respondents backwages only up to
August 25, 1995 after the Motion to Quash Writ of Execution and Suspend Further
Execution
 September 28, 2001: NLRC ruled that the computation of the respondents backwages
should be until January 29 1999 which was the date when the July 31, 1998 decision
attained finality
 BASIS OF RULING
 Article 279 of the Labor Code states that when reinstatement is ordered, backwages are
computed from the time of dismissal until the employee's reinstatement; this computation
can continue beyond the labor arbitrator's or NLRC's decision and ends only when the
employee is reinstated.
 When separation pay is ordered in place of reinstatement or reinstatement is deferred by
the employee, backwages are calculated from the time of dismissal until the decision
ordering separation pay becomes final.
 When separation pay is ordered after the finality of the decision ordering reinstatement
due to an intervening event rendering reinstatement impossible, backwages are calculated
from the time of dismissal until the finality of the decision ordering separation pay.
 In this case, the back wages of the respondents cannot be calculated up to the point of
reinstatement because there is no longer any reinstatement award to speak of.
 Consequently, the back wages of the respondents must be computed from the time of their
unlawful termination until the finality of the decision mandating the payment of separation
pay

COURT’S RULING
“We find the petition unmeritorious.” In light of the foregoing, the petition is DENIED,
and the decision dated September 1, 2005, and the resolution dated December 14, 2005, of
the Court of Appeals in CA-G.R. SP No. 70085 are effectively AFFIRMED with
MODIFICATION. It is ORDERED that the petitioners Bani Rural Bank, Inc., Enoc Theatre
I and II, and Rafael de Guzman PAY the respondents Teresa de Guzman, Edgar C. Tan, and
Teresa G. Tan.
The recalculated pay must include the following: a.) Back wages from the date the
petitioners unlawfully terminated the respondents until January 29, 1999; b.) Separation pay
computed from respondents' first day of employment up to January 29, 1999, at the rate of
one (1) month of pay per year of service; and c.) Legal interest of six percent (6) per annum
of the total monetary awards computed from January 29, 1999, until their satisfaction.

2. Reinstatement
Caparas v. PHILAMLIFE (G.R. No. 82976)

ANTECEDENTS
 Petitioners: Employees Association of the Philippine American Life Insurance Company
(EMAPALICO) and Napoleon Caparas
 Respondents: National Labor Relations Commission and the Philippine American Life
Insurance Company (PHILAMLIFE)
 Main Question: Whether he is entitled to reinstatement, assuming this is possible, or only
to back wages and separation pay from the private respondent.
 December 10, 1986: Labor Arbiter Ceferina J. Diosana ordered the Philippine American
Life Insurance Co. to reinstate Caparas to his original position "as an Accounting Clerk A
or to any equivalent position with back wages from the date of termination to actual
reinstatement."
 December 9, 1987: decision was affirmed by the NLRC but with the modification that the
private respondent should pay Caparas P9,650.00 as actual damages
 February 8, 1988: NLRC disposed that the respondent is ordered to pay complainant
Caparas backwages from the date his salary was withheld from him until the execution
hereof plus separation pay computed at one month's salary for every year of service, a
fraction of at least six (6) months shall be considered one (1) whole year
 Solicitor General’s Conclusion: While it may be conceded that Caparas was found to have
been illegally dismissed, his reinstatement is not warranted, as it would generate antipathy
or antagonism, which is not favorable to any harmonious or workable employer-employee
relationship.

BASIS OF RULING
 While there is no denying that relations have been strained between Caparas and
Philamlife, their differences are not of such a nature or degree as to preclude the
petitioner's reinstatement. As it was clear that the retention of the employee was not
advisable because of the irreconcilable enmity between the employee and management.
 Caparas was only acting as any responsible union president would when he protested the
abolition of the Computer Operations Department, the requirement of Philamlife that the
separated employees file applications for vacancies that might be created, his unsigned
probationary appointment to a lower position, and the demand that he sign his
unconditional acceptance thereof.
o a union president should be considered to have irremediably strained his relations with
management
o following the respondent's theory, be separated for this reason by management, subject
only to the grant to him of separation pay
 The evidence of record does not support the conclusion of the NLRC that the relations of
the employee and management have been so seriously strained as to prevent the former's
reinstatement.

COURT’S RULING
We also reject the plea that there is no other position in the whole organization of Philamlife
to which Caparas can be appointed to restore his original compensation and seniority to him.
We agree that hiring and firing personnel is a management prerogative, but this is with
limitations. The limitation is embodied in the constitutional requirement for the protection of
labor and the promotion of social justice, which tilts the scales of justice, whenever there is
doubt in favor of the worker.
 Thus, the resolution of the NLRC dated February 8, 1988, is SET ASIDE, and its original
decision dated December 9, 1987, is REINSTATED. It is so ordered.

3. Moral Damages
Ford Philippines Inc. v. Oboza (G.R. No. 99039)

ANTECEDENTS
 Petitioners: Ford Philippines, Inc., John Sagovac, and Anastacio R. Teodoro II
 Respondents: Court of Appeals and Manuel I. Oboza
 1968 – 1983: Manuel I. Oboza worked with appellee Ford Philippines
o initially employed as supervisor of Ford’s Sales and Planning Distribution Section
o received promotions and on August 19, 1980 appointed to the newly-created position
of General Sales Manager and concurrently member of the Operating Committee
o said position is one rank below the position of Director of Sales and Marketing, then
occupied by appellee Malcolm J. Johnston, an American Citizen
 December 9, 1982: Ford Philippines through Anastacio R. Teodoro II, in his capacity as
Director of Industrial Relations, wrote the following advisory to the appellant
o Decided and approved that it is no longer appropriate to maintain the position of
General Sales Manager as originally planned. Consequently, the position is declared
redundant.
 August 31, 1983: Oboza filed an action for damages in the trial court, alleging that the
abolition of his position on the ground of redundancy was done in bad faith.

BASIS OF RULING
 Bad faith does not simply connote bad judgment or negligence. It imports a dishonest
purpose or some moral obliquity and conscious doing of wrong. It must be reiterated that
bad faith should be established by clear and convincing evidence.
 Law always presumes good faith such that any person who seeks to be awarded damages
due to acts of another has the burden of proving that the latter acted in bad faith or with ill
motive.
 As admitted by the private respondent, he was not immediately terminated from the
employ of Ford Philippines, but was given the prerogative of choosing between availing
of the benefits under redundancy or continuing his employment as Vehicle Sales Manager.
 On the matter of awarding damages in illegal dismissal cases that moral damages are
recoverable only where the dismissal of the employee was attended by bad faith or fraud,
or constituted an act oppressive to labor, or was done in a manner contrary to morals, good
customs or public policy.
 COURT’S RULING
Not only was there good faith in dismissing the private respondent, as previously discussed,
but the same was also grounded in the cause. The private respondent concedes that
termination of employment due to redundancy is a management prerogative. And at the
hearing before the trial court, he admitted that his functions as General Sales Manager were
similar to those of Johnston as Director of Sales and Marketing. 15 Obviously, the private
respondent recognized that the petitioners had a just cause for terminating his employment
and, for this reason, did not file a case for illegal dismissal against them.
The petition is granted, and the assailed decision of the Court of Appeals is REVERSED.
The trial court's decision in Civil Case No. 83-20001 dismissing the complaint and the
counterclaim is with this REINSTATED.

4. Exemplary Damages
Montinola v. Philippine Airlines (G.R. No. 198656)

ANTECEDENTS
 Petitioner: Nancy S. Montinola
 Respondent: Philippine Airlines
 Illegally suspended employees, similar to illegally dismissed employees, are entitled to
moral damages when their suspension was attended by bad faith or fraud, oppressive to
labor, or done in a manner contrary to morals, good customs, or public policy.
 January 29, 2008: Montinola, a flight attendant, and other flight crew members were
subjected to custom searches in Honolulu, Hawaii, USA. Items from the airline were
recovered from the flight crew by customs officials.
 February 1, 2008: PAL’s Cabin Services Sub-Department required Montinola to comment
on the incident. She gave a handwritten explanation three days after, stating that she did
not take anything from the aircraft.
 February 22, 2008: PAL’s International Cabin Crew Division Manager, Jaime Roberto A.
Narciso (Narciso), furnished Montinola the emails from the Honolulu customs official.
 March 25, 2008: Notice of administrative charge was given to Montinola by Narciso.
 April 12, 2008: Clarificatory hearing was conducted by a panel of PAL’s Administrative
Personnel. Montinola alleged that her counselobjected during the clarificatory hearing
regarding PAL’s failure to specify her participation in the alleged pilferage.
 The Labor Arbiter ordered Montinola’s reinstatement with backwages, inclusive of
allowances and benefits amounting to ₱378,630.00. In addition, the Labor Arbiter awarded
moral damagesin the amount of ₱100,000.00 and exemplary damages amounting to
₱100,000.00.

BASIS OF RULING
 Since exemplary damages has been awarded, attorney’s fees can likewise be awarded.
  PAL’s acts and omissions compelled Montinola to incur expenses to protect her rights
with the National Labor Relations Commission and the judicial system. These expenses
would have been unnecessary if PAL had sufficient basis for its decision to discipline
Montinola.
 To bring justice to the illegal suspension of Montinola, she asked for backwages for her
year of suspension.
 Complainant's claim for attorney's fees is also justified. It is settled that where an employee
was forced 'to litigate and incur expenses to protect his rights and interest, as in the instant
case, he is entitled to an award of attorney's fees.

COURT’S RULING
We acknowledge the right of PAL to be constantly vigilant to prevent and deter pilferage.
After all, that is equally its property which the Constitution also protects. However, PAL
cannot assume liability for the employee. It has to endeavor to move through its
administrative investigations more humanely and per the law. Its employees may only have
their work. It is their work, no matter what the classification and how significant they may
be in the eyes of their employer that should give them their dignity.
Wherefore, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R.
SP No. 112552 is MODIFIED in order to REINTEGRATE the award for moral damages of
₱100,000.00, exemplary damages of ₱100,000.00, and attorney's fees of ₱57,863.00.

5. Nominal Damages
Bughaw v. Treasure Island Corporation (G.R. 173151)

ANTECEDENTS
 Petitioner: Eduardo Bughaw Jr.
 Respondent: Treasure Island Industrial Corporation
 Petitioner to be illegally dismissed from employment by respondent Treasure Island
Industrial Corporation
 March 1986: Petitioner to be illegally dismissed from employment by respondent Treasure
Island Industrial Corporation.
 June 5, 2001: One of its employees, Erlito Loberanes (Loberanes) was caught in flagrante
delicto by the police officers while in possession of shabu. Loberanes was arrested and
sent to jail.
 June 29, 2001: A Memo for Explanation to petitioner requiring him to explain within 120
hours why no disciplinary action should be imposed against him for his alleged
involvement in illegal drug activities.
 July 19, 2001: Respondent, through legal counsel, sent a second letter to petitioner
directing him to attend another administrative hearing scheduled on 23 July 2001 at 11:00
 o’clock in the morning at said legal counsel’s office but petitioner once again failed to
show up.
 July 20, 2001: petitioner filed a complaint for illegal dismissal against respondent and its
President, Emmanuel Ong, before the Labor Arbiter. Petitioner alleged that he had been
working for the respondent for 15 years and he was very conscientious with his job.
 August 21, 2001: A letter addressed to petitioner, terminated the latter’s employment
retroactive to 11 June 2001 for using illegal drugs within company premises during
working hours, and for refusal to attend the administrative hearing and submit written
explanation on the charges hurled against him.
 January 8, 2002: Labor Arbiter rendered a Decision10 in favor of petitioner since the
respondent failed to present substantial evidence to establish the charge leveled against
the petitioner.

BASIS OF RULING
 A dismissal for just cause under Article 282 implies that the employee concerned has
committed, or is guilty of, some violation against the employer, i.e., the employee has
committed some serious misconduct. Thus, it can be said that the employee himself
initiated the dismissal process.
 A dismissal for an authorized cause under Article 283 does not necessarily imply
delinquency or culpability on the part of the employee. Instead, the dismissal process is
initiated by the employer’s exercise of his management prerogative.
 The Agabon doctrine enunciates the rule that if the dismissal was for just cause but
procedural due process was not observed, the dismissal should be upheld.
 The employer should indemnify the employee for the violation of his right to procedural
due process. The indemnity to be imposed should be stiffer to discourage the abhorrent
practice of "dismiss now, pay later," which we sought to deter in the Serrano ruling.

COURT’S RULING
Conformably, the award of backwages by the Labor Arbiter and the NLRC should be
deleted, and instead, the private respondent should be repaid for ₱30,000.00 as nominal
damages.
Thus, premises considered, the instant Petition is DENIED. The Court of Appeals Decision
dated 14 June 2005 is now AFFIRMED WITH MODIFICATION. While there was a valid
ground for dismissal, the procedural requirements for termination, as mandated by law and
jurisprudence, were not observed. Respondent Treasure Island Corporation is ORDERED to
pay the amount of ₱30,000.00 as nominal damages. No costs.