FIRSTDIVISION

[G.R.No.117378.March26,1997]

GIL CAPILI and RICARDO CAPILI, petitioners, vs. NATIONAL LABOR

RELATIONS COMMISSION, National Capital Region (First Division),
BENIGNO SANTOS, DELFIN YUSON, LUISITO SANTOS, URSINO
BASISTER, RICARDO REYES, JOSELITO SANTOS, JORGE BINUYA
andNICOLASMULINGBAYAN,respondents.

DECISION
BELLOSILLO,J.:

Respondents Benigno Santos, Delfin Yuson, Luisito Santos, Ursino Basister, Ricardo
Reyes, Joselito Santos, Jorge Binuya and NicolasMulingbayan are licensed drivers of public
utility jeepneys plying the LibertadSta. Cruz route in Manila. The jeepneys were formerly
ownedbypetitionerGilCapili.Fortheuseofthejeepneyfortwelvehoursadriverwouldpay
rentorsocalled"boundary"ofP280.00andearnanetprofitofP200.00perday.
On7May1991,atatimewhenpetitionerRicardoCapilijointlywithhiswifehadassumed
ownershipandoperationofthejeepneysdrivenbyprivaterespondents,thelatterandtheother
driverssimilarlysituatedwererequiredbythejeepneyoperatorstosignindividuallycontractsof
lease of the jeepneys to formalize their lessorlessee relationship. However, having gathered
theimpressionthatthesigningofthecontractsofleasewasaconditionprecedentbeforethey
could continue driving for petitioners, all the drivers stopped plying their assigned routes
beginning7May1991.
Aweeklateroron14May1991thedrivers,numberingtwentytwo(22),filedacomplaint
for illegal dismissal before the Labor Arbiter praying not for reinstatement but for separation
pay.[1]
Intheinterim,fourteen(14)ofthecomplainantsdesistedandresumedplyingtheirroutes.
The remaining eight (8) complaintants with their reckoning dates of employment follow: (a)
Benigno Santos, 1972 (b) Jorge Binuya, 1965 (c) Luisito Santos, 1982 (d) Delfin Yuson,
1983 (e) Ursino Basister, 1980 (f) Ricardo Reyes, 1985 (g) Joselito Santos, 1989 and, (h)
NicolasMulingbayan,1978.
PetitionersopposedtheclaimofprivaterespondentsbeforetheLaborArbiterallegingthat
the latter voluntarily abandoned their respective jobs without any valid cause and thereafter
refusedandstillcontinuetorefusetoreturntoworkdespiterepeateddemandsand/ornotices
giventothemtoreturntowork.
Inresolvingthedispute,theLaborArbiterruled

Ontheissueofdismissalversusabandonment,weareinclinedtobelievethatthelatterscenario
happened.Itisnotsoundbusinesspracticetodismissmanyemployeesatthesametimesinceitwould
crippletheoperations.
Whatwasmorelikelywasthatthedrivers,all22ofthemxxxboycottedrespondentsonMay7,1991by
notreportingforworkonthatday.

xxxx

Fromtheviewpointofcomplainants,theirsigningoftheleasecontractwasaconditionsinequanonto
thecontinuousdrivingoftheirrespectivedrivers(jeepneys?).Butfromthepointofviewofrespondent
Capiliandasshownintheaforequotedparagraph5ofhisaffidavit,andasfurthershowninthenotices
(Exhibits"3B"and"3B1")whichmerelyaskedcomplainantstoreturntoworkwithoutmentioningany
conditionlikethesigningofthecontract,thesigningoftheleasecontractbythedriverswasmerely
intendedasaconfirmationoftheoriginalconceptofanoemployeremployeerelationship,andto
streamlinetheoperationbyindicatingtheamountoftheboundaryperdriver,dependingonthenumber
ofhourstheydriveandtheirobligationtocheckonthemotor/engine,oil,tires,brakesandother
routinaryrequirementsinordertoinsurethevehicles'roadworthiness.Itwasnevermeanttobethatifa
driverrefusestosignthecontract,hewouldnotbeallowedtocontinuedriving.

Toourmind,bothpartiesmisappreciatedthesituation.Respondents'erroneousinsistenceofano
employeremployeerelationshipeveninthefaceofawellestablishedcontrarydoctrineaspostulatedin
theDinglasancase[2](98Phil.649)andcomplainants'erroneousapprehensionofthelossofsuch
employeremployeerelationshipiftheysigntheleasecontractpropelledthecomplainantstofilethe
instantcomplaint.

Inshort,thisismerelyasimplecaseofmisunderstanding.

Toremedythesituation,wefeelthatthemostprudentapproachwouldbetoletthepartiesreturntothe
relationshipthatexistedbetweenthempriortoMay7,1991.[3]

TheLaborArbiterthusconcluded

WHEREFORE,decisionisherebyrendereddeclaringthebreakage(sic)ofrelationshipbetween
respondentRicardoCapiliandcomplainantsBenignoT.Santos,DelfinYuson,LuisitoSantos,Ursino
Basister,RicardoReyes,JoselitoSantos,JorgeBinuyaandNicholasMulingbayan,asaproductof
misunderstandingandmisappreciationofthesituationbybothpartiesand,therefore,respondentsare
herebydirectedtoreinstatethemtotheirformerpositionwithoutlossofseniorityrightsandother
benefits,butwithoutbackwages(p.7,Annex"F,"underscoringsupplied).[4]

PrivaterespondentsappealedtotheNationalLaborRelationsCommission.Theyreiterated
theirprayerforseparationpayequivalenttoone(1)monthsalaryforeveryyearofserviceand,
inaddition,three(3)yearsbackwages.
RespondentNLRCupheldthefindingoftheLaborArbiterthatthecasearoseduetosimple
misunderstanding between the complaining drivers on one hand and their employers on the
other.However,ittookexceptiontothereliefgrantedtoprivaterespondentsandmodifiedthe
appealeddecisionaccordinglybyholdingthat

Sincetherewasmisunderstandingbetweenthepartiesandthismisunderstandingresultedinanimosity
andstrainedrelationshipbetweenthem,wedeemitproperandmostprudentapproachtomaintain
industrialpeaceforrespondentstopaythecomplainantstheirseparationpayofonehalf(1/2)monthfor
everyyearofservice,basedontheirdailyearningsofP200.00.[5]

ThepetitionersmovedtohavetheabovedisquisitionofrespondentNLRCreconsideredbut
thelatterdeniedthemotion.Theynowcometousarguingthatsincetherewasaclearfinding
ofabandonmentbytheLaborArbiterconsisting in the failureof private respondents to report
forworkwithoutjustifiablereason,theawardofseparationpaycouldnotbewarranted.
The NLRC brushed aside the arguments of petitioners. It emphasized that if it were the
findingoftheLaborArbiterthatprivaterespondentswereguiltyofabandonmenthewould not
haveordered reinstatement but dismissal of the case. Thus on 9 August 1994 NLRC denied
reconsideration.
PetitionersimputegraveabuseofdiscretiononthepartofrespondentNLRCinawarding
separationpaytoprivaterespondents.
We agree with petitioners. The legal basis for the award of separation pay is clearly
provided by Art. 279 of the Labor Code which states that the remedy for illegal dismissal is
reinstatement without loss of seniority rights plus back wages computed from the time
compensation was withheld up to reinstatement. However there may be instances where
reinstatementisnotaviableremedyaswheretherelationsbetweenemployerandemployee
have been so severely strained that it is no longer advisable to order reinstatement or where
theemployeedecidesnottobereinstated.Insuchevents,theemployerwillinsteadbeordered
topayseparationpay.[6]
A reading of Art. 279 in relation to Art. 282 of the Labor Code reveals that an employee
whoisdismissedforcauseafterappropriateproceedingsincompliancewiththedueprocess
requirements is not entitled to an award of separation pay. Under Arts. 283 and 284 of the
same Code, separation pay is authorized only in cases of dismissals due to any of these
reasons:(a)installationoflaborsavingdevices(b)redundancy(c)retrenchment(d)cessation
of the employer's business, and, (e) when the employee is suffering from a disease and his
continuedemploymentisprohibitedbylaworisprejudicialtohishealthandtothehealthofhis
coemployees.[7] However, separation pay shall be allowed as a measure of social justice in
thosecaseswheretheemployeeisvalidlydismissedforcausesotherthanseriousmisconduct
orthosereflectingonhismoralcharacter,butonlywhenhewasillegallydismissed.
The common denominator of those instances where payment of separation pay is
warrantedisthattheemployeewasdismissedbytheemployer.Intheinstantcasetherewas
no dismissal at all. Respondent NLRC affirmed the factual findings of the Labor Arbiter that
therewasonlyamisunderstandingbetweenpetitionersandprivaterespondentswhichcaused
thelattertostopreportingforwork.IftheLaborArbiterorderedreinstatementitshouldnotbe
construed as relief proceeding from illegal dismissal instead, it should be considered as a
declaration or affirmation that private respondents may return to work because they were not
dismissedinthefirstplace,andtheyshouldbehappythattheiremployersareacceptingthem
back. This could be the reason why complainants asked only for separation pay not for
reinstatementintheircomplaintbeforetheLaborArbiter.
Theawardofseparationpaycannotbejustifiedsolelybecauseoftheexistenceof"strained
relations"betweentheemployerandtheemployee.It must be given to the employee only as
an alternative to reinstatement emanating from illegal dismissal. When there is no illegal
dismissal, even if the relations are strained, separation pay has no legal basis. Besides, the
doctrine on "strained relations" cannot be applied indiscriminately since every labor dispute
almostinvariablyresultsin"strainedrelations"otherwise,reinstatementcanneverbepossible
simply because some hostility is engendered between the parties as a result of their
disagreement.Thatishumannature.[8]
The constitutional policy of providing full protection to labor is not intended to oppress or
destroymanagement.ThecommitmentofthisCourttothecauseoflabordoesnotpreventus
fromsustainingtheemployerwhenitisintheright,asinthiscase.[9]
Whenrespondentsfiledtheircomplaint,andtakingaccountoftheallegationstherein,they
foreclosedreinstatementasarelief,sincetheyprayedonlyforanawardofseparationpay.This
isconfirmedintheirappealtotheNLRCwheretheyprayedforamodificationofthedecisionof
the Labor Arbiter, from reinstatement without back wages to payment of three (3) years back
wagesandseparationpayequivalenttoone(1)monthsalaryforeveryyearofservice.[10]Itis
thereforeclearthatrespondentsneverdesiredtobereinstated.Thisbeingso,theCourtcannot
order them to return to work.[11] If private respondents voluntarily chose not to return to work
anymore they must be considered as having resigned from their employment. This is without
prejudice however to the willingness of both parties to continue with their former contract of
employmentorenterintoanewonewhenevertheysodesire.
WHEREFORE,thepetitionisGRANTEDandtheemployeremployeerelationshipbetween
petitioners on one hand and each private respondent on the other is deemed voluntarily
terminated. Consequently, the decision of respondent National Labor Relations Commission
dated28February1994isREVERSEDandSETASIDE.
SOORDERED.
Padilla,(Chairman),Vitug,Kapunan,andHermosisima,Jr.,JJ.concur.

[1]SeeAnnex"C1,"PetitionRollo,p.42(atback).

[2]ReferringtoNationalLaborUnionv.Dinglasan,98Phil.649,whichdeclaredtheexistenceofemployeremployee
relationshipbetweenpublicutilityjeepneyoperatorsandtheirdrivers.
[3]Rollo,pp.5657.

[4]DecisionpennedbyLaborArbiterErnestoS.DinopolRollo,p.57.

[5]NLRC Decision penned by Commissioner Alberto R. Quimpo with Presiding Commisioner Bartolome S. Carale
andCommissionerVicenteS.E.Veloso,concurring.Rollo,p.33.
[6]KingsizeManufacturingCorp.v.NLRC,G.R.Nos.11045254,24November1994,238SCRA349.

[7]ZencoSalesInc.v.NLRC,G.R.No.111110,2August1994,234SCRA689.

[8]MaranawHotel&ResortsCorp.v.CourtofAppeals,G.R.No.103215,6November1992,215SCRA501.

[9]Garciav.NLRC,G.R.No.110518,1August1994,234SCRA632.

[10]Appealmemorandum,annexed"G,"PetitionRollo,p.69.

[11]SeeNote5.