G.R. No. 96439 - Lemery Savings and Loan Bank vs. National Labor Relations Commission

Private respondent Restituto Castillo was hired in February 1980 as a janitor-messenger of Lemery Savings and Loan Bank.
Castillo had a familial connection with the Hernandez family, which held a substantial number of bank shares, thus intertwining personal and professional relationships.

In January 1988, Castillo received a strongly worded letter dated January 20, 1988, from bank president Zosima C. Hernandez.
The letter demanded that Castillo vacate the residence of Generosa Hernandez-Aquino, based on allegations of disloyalty and political partisanship related to the 1988 local elections, using personal and disparaging language.
The letter underscored a personal conflict, not an exercise of official authority in the bank, thereby blurring the line between private animosity and workplace discipline.

Castillo was granted a leave of absence from January 27, 1988, to February 26, 1988.
After the leave period expired on February 27, 1988, Castillo did not return to work, prompting concerns from the bank.

On March 3, 1988, the bank’s general manager, Serafin Dimailig, sent a letter requesting an explanation for Castillo’s continued absence and inquiring about his intention to return to work.
On March 6, 1988, Castillo responded ambiguously, enclosing a copy of President Zosima Hernandez’s letter and hinting at a personal settlement with a relative, but without offering a clear explanation for his absence.

On March 9, 1988, Castillo filed a complaint with the Labor Arbiter, alleging illegal dismissal and seeking claims for non-payment of overtime and separation pay, based on his belief that the bank had effectively terminated his services.
On March 14, 1988, the bank issued a memorandum reiterating that personal differences should not interfere with the employer-employee relationship, warning Castillo that failure to report after his leave could lead to disciplinary action including dismissal.
The Labor Arbiter, in a decision dated October 26, 1988, ruled that Castillo was not dismissed since the dispute arose from personal issues, and consequently ordered his reinstatement or, alternatively, the payment of separation pay if he opted not to return.
The National Labor Relations Commission (NLRC) later modified the Arbiter’s decision by ordering the payment of financial assistance equivalent to one month’s salary for every year of service, basing the award on social and compassionate justice while affirming that there was no illegal dismissal.

Upon review, the Supreme Court found that there was no termination of Castillo’s employment since the bank had not effectively dismissed him nor had he abandoned his post under justifiable conditions.
The Court held that the circumstances—stemming from personal conflicts rather than an official act of dismissal—failed to support a claim for separation pay under the provisions of the Labor Code.

Whether Castillo’s failure to report for duty, based on his mistaken belief of being constructively dismissed, constituted an actionable ground for claiming illegal dismissal.
Whether the actions or inactions of the bank constituted a termination or an abandonment of duty by Castillo.

Whether the strongly worded letter from President Zosima Hernandez could be interpreted as a constructive dismissal.
If personal matters and non-official actions could legally affect Castillo’s employment status.

Whether separation pay, as a form of financial assistance premised on social and compassionate justice, was appropriate in the absence of a lawful dismissal.
Whether the modification of the Labor Arbiter’s decision by the NLRC, granting separation pay under these circumstances, was legally tenable.

The extent to which private disputes between employees and management (or relatives thereof) impact the legal determination of dismissal.
Whether the bank’s directives, such as the March 14, 1988 memorandum ordering Castillo to return to work, could be construed as an official termination.