G.R. No. 226002 - Ferdez, Jr. vs. Manila Electric Co.

Case Summary (G.R. No. 226002)

Factual Background

Lino A. Fernandez, Jr. was employed by MERALCO from October 3, 1978 until his dismissal on September 14, 2000 for alleged participation in an illegal strike. Fernandez filed a case for illegal dismissal. The Labor Arbiter and thereafter the NLRC initially ruled against him, but the Court of Appeals, in CA-G.R. SP No. 95923, declared Fernandez to have been illegally dismissed and ordered reinstatement with full backwages or separation pay if reinstatement was no longer feasible, in a decision dated January 30, 2007.

Prior Proceedings and Finality of the CA Judgment

The CA judgment of January 30, 2007 was sustained in a resolution dated January 16, 2008. With denial of motions for reconsideration, the CA judgment became final and executory on May 26, 2008. Execution proceedings thereafter produced disputes between the parties concerning the computation and inclusions of monetary awards due to Fernandez.

Execution Proceedings before the Labor Arbiter

During execution, LA Marie Josephine C. Suarez framed the issues as whether Fernandez was entitled to additional backwages beyond sums already paid, entitlement to additional backwages computed pursuant to the Collective Bargaining Agreement (CBA), whether backwages should accrue from January 31, 2009 after MERALCO manifested its option to pay separation pay, and whether reinstatement remained appropriate. In an Order dated June 27, 2014, LA Suarez denied MERALCO’s motion to declare full satisfaction and denied several motions of Fernandez, ordered the release of garnished funds, declared Fernandez legally separated effective January 31, 2009, and awarded Fernandez PESOS: ONE MILLION NINE HUNDRED FIFTY THOUSAND FIVE HUNDRED TWENTY-FIVE & 53/100 (P1,950,525.53) representing additional backwages pursuant to the CBA for the period September 14, 2000 to June 26, 2008.

Procedural Posture of Fernandez's Pleading

Fernandez received a copy of the LA Order on July 4, 2014 and filed a Notice of Appeal and Memorandum on Appeal on July 11, 2014. The appeal challenged, among other things, the LA’s finding that Fernandez was deemed separated effective January 31, 2009, the denial of retirement benefits, and the denial of certain CBA benefits and attorney’s fees. Recognizing a procedural defect, Fernandez filed a Motion to Treat the previously filed remedy as a Verified Petition on July 23, 2014, asserting that his pleading was verified and that its title was the only discrepancy. LA Suarez noted the appeal without action on July 30, 2014, invoking the NLRC Rules that prohibit appeals from LA orders issued during execution proceedings.

NLRC Decisions and Meralco Petitions

Fernandez filed a Verified Petition on August 26, 2014; the NLRC Fifth Division denied it on August 29, 2014 and denied reconsideration on October 20, 2014. MERALCO had also filed a Verified Petition to assail the June 27, 2014 Order; that petition was dismissed for insufficiency in form and substance on July 31, 2014, later reinstated, and finally denied for lack of merit on October 31, 2014. Fernandez elevated the NLRC denial to the Court of Appeals by petition for certiorari, which denied relief; his petition for reconsideration likewise failed, leading to the present petition to the Supreme Court.

Issue Presented to the Supreme Court

The dispositive issue before the Supreme Court was whether the NLRC committed grave abuse of discretion by noting without action Fernandez’s Notice of Appeal and denying his later-filed Verified Petition, and whether the NLRC should instead have treated Fernandez’s appeal as a Verified Petition to annul or modify the LA Order in the execution proceedings.

Supreme Court's Analysis on Proper Remedy

The Court examined controlling NLRC rules. It cited Rule V, Section 5(i) and Rule XII, Section 15 of the 2011 NLRC Rules of Procedure, which prohibit appeals from LA orders issued in execution proceedings and prescribe a verified petition as the proper remedy. The Court relied on its recent decision in Velasco v. Matsushita Electric Philippines Corp., G.R. No. 220701, June 6, 2016, concluding that while appeal from LA execution orders is prohibited, the NLRC must liberally apply its rules to prevent injustice and grave or irreparable injury to an illegally dismissed employee. The Court held that where an aggrieved party files an appeal in lieu of a verified petition, the NLRC should, in the interest of substantial justice, consider the appeal as a verified petition rather than simply noting it without action.

Discussion on Reinstatement and the Doctrine of Strained Relations

The Court reiterated that under prevailing jurisprudence, reinstatement is the primary right of an illegally dismissed employee and that separation pay is an exception available when reinstatement is no longer feasible. The Court explained that the doctrine of strained relations may justify separation pay in lieu of reinstatement only when strained relations are demonstrated by substantial evidence. The Court emphasized that strained relations must be proven and cannot rest on impressions or litigation hostility alone. Applying these principles, the Court observed that Fernandez consistently manifested willingness to be reinstated and that MERALCO’s bare allegation that the prolonged litigation severed the employment relationship was unsupported by substantive evidence. The Court found that MERALCO failed to establish the existence of a confidential or sensitive position for Fernandez, or facts showing that hostility or other circumstances made reinstatement infeasible.

Computation of Backwages, Retirement Benefits, and Interest

The Court directed that unless valid grounds exist for separation pay in lieu of reinstatement, backwages should be computed from the date of illegal dismissal, September 14, 2000, until Fernandez’s retirement in April 2009. The Court instructed that backwages include salaries, benefits, bonuses, and general wage increases to which Fernandez would have been entitled. The Court ordered that monetary awards accrue legal interest of twelve percent per annum from September 14, 2000 until June 30, 2013, and six percent per annum from July 1, 2013 until full satisfaction. The Court also held that retirement benefits, if proven payable under law, CBA, employment contract, or company policy, remain recoverable even if separati

Case Syllabus (G.R. No. 226002)

Parties and Procedural Posture

Petitioner Lino A. Fernandez, Jr. was an employee of Respondent Manila Electric Company (MERALCO) from October 3, 1978 until his termination on September 14, 2000 for alleged participation in an illegal strike.
Petitioner filed an illegal dismissal case that culminated in a January 30, 2007 Decision of the Court of Appeals finding him illegally dismissed and ordering reinstatement or separation pay with full backwages.
The CA Decision became final and executory on May 26, 2008 after denial of the motion for reconsideration and a subsequent Our Resolution dated January 16, 2008.
Execution proceedings produced disputed motions over the inclusions to and computation of monetary awards which were acted upon by Labor Arbiter Marie Josephine C. Suarez in an order dated June 27, 2014.
Petitioner filed a notice of appeal to the National Labor Relations Commission within ten days of receipt of the June 27, 2014 Order but later sought to treat the same remedy as a verified petition after being informed that appeals from execution orders are prohibited.

Key Factual Allegations

Petitioner alleged entitlement to additional backwages beyond a P3,307,362.05 monetary award covering September 14, 2000 to June 26, 2008, and sought recomputation inclusive of CBA salary increases, 14th and 15th month pay, and attorney's fees.
Respondent manifested on January 13, 2009 that it was exercising its option to pay separation pay in lieu of reinstatement on the ground that prolonged litigation had severed the employer-employee relationship.
The Labor Arbiter, in the June 27, 2014 Order, declared Petitioner legally separated effective January 31, 2009 and ordered the release of garnished funds and payment of P1,950,525.53 as additional backwages under the CBA, while denying other claims.
Petitioner repeatedly affirmed his willingness to be reinstated, as reflected in filings dated July 10, 2008, December 17, 2008, and January 21, 2009.

Procedural History

Petitioner filed a Notice of Appeal and Memorandum of Appeal on July 11, 2014 and subsequently moved to treat the pleading as a Verified Petition on July 23, 2014 after being informed of the procedural defect.
The Labor Arbiter noted the appeal and motion without action and the Petitioner filed a Verified Petition on August 26, 2014, which the NLRC denied on August 29, 2014 and denied reconsideration on October 20, 2014.
Respondent also filed a Verified Petition assailing the June 27, 2014 Order which was dismissed for insufficiency on July 31, 2014, later reinstated on October 31, 2014, and denied for lack of merit.
The Court of Appeals in CA-G.R. SP No. 138212 affirmed the NLRC Resolutions in a December 11, 2015 Decision and a July 25, 2016 Resolution, prompting this petition for review on certiorari to the Supreme Court.
The Supreme Court resolved the petition by reversing and setting aside the CA and NLRC rulings and remanding the matter to the NLRC for resolution.

Issues Presented

Whether noting without action Petitioner's Notice of Appeal amounted to grave abuse of discretion by the NLRC.
Whether an appeal from an order issued by the Labor Arbiter during execution proceedings is a proper remedy or must be treated as a Verified Petition under Rule XII of the NLRC Rules.
Whether Petitioner is entitled to reinstatement rather than separation pay and the correct computation and inclusions of backwages, retirement benefits, and other contractual or CBA-entitled benefits.
Whether Petitioner is entitled to attorney's fees in execution of the CA Decision.

Contentions of the Parties

Petitioner contended that his remedy, though captioned as a Notice of Appeal,