Bank of Lubao v. Manabat
G.R. No. 188722 (February 1, 2012)
Facts:
In 2001, Rommel J. Manabat was employed by the Bank of Lubao, Inc. as a Market Collector and later became an encoder at the bank's Sta. Cruz Extension Office. His primary responsibility involved encoding client deposits into the bank's computer system. In November 2004, an audit revealed a significant misappropriation of funds amounting to approximately P3,000,000.00, with discrepancies noted in client transactions and erroneous postings in the bank's records.
On November 17, 2004, the bank requested an explanation from Manabat regarding the audit findings. He responded on November 19, 2004, claiming that the discrepancies occurred while he was away on errands and that his co-worker, Susan P. Lingad, had access to the computer during those times. An administrative hearing was held on December 11, 2004, where the investigating committee concluded that Manabat conspired with Lingad in the fraudulent activities.
On August 9, 2005, the bank filed criminal complaints for qualified theft against both Lingad and Manabat. Subsequently, the bank terminated Manabat's employment on September 1, 2005, citing serious misconduct and willful breach of trust.
In response, Manabat filed a complaint for illegal dismissal with the National Labor Relations Commission (NLRC) on September 26, 2005, arguing that the criminal charges against him were dismissed due to insufficient evidence. He sought reinstatement, backwages, separation pay, and damages.
The bank maintained that Manabat's dismissal was justified based on the audit findings and the subsequent criminal complaints. The Labor Arbiter ruled in favor of Manabat, ordering his reinstatement and awarding backwages and 13th month pay, stating that the bank failed to provide substantial evidence for the dismissal.
The NLRC affirmed the Labor Arbiter's decision, concluding that only Lingad was responsible for the misappropriations and that the audit reports presented by the bank were inadmissible as they were executed after Manabat's dismissal. The bank's motion for reconsideration was denied.
The bank then filed a petition for certiorari with the Court of Appeals, which denied the petition but modified the ruling to award Manabat separation pay instead of reinstatement, citing the strained relationship between the parties.
Legal Issues:
- Did the Court of Appeals err in awarding separation pay to Manabat in lieu of reinstatement?
- Is Manabat entitled to backwages following his illegal dismissal?
Arguments:
Petitioner (Bank of Lubao):
- The Court of Appeals erred in awarding separation pay, as the appeal only concerned the legality of Manabat's dismissal.
- Manabat did not request separation pay in his complaint, thus it should not be granted.
- The bank acted in good faith in terminating Manabat's employment based on loss of trust and confidence.
Respondent (Rommel J. Manabat):
- The Court of Appeals correctly awarded separation pay due to the strained relationship between him and the bank, making reinstatement impractical.
- The bank's previous criminal charges against him contributed to the animosity, justifying the separation pay award.
Court's Decision and Legal Reasoning:
The Supreme Court upheld the findings of the Labor Arbiter, NLRC, and Court of Appeals that Manabat was illegally dismissed. The Court emphasized that factual findings of quasi-judicial bodies are given respect and finality when supported by substantial evidence.
Separation Pay in Lieu of Reinstatement:
- The Court recognized the doctrine of strained relations, which allows for separation pay instead of reinstatement when the relationship between the employer and employee is irreparably damaged. The Court found that the animosity between Manabat and the bank, exacerbated by the criminal charges and the lengthy proceedings, justified the award of separation pay.
Backwages:
- The Court ruled that Manabat was entitled to backwages from the date of his illegal dismissal (September 1, 2005) until the date he was required to report back to work (May 4, 2007). The Court clarified that while he was entitled to backwages, the award should be limited to this period due to his refusal to return to work.
Significant Legal Principles Established:
- The doctrine of strained relations can justify the award of separation pay in lieu of reinstatement when the relationship between the employer and employee is irreparably damaged.
- Employees who are illegally dismissed are entitled to backwages, which should be computed from the date of dismissal until the date they are required to report back to work if reinstatement is ordered.