1. Concept
If employees win an illegal dismissal case, the default remedy is for them to be reinstated back to work. However, it is possible that the employees and/or the employers may ask the court that they part ways due to strained relations between them. If granted by the court, the employee is deemed separated from employment subject to payment of separation pay in addition to and on top of the full backwages and other damages in favor of the employee as a result of the finding on illegal dismissal.
Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to reinstatement as a matter of right. Over the years, however, the case law developed that where reinstatement is not feasible, expedient or practical, as where reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement. (Nippon Express Philippines Corporation v. Daguiso, G.R. No. 217970, 17 June 2020)
2. Reinstatement as the general rule
As reinstatement is the rule, for the exception of strained relations to apply, it should be proved that the employee concerned occupies a position where he/she enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism would be generated as to adversely affect the efficiency and productivity of the employee concerned. Strained relations must be of such nature or degree as to preclude reinstatement. (Nippon Express Philippines Corporation v. Daguiso, G.R. No. 217970, 17 June 2020)
3. Strained relation as the exception
The doctrine of strained relations, however, should not be used recklessly, applied loosely and/or indiscriminately, or be based on impression alone; otherwise, reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. (Nippon Express Philippines Corporation v. Daguiso, G.R. No. 217970, 17 June 2020)
a. Factually proven
Moreover, strained relations must be demonstrated as a fact, adequately supported by evidence on record. Since the application of this doctrine will result in the deprivation of employment despite the absence of just cause, the implementation of the doctrine of strained relations must be supplemented by the rule that the existence of strained relations is for the employer to clearly establish and prove in the manner it is called upon to prove the existence of a just cause. (Nippon Express Philippines Corporation v. Daguiso, G.R. No. 217970, 17 June 2020)
Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence – substantial evidence to show that the relationship between the employer and the employee is indeed strained as a necessary consequence of the judicial controversy. (Golden Ace Builders v. Talde, G.R. No. 187200, 05 May 2010)
[T]he doctrine of strained relations cannot be applied indiscriminately since every labor dispute almost invariably results in “strained relations;” otherwise, reinstatement can never be possible simply because some hostility is engendered between the parties as a result of their disagreement. That is human nature. Strained relations must be demonstrated as a fact. The doctrine should not be used recklessly or loosely applied, nor be based on impression alone. (Rodriguez v. Sintron Systems, Inc., G.R. No. 240254, 24 July 2019)
Bank of Lubao, Inc. v. Manabat, G.R. No. 188722, 01 February 2012
⦁ Here, we agree with the CA that the relations between the parties had been already strained thereby justifying the grant of separation pay in lieu of reinstatement in favor of [the Company, a bank].
⦁ First, it cannot be gainsaid that [the Complainant’s] reinstatement to his former position would only serve to intensify the atmosphere of antipathy and antagonism between the parties. Undoubtedly, the [the Complainant’s] filing of various criminal complaints against the [the Company] for qualified theft and the subsequent filing by the latter of the complaint for illegal dismissal against the latter, taken together with the pendency of the instant case for more than six years, had caused strained relations between the parties.
⦁ Second, considering that the [the Complainant’s] former position as bank encoder involves the handling of accounts of the depositors of [the Company], it would not be equitable on the part of the petitioner to be ordered to maintain the former in its employ since it may only inspire vindictiveness on the part of the [the Complainant].
⦁ Third, the refusal of the [the Complainant] to be re-admitted to work is in itself indicative of the existence of strained relations between him and the petitioner. In the case of Lagniton, Sr. v. National Labor Relations Commission, the Court held that the refusal of the dismissed employee to be re-admitted is constitutive of strained relations…
1) If not proven, reinstatement is due
Claudia’s Kitchen, Inc. v. Tanguin, G.R. No. 221096, 28 June 2017
⦁ The CA, in declaring that the relations of the parties are so strained such that reinstatement is no longer feasible, merely stated that it would not be equitable for the [the Company] to be ordered to maintain [the Complainant] in their employ for it may only inspire vindictiveness on the part of the latter and that the filing of the illegal dismissal case created an atmosphere of antipathy and antagonism between the parties.
⦁ That [the Complainant] would be spiteful towards the [the Company], however, is a mere presumption without any factual basis. Further, the filing of an illegal dismissal case alone is not sufficient reason to engender a conclusion that the relationship between employer and employee is already strained. The doctrine on strained relations cannot be applied indiscriminately since every labor dispute almost invariably results in strained relations; otherwise, reinstatement can never be possible simply because some hostility is engendered between the parties as a result of their disagreement. Finally, it must be noted that [the Complainant] herself is asking for her reinstatement, the same being one of the reliefs she prayed for in her Appeal before the NLRC and even in her Comment to the petition for review filed by the [the Company].
⦁ To recapitulate, there was neither dismissal nor abandonment. At the time [the Complainant] initiated the illegal dismissal case, the complaint had no basis. The status quo ante was that she was being asked to explain the accusation against her. Instead of complying, she opted to file a complaint for illegal dismissal. It was premature, if not pre-emptive, which the Court cannot tolerate or accommodate. At this time, her plea for reinstatement, backwages and/or separation pay cannot be granted. [The Complainant] should return to work and answer the complaints against her and the [the Company] should accept her, without prejudice to the result of the investigation against her.
Nippon Express Philippines Corporation v. Daguiso, G.R. No. 217970, 17 June 2020
⦁ In this case, the Labor Arbiter ordered the payment of separation pay in lieu of reinstatement, but he did not discuss the reason why [the Complainant] should not be reinstated. The NLRC affirmed the decision of the Labor Arbiter and grounded the non-reinstatement of [the Complainant] on strained relations between the parties.
⦁ We agree with the Court of Appeals that the NLRC gravely abused its discretion in ruling against the reinstatement of [the Complainant] due to strained relations on these bases: (1) [the Complainant’s] resentment toward Senior Manager De Vera was apparent when she insisted in her appeal that De Vera be held personally liable for her illegal dismissal; and (2) [the Complainant] did not deny that she was involved in a shouting match with her subordinate, Aguirre, which shows that [the Complainant]’s continuance in her employment could not foster a harmonious workplace.
⦁ We have held that the filing of a complaint does not necessarily translate to strained relations between the parties. Such filing of a complaint includes the prayer of the complainant, and in this case, the prayer of [the Complainant] that De Vera be held solidarily liable, which is for the labor tribunals and the courts to resolve. As a rule, no strained relations should arise from a valid and legal act asserting one’s right. Although litigation may engender a certain degree of hostility, the understandable strain in the parties’ relation would not necessarily rule out reinstatement which would, otherwise, become the rule, rather the exception, in illegal dismissal cases.
⦁ Moreover, because [the Complainant] did not deny that a shouting match transpired between her and Aguirre, the NLRC concluded that [the Complainant’s] continuance in her employment could not foster a harmonious workplace. However, The NLRC’s conclusion disregarded one important detail: the origin of the altercation was the fact that De Vera bypassed [the Complainant] in the dissemination of information by Aguirre, [the Complainant’s] subordinate. Thus, the Court of Appeals correctly stated that the said bases of the NLRC are insufficient to deny [the Complainant]’s reinstatement, viz.:
It bears stressing that these are insufficient to deny reinstatement for the simple reason that the altercation between [the Complainant] and Aguirre transpired due to the fact that De Vera bypassed Human Resource Supervisor [the Complainant] when she directly ordered Human Resource Specialist Aguirre (who is the immediate subordinate of [the Complainant]) to send an electronic mail to all Department Heads informing them that “all attendance monitoring and other DTR concern shall be directed to Ms. Honeylet Suaiso x x x effective June 01, 2012.” The misunderstanding could have been avoided had De Vera followed the normal process of informing and/or consulting [the Complainant] of her decision to transfer the monitoring of attendance to Suaiso. As Human Resource Supervisor, [the Complainant] had a right to be informed and/or consulted on matters involving the monitoring of employees’ attendance. Clearly, [the Complainant] had a legitimate grievance against Aguirre and De Vera. Hence, to deny [the Complainant] of reinstatement due to the “strained relations” between her and De Vera would result in rewarding respondents and penalizing [the Complainant], the one bypassed. This is injustice on the part of [the Complainant] because respondents should not be allowed to profit from their own misdeeds. As decided by the Supreme Court, an employer should not profit from his own misdeeds.
⦁ In the same vein, [the Complainant’s] non-reinstatement cannot be justified based on her position as Corporate Human Resource Supervisor, which is said to be a position of trust as [the Complainant] handled the daily time records of employees, and her employer has allegedly lost confidence in her.
⦁ First, it must be emphasized that [the Complainant] was dismissed without just cause and without due process as ruled by the Labor Arbiter. [the Company] did not appeal the decision of the Labor Arbiter, which implies its acquiescence to the Labor Arbiter’s findings.
⦁ Second, [the Company] failed to prove with substantial evidence that [the Complainant] committed an act in the performance of her duties which justifies its loss of confidence in her to merit the NLRC’s reasoning that “it would be unjust to compel respondents-appellees to maintain in their employ complainant-appellant [the Complainant] in whom they have already lost their trust and confidence.”
⦁ Third, we have discussed that to deny [the Complainant] reinstatement due to “strained relations” between her and Senior Manager De Vera would be an injustice to [the Complainant], the one bypassed by De Vera. [The Company] failed to present competent evidence as basis for concluding that its relationship with [the Complainant] has reached a point where it is best severed. In fact, [the Complainant] asks to be reinstated.
⦁ The doctrine of strained relations should not be applied indiscriminately to cause the non-reinstatement of a supervisory employee who is dismissed without just cause and without due process by the employer due to an altercation caused by its senior officer who bypassed the dismissed employee. An employee’s occupation is his/her means of livelihood, which is a precious economic right; hence, it should not just be taken away from the employee by applying the exception of “strained relations” that is not justified. The State guarantees security of tenure to workers; thus, all efforts must be exerted to protect a worker from unjust deprivation of his/her job.
⦁ Further, [the Company] contends that the reinstatement of [the Complainant] is inconsistent with her motion for partial writ of execution of the total sum of P394,362.20, the amount computed to be due to [the Complainant] by the Labor Arbiter (which includes [the Complainant’s] full backwages computed from the date of dismissal up to the finality of the Labor Arbiter’s decision, separation pay and nominal damages of P50,000.00).
⦁ The contention is without merit. The said motion dated January 8, 2013 was filed by [the Complainant] without prejudice to her appeal before the NLRC. The Court notes that [the Company] filed a motion dated April 5, 2013 before the NLRC manifesting that it was willing to pay the said monetary award to amicably settle the issue and advised [the Complainant] to collect that amount any time, but [the Complainant] did not do so.
⦁ In fine, the Court of Appeals correctly ordered the immediate reinstatement of respondent [the Complainant] to her previous position without loss of seniority rights and payment of her full backwages, inclusive of allowances, and other benefits computed from the time her compensation was withheld from her up to the time of her actual reinstatement.
b. No dismissal, no strained relations
Rodriguez v. Sintron Systems, Inc., G.R. No. 240254, 24 July 2019
⦁ In the present case, [the Complainant] prays for the payment of separation pay in lieu of reinstatement, evidently relying on the alleged strained relations between her and [the Company]. Under the doctrine of strained relations, such payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On the one hand it liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. However, as discussed, the doctrine presupposes that the employee was dismissed. This factor is clearly absent in [the Complainant’s] case.
4. Separation pay, alternative to reinstatement
Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. (Golden Ace Builders v. Talde, G.R. No. 187200, 05 May 2010)
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/Updated: January 4, 2023
