ERWIN H. REYES, PETITIONER, VS.NATIONAL LABOR RELATIONS COMMISSION, COCA-COLA BOTTLERS PHILS. AND/OR ROTAIDA TAGUIBAO, RESPONDENTS.

Reyes versus National Labor Relations Commission

The Case

This is a labor case that reached the Supreme Court through a special civil action for certiorari. Erwin Reyes, an employee, sued Coca-Cola Bottlers Philippines and its Human Resource Manager, Rotaida Taguibao, for illegal dismissal, claiming moral and exemplary damages and attorney's fees. The case matters for two reasons. First, it is a leading statement on when the negligence of counsel will not bind the client, and on the liberal construction of the rule requiring a written explanation for substituted service. Second, it restates the rule on full backwages under Article 279 of the Labor Code, and it rejects the easy resort to "strained relations" and to the label of "confidential employee" as excuses for denying reinstatement.

Procedural History

Reyes filed his complaint for illegal dismissal before the Labor Arbiter. The Labor Arbiter ruled in his favor, ordering reinstatement, full backwages, and attorney's fees. Coca-Cola and Taguibao appealed to the National Labor Relations Commission and posted a supersedeas bond. The Commission affirmed the finding of illegal dismissal but modified the award. It reduced the backwages, deleted the order of reinstatement, and deleted the attorney's fees. Both sides moved for reconsideration, and the Commission denied both motions.

Only Reyes elevated the matter to the Court of Appeals by petition for certiorari. The Court of Appeals dismissed his petition outright because he failed to give any explanation why a copy of the petition was not personally served on the counsel of the adverse parties. He failed to file a timely motion for reconsideration, so that dismissal became final and executory, and an entry of judgment was made. His new counsel later filed an entry of appearance with an urgent motion for reconsideration, this time supplying the required explanation. The Court of Appeals denied the motion for having been filed out of time. Reyes then came to the Supreme Court by special civil action for certiorari, assailing both resolutions of the Court of Appeals.

Facts

Reyes was first employed by Coca-Cola through a manpower agency as a Leadman in February 1988. His contract was renewed every five months, and he was assigned a different task each time. This arrangement continued until Coca-Cola hired him directly as a Route Salesman on 15 September 2000. Exactly one year later, on 15 September 2001, the company, through Taguibao, terminated his services.

Reyes claimed he had already attained regular status, and that he was dismissed without due process. Coca-Cola countered that his employment was for a fixed period of three months, extended with his consent, under a "mini-bodega" project meant to reach areas its regular salesmen could not service. When the project proved unviable, the company discontinued his fixed-term employment. It also argued that Taguibao bore no personal liability.

The Labor Arbiter found for Reyes, because the company failed to produce the supposed contract of employment. Its only evidence was Taguibao's own affidavit, which carried no weight without independent corroboration. The company reinstated Reyes to his former position on 1 March 2006, but appealed the monetary awards. The Commission then reduced the backwages, deleted the reinstatement order, and deleted the attorney's fees.

Issues

• Whether or not the Court of Appeals gravely abused its discretion in not excusing the procedural lapses of Reyes.
• Whether or not the National Labor Relations Commission gravely abused its discretion in reducing the backwages by computing them only from the filing of the complaint.
• Whether or not the National Labor Relations Commission gravely abused its discretion in ordering separation pay in lieu of reinstatement.
• Whether or not the National Labor Relations Commission gravely abused its discretion in deleting the award of attorney's fees.

Applicable Provisions

Section 11 of Rule 13 of the Revised Rules of Court, on the explanation required for substituted service, provides:

Section 11. Change of electronic mail address or facsimile number. — A party who changes his electronic mail address or facsimile number while the case is pending must promptly file with the court a notice of the change, serving a copy thereof on all other parties.

This is the rule the Court of Appeals invoked when it dismissed the petition outright, and which the Supreme Court declined to apply with full rigor.

Article 279 of the Labor Code, on security of tenure, provides:

Article 279. Security of Tenure. — In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

This provision fixes both the period for computing backwages and the right to reinstatement, and it is the measure against which the Commission's modifications were tested.

Ruling

On the first issue, the Court ruled for Reyes. It conceded that he failed to comply with the rule on substituted service, and that he filed no timely motion for reconsideration. It also acknowledged the general rule that the negligence of counsel binds the client. But it held that this general rule covers only simple negligence. Where the negligence is gross, palpable, pervasive, reckless, and inexcusable, it does not bind the client, because the client is effectively deprived of his day in court. Here, former counsel failed to attach the required explanation, never informed Reyes of the dismissal, and abandoned the case by letting the period for reconsideration lapse. The Court therefore relaxed the rules in the service of substantial justice, and it chose not to remand the case to the Court of Appeals, since there was enough basis to settle the entire controversy in one proceeding.

On the second issue, the Court held that the Commission gravely abused its discretion. Under Article 279, backwages are computed from the time compensation was withheld, that is, from the illegal dismissal, up to actual reinstatement. There can be no gap or interruption. The fact that Reyes delayed in filing his complaint did not diminish his right, since he filed within the four-year prescriptive period. The Court found no justice or rationality in the distinction drawn by the Commission, and held that it transgressed the equal protection principle. Backwages must therefore run from 15 September 2001, the date of dismissal, to 1 March 2006, the date of actual reinstatement.

On the third issue, the Court rejected the deletion of the reinstatement order. The doctrine of strained relations must be strictly applied, since every labor dispute almost always produces strained relations. Here, Reyes had already returned to work in March 2006 without any reported antagonism. Neither was he a confidential employee. A confidential employee is one who assists or acts in a confidential capacity with respect to persons who formulate, determine, and effectuate management policies in the field of labor relations. Receiving sales proceeds does not make a salesman confidential.

On the fourth issue, the Court held that Reyes was entitled to attorney's fees, because he was compelled to litigate to protect his interest by reason of the unjustified and unlawful termination of his employment.

Doctrine

The negligence of counsel binds the client, but only simple negligence. Gross, palpable, pervasive, reckless, and inexcusable negligence does not bind the client, because it deprives him of his day in court. Procedural rules of even a mandatory character may be relaxed in the service of substantial justice. Under Article 279 of the Labor Code, an illegally dismissed employee is entitled to reinstatement without loss of seniority rights and to full backwages computed from the time his compensation was withheld up to actual reinstatement, with no gap or interruption, provided he files his complaint within the prescriptive period. The doctrine of strained relations must be strictly applied, and a salesman who merely receives sales proceeds is not a confidential employee.

Disposition

The petition was granted. The resolutions of the Court of Appeals were set aside, and the decision of the Labor Arbiter was effectively restored, with full backwages computed from the date of illegal dismissal up to actual reinstatement, reinstatement, and attorney's fees.

Remember This

Memorize this line: gross and inexcusable negligence of counsel does not bind the client, and full backwages run from illegal dismissal to actual reinstatement without interruption. Examiners use this case on the negligence-of-counsel exception, on the liberal construction of procedural rules, and on the computation of backwages under Article 279.