ADVAN MOTOR, INC., PETITIONER, V. VICTORIANO G. VENERACION, RESPONDENT.

Advan Motor versus Veneracion

The Case

This is a labor case in which Advan Motor, Incorporated, a car dealership, asks the Supreme Court to overturn the rulings of the labor tribunals and the Court of Appeals finding that it illegally dismissed its sales consultant, Victoriano Veneracion. The company insists that the dismissal was justified by repeated unauthorized absences and by loss of trust and confidence, and that in any event reinstatement is no longer feasible because of strained relations. The case matters because it draws a firm line around two ideas that examiners love to test: who may be considered a position of trust and confidence, and when the doctrine of strained relations may be used to defeat reinstatement.

Procedural History

Veneracion filed a complaint for constructive dismissal, later amended into one for actual illegal dismissal with a claim for underpayment of salaries. The Labor Arbiter declared the dismissal illegal and ordered the company to pay backwages, separation pay in lieu of reinstatement, and attorney's fees. The company appealed to the National Labor Relations Commission, which affirmed the Labor Arbiter. Both parties moved for reconsideration, and the Commission denied both motions.

Veneracion then went to the Court of Appeals on a petition for certiorari, alleging grave abuse of discretion. The Court of Appeals partially granted the petition. It affirmed the finding of illegal dismissal but modified the relief: it ordered reinstatement without loss of seniority rights, ordered backwages computed on the basis of the minimum wage from the time compensation was withheld until actual reinstatement, deleted the separation pay, and affirmed the attorney's fees. The company's motion for partial reconsideration was denied. The company then came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Veneracion began working in September 1999 as a Sales Consultant in the company's business of selling and repairing General Motors vehicles. In December 2000, he came to believe he was suspected of planning to organize a union. From then on, he claimed, management harassed him, pressured him to resign in exchange for a financial package, ignored his purchase orders and a sub-dealership agreement, withheld a salary adjustment given to others, and stopped giving him duty dates, a showroom assignment, and a telephone. He applied for a leave of absence in April 2001, which he says was verbally approved and later denied, and his salaries from April 2001 onward were withheld.

The company's version was different. It said Veneracion was often absent or tardy, failed to meet a sales quota of three cars a month, went on an unannounced leave from March 28 to 31, 2001, and then simply handed his request for vacation leave from April 2 to 18, 2001 to the security guard. On April 20, 2001, he allegedly told the Personnel Officer he would no longer report for work. By letter dated May 21, 2001, the company informed him of the termination of his services effective May 2, 2001, citing repeated absences without official leave for more than six consecutive days and loss of trust and confidence.

The company relied on its personnel manual, which treats five consecutive days of unauthorized absence as a ground for termination and three violations within two months as habitual absence. The Labor Arbiter found the claim unsubstantiated, noting that the security guard was never presented and that the employer bears the burden of proving a lawful cause. The tribunals below found the dismissal illegal, and the dispute before the Supreme Court narrowed to reinstatement and backwages.

Issues

• Whether or not the Court of Appeals erred in ordering the reinstatement of Veneracion to his former position, given the company's claim that his position was one of trust and confidence and that relations had become strained.
• Whether or not the Court of Appeals erred in ordering the award of backwages.

Applicable Provisions

Article 294 of the Labor Code, on security of tenure, provides:

ARTICLE 294. 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 is the provision that supplies both reliefs at stake, reinstatement and backwages, once the dismissal is shown to be unjust.

Article 282 of the Labor Code, on termination by the employer, provides in its relevant part:

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.

The company invoked loss of trust and confidence as a just cause, and the Court's treatment of that ground bears directly on whether a sales consultant occupies a position of trust.

Ruling

On the first issue, the Court held that reinstatement was proper. A sales consultant whose function is precisely to sell cars is not a position vested with complete trust and confidence, unlike, for example, a managerial employee. The Court quoted its earlier ruling that strained relationship may be invoked only against employees whose positions demand trust and confidence, or whose differences with the employer are of such nature or degree as to preclude reinstatement, and that an ordinary employee whose relationship with management is on an impersonal level does not occupy so sensitive a position.

The Court also held that strained relations is a question of fact that must be clearly established and proved by the employer, in the same manner that a just cause must be proved. The company never alleged strained relations in its position paper, so the matter was never a factual issue subject to proof before the Labor Arbiter. The Court agreed that every labor dispute almost always results in strained relations, and that the phrase cannot be given an overarching interpretation, otherwise an unjustly dismissed employee could never be reinstated. It was Veneracion who kept pleading for reinstatement, which showed he was still willing to return to work. The Court added that to affirm the allegation of loss of trust and confidence would lead to the illogical conclusion that he was validly dismissed, when the conclusive finding was that he was unjustly dismissed.

On the second issue, the Court held that since the dismissal was conclusively found unjust, the award of backwages must likewise be affirmed. Backwages allow the employee to recover what he lost in wages by reason of the dismissal. The Court stressed that backwages and reinstatement are separate and distinct reliefs: reinstatement restores the employee to the state from which he was removed, while backwages restore the income lost by reason of the unlawful dismissal, and the award of one does not bar the other. Separation pay is granted only where reinstatement is no longer feasible, and it is in addition to backwages.

Doctrine

A sales consultant or sales agent is not a position of trust and confidence; loss of trust and confidence under Article 282, paragraph (c), of the Labor Code cannot be used against an ordinary employee whose relationship with management is impersonal. The doctrine of strained relations must be demonstrated as a fact, clearly established and proved by the employer, and cannot rest on impression or on the hostility that ordinarily attends litigation. Under Article 294 of the Labor Code, an unjustly dismissed employee is entitled to reinstatement without loss of seniority rights and to full backwages computed from the time compensation was withheld up to actual reinstatement; these are separate and distinct reliefs, and separation pay substitutes for reinstatement only where reinstatement is no longer viable.

Disposition

The petition was denied, and the decision and resolution of the Court of Appeals were affirmed: Veneracion wins reinstatement without loss of seniority rights, backwages computed from the time his compensation was withheld until actual reinstatement, and attorney's fees, with the separation pay deleted.

Remember This

Memorize the line that a sales consultant is not a position of complete trust and confidence, and that strained relations must be proved as a fact by the employer, not presumed from the friction of litigation. Examiners use this case to test the limits of loss of trust and confidence and the doctrine of strained relations as a bar to reinstatement.