GOLDEN AGE BUILDERS and ARNOLD AZUL v.

JOSE TALDE
5 May 2010 | Carpio-Morales, J. | Termination of employment > General concepts > Normal consequences of illegality of dismissal
SUMMARY: Talde, carpenter of Golden Age, filed an illegal dismissal case and was reinstated by the LA. He then manifested to
the LA that animosity existed between him and owner-manager Azul, leading the NLRC to compute his separation pay. Such pay
was vacated by the NLRC on petitioners MR that Talde never challenged the LA decision of reinstatement. CA allowed
separation pay because of strained relations, as affirmed by the SC in this case with modification that separation pay and
backwages be computed from June 30, 2005, the date of his actual separation when reinstatement was rendered impossible.
DOCTRINE: An illegally dismissed employee is entitled to two separate, distinct reliefs: (1) reinstatement without loss of
seniority rights, and (2) payment of backwages computed from the time compensation was withheld up to the date of actual
reinstatement. Where reinstatement is not viable because of strained employee-employer relations, separation pay equivalent to
one month salary for every year of service should be awarded as an alternative. Strained employer-employee relations must be
demonstrated as fact as a necessary consequence of the judicial controversy, and adequately supported by substantial evidence.
FACTS:
1. Talde was hired in 1990 as carpenter by Golden Ace
Builders of which co-petitioner Azul is owner-manager.
2. In February 1999, when Azul alleged unavailability of
construction projects and stopped giving work
assignments, Talde filed a complaint for illegal dismissal.
3. LA on 10 January 2001 ruled for Talde, ordering
reinstatement, backwages (P144,382.23), premium pay
for rest days, SIL pay and 13th month pay (P3,236.37).
4. Pending their appeal to NLRC, petitioners advised Talde
to report for work within 10 days from receipt.
5. Talde submitted a manifestation on 16 May 2001 to LA
that animosities existed between him and petitioners and
there had been threats to him and his familys safety, so
he opted for separation pay. Petitioners denied animosity.
6. NLRC on 22 April 2002 dismissed appeal and denied
MR holding that Talde was an illegally dismissed regular
employee and not a project employee. Petitioners CA
appeal was dismissed August 12, 2004.
7. The NLRC Fiscal Examiner recomputed at P562,804.69
the amount due Talde, approved by the LA on 5 July
2005. A writ of execution was issued 8 July.
8. On March 9, 2006, the NLRC granted petitioners MR
and vacated the computation on the arguments that:
Talde did not appeal LA decision of reinstatement;
cannot be given affirmative relief like separation pay
Talde may recover backwages up to 20 May 2001,
the day he was supposed to return to his job (and not
15 May 2001 when Talde refused to be reinstated as
argued by petitioners)
9. Taldes MR was denied by the NLRC on June 30, 2006,
hence he appealed to the CA
10. CA on September 10, 2008 set aside NLRC Resolutions,
ruling Talde entitled to backwages (P562,804.69) and
separation pay (P220.00 x 26 days = P5,720,00 x 8 years
= P45,760), even if LA did not grant separation pay
given strained relations. CA also denied MR.
MAIN ISSUE:
Whether Talde is entitled to separation pay YES
DISPOSITIVE: Petition dismissed. CA affirmed with
modification that separation pay is computed at P85,800.

RULES:
(A) The basis for backwages is different from separation pay:
Separation pay is granted where reinstatement is no longer
advisable because of strained relations between employee
and employer, computed by the actual period where the
employee was unlawfully prevented from working.
Backwages represent compensation that should have been
earned but were not collected because of unjust dismissal,
computed on the length of the employees service.
(B) An illegally dismissed employee is entitled to two
separate and distinct reliefs under Article 279 LC:
reinstatement without loss of seniority rights, and payment
of backwages computed from the withholding of
compensation up to the date of actual reinstatement.
Where reinstatement is no longer viable because of
strained employee-employer relations, separation pay
equivalent to one month salary for every year of service
should be alternatively awarded, in addition to payment of
backwages. (Macasero v. Southern Industrial Gases PH)
(C) The doctrine of strained relations: separation pay may be
availed of in lieu of reinstatement if reinstatement is no
longer practical, in the best interest of the parties, or if the
employee decides not to be reinstated (Velasco v. NLRC)
Benefits: Payment of separation pay frees employer
from what could be a highly oppressive work
environment and releases employer from unpalatable
obligation of employing a worker it cannot trust.
Standard of proof: Strained employer-employee
relations must be demonstrated as fact as a necessary
consequence of the judicial controversy, to be
adequately supported by substantial evidence.
RATIO:
(1) LA found that actual animosity existed between Azul and
Talde as a result of the filing of the illegal dismissal case,
entitling the latter to backwages and separation pay.
(2) Backwages must be computed from the time he was
unjustly dismissed until his actual reinstatement, or from
February 1999 until June 30, 2005 when his reinstatement
was rendered impossible without fault on his part.
(3) Separation pay must be computed on the 15 years from
Taldes hiring in 1990 until June 30, 2005 or actual
separation. Appellate court considered only his 8 years of
service until 1999, when Talde was unjustly dismissed.