Demonstrated Litigiousness of the Parties

2020 January 08

On 6 June 1996, Papertech hired Katando as a machine operator in its office at Pasig City.

On 14 December 2013, Katando received a memorandum from Papertech stating that due to urgency of business, she will be transferred to its Makati office. The memorandum stated that she will still be under the same employment terms and conditions but will be tasked to clean the area.

Papertech issued a memorandum dated 6 February 2014 to Katando reiterating her transfer to its Makati office. Thereafter, Papertech issued a notice to Katando requiring her to explain within 48 hours why she refused to receive the 6 February 2014 memorandum. Katando submitted her explanation.

Papertech issued another notice to Katando on 17 February 2014 directing her to explain why she should not be administratively charged for refusing to transfer to its Makati office. Despite submitting her explanation, Papertech issued a notice on 24 February 2014 dismissing Katando for her insubordination. Katando filed a complaint for illegal dismissal against Papertech and its officers.

The Office of the Labor Arbiter held that no just cause attended Katando’s dismissal. Papertech failed to prove the existence of a legitimate urgency which justified her transfer to the Makati office. In fact, Papertech did not disprove a certification from the Makati City Business Permit Office that it is not a registered entity in Makati City.

Thus, the Office of the Labor Arbiter ordered Papertech to pay Katando backwages. However, Katando’s prayer for reinstatement was not granted. Instead, Papertech was ordered to pay her separation pay. According to the Office of the Labor Arbiter, “[t]he filing of the instant case and the attempts of Papertech to transfer the complainant have brought about antipathy and antagonism between them, thereby resulting to strained relationship.”

Katando partially appealed to the National Labor Relations Commission.

The National Labor Relations Commission agreed with the Office of the Labor Arbiter that separation pay should be given to Katando in lieu of her reinstatement. Katando went to the Court of Appeals.

The Court of Appeals granted Katando’s petition and ordered Papertech to immediately reinstate her to her previous position without loss of seniority rights in addition to the award of backwages.

The Court of Appeals ruled that the doctrine of strained relations cannot apply to Katando as she is part of the rank and file workforce and does not occupy a managerial or key position in the company. She even asked for her reinstatement. In addition, there is no proof of strained relations between her and Papertech. The fact that Katando and Papertech had been involved in several cases (illegal dismissal in connection with a strike and illegal suspension which happened around 2008) is not sufficient because no strained relations should arise from a valid and legal act of asserting one’s right.

Papertech filed a motion for reconsideration but it was denied by the Court of Appeals.

Issue:

Whether the Court of Appeals erred in ordering the reinstatement of Katando instead of granting her separation pay.

Ruling:

In this case, the Supreme Court explained the doctrine of strained relations, which contemplates a situation where a monetary award is to be paid to an employee as an alternative to a reinstatement that can no longer be effected.

According to the Court, the following factors should be considered in applying the doctrine of strained relations:

  • The employee must occupy a position where he or she enjoys the trust and confidence of his or her employer;
  • It is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned;
  • It cannot be applied indiscriminately because some hostility is invariably engendered between the parties as a result of litigation; and
  • It cannot arise from a valid and legal act of asserting one’s right.

The doctrine cannot apply when the employee:

  • has not indicated an aversion to returning to work;
  • does not occupy a position of trust and confidence; or
  • has no say in the operation of the employer’s business.

Furthermore, strained relations between the parties must be proven as a fact.

In the present case, the Court noted that Katando did not occupy a position of trust and confidence as a machine operator. However, the Court found it apt to apply the doctrine of strained relations.

Although acknowledging that litigation between the parties per se should not bar the reinstatement of an employee, the Court found the present case was not the only case that involved Papertech and Katando. Papertech and Katando had been in conflict for more than 10 years. The length of time from the occurrence of the incident to its resolution and the demonstrated litigiousness of the parties showed that their relationship is strained. Protracted litigation between the parties here sufficiently demonstrated that their relationship was already strained.

Papertech had not even bothered to appeal the ruling of the Labor Arbiter, and even stated that “in order not to prolong the proceedings, and for both parties to peacefully move on from this unwanted situation, Papertech is willing to pay the judgment award of separation pay.” The Court took this as a confirmation that Papertech no longer wanted Katando back as its employee.

Moreover, what remained in the Pasig City premises of Papertech was its sales, marketing, and distribution operations since its manufacturing and production departments were transferred to the province. Consequently, the position held by Katando was abolished. Katando’s reinstatement as a machine operator in Papertech’s Pasig City premises was no longer possible.

The Court awarded separation pay to Katando, being the only viable option under the circumstances.

Further reading:

  • Papertech, Inc. v. Katando, G.R. No. 236020, January 8, 2020.