4. G.R. No.

164820 December 8, 2008 Nonetheless, this statutory provision is not absolute, and its
application has been qualified and/or limited by our
VICTORY LINER, INC., petitioner, jurisprudence.
vs.
PABLO RACE, respondent. Foremost is the case of Agabon v. National Labor Relations
Commission,3 which definitively settled that where there is
RESOLUTION valid or authorized cause for the dismissal of the employee,
but the employer failed to comply with statutory due process
in effecting the same, the dismissal is not illegal. Logically,
CHICO-NAZARIO, J.:
if there is no illegal dismissal in such a case, then we can
deduce that the dismissed employee cannot avail himself of
Petitioner Victory Liner, Inc. filed the present Motion for the rights under Article 279 of the Labor Code, i.e.,
Reconsideration seeking modification of our Decision dated reinstatement and full backwages. What the employee can
28 March 2007. In the said Decision, we found that demand from the employer, according to Agabon, is the
respondent Pablo Race, employed as one of petitioners bus payment of nominal damages as indemnification for the
drivers, was illegally dismissed by petitioner since petitioner violation of the formers statutory rights.
failed to comply with both substantive and procedural due
process in terminating respondents employment. However,
considering the leg injury sustained by respondent in an In San Miguel Corporation v. Javate, Jr.,4 we affirmed the
accident which already rendered him incapable of driving a consistent findings and conclusions of the Labor Arbiter,
National Labor Relations Commission (NLRC), and Court
bus, we ordered payment of his separation pay instead of his
of Appeals that the employee was illegally dismissed since
reinstatement. The dispositive portion of our Decision reads:
he was still fit to resume his work; but the employers
liability was mitigated by its evident good faith in
WHEREFORE, the petition is PARTLY terminating the employees services based on the terms of
GRANTED insofar as it prays for the non- its Health, Welfare and Retirement Plan.5 Hence, the
reinstatement of respondent. The Decision of the employee was ordered reinstated to his former position
Court of Appeals dated 26 April 2004 in CA-G.R. without loss of seniority and other privileges appertaining to
SP No. 74010, is hereby AFFIRMED with the him prior to his dismissal, but the award of backwages was
following MODIFICATIONS: Petitioner is ordered limited to only one year considering the mitigating
to pay the respondent, in lieu of reinstatement, circumstance of good faith attributed to the employer.
separation pay of ONE (1) MONTH PAY for every
year of service, and full backwages inclusive of
In another case, Dolores v. National Labor Relations
allowances and other benefits or their monetary
Commission,6 the employee was terminated for her
equivalent from 1 January 1998 up to the finality of
this Decision. No costs.1 continuous absence without permission. Although we found
that the employee was indeed guilty of breach of trust and
violation of company rules, we still declared the employees
Petitioner impugns the Decision on two grounds: (1) the dismissal illegal as it was too severe a penalty considering
award of full backwages inclusive of allowances and other that she had served the employer company for 21 years, it
benefits or their monetary equivalent to respondent is not was her first offense, and her leave to study the French
warranted; and (2) the dismissal of respondent is authorized language would ultimately benefit the employer who no
under Article 284 of the Labor Code. longer had to spend for translation services. Even so, other
than ordering the employees reinstatement, we awarded the
We find petitioners motion to be partly meritorious, said employee backwages limited to a period of two years,
compelling us to modify our Decision accordingly. given that the employer acted without malice or bad faith in
terminating the employees services.7
Article 279 of the Labor Code, as amended, provides that an
illegally dismissed employee shall be entitled to While in the aforementioned cases of illegal dismissal, we
reinstatement, full backwages, inclusive of allowances, and ordered the employees reinstatement, but awarded only
to his other benefits or their monetary equivalent computed limited backwages in recognition of the employers good
from the time his compensation was withheld from him up faith, there were also instances when we only required the
to the time of his actual reinstatement. Based on this employer to reinstate the dismissed employee without any
provision, an illegally dismissed employee shall be entitled award for backwages at all.
to (1) reinstatement and (2) full backwages. In the event that
reinstatement is no longer possible, then payment of The employee in Itogon-Suyoc Mines, Inc. v. National
separation pay may be ordered in its stead, hence, the Labor Relations Commission,8was found guilty of breach of
illegally dismissed employee may claim (1) separation pay, trust for stealing high-grade stones from his employer.
and (2) full backwages.2 However, taking into account the employees 23 years of
previously unblemished service to his employer and absent
any showing that his continued employment would result in
the employers oppression or self-destruction, we

1
considered the employees dismissal a drastic punishment. condition would place petitioner in jeopardy of violating its
We deemed that the ends of social and compassionate obligation as a common carrier to always exercise extra-
justice would be served by ordering the employee reinstated ordinary diligence. Thus, invoking good faith, petitioner
but without backwages in view of the employers obvious denies any liability to respondent for the payment of his
good faith. backwages and allowances from 1 January 1998 to the date
of finality of our Decision.
Similarly, in San Miguel Corporation v. Secretary of
Labor,9 the employee was dismissed after he was caught We agree.
buying from his co-workers medicines that were
given gratis to them by the employer company, and re- While we cannot subscribe to petitioners argument that
selling said medicines, in subversion of the employers respondent had already abandoned his job in 1994, we may
efforts to give medical benefits to its workers. We likewise concede that petitioner, given the particular circumstances
found in this case that the employees dismissal was too of this case, had sufficient basis to reasonably and in good
drastic a punishment in light of his voluntary confession that faith deem respondent resigned by 1998. In attributing good
he committed trafficking of company-supplied medicines faith to petitioner, we give due regard to the following
out of necessity, as well as his promise not to repeat the circumstances:
same mistake. We ordered the employees reinstatement but
without backwages, again, in consideration of the
First, respondent had been working for petitioner for only
employers good faith in dismissing him. 15 months, from June 1993 to August 1994, when the
accident occurred causing injury to his leg. Hence, he was
Reference may also be made to the case of Manila Electric able to render actual service to petitioner as a bus driver for
Company v. National Labor Relations the mere period of a little over a year, since his injury
Commission,10wherein the employee was found responsible already kept him from working from 1994 onwards.
for the irregularities in the installation of electrical
connections to a residence, for which reason, his services
Second, respondents leg injury prevented him from
were terminated by the employers company. We, however,
working as a bus driver for petitioner. In January 1998,
affirmed the findings of the NLRC and the Labor Arbiter
when he went to petitioners office and was informed that he
that the employee should not have been dismissed
was deemed resigned from work, he was still limping
considering his 20 years of service to the employer without heavily. Respondent neither alleged nor proved that despite
any previous derogatory record and his being awarded in the the injury to his leg, he could still drive a bus. In fact,
past two commendations for honesty. We thus ruled that the
respondents letter to petitioners Vice President, dated 18
employees reinstatement is proper, without backwages,
March 1996,11 requesting that he be transferred to the
bearing in mind the employers good faith in terminating his
position of dispatcher or conductor, is very revealing of the
services.
fact that he could no longer drive a bus because of his leg
injury.
In our Decision in the present Petition, respondent suffered
leg injury after figuring in an accident on 24 August 1994
Third, despite respondents inability to render actual service
while driving petitioners bus, for which he was operated on
for four years following the accident in 1994, petitioner still
and confined at the hospital. We are unable to sustain
continued to pay him his salary and shoulder his medical
petitioners position that respondent abandoned his job as expenses. When petitioner informed respondent that he was
early as 1994. For the next four years, respondent was deemed resigned in 1998, petitioner even offered respondent
reporting to petitioners office twice a month and still
the amount of P50,000.00 as financial assistance; and when
receiving his salary and medical assistance from petitioner.
respondent refused to receive the said amount, petitioner
It was only in January 1998 that respondent was actually
raised its offer to P100,000.00. Even though we do not have
dismissed from employment when he was expressly
an exact determination of respondents monthly salary,12 it
informed that he was considered resigned from his job. We is safe to assume that the P100,000.00 would have been
further found that respondent was not afforded procedural
sufficient separation pay. In 1998, respondent had been in
due process prior to his dismissal in 1998. We ordered that
petitioners employ for only five years and, should he have
petitioner pay respondent (1) separation pay of one month
agreed to accept the P100,000.00, he would have received a
for every year of service, in lieu of reinstatement; and (2)
separation pay of P20,000.00 for every year of service
full backwages inclusive of allowances and other benefits or (although strictly speaking, he rendered actual service for
their monetary equivalent from 1 January 1998 up to the only a year and three months).
finality of this Decision.
And finally, as we discussed in our Decision,13 petitioner is a
In its present motion, petitioner is asserting that it should be
common carrier and, as such, is obliged to exercise extra-
deemed to have acted in good faith when it considered ordinary diligence in transporting its passengers
respondent as resigned from work because the Court itself safely.14 Understandably, petitioner feared that it would be
stated in the Decision that respondents reinstatement is no
exposing to danger the lives of its passengers if it allowed
longer feasible due to his leg injury, and that to allow the
the respondent to drive its bus despite the fact that his leg
respondent to drive petitioners bus in his present physical
was injured.
2
Although we still cannot depart from our original ruling that because it would place petitioner in jeopardy of violating its
respondent was illegally dismissed since petitioner was, at common carrier obligation to observe extra-ordinary
the beginning, unable to identify with certitude its basis for diligence.
respondents termination,15 as well as the date of effectivity
thereof,16 we are now convinced, taking into account the We note that petitioner cites Article 284 of the Labor Code
foregoing circumstances, that petitioner acted without as an authorized cause in dismissing respondent for the first
malice and in good faith when it formally informed time in its Motion for Reconsideration before us. Petitioner
respondent in 1998 that he was deemed resigned from work. did not raise Article 284 as an authorized cause in
terminating respondents employment during the
We then proceed to determining what is the effect of proceedings before the Labor Arbiter, NLRC, and Court of
petitioners good faith on its liability for backwages. Appeals, and even in its Petition for Review before us. To
reiterate, petitioner alleged causes for dismissing respondent
Unrebutted and, thus, already established, is the fact that were abandonment of work, insubordination and gross and
respondent is unable to drive a bus since the accident in habitual neglect of duty. Petitioners reference to Article
August 1994. Yet, petitioner still kept him in its employ, 284 of the Labor Code at such a belated stage cannot be
gave him his salary, and paid for his medical expenses for allowed.
the next four years, despite the fact that respondent did not
render actual service for the said period. Respondent wanted The rule is well-settled that points of law, theories, issues,
to continue working for petitioner as a dispatcher or and arguments not adequately brought to the attention of the
conductor, but he failed to show that such positions were lower court (or in this case, the appropriate quasi-judicial
available and that he would have been qualified and capable administrative body) need not be considered by the
for the said jobs. reviewing court as they cannot be raised for the first time on
appeal, much more in a motion for reconsideration as in this
We have previously recognized that the constitutional policy case, because this would be offensive to the basic rules of
of providing full protection to labor is not intended to fair play, justice and due process.19 This last ditch effort to
oppress or destroy management.17 The employer cannot be shift to a new theory and raise a new matter in the hope of a
compelled to continuously pay an employee who can no favorable result is a pernicious practice that has been
longer perform the tasks for which he was hired. Seeing as consistently rejected.20 We are not prepared to make a
petitioner continued to pay respondent his salaries and conclusion of law herein that may have far-reaching
medical expenses for four years following the accident consequences based on an argument that was belatedly
which caused his leg injury, despite the fact that respondent raised and evidently a mere after-thought.
was unable to render actual service to petitioner, it would be
the height of injustice to still require petitioner to pay WHEREFORE, in view of the foregoing, the Motion
respondent full backwages from the time of his termination is PARTIALLY GRANTED. The dispositive portion of
in 1998 until the finality of this Decision. Reasons of the Decision dated 28 March 2007 in G.R. No. 164820
fairness and equity, as well as the particular factual is MODIFIED in that petitioner is ordered to pay the
circumstances attendant in this case, dictate us to modify our respondent, in lieu of reinstatement, SEPARATION
Decision by ordering petitioner to pay respondent limited PAY of one (1) month pay for every year of service,
backwages (inclusive of allowances and other benefits or and LIMITED BACKWAGES, inclusive of allowances
their monetary equivalent) for five years,18 from 1 January and other benefits or their monetary equivalent, for a period
1998 to 31 December 2002, in addition to the separation pay of five (5) years, computed from 1 January 1998 to 31
of one month for every year of service awarded in lieu of December 2002.
reinstatement. We must clarify, however, that for purposes
of computing respondents separation pay, he must still be SO ORDERED.
deemed in petitioners employ until the finality of this
Decision since his termination remains illegal, and is only
mitigated by petitioners good faith.

With respect to the second ground, petitioner invokes

Article 284 of the Labor Code which provides that "an
employer may terminate the services of an employee who
has been found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial
to his health as well as to the health of his co-employees."
According to petitioner, the dismissal of respondent on
account of his physical infirmity may be deemed analogous
to a termination for health reasons because respondents
physical disability rendered him incapable of performing his
job as a bus driver. Moreover, respondents continued
employment under such circumstance is prohibited by law