G.R. No. 117378 - Capili vs. National Labor Relations Commission

Petitioners: Gil Capili and Ricardo Capili, previously owners of the jeepneys.
Respondents: Licensed drivers of public utility jeepneys (including Benigno Santos, Delfin Yuson, Luisito Santos, Ursino Basister, Ricardo Reyes, Joselito Santos, Jorge Binuya, and Nicolas Mulingbayan) plying the Libertad-Sta. Cruz route in Manila.
Operational Arrangement:

Drivers paid a “boundary” fee of P280.00 for twelve hours of jeepney operation and earned a net profit of P200.00 per day.
Prior to May 7, 1991, the drivers operated under an established arrangement with petitioners.

On May 7, 1991, petitioners, having assumed ownership and operations with Ricardo Capili and his wife, demanded that the drivers sign individual contracts of lease for the jeepneys.
Drivers, under the impression that signing the lease was a condition precedent to their continued employment, collectively ceased reporting for work on the said date.

On May 14, 1991, twenty-two drivers filed a complaint for illegal dismissal before the Labor Arbiter, praying for separation pay rather than reinstatement.
In the interim, fourteen drivers later resumed their operations while eight drivers maintained their protest by not returning to work.
Their respective reckoning dates of employment varied from as early as 1965 to 1989.

Argued that drivers voluntarily abandoned their positions by refusing to sign the lease and report for work, thus forfeiting any employer-employee relationship.

Maintained that the signing of the lease was a mere confirmation of a non-employer-employee relationship aimed at streamlining operations.
Asserted that their refusal was based on an erroneous apprehension of losing benefits inherent in the existing employment relationship.

Affidavits and notices (Exhibits “3-B” and “3-B-1”) suggested that signing the lease was for clarity regarding fees and vehicle requirements, not as a precondition for continued employment.

Determined that there was a misapprehension on both sides—drivers misunderstood the lease requirement, and petitioners misinterpreted the implications of the lease on the employer-employee relationship.
Found the stoppage on May 7, 1991, to be an act of abandonment rather than dismissal by the employer, noting that a simultaneous dismissal of many employees would cripple operations.
Ordered that the drivers be reinstated to their former positions without loss of seniority, although without back wages.

Respondents appealed to the National Labor Relations Commission (NLRC), seeking separation pay equivalent to one month’s salary per year of service plus three years’ back wages.
While the NLRC agreed with the finding of a misunderstanding, it modified the relief by awarding separation pay computed at one-half month’s salary for every year of service.
Petitioners moved for reconsideration before the NLRC, arguing that no legal dismissal had occurred, but the NLRC denied the motion.

Whether the drivers’ refusal to sign the lease contract, which subsequently led to their absence from work, constituted an act of illegal dismissal or merely abandonment of service.

Consideration of whether the drivers were forced into a condition that disrupted their established relationship with their employer.
Examination of the implications of a misunderstanding regarding the lease contract and its effect on the continuity of the employment relationship.

Whether the award of separation pay is legally justified under the circumstances.

Analysis of the requirements under Articles 279 and 282 of the Labor Code regarding remedies for illegal dismissal.
Determination if separation pay is warranted in cases where there is no actual dismissal, but merely strained relations or voluntary cessation of work by the employee.

Whether the NLRC did proper and proper exercise its discretion in modifying the relief and awarding separation pay in lieu of reinstatement or back wages.

Evaluation of the factual findings that led to the characterization of the incident as a misunderstanding rather than a wrongful dismissal.