Galbinez, Jr. vs. Mc Gerry's Restaurant

G.R. No. 205597
A delivery boy claimed illegal dismissal and unpaid wages against Mc Gerry's Restaurant. Courts ruled no illegal dismissal but awarded separation pay and adjusted attorney's fees.
illegal dismissal underpayment of wages delivery boy

Case Summary (G.R. No. 205597)

Factual Background

The petitioner alleged that he was hired by Hokian and Kim Co. as a delivery boy, dishwasher, and janitor at Mc Gerry's Restaurant on January 6, 2006 at a daily rate of P100.00 and that he worked long hours without overtime, premium pay for rest days and holidays, and holiday pay. He claimed that he was given customer leftovers as food and, later, subsisted mainly on galunggong. In September 2006 his salary purportedly began to be coursed through Metro's Manpower Agency (MMA) and his schedule was adjusted. The petitioner alleged that on December 30, 2007 he was barred from entering the restaurant and told that the respondent spouses no longer wanted his services.

Labor Arbiter Proceedings

Before the Labor Arbiter, the petitioner's complaint for illegal dismissal and unpaid monetary benefits named Mc Gerry's Restaurant, the respondent spouses, Gerry Velasquez, and Metro's Manpower Agency. The Labor Arbiter found lack of employer-employee relationship between Mc Gerry's and the petitioner, accepted petitioner’s admission that his salary was paid by MMA, and concluded that MMA was petitioner’s employer. The Labor Arbiter dismissed the complaint against Mc Gerry's Restaurant and the respondent spouses and ordered reinstatement and backwages only against MMA and an individual named Velasco.

NLRC Decision

On appeal, the NLRC, Sixth Division, reversed the Labor Arbiter. The NLRC found that the petitioner was a regular employee of the respondents and not of MMA. The NLRC ordered the respondent spouses, Mc Gerry's Restaurant, and Gerry Velasquez, jointly and severally, to pay separation pay, backwages, underpaid wages, overtime pay for a specified period, unpaid rest day and holiday premium, ECOLA, 13th month pay, and attorney’s fees equivalent to the petitioner’s total money claims. The NLRC dismissed the complaint against MMA and Velasco for lack of jurisdiction. Reconsideration by the NLRC was denied.

Court of Appeals Proceedings

The respondents filed a Petition for Certiorari with the Court of Appeals alleging grave abuse of discretion by the NLRC. The CA partially granted the petition. The CA affirmed the existence of an employer-employee relationship between the petitioner and the respondents but nullified the NLRC’s finding of illegal dismissal. Consequently, the CA deleted awards of separation pay, backwages, overtime pay, and unpaid rest day and holiday premium. The CA affirmed awards of underpaid wages, ECOLA, 13th month pay, and attorney’s fees, and remanded the case to the NLRC for detailed computation.

Issues Presented to the Supreme Court

The petitioner raised two issues to the Supreme Court: (1) whether the CA erred in failing to recognize that the petitioner was illegally dismissed; and (2) whether the CA erred in denying awards for separation pay, backwages, and other money claims.

The Parties' Contentions

The petitioner contended that he was illegally dismissed and that respondents should be held jointly and severally liable for monetary claims. The respondents maintained that the petitioner ceased reporting for work by the end of 2007 and effectively abandoned his employment, and that the restaurant was a sole proprietorship under Gerry Velasquez with workers provided by MMA.

Supreme Court’s Analysis on Proof of Dismissal

The Court reiterated the settled burden of proof in illegal dismissal cases: the employee must first establish by substantial evidence that dismissal occurred; only then does the employer bear the burden to prove a valid cause for termination. Applying that rule, the Court held that the petitioner failed to substantiate the alleged dismissal on December 30, 2007 with substantial evidence. The Court cited precedent that bare and self-serving allegations of dismissal warrant no legal credit and concluded there was no basis to declare illegal dismissal.

Supreme Court’s Analysis on Abandonment

The Court examined respondents' claim of abandonment and reiterated that abandonment requires two concomitant elements: unjustified absence and a clear intention to sever employment manifested by overt acts. The Court found that respondents did not prove such overt conduct and that the petitioner’s filing of a complaint for illegal dismissal negated any clear intention to abandon employment. Consequently, respondents failed to establish abandonment.

Remedy Adopted by the Supreme Court

Because neither illegal dismissal nor abandonment was established, the Court concluded that reinstatement without backwages would be the usual remedy when termination is neither proven nor abandonment shown. However, given the considerable lapse of time rendering reinstatement impracticable, the Court awarded separation pay in lieu of reinstatement. The Court ordered separation pay equivalent to one month salary for every year of service computed until the time the petitioner stopped working in 2007.

Employer-Employee Relationship and Liability

The Court affirmed the CA’s finding of an employer-employee relationship between the petitioner and the respondents. The Court clarified the legal position of a sole proprietorship: Mc Gerry's Restaurant, as a sole proprietorship registered under Gerry Velasquez, has no juridical personality separate from its proprietor, and the registered sole proprietor is personally liable for the business’ debts and obligations. The Court further ruled that, absent credible proof of bad faith by the respondent spouses, they could not be held solidarily liable with Velasquez.

Attorney’s Fees and Statutory Clarification

The Court addressed attorney’s fees and clarified that under Art. 111, Labor

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