Case Summary (G.R. No. 119500)
Applicable Law and Jurisprudence
Constitutional framework: 1987 Philippine Constitution (decision rendered in 1998).
Principal statutory provisions: Labor Code provisions on security of tenure (Art. 279) and Article 221 on the informality of procedural technicalities in labor proceedings.
Relevant precedents cited by the Court: Doce v. WCC; Martinez v. NLRC; Mabeza v. NLRC; PMI Colleges v. NLRC; Ilocos Sur Electric Cooperative v. NLRC; Bustamante v. NLRC; Capili v. NLRC; Conti v. NLRC; Canete v. NLRC.
Key Dates
Hiring of complainant: December 25, 1992.
Alleged illegal dismissal/withholding of compensation: November 28, 1993 (incident culminating in complainant being told not to report for work).
Labor Arbiter decision: June 28, 1994.
NLRC Decision: December 16, 1994.
NLRC Resolution denying reconsideration: February 21, 1995.
Supreme Court resolution of petition: August 28, 1998.
Procedural Posture
Complainant filed for illegal dismissal before the Labor Arbiter. The Labor Arbiter ordered reinstatement with full backwages and 13th month pay, computing backwages at P67,200. The NLRC affirmed illegal dismissal but modified the backwages to P86,400 and limited liability to the corporation (not the president). Petitioner sought certiorari/prohibition in the Supreme Court challenging the NLRC Decision and its denial of reconsideration.
Statement of Facts
Melchor was engaged as a taxi driver under the boundary system, remitting a P650 boundary per trip and retaining excess earnings. He was assigned a taxi on a 24-hour schedule every two days. On November 4, 1993 (the significant incident), Melchor was involved in a vehicular accident; after submitting a traffic accident report, he was told to stop working and later informed that his services were no longer needed. Petitioner alleged three vehicular incidents involving Melchor (August 3, August 4, and November 4, 1993) causing various repair costs, and claimed Melchor refused to satisfactorily explain the incidents. Petitioner argued no employer-employee relationship existed given claimed lack of control and presence of a “wase-agreement” (lease-like arrangement), and alternatively asserted just cause for dismissal.
Issues Presented to the Court
- Whether the NLRC acted without or in excess of jurisdiction or with grave abuse of discretion in ordering reinstatement with full backwages despite alleged strained relations and asserted operational prejudice; and
- Whether the NLRC abused its discretion in denying reconsideration despite purported facts warranting reversal.
The Court framed its analysis around five points: existence of employer-employee relationship, presence of just cause, compliance with due process, existence of strained relations, and propriety of reinstatement and back wages.
Supreme Court Holding (Disposition)
The petition was dismissed for lack of merit. The NLRC Decision and Resolution were affirmed. The Court ordered costs against the petitioners and sustained reinstatement with back wages computed by the NLRC (P86,400), reaffirming that liability should inure against the corporation.
Employer-Employee Relationship — Court’s Reasoning
The Court found that operation under the boundary system presupposes an employer-employee relationship. Relying on Martinez and Doce, the Court explained that the so-called lease-of-chattel characterization does not obtain when the owner exercises supervision and control and when the driver performs activities normally necessary to the employer’s business. The fact that drivers do not receive fixed wages but retain earnings in excess of the boundary payment does not negate employment status. Consequently, Melchor was an employee of Paguio Transport Corporation.
Just Cause for Dismissal — Burden of Proof and Evidence
The Court reiterated that the employer bears the burden of proving the existence of just (authorized) cause for dismissal. Petitioner alleged Melchor’s recklessness and fault in three accidents and asserted documentary proof (police reports, repair expenses, and a city prosecutor’s resolution) showing fault in the November 4 accident. Those documents, however, were not presented to the Labor Arbiter or the NLRC and were first attached to the petition before the Supreme Court. The Court declined to entertain factual disputes or new evidence in a Rule 65 certiorari petition, emphasizing that certiorari is limited to questions of jurisdiction and grave abuse of discretion and is not a substitute for factual review. Because petitioner failed to prove fault or recklessness before the triers of fact, the Court concluded that there was no proven just cause for dismissal and therefore Melchor was illegally dismissed.
Due Process — Notice and Opportunity to Be Heard
The Court reaffirmed the twin-notice requirement for dismissals: (1) notice specifying the acts or omissions alleged; and (2) a notice informing the employee of the employer’s decision to dismiss. The essence of due process is providing an opportunity to be heard. The Court found that Melchor was not given notice that his continued employment was in jeopardy when asked to explain the accident; he was only told subsequently not to report for work. Petitioner failed to present proof of compliance with the procedural requirements, and thus the dismissal lacked due process.
Strained Relations Doctrine — Factual Predicate Required
Petitioner invoked strained relations as a bar to reinstatement, arguing that alleged repeated recklessness and resulting damages made reinstatement impracticable. The Court held that strained relations must be demonstrated by facts; mere allegation or the filing of an illegal dismissal complaint does not suffice. Because petitioner produced no admissible evidence before the Labor Arbiter or NLRC to substantiate incompetence or recklessness, the doctrine of strained relations was inapplicable. The Court emphasized that strained relations cannot be applied indiscriminately
...continue readingCase Syllabus (G.R. No. 119500)
Procedural Posture
- Petition for certiorari and prohibition with preliminary injunction filed to assail the December 16, 1994 Decision of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 00-02-01564-94 (Wilfredo Melchor vs. Paguio Transport Corporation/Serafin Paguio).
- Petitioner also challenged the February 21, 1995 NLRC Resolution denying motion for reconsideration.
- The labor arbiter rendered a June 28, 1994 Decision ordering reinstatement with full backwages and awarding 13th month pay of P5,600.00; labor arbiter computed back wages as P67,200.00.
- NLRC affirmed finding of illegal dismissal but modified computation of back wages to P86,400.00 and held liability against Paguio Transport Corporation only.
- Case reached the Supreme Court (G.R. No. 119500), reported at 356 Phil. 158; decision promulgated August 28, 1998.
- This Court deemed the case submitted for resolution on January 14, 1998 upon noting and granting the Solicitor General's Manifestation and Motion dated November 25, 1997.
Core Doctrines Reiterated by the Court
- The Court reiterated the following doctrines in dismissing the petition:
- The boundary system as used in taxi (and jeepney) operations presupposes an employer-employee relation.
- The employer must prove just (or authorized) cause and due process to justify dismissal of an employee.
- Strained relations must be demonstrated as a fact before being invoked to deny reinstatement.
- Back wages and reinstatement are necessary consequences of illegal dismissal.
Facts
- Complainant Wilfredo Melchor was hired by Paguio Transport Corporation as a taxi driver on December 25, 1992 under the "boundary system."
- Melchor was engaged to drive the taxi unit assigned to him on a 24-hour schedule every two days.
- Under the arrangement, he remitted a boundary payment of P650.00 per trip; whatever he earned in excess constituted his income; average income per trip ranged from P500 to P700 exclusive of the P650 boundary and other deductions (as summarized in the NLRC decision).
- Allegedly on 24 [sic] November 1993 Melchor met a vehicular accident along Quirino Avenue near the PNR Station and Plaza Dilao after bumping a car stopped at an intersection; after submission of the traffic accident report he was allegedly advised to stop working and rest, and on reporting back was told his services were no longer needed, prompting a complaint for illegal dismissal.
- Respondent (petitioner) contended there was no employer-employee relationship, arguing lack of control and payment of boundary in lieu of wages (alleged "wage-agreement"), and alternatively asserted just cause based on three vehicular incidents involving Melchor:
- August 3 (damage P150.00),
- August 4 (damage P615.00),
- November 4, 1993 (damage P25,370.00) — alleged compounded damages and recklessness; respondents claimed Melchor failed to satisfactorily explain after several opportunities.
Labor Arbiter Decision (June 28, 1994)
- Ordered respondents to reinstate complainant with full backwages from the time his salaries were withheld until actual reinstatement.
- Ordered respondents to pay 13th month pay of P5,600.00.
- Labor arbiter's computation of backwages (as presented):
- Period: 11/28/93 - 6/28/94 = 7 months.
- Monthly income basis: P800.00 x 3 days x 4 weeks = P9,600.00.
- P9,600.00 x 7 months = P67,200.00.
- Directed that reinstatement either on the job or payroll at the employers' option be immediately executory under Article 223 of the Labor Code when complainant reported for work.
- Dismissed other claims for lack of evidence.
NLRC Decision and Findings (December 16, 1994)
- Affirmed labor arbiter's finding that complainant was illegally dismissed for lack of due process, and sustained employer-employee relationship under the boundary system.
- Rejected petitioner's claim of three vehicular incidents as constituting just cause, finding petitioner presented only bare statements without proof establishing circumstances or guilt with particularity.
- Adjusted backwages computation and awarded P86,400.00 instead of P67,200.00.
- Imposed liability on Paguio Transport Corporation only, not on its president who had been impleaded.
Issues Raised by Petitioner
- Whether NLRC acted in excess of jurisdiction and/or with grave abuse of discretion in ordering reinstatement with full backwages despite alleged strained relations rendering reinstatement inimical to petitioner and the riding public.
- Whether NLRC acted in excess of jurisdiction and/or with grave abuse of discretion in denying reconsideration despite alleged factual grounds supporting it.
- Note: private respondent did not challenge the NLRC decision or any portion thereof.
Points the Court Stated It Would Address
- (1) Existence of employer-employee relation;
- (2) Presence of just cause for dismissal;
- (3) Whether