G.R. No. 117495 Case Digest

G.R. No. 117495, May 29, 1997

Nelly Acta Martinez, petitioner,

vs NLRC, etc. respondents.

Ponente: Bellosillo

Facts:

Raul Martinez was an operator of two taxicab units under business name PAMATX and another two units under business name TIGERTX. Private respondents worked for him as drivers. When Martinez died, he left behind his mother, Nelly Martinez as his sole heir.

July 1992, the drivers lodged complaint against Raul and Nelly before the labor arbiter for violation of PD 851 and illegal dismissal. They alleged that they have been regular drivers of Raul earning 400 a day, not once during their employment that they received 13th month pay. When Nelly assumed the management of the units, she informed the drivers that she will sell the units for she can't manage it, but later did not proceed with her plan and assigned the units to other drivers instead.

Nelly traversed that the 13th month pay was personal to Raul and therefore didn't survive the death of Raul. Nelly contend too that the drivers were not entitled of the benefits of PD 851 because paid on purely boundary basis which are not covered by PD 851, the relationship was not employer-employee but that od lessee-lessor. 

On 30 August 1993 the Labor Arbiter dismissed the complaint on the following grounds:  (a) private respondents' claims being personal were extinguished upon the death of Raul Martinez; (b) petitioner was a mere housewife who did not possess the required competence to manage the business; and, (c) private respondents were not entitled to 13th    month    pay    because the existence of employer-employee relationship was doubtful on account of the boundary system adopted by the parties.

However, respondent National Labor Relations Commission viewed the case differently.  According to NLRC, (a) private respondents were regular drivers because payment of wages, which is one of the essential requisites for the existence of employment relation, may either be fixed, on commission, boundary, piece-rate or task basis; (b) the management of the business passed on to petitioner who even replaced private respondents with a new set of drivers; and, (c) the claims of private respondents survived the death of Raul Martinez considering that the business did not cease operation outright but continued presumably, in the absence of proof of sale, up to the moment.  

On 28 January 1994 respondent NLRC thus set aside the appealed decision, and as alternative to reinstatement, ordered petitioner to grant respondents separation pay equivalent to one (1) month salary for every year of service a fraction of six (6) months being considered as one (1) whole year. On 30 September 1994 the motion for reconsideration was denied. Hence, this recourse of petitioner.

Ruling:

The claim for 13th month pay pertains to the personal obligation of Raul Martinez which did not survive his death.  The rule is settled that unless expressly assumed, labor contracts are not enforceable against the transferee of an enterprise.  In the present case, petitioner does not only disavow that she continued the operation of the business of her son but also disputes the existence of labor contracts between her son and private respondents. 

The reason for the rule is that labor contracts are in personam, and that claims for backwages earned from the former employer cannot be filed against the new owners of an enterprise. Nor is the new operator of a business liable for claims for retirement pay of employees. Thus the claim of private respondents should have been filed instead in the intestate proceedings involving the estate of Raul Martinez in accordance with Sec. 5, Rule 86, of the Rules of Court.

In National Labor Union v. Dinglasan,[9] this Court ruled that the relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee.  

In the present case, however, private respondents simply assumed the continuance of an employer-employee relationship between them and petitioner, when she took over the operation of  the  business  after  the death of her son Raul Martinez, without any supporting evidence.  Consequently, we cannot sustain for lack of basis the factual finding of respondent NLRC on the existence of employer-employee  relationship between petitioner and private respondents.  Clearly, such finding emanates from grave abuse of discretion.  With this conclusion, consideration of the issue on illegal dismissal becomes futile and irrelevant.

WHEREFORE, the petition is GRANTED.  The Decision of respondent National Labor Relations Commission dated 28 January 1994 ordering petitioner Nelly Acta Martinez to grant respondents separation pay as well as its Order of 30 September 1994 denying reconsideration is  SET  ASIDE.  The Decision of the Labor Arbiter dated 30 August 1993 dismissing the complaint is  REINSTATED.