R Transport Corporation vs. Rogelio Ejandra

An employer that invokes its right to dismiss an employee for just cause is barred from denying the existence of an employer-employee relationship; payment on a commission basis does not negate employment, and dismissal for abandonment requires both absence without valid or justifiable reason and a clear intention to sever the relationship, as well as compliance with the notice and hearing requirements of procedural due process.

R Transport Corporation maintained buses, and Rogelio Ejandra claimed to have driven one of them on a commission basis. The dispute implicated the Labor Code and its implementing rules on employer-employee relationship, abandonment, and procedural due process in termination, particularly Article 97(f) of the Labor Code and Department Order No. 9, series of 1997.

R Transport Corporation maintained buses, and Rogelio Ejandra alleged that from July 15, 1990 to January 31, 1996, almost six years, he worked as a bus driver of petitioner. He plied the route "Muntilupa-Alabang-Malanday-Monumento-UE-Letre-Sangandaan" from 5:00 a.m. up to 2:00 a.m. the next day and was paid 10% of his daily earnings.

On January 31, 1996, an officer of the Land Transportation Office (LTO), Guadalupe Branch, Makati City, apprehended him for obstruction of traffic, and his license was confiscated. Upon his arrival at petitioner’s garage, he immediately reported the incident to his manager, Mr. Oscar Pasquin, who gave him ₱500 to redeem his license. The following day, he went to LTO, Guadalupe Branch, to claim it, but he was told that it had not yet been turned over by the officer who apprehended him. He was able to retrieve his license only after a week.

On February 8, 1996, private respondent informed Mr. Pasquin that he was ready to report for work. He was told that the company was still studying whether to allow him to drive again. He was likewise accused of causing damage to the bus he used to drive. Denying the charge, he blamed the person who drove the bus during his absence, considering that the damage was sustained during the week he did not drive. Mr. Pasquin nonetheless told him, "Magpahinga ka muna at tatawagin ka na lang namin kung kailangan ka na para magmaneho. Magbakasyon ka muna, bata." When he asked how long he had to rest, the manager did not give a definite time.

Petitioner denied private respondent’s allegations and claimed that private respondent, a habitual absentee, abandoned his job. Petitioner asserted that, had the license confiscation been true, private respondent should have presented an apprehension report and informed petitioner of his problems with the LTO, but he did not. Petitioner further argued that private respondent was not an employee because theirs was a contract of lease and not of employment, with payment on a commission basis.

Considering himself dismissed, private respondent filed a complaint for illegal dismissal against petitioner. The labor arbiter, the NLRC, and the Court of Appeals were unanimous in finding that private respondent worked as a driver of one of petitioner’s buses and was paid on a 10% commission basis; that after he was apprehended for a traffic violation, his license was confiscated and released only after a week; and that when he reported back to work, petitioner’s manager told him to wait until his services were needed again.

• Abandonment: Petitioner argued that private respondent was a habitual absentee who abandoned his job; had his license truly been confiscated, he should have presented an apprehension report and informed petitioner of his LTO problem, but he did not.
• Lease of Services: Petitioner maintained that the parties’ agreement was a contract of lease of services, not employment, with payment on a commission basis, so termination did not require notice and hearing.
• Grave Abuse of Discretion / Factual Findings: Petitioner argued that the Court of Appeals committed grave abuse of discretion in affirming the NLRC based on speculation, surmise, or conjecture, and that the findings of fact were mere conclusions without citation or specific evidence.
• Evidence: Petitioner claimed that private respondent’s affidavit was hearsay and self-serving.
• Review of Records: Petitioner asked the Court to give a second look to the NLRC records to avoid miscarriage of justice and to further due process.

• Finality of Labor Tribunals’ Factual Findings: Whether the Court of Appeals erred in affirming the factual findings of the labor arbiter and the NLRC.
• Employer-Employee Relationship: Whether an employer-employee relationship existed between R Transport Corporation and Rogelio Ejandra despite payment on commission basis and petitioner’s claim of a lease of services.
• Abandonment: Whether Rogelio Ejandra abandoned his work, constituting just cause for dismissal.
• Procedural Due Process: Whether Rogelio Ejandra was accorded the required notice and hearing before termination.

• Finality of Labor Tribunals’ Factual Findings: No. The petition raises factual issues, and the factual findings of the Court of Appeals, especially when affirming labor tribunals, are conclusive and binding; they are supported by substantial evidence.
• Employer-Employee Relationship: Yes. Petitioner was barred from denying employment because it invoked the employer’s right to dismiss for just cause; the power to dismiss is an indication of employment, and commission payment does not negate it under Article 97(f).
• Abandonment: No. Abandonment requires absence without valid or justifiable reason and a clear intention to sever the employment relationship; Ejandra’s absence was justified and he reported for work, and petitioner failed to report the dismissal to the DOLE.
• Procedural Due Process: No. Petitioner terminated Ejandra without the written notice, opportunity to explain, hearing or conference, and written notice of termination required by Section 2, Rule XXIII, Book V, Department Order No. 9.

• Finality of Labor Tribunals’ Factual Findings: Under Section 1, Rule 45 of the 1997 Rules of Civil Procedure, a petition for review shall only raise questions of law; findings of fact of the Court of Appeals are, as a general rule, conclusive upon and binding on the Supreme Court. This doctrine applies with greater force in labor cases where the factual findings of the labor tribunals are affirmed by the Court of Appeals, because labor officials are deemed to have acquired expertise in matters within their jurisdiction. In this case, the labor arbiter, the NLRC, and the Court of Appeals were unanimous that private respondent worked as a driver of one of petitioner’s buses and was paid on a 10% commission basis; that after apprehension for a traffic violation his license was confiscated; that when he informed petitioner’s general manager, the latter gave him money to redeem his license; that he went to the LTO office everyday but recovered his license only after a week; that when he reported back to work, petitioner’s manager told him to wait until his services were needed again; and that, considering himself dismissed, he filed a complaint for illegal dismissal. These findings were amply supported by substantial evidence, and no reason existed to disturb them.
• Employer-Employee Relationship: Petitioner insisted that the parties’ agreement was a contract of lease of services. Petitioner was barred from negating the existence of an employer-employee relationship. In its petition before the Supreme Court, petitioner invoked rulings on the right of an employer to dismiss an employee for just cause and maintained that private respondent was justifiably dismissed due to abandonment. By adopting those rulings, petitioner impliedly admitted that it was in fact the employer of private respondent. According to the control test, the power to dismiss an employee is one of the indications of an employer-employee relationship. Petitioner’s claim that private respondent was legally dismissed for abandonment was in fact a negative pregnant: an acknowledgement that there was no mutual termination of the alleged contract of lease and that private respondent was its employee. The fact that petitioner paid private respondent on a commission basis did not rule out the presence of an employer-employee relationship, because Article 97(f) of the Labor Code provides that an employee’s wages can be in the form of commissions.
• Abandonment: Petitioner claimed that private respondent abandoned his job and lied about the confiscation of his license. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason and (2) a clear intention to sever the employer-employee relationship. Of the two, the second element is the more determinative factor and should be manifested by some overt acts; mere absence is not sufficient. The employer bears the burden of proof to show a deliberate and unjustified refusal of the employee to resume employment without any intention of returning. Petitioner fell short of proving the requisites. Private respondent’s absence was justified because the LTO, Guadalupe Branch, did not release his license until after a week, a unanimous factual finding of the labor tribunals and the Court of Appeals. Private respondent never intended to sever his employment, as he reported for work as soon as he got his license back, and petitioner offered no evidence to rebut these established facts. If private respondent really abandoned his work, petitioner should have reported such fact to the nearest Regional Office of the Department of Labor and Employment in accordance with Section 7, Rule XXIII, Book V of Department Order No. 9, series of 1997; no such report was made.
• Procedural Due Process: In addition to the absence of a valid cause to terminate private respondent from work, petitioner violated his right to procedural due process by not giving him the required notice and hearing. Section 2, Rule XXIII, Book V of Department Order No. 9 provides the procedure for dismissal for just or authorized cause. For termination based on just causes as defined in Article 282 of the Labor Code, the standards are: (a) a written notice served on the employee specifying the ground or grounds for termination and giving the employee reasonable opportunity within which to explain his side; (b) a hearing or conference during which the employee, with the assistance of counsel if desired, is given opportunity to respond to the charge, present evidence, or rebut the evidence presented against him; and (c) a written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify termination. For termination based on authorized causes defined in Article 283, due process is deemed complied with upon service of a written notice to the employee and the appropriate Regional Office at least thirty days before the effectivity of the termination, specifying the ground or grounds. If termination is brought about by the completion of the contract or phase thereof, no prior notice is required; if by failure of a probationary employee to meet standards, a written notice within a reasonable time from the effective date of termination is sufficient. Petitioner did not comply with these requirements. The NLRC also noted that, from petitioner’s own admission, complainant was not afforded his right to due process prior to the severance of his employment.

• Finality of factual findings of labor tribunals — Factual findings of labor tribunals, especially when affirmed by the Court of Appeals, are generally accorded respect and finality because labor officials have acquired expertise in matters within their jurisdiction. In this case, the unanimous findings that Ejandra was a commission-paid driver, that his license was confiscated and released only after a week, and that he reported for work were supported by substantial evidence and not disturbed.
• Control test — The power to dismiss an employee is one of the indications of an employer-employee relationship. Petitioner’s invocation of its right to dismiss for just cause and its defense of abandonment impliedly admitted that it was Ejandra’s employer.
• Negative pregnant — A negative pregnant is a denial pregnant with an admission of the substantial facts alleged. Petitioner’s claim that Ejandra was legally dismissed for abandonment was a negative pregnant: it acknowledged that there was no mutual termination of the alleged lease and that Ejandra was its employee.
• Abandonment — Abandonment requires two elements: (1) failure to report for work or absence without valid or justifiable reason and (2) a clear intention to sever the employer-employee relationship. The second is more determinative and must be shown by overt acts; mere absence is insufficient. The employer bears the burden of proving a deliberate and unjustified refusal to resume employment without intention of returning. Ejandra’s absence was justified and he reported for work, so abandonment was not established.
• Commission as wages — Article 97(f) of the Labor Code provides that an employee’s wages can be in the form of commissions. Payment on a commission basis therefore did not rule out an employer-employee relationship.
• Procedural due process in dismissal — For termination based on just causes under Article 282, the employer must substantially observe: (a) a written notice specifying the ground/s and giving reasonable opportunity to explain; (b) a hearing or conference where the employee may respond, present evidence, or rebut; and (c) a written notice of termination indicating that grounds have been established. For authorized causes under Article 283, a written notice to the employee and the Regional Office at least 30 days before effectivity is required. Petitioner failed to comply.
• Report of dismissal — Under Section 7, Rule XXIII, Book V, Department Order No. 9, series of 1997, the employer shall submit a monthly report to the Regional Office of all dismissals. Petitioner’s failure to report the alleged abandonment supported the finding that no abandonment occurred.

• "Under Section 1, Rule 45 of the 1997 Rules of Civil Procedure, a petition for review shall only raise questions of law considering that the findings of fact of the Court of Appeals are, as a general rule, conclusive upon and binding on this Court." — This states the procedural threshold that barred review of the factual findings and explains why the labor tribunals’ findings were not disturbed.
• "Petitioner is barred to negate the existence of an employer-employee relationship. In its petition filed before this Court, petitioner invoked our rulings on the right of an employer to dismiss an employee for just cause." — This is the ratio for treating petitioner’s invocation of employer rights as an implied admission of employment.
• "According to the control test, the power to dismiss an employee is one of the indications of an employer-employee relationship." — This states the control-test indicator applied to petitioner’s power to dismiss private respondent.
• "To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason and (2) a clear intention to sever the employer-employee relationship. Of the two, the second element is the more determinative factor and should be manifested by some overt acts. Mere absence is not sufficient." — This is the canonical formulation of abandonment applied to reject petitioner’s just-cause defense.

• Herbosa, et al. vs. Court of Appeals, 374 SCRA 578, 591 [2001] — Cited for the rule that a petition for review under Rule 45 shall only raise questions of law and that the Court of Appeals’ factual findings are generally conclusive and binding.
• Alfaro vs. Court of Appeals, 363 SCRA 799 [2001] — Cited for the greater force of the finality doctrine in labor cases, where factual findings of labor tribunals affirmed by the Court of Appeals are accorded respect and finality because of labor officials’ expertise.
• Jimenez vs. National Labor Relations Commission, 256 SCRA 84 [1996] — Cited for the control test, particularly that the power to dismiss an employee is one of the indications of an employer-employee relationship.
• Millares, et al. vs. National Labor Relations Commission, 328 SCRA 79 [2000] — Cited for the rule that the employer bears the burden of proving a deliberate and unjustified refusal of the employee to resume employment without any intention of returning.
• Republic vs. Sandiganbayan, et al., G.R. No. 152154, July 15, 2003 — Cited for the definition of a negative pregnant as a denial pregnant with an admission of the substantial facts alleged.

• Section 1, Rule 45, 1997 Rules of Civil Procedure — A petition for review shall only raise questions of law; the Court of Appeals’ factual findings are generally conclusive and binding. Applied to deny review of petitioner’s factual challenges.
• Article 97(f), Labor Code — An employee’s wages can be in the form of commissions. Applied to hold that payment on commission basis did not negate an employer-employee relationship.
• Section 7, Rule XXIII, Book V, Department Order No. 9, series of 1997 — The employer shall submit a monthly report to the Regional Office of all dismissals, specifying names, reasons, dates, positions, and other required information. Petitioner’s failure to report the alleged abandonment supported the finding that no abandonment occurred.
• Section 2, Rule XXIII, Book V, Department Order No. 9, series of 1997 — Sets the standards of due process for termination. For just causes under Article 282: written notice specifying grounds and opportunity to explain; hearing or conference; written notice of termination. For authorized causes under Article 283: written notice to the employee and the appropriate Regional Office at least thirty days before effectivity. For completion of contract or probationary failure: no prior notice for completion; written notice within a reasonable time for probationary failure. Applied to find a procedural due process violation.
• Article 282, Labor Code — Just causes for termination referenced in Section 2(I) of Department Order No. 9.
• Article 283, Labor Code — Authorized causes for termination referenced in Section 2(II) of Department Order No. 9.

Justice Vitug (Acting Chief Justice), Justice Sandoval-Gutierrez, and Justice Carpio-Morales concurred.