Valenzuela vs. Alexandra Mining and Oil Ventures, Inc.

An employer's invocation of a legal provision permitting termination at will, coupled with a claim that the employee was not a company employee but a household servant, constitutes an implied admission of dismissal sufficient to establish the fact of dismissal. Where such dismissal is made without just or authorized cause and without the twin requirements of notice and hearing, the employee is illegally dismissed and is entitled to reinstatement and full backwages, or separation pay in lieu of reinstatement when strained relations render reinstatement no longer viable.

Valenzuela was hired as a company driver of AMOVI, a family corporation owned and presided over by Cesar Detera. The respondents claimed that Valenzuela was actually a family driver of the Deteras, with his salary charged to AMOVI's account merely for convenience. This distinction mattered because household service personnel, unlike regular company employees, may be terminated at will under Article 150 of the Labor Code, which governs the termination of household service relationships.

Ramil R. Valenzuela was hired on January 12, 2008 as a company driver of Alexandra Mining and Oil Ventures, Inc. (AMOVI), a family corporation owned and presided over by Cesar E. Detera. He worked an eight-hour shift from 8:00 a.m. to 5:00 p.m. with a monthly salary of ₱12,000.00. On June 15, 2013, after five years and five months of service, Valenzuela was told he could no longer continue working because there were no forthcoming funds to pay his salary.

The respondents presented a different version of events. They claimed Valenzuela was actually hired as a family driver of the Deteras, with his salary charged to AMOVI's account for convenience. According to them, on June 15, 2013, Valenzuela informed Cesar's wife, Annlynn, that he was going home to his province to visit his parents. Annlynn granted him leave, but when she asked whether he could return the following Monday, Valenzuela said he would call. He did not show up for work that Monday and did not call, causing inconvenience as it was his responsibility to bring the Deteras' daughter to and from school. A week later, Valenzuela appeared at the Deteras' residence, informed them he was resigning, and asked for separation pay. Annlynn agreed but asked him to submit a resignation letter; Valenzuela walked out and never returned.

In his Reply, Valenzuela denied asking permission to visit parents in Bicol, as the Deteras knew his parents had long been dead and their remains were buried in Pateros. He alleged that he actually reported for work on June 17, 2013, but was prevented by Cesar, who told him his service was no longer needed because there were no funds forthcoming to pay his salary. Valenzuela emphasized that he not only worked for the company but also drove for members of the Detera family.

The Labor Arbiter found Valenzuela had been illegally dismissed, noting that the respondents failed to present evidence supporting their claim of abandonment. The NLRC affirmed, pointing to Valenzuela's identification card and payslips as evidence of his employment with AMOVI. The Court of Appeals, while affirming that Valenzuela was an employee of AMOVI under the four-fold test, found no evidence of dismissal and applied the ruling in Exodus, ordering reinstatement without backwages. The CA reasoned that since there was no clear evidence of dismissal by the employer and no proof of abandonment by the employee, the proper relief was reinstatement without backwages.

• Fact of Dismissal Established: Valenzuela contended that the fact of his dismissal was clearly established, as he was told on June 15, 2013 that he could no longer continue working due to lack of funds, and when he reported for work on June 17, 2013, Cesar prevented him from working, saying his service was no longer needed.

• Entitlement to Full Backwages: Valenzuela argued that because his dismissal was illegal, he was entitled to both separation pay and full backwages, contrary to the CA's ruling that deleted the award of backwages.

• Family Driver Status: The respondents argued that Valenzuela was not an employee of AMOVI but a family driver of the Deteras, and that his salary was charged to AMOVI's account merely for convenience.

• Termination at Will Under Article 150: The respondents invoked Article 150 of the Labor Code, arguing that as a member of the household service, Valenzuela could be terminated at will by his employer.

• Abandonment of Employment: The respondents alleged that Valenzuela abandoned his employment when he failed to return to work after being granted leave to visit his parents, and that he later voluntarily resigned and asked for separation pay.

• Illegal Dismissal: Whether Valenzuela was illegally dismissed from his employment.

• Applicability of Exodus: Whether the Court of Appeals correctly applied the ruling in Exodus International Construction Corporation vs. Biscocho in deleting the award of backwages.

• Entitlement to Backwages and Separation Pay: Whether Valenzuela is entitled to full backwages and separation pay in lieu of reinstatement.

• Solidary Liability of Cesar Detera: Whether Cesar Detera should be held solidarity liable with AMOVI for the monetary awards.

• Illegal Dismissal: Yes. Valenzuela was illegally dismissed. Cesar's repeated invocation of Article 150 of the Labor Code, claiming Valenzuela was a family driver who could be terminated at will, constituted an implied admission that he terminated Valenzuela out of his own volition, without sufficient ground and notice.

• Applicability of Exodus: No. The ruling in Exodus is inapplicable because in that case, there was neither illegal dismissal nor abandonment, whereas in the instant case, Cesar's own admissions established the fact of dismissal.

• Entitlement to Backwages and Separation Pay: Yes. Under Article 279 of the Labor Code, an illegally dismissed employee is entitled to reinstatement and full backwages. Due to strained relations between the parties, separation pay in lieu of reinstatement is a more feasible alternative, computed at one month for every year of service plus full backwages from the time of illegal dismissal up to the finality of the Decision.

• Solidary Liability of Cesar Detera: Yes. Cesar's bad faith was manifested by his persistent assertion that Valenzuela was merely a family driver to justify his unceremonious dismissal, warranting solidary liability with AMOVI.

• Illegal Dismissal: The Court held that the CA erred in finding no evidence of dismissal. Cesar's own pleadings before the LA, NLRC, and CA revealed that while claiming to be Valenzuela's real employer, he impliedly admitted dismissing him by repeatedly invoking Article 150 of the Labor Code to justify his action. Since the labor tribunals and the CA unanimously agreed that Valenzuela was a company employee of AMOVI, Cesar's admission on the fact of dismissal established that it was done without regard to substantive and procedural due process. The respondents raised no valid ground to justify the dismissal, and the twin requirements of notice and hearing were not observed — Valenzuela was not informed of any ground for dismissal and was deprived of the opportunity to explain his side.

• Applicability of Exodus: The Court distinguished Exodus, noting that in that case, the resolution to reinstate workers without backwages was based on a finding of neither illegal dismissal nor abandonment. The instant case does not share the same factual milieu because Cesar vigorously refuted the existence of an employer-employee relationship while simultaneously presenting himself as the real employer, and his invocation of Article 150 constituted an implied admission of dismissal. The Court emphasized that the question of who was the real employer had been unanimously resolved by the LA, NLRC, and CA in favor of AMOVI, as evidenced by the identification card and payslips, and by the four-fold test of employer-employee relationship.

• Entitlement to Backwages and Separation Pay: Citing Skippers United Pacific, Inc. vs. Doza, the Court reiterated that valid dismissal requires compliance with both procedural and substantive due process. Procedural due process consists of the twin requirements of notice and hearing — two written notices before termination, with an opportunity to be heard before the second notice. Substantive due process requires dismissal under a just or authorized cause under Articles 282 to 284 of the Labor Code. Neither was satisfied here. Under Article 279, an illegally dismissed employee is entitled to reinstatement and full backwages. Citing Macasero vs. Southern Industrial Gases Philippines, the Court noted that backwages and reinstatement are separate and distinct reliefs, and separation pay may be granted in lieu of reinstatement when reinstatement is no longer feasible due to strained relations. Applying the doctrine of strained relations from CRC Agricultural Trading vs. NLRC, the Court found that compelling reinstatement would do more harm given the antagonistic stance of the parties, especially since Valenzuela performed personal errands for the Deteras, making trust essential. The Court also noted that the alleged closure of AMOVI was not clearly established in the records, so the company is reasonably presumed to be in full operation, and the computation of separation pay remains one month for every year of service plus backwages from illegal termination up to the finality of the Decision.

• Solidary Liability of Cesar Detera: The Court applied the rule that a corporate officer is not personally liable for money claims of discharged corporate employees unless he acted with evident malice and bad faith in terminating their employment. Cesar's bad faith was manifested by his persistent assertion that Valenzuela was merely a family driver to justify his unceremonious dismissal, and his admission of the reckless manner of dismissal justified holding him solidarity liable with AMOVI.

• Implied Admission of Dismissal — An employer's invocation of a legal provision permitting termination at will, coupled with claims that the employee was not a company employee but a household servant, constitutes an implied admission of the fact of dismissal. The Court applied this doctrine where Cesar repeatedly invoked Article 150 of the Labor Code to justify terminating Valenzuela, which, combined with the finding that Valenzuela was a company employee, established that the dismissal was done without just cause and without due process.

• Four-Fold Test of Employer-Employee Relationship — The existence of an employer-employee relationship is determined by: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. The Court applied this test, noting that AMOVI hired Valenzuela, issued his identification card, included him in its payroll, and exercised the power to discipline and dismiss through Cesar as President, with the control test satisfied because Valenzuela had no choice as to his passengers and was required to render service to the President and his family.

• Doctrine of Strained Relations — Under this doctrine, the payment of separation pay is an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. The payment liberates the employee from a highly oppressive work environment and releases the employer from the obligation of maintaining in its employ a worker it could no longer trust. The Court applied this doctrine, finding that the antagonistic stance of the parties and the trust essential to Valenzuela's role made reinstatement impractical.

• Requisites of Valid Dismissal — For a worker's dismissal to be valid, it must comply with both procedural and substantive due process. Procedural due process consists of the twin requirements of notice and hearing: the employer must furnish the employee with two written notices — the first apprising the employee of the particular acts or omissions for which dismissal is sought, and the second informing the employee of the decision to dismiss — with an opportunity to be heard before the second notice. Substantive due process requires dismissal under a just or authorized cause under Articles 282 to 284 of the Labor Code.

• "Thus, there is implied admission that he indeed terminated Valenzuela out of his own volition, without sufficient ground and notice. Unfortunately for Cesar, the labor tribunals and the CA all agreed that Valenzuela was a company employee and his admission on the fact of the latter's dismissal only established that it was done without regard to substantive and procedural due process." — This passage articulates the core ratio decidendi: Cesar's invocation of Article 150 constituted an implied admission of dismissal, and because Valenzuela was a company employee, the dismissal was illegal for want of just cause and due process.

• "For a worker's dismissal to be considered valid, it must comply with both procedural and substantive due process. The legality of the manner of dismissal constitutes procedural due process, while the legality of the act of dismissal constitutes substantive due process." — This quotation from Skippers United Pacific, Inc. v. Doza states the canonical formulation of the requisites of valid dismissal, distinguishing between procedural and substantive due process components.

• "In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages." — This passage from Macasero v. Southern Industrial Gases Philippines articulates the reliefs available to an illegally dismissed employee, clarifying that backwages and reinstatement are separate and distinct reliefs, with separation pay available as an alternative to reinstatement.

• "On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust." — This quotation from CRC Agricultural Trading v. NLRC explains the rationale behind the doctrine of strained relations, justifying the award of separation pay in lieu of reinstatement.

• Exodus International Construction Corporation, et al. vs. Biscocho, et al., 659 Phil. 142 (2011) — Distinguished. The Court held this case inapplicable because in Exodus, the resolution to reinstate workers without backwages was based on a finding of neither illegal dismissal nor abandonment, whereas in the instant case, Cesar's admissions established the fact of dismissal.

• Skippers United Pacific, Inc., et al. vs. Doza, et al., 681 Phil. 427 (2012) — Cited as controlling authority on the requisites of valid dismissal, specifically the twin requirements of procedural due process (notice and hearing) and substantive due process (just or authorized cause under Articles 282 to 284 of the Labor Code).

• Macasero vs. Southern Industrial Gases Philippines and/or Lindsay, 597 Phil. 494 (2009) — Cited for the proposition that an illegally dismissed employee is entitled to two separate and distinct reliefs: backwages and reinstatement, with separation pay available in lieu of reinstatement when reinstatement is no longer viable.

• CRC Agricultural Trading, et al. vs. NLRC, et al., 623 Phil. 789 (2009) — Cited for the doctrine of strained relations, explaining the rationale for allowing separation pay as an alternative to reinstatement.

• Bank of Lubao, Inc. vs. Manabat, et al., 680 Phil. 792 (2012) — Cited for the proposition that the computation of separation pay remains one month for every year of service plus backwages from illegal termination up to the finality of the Decision, where actual closure of business is not clearly established.

• Businessday Information Systems and Services, Inc. vs. NLRC, G.R. No. 103575, April 5, 1993, 221 SCRA 9 — Cited for the rule that a corporate officer is not personally liable for money claims of discharged corporate employees unless he acted with evident malice and bad faith in terminating their employment.

• Article 150, Labor Code — The provision governing service of termination notice for household service, invoked by Cesar to justify terminating Valenzuela at will. The Court held that this invocation constituted an implied admission of dismissal, but since Valenzuela was a company employee, not a household servant, the provision did not apply.

• Article 279, Labor Code — The security of tenure provision, providing that an employee who is unjustly dismissed shall be entitled to reinstatement without loss of seniority rights and other privileges, and to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time compensation was withheld up to actual reinstatement. The Court applied this provision to award Valenzuela full backwages and separation pay.

• Articles 282 to 284, Labor Code — The provisions enumerating just and authorized causes for termination of employment. The Court cited these provisions in explaining that substantive due process requires dismissal under a just or authorized cause, which the respondents failed to establish.

• Rule 45, Rules of Court — The procedural rule governing Petitions for Review on Certiorari, under which Valenzuela filed the instant petition assailing the CA's Decision and Resolution.

Velasco, Jr. (Chairperson), Peralta, Perez, and Jardeleza, JJ., concurred in the decision.