FELIPE CAGUIMBAGA, JR. AND REYNALDO G. SERMONIA, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, GENE CANAYA SAND AND GRAVEL, AND GENE C. CANAYA, RESPONDENTS,

Caguimbaga versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by Felipe Caguimbaga, Junior and Reynaldo Sermonia against the National Labor Relations Commission, the sand and gravel enterprise Gene Canaya Sand and Gravel, and its owner Gene Canaya. The two petitioners were truck drivers who claimed they had been illegally dismissed and who had won separation pay and backwages before the Labor Arbiter. The Commission affirmed the finding of illegal dismissal but deleted the backwages, and the petitioners came to the Supreme Court to restore them. The case matters because the Court does more than settle a payroll dispute: it reminds every reviewee that the employer's burden to prove a valid dismissal arises only after the employee first proves, by substantial evidence, that a dismissal ever took place at all.

Procedural History

Caguimbaga and Sermonia filed separate complaints for illegal dismissal and money claims before the Labor Arbiter. In a decision dated May 20, 2009, the Labor Arbiter declared that they had been illegally terminated and ordered Gene Canaya, doing business as Gene Canaya Sand and Gravel, to pay them separation pay and backwages. The petitioners appealed to the National Labor Relations Commission, which in a decision dated January 25, 2010 affirmed the ruling with modification, deleting the awards of backwages. The petitioners then filed this petition for certiorari under Rule 65 of the Rules of Court, seeking to nullify the Commission's decision, to reinstate the award of backwages, and to obtain a writ of preliminary prohibitory injunction. The Supreme Court denied the petition and modified the Commission's decision by also deleting the separation pay.

Facts

Gene Canaya operated Gene Canaya Sand and Gravel, a sole proprietorship engaged in supplying sand and gravel to clients. He engaged truck drivers, helpers, and an office secretary. The drivers were hired on a verbal agreement to deliver sand and gravel, paid seventy pesos per trip plus one hundred pesos per day, and assigned to particular trucks. Caguimbaga worked as a truck driver from January 2000 until August 21, 2008, and Sermonia from March 3, 2002 until September 3, 2008.

Caguimbaga claimed that he told Canaya he could not report for duty on August 20, 2008 because he was not feeling well, and that the following morning his services were terminated without just or authorized cause. Sermonia claimed that he was terminated after he demanded his Social Security System, Pag-IBIG, and PhilHealth benefits and asked for a certificate of employment. Both asserted that they were dismissed without the notice required by law.

Canaya denied dismissing anyone. He presented attendance sheets showing numerous successive absences by both men without justifiable reason. His secretary attested that Caguimbaga gave no explanation for his absences and that they later saw him driving a competitor's truck. A fellow driver, Roberto Taras, said he saw Caguimbaga several times driving the competitor's truck, and that when he was sent to Caguimbaga's house to ask him to return, this was of no avail. As for Sermonia, a witness testified that after receiving his certificate of employment, Sermonia said the issuance freed him from any liability, and he did not report back despite efforts to make him return; it was later discovered that he intended to work for a liner company.

Issues

• Whether or not an employer-employee relationship existed between the petitioners and Gene Canaya as owner of Gene Canaya Sand and Gravel.
• Whether or not the petitioners were illegally dismissed by Gene Canaya.
• Whether or not the National Labor Relations Commission correctly deleted the award of backwages granted by the Labor Arbiter.

Applicable Provisions

Article 97, Chapter 1, Title II of the Labor Code, which the Court cites in holding that Canaya falls within the term employer, provides in its definition of employer:

"Employer" includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer.

This definition is what brings Canaya's acts of hiring, supervising, approving leave, and paying wages within the concept of an employer, and thus anchors the finding of an employment relationship.

Ruling

On the first issue, the Court held that an employer-employee relationship existed. Applying the four-fold test of the selection and engagement of the employee, the payment of wages, the power of dismissal, and the employer's power to control the employee on the means and methods by which the work is accomplished, the Court found that Canaya had the power to control the petitioners. His acts of hiring workers, supervising their performance, approving applications for leave, and paying their salaries are acts representing the interests of the employer. The Court added that payment on a per trip basis is not significant; it is merely a method of computing compensation. The petitioners were not independent contractors because they carried on no distinct and independent business of their own.

On the second issue, the Court held that there was no illegal dismissal. It began from the premise that before the employer must bear the burden of proving that a dismissal was legal, the employee must first establish by substantial evidence that a dismissal occurred, for if there is no dismissal, there can be no question as to its legality or illegality. The petitioners failed to present evidence controverting Canaya's counter-allegations, which were substantiated by sworn statements. Absent any showing of an overt or positive act proving dismissal, the claim of illegal dismissal cannot be sustained. The Court characterized the situation as an informal voluntary termination of employment by the petitioners.

On the third issue, the Court held that the Commission did not commit grave abuse of discretion in deleting the backwages. It went further: since the petitioners were not illegally dismissed but voluntarily terminated their work, they are not entitled to separation pay either. The Court also restated that factual findings of labor officials, who have acquired expertise in matters within their jurisdiction, are generally accorded not only respect but even finality when supported by substantial evidence, and it found no arbitrariness in the findings below.

Doctrine

First, the existence of an employer-employee relationship is determined by the four-fold test: the selection and engagement of the employee, the payment of wages, the power of dismissal, and the employer's power to control the employee on the means and methods by which the work is accomplished, with the control test being the most important element. Payment on a per trip basis does not negate employment, for it is merely a method of computing compensation.

Second, and this is the line to memorize, the rule that the employer bears the burden of proof in illegal dismissal cases finds no application where the employer denies having dismissed the employee. One who alleges a fact has the burden of proving it, and the evidence must be clear, positive, and convincing. Only after the employee establishes dismissal by substantial evidence does the burden shift to the employer to prove a valid or authorized cause.

Third, where the employee voluntarily terminates employment, whether formally or informally, there is no illegal dismissal, and neither backwages nor separation pay may be awarded.

Disposition

The petition was denied, the Commission's decision was affirmed with the modification that the awards of separation pay to Caguimbaga and Sermonia were also deleted, and the prayer for a writ of preliminary injunction or temporary restraining order was denied for being moot and academic.

Remember This

Memorize this: the employer's burden to prove a lawful dismissal arises only after the employee first proves by substantial evidence that a dismissal took place, for if there is no dismissal, there is no question of legality. Examiners use this case to test the four-fold test, the per trip payment argument, and the distinction between illegal dismissal and informal voluntary termination, which bars both backwages and separation pay.