G.R. No. 155056-57; October 19, 2007
THE HEIRS OF THE LATE PANFILO V. PAJARILLO, Petitioners, vs. THE HON. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION and SAMAHAN NG MGA MANGGAGAWA NG PANFILO V. PAJARILLO, ET AL., Respondents.

FACTS

Panfilo V. Pajarillo owned and operated buses under the name “PVP Liner.” Private respondents were his drivers, conductors, and conductresses, paid on a commission basis with various unauthorized deductions from their earnings. They later formed a union, the Samahan ng mga Manggagawa ng Panfilo V. Pajarillo. Upon learning of the union, Pajarillo and his family coerced employees to sign documents expressing trust in management or blank papers that turned out to be resignation letters. Those who refused were barred from work or dismissed.
Two complaints were filed: one for unfair labor practice, illegal dismissal, and illegal deduction (NLRC NCR Case No. 00-08-03013-87), and another for non-payment of labor standard benefits like ECOLA and holiday pay (NLRC Case No. 00-01-00331-88). The cases were consolidated. Panfilo Pajarillo died during the proceedings, and his heirs were substituted. The Labor Arbiter dismissed the complaints, but the NLRC reversed, finding illegal dismissal and ordering monetary awards. The Court of Appeals affirmed the NLRC.

ISSUE

Whether the heirs of Panfilo Pajarillo can be held liable for the monetary awards arising from the labor violations committed during his lifetime.

RULING

Yes. The Supreme Court affirmed the liability of the estate. The Court explained that upon the death of a party, the proceedings do not abate but continue against the legal representative or the heirs. The obligation to pay validly adjudged monetary awards in a labor case survives the death of the employer. The claims for unpaid wages, ECOLA, 13th month pay, and other benefits, as well as the awards for illegal dismissal, are charges against the estate of the deceased employer. These awards are considered actual liabilities that must be settled from the estate assets before distribution to the heirs.
The Court rejected the heirs’ argument that they were not properly substituted. The records showed that the heirs, through counsel, actively participated in the proceedings before the NLRC after Panfilo’s death, effectively submitting to the tribunal’s jurisdiction. Their participation cured any procedural defect in the substitution. Consequently, the estate, represented by the heirs, remains liable for the labor claims. The decision of the Court of Appeals was upheld.