G.R. No. 233413 , June 17, 2019
CELIA R. ATIENZA, Petitioner, vs. NOEL SACRAMENTO SALUTA, Respondent.

FACTS

Noel Sacramento Saluta (respondent) was hired in May 2012 as a driver for Celia R. Atienza (petitioner), a top official of CRV Corporation. He received a monthly salary of ₱9,000.00, which was coursed through the company’s General Manager, Rodolfo Reyes. On December 11, 2014, respondent figured in a vehicular accident while driving. The company advanced ₱15,000.00 for the damages, with an agreement that it would be deducted from his salary. His driver’s license was confiscated, and he was issued a Temporary Operator’s Permit (TOP). On December 23, 2014, respondent informed petitioner he needed to absent himself to retrieve his license as the TOP had expired. Petitioner refused, citing her appointments. Respondent, fearing it was illegal to drive without a license, did not report for work on December 24, 2014, after arranging for a replacement driver. Petitioner called him and stated, “kung hindi ka makakapag-drive ngayon, mabuti pa maghiwalay na tayo.” Respondent interpreted this as a verbal termination. Later that day, General Manager Reyes confirmed his termination and refused to release his final salary due to the outstanding ₱15,000.00 debt.
On April 7, 2015, respondent filed a complaint for illegal dismissal and various monetary claims against both CRV Corporation and petitioner. Petitioner contended that respondent was her personal/family driver, not a company employee, and that he had abandoned his job after the December incident. She claimed the ₱15,000.00 was a personal loan and that respondent had ceased reporting for work without notice.

ISSUE

1. Whether an employer-employee relationship existed between respondent and petitioner (or CRV Corporation).
2. If so, whether respondent was illegally dismissed.
3. Whether respondent is entitled to his monetary claims (overtime, holiday pay, etc.).

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals’ decision, which had modified the NLRC ruling. The Court held:
1. On Employer-Employee Relationship: The Court found that respondent was an employee of petitioner Celia R. Atienza personally, not of CRV Corporation. The four-fold test for employment (selection and engagement, payment of wages, power of dismissal, and power of control) was satisfied. Petitioner hired respondent, paid his salary through her company’s manager, had the power to dismiss him, and exercised control over his daily tasks as her personal driver. The fact that his salary was processed through the corporation did not make him a corporate employee, as it was merely a payroll convenience. Thus, an employer-employee relationship existed between petitioner and respondent.
2. On Illegal Dismissal: The Court ruled that respondent was illegally dismissed. Petitioner’s statement, “mabuti pa maghiwalay na tayo,” was a clear act of dismissal. The Labor Arbiter’s finding that this was merely a “figure of speech” was erroneous. In labor law, any ambiguous act by the employer leading an employee to believe his employment is terminated constitutes dismissal. Petitioner failed to prove any just or authorized cause for termination. Her claim of abandonment was untenable, as abandonment requires a clear, deliberate, and unjustified refusal to resume work, which was not present here. Respondent’s absence was for a necessary purpose (retrieving his license) and he had secured a replacement. His subsequent filing of a complaint reinforced his desire to work, negating abandonment.
3. On Monetary Claims: The Court held that as a person in the personal service of another, respondent is excluded from the coverage of the Labor Code provisions on overtime pay, holiday pay, premium pay, and service incentive leave under Articles 82, 91, 93, 94, and 95. His terms of employment are primarily governed by Articles 1689 and 1699 of the Civil Code on domestic servants. However, he is entitled to his full backwages from the date of illegal dismissal until finality of this decision, and separation pay in lieu of reinstatement, as the relationship was one of personal trust and confidence. The ₱15,000.00 deduction was declared illegal, as it was a personal loan, not a lawful wage deduction under Article 113 of the Labor Code.

DOCTRINES

1. Determination of Employer-Employee Relationship for Personal Drivers: A driver hired primarily for the personal and family needs of an individual, paid by that individual (even if salary is processed through a corporate entity for convenience), and under that individual’s direct control, is considered an employee of that individual, not of the corporation. The four-fold test is applied, with the “control test” being most determinative.
2. Constructive Dismissal by Verbal Statement: A statement from an employer that reasonably leads an employee to believe his services are being terminated, such as “it’s better we part ways,” constitutes a dismissal. The employer’s intent is interpreted from the perspective of the employee’s reasonable understanding.
3. Exclusion of Persons in Personal Service from Labor Code Benefits: Individuals employed in the personal service of another (e.g., personal drivers, domestic helpers) are excluded from the coverage of the Labor Code provisions on overtime pay, holiday pay, premium pay for holiday and rest day work, and service incentive leave, pursuant to Article 82. Their relationship is principally governed by the Civil Code.
4. Illegal Deduction for Personal Debt: Deducting from an employee’s wages to satisfy a personal loan extended by the employer is illegal. Article 113 of the Labor Code only permits deductions authorized by law or with the employee’s written authorization, which must be for a lawful purpose. A personal loan does not qualify.
5. Separation Pay in Lieu of Reinstatement for Personal Service Employees: When an employee engaged in a position of personal trust and confidence is illegally dismissed, reinstatement is often not feasible due to the eroded relationship. The grant of separation pay in lieu of reinstatement is proper, in addition to the award of full backwages.