G.R. No. 117495 . May 29, 1997. NELLY ACTA MARTINEZ, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, DOMINADOR CORRO, PASTOR CORRO, CELESTINO CORRO, LUIS CORRO, EREBERTO CORRO, JAIME CRUZ, WENCESLAO DELVO, GREGORIO DELVO, HERMEJIAS COLIBAO, JOSE OGANA and ALONSO ALBAO, respondents.
FACTS:

Private respondents worked as drivers for Raul Martinez, who operated taxicab units under the business names PAMA TX and P. J. TIGER TX. They filed a complaint for illegal dismissal and non-payment of 13th-month pay against Raul Martinez and, after his death on March 18, 1992, against his sole heir, petitioner Nelly Acta Martinez. They alleged that after Raul’s death, petitioner took over the business, informed them of her intent to sell the units, but instead assigned the vehicles to other drivers, effectively terminating their employment.
Petitioner contested the claims, arguing that the 13th-month pay claim was a personal obligation of her deceased son that did not survive his death. She also denied the existence of an employer-employee relationship, contending that the drivers were governed by a boundary system, making them lessees. She further asserted that the business ceased operation upon her son’s death and that she did not continue it due to a lack of competence. The Labor Arbiter dismissed the complaint, agreeing that the claims were personal and extinguished upon death and that an employer-employee relationship was doubtful.

ISSUE

Whether the National Labor Relations Commission (NLRC) committed grave abuse of discretion in reversing the Labor Arbiter and holding petitioner liable for the money claims of the drivers after the death of the original employer, Raul Martinez.

RULING

The Supreme Court granted the petition and reinstated the Labor Arbiter’s decision. The Court ruled that the NLRC acted with grave abuse of discretion. The claims for 13th-month pay and separation pay were personal obligations of the deceased employer, Raul Martinez. Upon his death, such claims should have been filed as money claims against his estate in the proper intestate proceedings pursuant to Section 5, Rule 86 of the Rules of Court, not pursued against his heir in a labor case. The objective is to avoid duplicity of procedures and to settle all claims proportionately from the estate.
The Court emphasized that labor contracts are in personam. Unless expressly assumed, they are not enforceable against a transferee or heir. Petitioner disavowed continuing the business and disputed the existence of any labor contract. The NLRC’s finding of an employer-employee relationship between petitioner and the drivers was baseless, as it relied merely on allegations in the position paper without competent evidence. Consequently, the issue of illegal dismissal became irrelevant. The claims abated with the death of Raul Martinez and must be ventilated in the settlement of his estate.