Labor Law

Melencio Gabriel vs Nelson Bilon

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515 SCRA 29 – Labor Law – Labor Standards – Illegal Dismissal – Separation Pay – Appeal by Employer – Death of a Party – Strained Relations Principle – Employer-employee Relationship

Nelson Bilon, Angel Brazil and Ernesto Pagaygay were jeepney drivers of jeepneys owned by Melencio Gabriel. They are paying P400/day for their boundary. Later, the drivers were required to pay an additional P50.00 to cover police protection, car wash, deposit fee, and garage fees.

The three drivers refused to pay the additional P50.00. On April 30, 1995, when the drivers reported to work, they were not given any jeepney to drive. Eventually, they were dismissed. The three drivers sued Gabriel for illegal dismissal.

The Labor Arbiter ruled in favor of the drivers and ordered Gabriel to pay the drivers their backwages and their separation pay amounting to about a total of P1.03M.

On April 18, 1997, the LA promulgated its decision and on the same day sent a copy thereof to Gabriel but Flordeliza (wife of Gabriel) refused to receive the copy. Apparently, Gabriel died on April 4, 1997. The copy was re-sent via registered mail on May 28, 1997. Flordeliza appealed to the LA on June 5, 1997.

The LA dismissed the appeal; it ruled that the appeal was not on time because the promulgation was made on April 18, 1997 and that the appeal on June 5, 1997 was already beyond the ten day period required for appeal.

The National Labor Relations Commission reversed the LA. It ruled that there was no employee-employer relationship between the drivers and Gabriel. The Court of Appeals reversed the NLRC but it ruled that the separation pay should not be awarded but rather, the employees should be reinstated.


1. Whether or not the appeal before the LA was made on time.

2. Whether or not there was an employer-employee relationship between the drivers and Gabriel.

3. Whether or not there was a strained relation between Gabriel and the drivers.


1. Yes. The appeal was made on time because when the promulgation was made Gabriel is already dead. The ten day requirement to make an appeal is not applicable in this situation because Gabriel was not yet properly substituted by the wife. The counting of the period should be made starting from the date when the copy was sent via registered mail. Therefore, the appeal filed on June 5 was made on time.

2. Yes. There exists an employer-employee relationship between the drivers and Gabriel. The fact that the drivers do not receive fixed wages but get only whatever exceeds the so-called “boundary” [that] they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee.

3. No. The award of the separation pay is not proper. It was not shown that there was a strained relationship between Gabriel and the drivers so as to cause animosity if they are reinstated. The Strained Relations Principle is only applied if it is shown that reinstatement would only cause antagonism between the employer and the employee; and that the only solution is separation and the payment of separation pay.

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