VICTORY LINER, INC., Petitioner, vs. PABLO M. RACE, Respondent. G.R. No.

164820 March 28, 2007

Doctrine: It is settled that in illegal dismissal cases, the cause of action accrues from the time the employment of the worker
was unjustly terminated. Thus, the four-year prescriptive period shall be counted and computed from the date of the
employee’s dismissal up to the date of the filing of complaint for unlawful termination of employment.

Facts:
 June 1993, respondent was employed by the petitioner as a bus driver. As a requisite for his hiring, the respondent
deposited a cash bond in the amount of ₱10,000.00 to the petitioner. Respondent was assigned to the Alaminos,
Pangasinan - Cubao, Quezon City, route on the evening schedule.
 August 24, 1994 in the evening, respondent drove his assigned bus from Alaminos, Pangasinan, destined to
Cubao, Quezon City. While traversing Moncada, Tarlac, the bus was bumped by a Dagupan-bound bus.
 Respondent suffered a fractured left leg and was rushed to the Country Medical and Trauma Center in Tarlac where
he was operated on and confined from 24 August 1994 up to 10 October 1994. One month after his release from
the said hospital, the respondent was confined again that lasted for a month for further treatment of his fractured
left leg at the Specialist Group Hospital in Dagupan City. Petitioner shouldered the doctor’s professional fee and
the operation, medication and hospital expenses of the respondent.
 January 1998, the respondent, still limping heavily, went to the petitioner’s office to report for work. He was,
however, informed by the petitioner that he was considered resigned from his job. Respondent refused to accede
and insisted on having a dialogue with the petitioner’s officer named Yolanda Montes. Montes told him that he was
deemed to have resigned from his work and to accept a consideration of ₱50,000.00. Respondent rejected the
explanation and offer. Thereafter, before Christmas of 1998, he again conversed with Montes who reiterated to him
that he was regarded as resigned but raised the consideration therein to ₱100,000.00. Respondent rebuffed the
increased offer.
 30 June 1999, respondent, through his counsel, sent a letter to the petitioner demanding employment-related money
claims. There being no response from the petitioner, the respondent filed before the Labor Arbiter on 1
September 1999 a complaint for (1) unfair labor practice; (2) illegal dismissal; (3) underpayment of wages; (4)
nonpayment of overtime and holiday premium, service incentive leave pay, vacation and sick leave benefits, 13th
month pay; (5) excessive deduction of withholding tax and SSS premium; and (6) moral and exemplary damages
and attorney’s fees.

 Petitioner Victory claimed that

o Respondent was a mere field personnel who performed his duties and functions outside the petitioner’s
premises and whose time of work cannot be determined with reasonable certainty; petitioner, therefore,
was exempted from paying the respondent overtime compensation, night shift differential, holiday pay and
service incentive leave; and paid strictly on commission basis; the petitioner gave the respondent benefits
better than those received by the other bus drivers of the petitioner;
o during his employment, respondent was charged with and found guilty of numerous offenses which were
sufficient bases for his dismissal;
o the prescriptive period for the filing of an action or claim for reinstatement and payment of labor standard
benefits is four years from the time the cause of action accrued; and
o that the respondent’s cause of action against petitioner had already prescribed because when the former
instituted the aforesaid complaint on 1 September 1999, more than five years had already lapsed from the
accrual of his cause of action on 24 August 1994.

 In his Reply, respondent explained that when he stated in his complaint that he was illegally dismissed on 24 August
1994, what he meant and referred to was the date when he was no longer in a position to drive since he was
hospitalized from 24 August 1994 up to 10 October 1994. Respondent also admitted that it was only in January
1998 that he informed the petitioner of his intent to report back for work.

LA Ruling (dismissed complaint)

 LA Nambi dismissed the complaint of respondent for lack of merit.
 That the prescriptive period for filing an illegal dismissal case is 4 years from the dismissal of the employee
concerned.
 Since the respondent stated in his complaint that he was dismissed from work on 24 August 1994 and he filed the
complaint only on 1 September 1999, Nambi concluded that respondent’s cause of action against petitioner had
already prescribed.
 That respondent committed several labor-related offenses against the petitioner which may be considered as just
causes for the termination of his employment under Article 282 of the LC.
  Nambi opined that respondent was not a regular employee but a mere field personnel and, therefore, not entitled
to service incentive leave, holiday pay, overtime pay and 13th month pay. He also ruled that respondent failed to
present evidence showing that the latter was entitled to the money claims.
o WHEREFORE, considering that the causes of action in this case rooted from the purported illegal dismissal
of Pablo M. Race on August 24, 1994 when he figured in a vehicular accident, or on October 10, 1994 when
he was released from the hospital, and he filed his complaint only on September 1, 1999 after a lapse of
more than five (5) years, the action has long prescribed, aside from the fact that there is absolutely no
evidence that respondent Victory Liner, Inc. is guilty of unfair labor practice and unjust dismissal, in addition
to its specific exemptions from the letters of Article 82 of the LC

NLRC Ruling
 reversed LA decision
 Ordered the reinstatement of the respondent without loss of seniority rights and other privileges and benefits with
full back-wages computed from the time of his illegal dismissal in January 1998 up to his actual reinstatement.
 Held that the respondent’s cause of action accrued, not on 24 August 1994, but in January 1998, when the
respondent reported for work but was rejected by the petitioner. Thus, the respondent’s filing of complaint on 1
September 1999 was well-within the four-year prescriptive period.
 It also ruled that respondent was illegally dismissed by the petitioner as the latter failed to accord him due process
because the petitioner did not give the respondent a written notice apprising him of acts or omissions being
complained of and a written notice informing him of the termination of his employment.

 Petitioner filed a MR of the NLRC Decision. The NLRC, however, denied the same for lack of merit in its Resolution

CA Ruling
 dismissed the Petition. No grave abuse of discretion of the NLRC.
 It also held that the respondent’s filing of complaint on 1 September 1999 was within the four-year prescriptive
period since the cause of action accrued when the respondent reported for work in January 1998 and was informed
that he was considered resigned.
 It ratiocinated that respondent did not abandon his work and, instead, continued to be an employee of petitioner
after he was discharged from the hospital
 It also found that the petitioner failed to comply with the requirements of due process in terminating the employment
of respondent.

Issue: WON respondent Race’s filing of complaint on September 1, 1999 was within the four-year prescriptive period?
Ruling: YES.

Petitioner Victory’s argument as to prescription

 Petitioner argued that the cause of action of respondent had accrued on 10 November 1994; that from 10 November
1994 up to November 1998, the respondent did not render any services to nor filed a case or action against the
petitioner;
o that the respondent’s filing of a complaint against petitioner on 1 September 1999 was clearly beyond the
four-year prescriptive period allowed by law;
o that if the reckoning period of the accrual of a cause of action would be the time when the written demand
was made by the respondent on the petitioner, then the four-year prescriptive period would be interminable
as it could be extended to one or more years;
o that this is not the spirit or intent of the law; that otherwise there is no more need to provide the four-year
prescriptive period as any complainant may simply allow the lapse of four years and file the action thereafter
and that it would be considered as a compliance by simply making a purported demand for reinstatement
after more than four years.

Court Ruling
 These contentions are devoid of merit.

Prescription
 In illegal dismissal cases, the employee concerned is given a period of four years from the time of his dismissal
within which to institute a complaint based on Article 1146 of the New Civil Code which states that actions based
upon an injury to the rights of the plaintiff must be brought within four years.
 We explained the rationale in the case of Callanta v. Carnation Philippines, Inc., thus:
o [O]ne’s employment, profession, trade or calling is a "property right," and the wrongful interference therewith
is an actionable wrong. The right is considered to be property within the protection of a constitutional
 guaranty of due process of law. Clearly then, when one is arbitrarily and unjustly deprived of his job or
means of livelihood, the action instituted to contest the legality of one’s dismissal from employment
constitutes, in essence, an action predicated "upon an injury to the rights of the plaintiff," as contemplated
under Art. 1146 of the New Civil Code, which must be brought within four years.

 The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of the worker.
 It is settled that in illegal dismissal cases, the cause of action accrues from the time the employment of the worker
was unjustly terminated. Thus, the four-year prescriptive period shall be counted and computed from the
date of the employee’s dismissal up to the date of the filing of complaint for unlawful termination of
employment.

Application
 It is error to conclude that the employment of the respondent was unjustly terminated on 10 November 1994
because he was, at that time, still confined at the Specialist Group Hospital, Dagupan City, for further treatment of
his fractured left leg. He must be considered as merely on sick leave at such time.
 Likewise, the respondent cannot also be deemed as illegally dismissed from work upon his release from the said
hospital in December 1994 up to December 1997 since the records show that the respondent still reported for work
to the petitioner and was granted sick and disability leave by the petitioner during the same period.

 The respondent must be considered as unjustly terminated from work in January 1998 since this was the first time
he was informed by the petitioner that he was deemed resigned from his work. During that same occasion, the
petitioner, in fact, tried to convince the respondent to accept an amount of ₱50,000.00 as a consolation for his
dismissal but the latter rejected it. Thus, it was only at this time that the respondent’s cause of action accrued.
 Consequently, the respondent’s filing of complaint for illegal dismissal on 1 September 1999 was well
within the four-year prescriptive period.

 It is also significant to note that from 10 November 1994 up to December 1997, the petitioner never formally informed
the respondent of the fact of his dismissal either through a written notice or hearing. Indeed, it cannot be gainfully
said that respondent was unlawfully dismissed on 10 November 1994 and that the cause of action accrued on that
date.

Other Issues and Court Rulings

Petitioner Victory’s arguments on Abandonment
 That respondent had already abandoned his work and ceased to be its employee since November 1994; that the
alleged "pay slip" for the period August 1-15, 1998 was a mere cash advance/monetary aid extended to the
respondent; that the respondent’s letter to the petitioner’s VP Gerarda Villa was only an application for the position
of dispatcher or conductor and that such application was not granted; That although the respondent reported for
work twice a month after he was discharged from the hospital, it does not imply that the respondent was still
considered as an employee at that time by the petitioner; and that it granted disability leave to the respondent since
the latter was a former employee and that respondent’s application for disability leave implied an admission on the
part of the respondent that he was no longer fit to work as a bus driver.
 That based on the four-fold test, the respondent was no longer its employee upon the latter’s discharge from the
hospital in November 1994 because the respondent was no longer fit to work as a bus driver and respondent did
not render services to the petitioner. Thus, petitioner reasoned that it had no more power to control the conduct of,
and it no longer paid any wages to, the respondent.

Court Ruling
Abandonment
 it should be emphasized that two factors must be present in order to constitute an abandonment:
o (1) the failure to report for work or absence without valid or justifiable reason; and
o (2) a clear intention to sever employer-employee relationship. The second factor is the more determinative
factor and is manifested by overt acts from which it may be deduced that the employee has no more
intention to work.
 The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. Mere
absence from work does not imply abandonment.

Four-fold Test
 It should be borne in mind that there are four tests in determining the existence of employer-employee relationship:
(1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power
of dismissal; and (4) the presence or absence of the power of control. The so-called "control test" is commonly
 regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee
relationship. Under the control test, an employer-employee relationship exists where the person for whom the
services are performed reserves the right to control not only the end achieved, but also the manner and means to
be used in reaching that end.

Application
 Respondent did not abandon his work. His absence from work for a long period of time was obviously due to the
fact that he was still recuperating from two operations on his fractured leg. Petitioner knew this very well. In fact,
petitioner shouldered the respondent’s medication and hospital expenses during the latter’s confinement and
operation in two hospitals. Moreover, when the respondent was able to walk, although limping heavily, he still
reported for work to the petitioner and was granted sick and disability leave.

 Applying the test, the employer-employee relationship between petitioner and respondent continued even after the
latter’s discharge from the hospital in December 1994 up to 1997. Respondent had reported for work to the petitioner
after his release from the hospital in December 1994 and was also granted a 120-day sick leave and disability leave
by the petitioner. Respondent also availed himself of the services of the petitioner’s physician after his release from
the hospital in December 1994.
 Except for its flimsy reason that the sick leave, disability leave and physician consultations were given to the
respondent as mere accommodations for a former employee, the petitioner did not present any evidence showing
that its employer-employee relationship with the respondent was extinguished on 10 November 1994. Evidently,
these circumstances clearly manifest that petitioner exercised control over the respondent and that the latter was
still under the employment of the petitioner even after December 1994.

 Given the foregoing considerations, petitioner’s assertion that the respondent’s cause of action accrued
on 10 November 1994 must fail.

Petitioner Victory’s arguments on Reinstatement

 That the order for the reinstatement of the respondent as bus driver was unconstitutional for being tantamount to
involuntary servitude; that when the respondent filed his complaint for illegal dismissal, the latter no longer desired
to be reinstated as bus driver and manifested his intention to be hired as a dispatcher or conductor; and that to
reinstate the respondent as bus driver despite the fact that it is against his will is involuntary servitude; the order for
the reinstatement was contrary to law; that as a common carrier, it is obliged under the law to observe extra-ordinary
diligence in the conduct of its business; that it will violate such obligation if it will reinstate the respondent as bus
driver; that to allow the respondent to drive a bus, despite the fact that the latter sustained a fractured left leg and
was still limping, would imperil the lives of the passengers and the property of the petitioner; and that the award of
backwages to the respondent was unjustified.

Court Ruling
 The Labor Code mandates that before an employer may legally dismiss an employee from the service, the
requirement of substantial and procedural due process must be complied with. Under the requirement of substantial
due process, the grounds for termination of employment must be based on just or authorized causes.

 Abandonment of work, or the deliberate and unjustified refusal of an employee to resume his employment, may be
a just cause for the termination of employment under paragraph (b) of Article 282 of the Labor Code since it is a
form of neglect of duty.

Application
 We, however, found that there was no abandonment of work on the part of the respondent.
 Petitioner also alleged that respondent was guilty of insubordination as well as gross and habitual neglect in the
performance of his duties for reckless driving and for being involved in several vehicular accidents.
o The records, nonetheless, failed to show that the said charges were proven and that respondent was duly
informed and heard with regard to the accusations. Since the petitioner, as an employer, is burdened to
prove just cause for terminating the employment of respondent with clear and convincing evidence, and
that petitioner failed to discharge this burden, we hold that respondent was dismissed without just cause by
the petitioner.

Substantial Due Process

 Petitioners failed to comply with the requirement of substantial due process in terminating the employment of
respondent.
Procedural Due Process
 In the termination of employment, the employer must (a) give the employee a written notice specifying the ground
or grounds of termination, giving to said employee reasonable opportunity within which to explain his side; (b)
conduct a hearing or conference during which the employee concerned, with the assistance of counsel if the
employee so desires, is given the opportunity to respond to the charge, present his evidence or rebut the evidence
presented against him; and (c) give the employee a written notice of termination indicating that upon due
consideration of all circumstances, grounds have been established to justify his termination.

Respondent Race was illegally dismissed

 Petitioner miserably failed to comply with the foregoing requirements. There was nothing in the records which
evinces that petitioner had sent a written notice to the respondent informing him of the grounds of his termination
or the reason why he was deemed resigned. It does not also appear that the petitioner held a hearing or conference
where the respondent was given the opportunity to answer the charges of abandonment, insubordination and
habitual neglect of duty against him. Neither did the petitioner send a written notice to the respondent informing the
latter that his service is terminated after considering all the circumstances.
 In view of the fact that the petitioner neglected to observe the substantial and procedural due process in terminating
the employment of respondent, we rule that the latter was illegally dismissed from work by the petitioner.

Reinstatement of Respondent Race is no longer feasible

 Consequently, the respondent is entitled to reinstatement without loss of seniority rights, full backwages, inclusive
of allowances, and other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.

 It appears, however, that respondent was not seeking reinstatement. Respondent also sent to a letter applying for
the position of a dispatcher or conductor. It obviously shows that respondent was unwilling to be reinstated as a
bus driver.

 Even assuming that respondent is willing to be reinstated as petitioner’s bus driver, the reinstatement is still
unwarranted. There is a serious doubt as to whether the respondent is physically capable of driving a bus based
on the following undisputed facts:
o (1) respondent was operated on and confined twice in two different hospitals for a fractured left leg;
o (2) steel plates were attached to his fractured leg;
o (3) each confinement lasted for a month;
o (4) after his discharge from the second confinement, respondent was still limping heavily;
o (5) when respondent had reported for work to the petitioner in January 1998, he was also limping; and
o (6) respondent does not have a medical certificate which guarantees that his leg injury has already healed
and that he is now physically capable of driving a bus.

 It should be stressed that petitioner is a common carrier and, as such, is obliged to exercise extra-ordinary diligence
in transporting its passengers safely. To allow the respondent to drive the petitioner’s bus under such uncertain
condition would, undoubtedly, expose to danger the lives of the passengers and the property of the petitioner. This
would place the petitioner in jeopardy of violating its extra-ordinary diligence obligation and, thus, may be subjected
to numerous complaints and court suits. It is clear therefore that the reinstatement of respondent not only would be
deleterious to the riding public but would also put unreasonable burden on the business and interest of the petitioner.
In this regard, it should be remembered that an employer may not be compelled to continue to employ such persons
whose continuance in the service will patently be inimical to his interests.
 Based on the foregoing facts and circumstances, the reinstatement of the respondent is no longer feasible. Thus,
in lieu of reinstatement, payment to respondent of separation pay equivalent to one month pay for every year of
service is in order. WHEREFORE, the petition is PARTLY GRANTED insofar as it prays for the non-reinstatement
of respondent. SO ORDERED.