PEDRO
CHAVEZ,
Petitioner,
-versus-
G.R.
No. 146530
January
17, 2005
NATIONAL LABOR RELATIONS COMMISSION, SUPREME PACKAGING, INC.
and ALVIN LEE, Plant Manager,
Respondents. x----------------------------------------------------------------------------x
D
E C I S I O N
CALLEJO, SR., J.:
Before
the Court is the Petition for Review on
Certiorari of the Resolution[1]
dated December 15, 2000 of the Court of Appeals (CA) reversing its
Decision dated April 28, 2000 in CA-G.R. SP No. 52485. The
assailed resolution reinstated the Decision dated July 10, 1998 of the
National Labor Relations Commission (NLRC), dismissing the complaint
for illegal dismissal filed by herein petitioner Pedro Chavez.
The said NLRC decision similarly reversed its earlier Decision dated
January 27, 1998 which, affirming that of the Labor Arbiter, ruled that
the petitioner had been illegally dismissed by respondents Supreme
Packaging, Inc. and Mr. Alvin Lee.
The
case stemmed from the following facts:
The
respondent company, Supreme Packaging, Inc., is in the business of
manufacturing cartons and other packaging materials for export and
distribution. It engaged the services of the petitioner, Pedro
Chavez, as truck driver on October 25, 1984. As such, the
petitioner was tasked to deliver the respondent company’s products from
its factory in Mariveles, Bataan, to its various customers, mostly in
Metro Manila. The respondent company furnished the petitioner
with a truck. Most of the petitioner’s delivery trips were made at
nighttime, commencing at 6:00 p.m. from Mariveles, and returning
thereto in the afternoon two or three days after. The deliveries
were made in accordance with the routing slips issued by respondent
company indicating the order, time and urgency of delivery.
Initially, the petitioner was paid the sum of P350.00 per trip.
This was later adjusted to P480.00 per trip and, at the time of his
alleged dismissal, the petitioner was receiving P900.00 per trip.
Sometime
in 1992, the petitioner expressed to respondent Alvin Lee, respondent
company’s plant manager, his (the petitioner’s) desire to avail himself
of the benefits that the regular employees were receiving such as
overtime pay, nightshift differential pay, and 13th month pay, among
others. Although he promised to extend these benefits to the
petitioner, respondent Lee failed to actually do so.
On
February 20, 1995, the petitioner filed a complaint for regularization
with the Regional Arbitration Branch No. III of the NLRC in San
Fernando, Pampanga. Before the case could be heard, respondent
company terminated the services of the petitioner. Consequently,
on May 25, 1995, the petitioner filed an amended complaint against the
respondents for illegal dismissal, unfair labor practice and
non-payment of overtime pay, nightshift differential pay, 13th month
pay, among others. The case was docketed as NLRC Case No.
RAB-III-02-6181-95.
The
respondents, for their part, denied the existence of an
employer-employee relationship between the respondent company and the
petitioner. They averred that the petitioner was an independent
contractor as evidenced by the contract of service which he and the
respondent company entered into. The said contract provided as
follows:
That
the Principal [referring to Supreme Packaging, Inc.], by these
presents, agrees to hire and the Contractor [referring to Pedro
Chavez], by nature of their specialized line or service jobs, accepts
the services to be rendered to the Principal, under the following terms
and covenants heretofore mentioned:
1. That the
inland transport delivery/hauling activities to be performed by the
contractor to the principal, shall only cover travel route from
Mariveles to Metro Manila. Otherwise, any change to this travel
route shall be subject to further agreement by the parties concerned.
2.
That the payment to be made by the Principal for any hauling or
delivery transport services fully rendered by the Contractor shall be
on a per trip basis depending on the size or classification of the
truck being used in the transport service, to wit:
a)
If the hauling or delivery service shall require a truck of six
wheeler, the payment on a per trip basis from Mariveles to Metro Manila
shall be THREE HUNDRED PESOS (P300.00) and EFFECTIVE December 15, 1984.
b)
If the hauling or delivery service require a truck of ten wheeler, the
payment on a per trip basis, following the same route mentioned, shall
be THREE HUNDRED FIFTY (P350.00) Pesos and Effective December 15, 1984.
3.
That for the amount involved, the Contractor will be to [sic] provide
for [sic] at least two (2) helpers;
4.
The Contractor shall exercise direct control and shall be responsible
to the Principal for the cost of any damage to, loss of any goods,
cargoes, finished products or the like, while the same are in transit,
or due to reckless [sic] of its men utilized for the purpose above
mentioned;
5.
That the Contractor shall have absolute control and disciplinary power
over its men working for him subject to this agreement, and that the
Contractor shall hold the Principal free and harmless from any
liability or claim that may arise by virtue of the Contractor’s
non-compliance to the existing provisions of the Minimum Wage Law, the
Employees Compensation Act, the Social Security System Act, or any
other such law or decree that may hereafter be enacted, it being
clearly understood that any truck drivers, helpers or men working with
and for the Contractor, are not employees who will be indemnified by
the Principal for any such claim, including damages incurred in
connection therewith;
6.
This contract shall take effect immediately upon the signing by the
parties, subject to renewal on a year-to-year basis.[2]
This
contract of service was dated December 12, 1984. It was
subsequently renewed twice, on July 10, 1989 and September 28,
1992. Except for the rates to be paid to the petitioner, the
terms of the contracts were substantially the same. The
relationship of the respondent company and the petitioner was allegedly
governed by this contract of service.
The
respondents insisted that the petitioner had the sole control over the
means and methods by which his work was accomplished. He paid the
wages of his helpers and exercised control over them. As such,
the petitioner was not entitled to regularization because he was not an
employee of the respondent company. The respondents, likewise,
maintained that they did not dismiss the petitioner. Rather, the
severance of his contractual relation with the respondent company was
due to his violation of the terms and conditions of their
contract. The petitioner allegedly failed to observe the minimum
degree of diligence in the proper maintenance of the truck he was
using, thereby exposing respondent company to unnecessary significant
expenses of overhauling the said truck.
After
the parties had filed their respective pleadings, the Labor Arbiter
rendered the Decision dated February 3, 1997, finding the respondents
guilty of illegal dismissal. The Labor Arbiter declared that the
petitioner was a regular employee of the respondent company as he was
performing a service that was necessary and desirable to the latter’s
business. Moreover, it was noted that the petitioner had
discharged his duties as truck driver for the respondent company for a
continuous and uninterrupted period of more than ten years.
The
contract of service invoked by the respondents was declared null and
void as it constituted a circumvention of the constitutional provision
affording full protection to labor and security of tenure. The
Labor Arbiter found that the petitioner’s dismissal was anchored on his
insistent demand to be regularized. Hence, for lack of a valid
and just cause therefor and for their failure to observe the due
process requirements, the respondents were found guilty of illegal
dismissal. The dispositive portion of the Labor Arbiter’s
decision states:
WHEREFORE, in the
light of the foregoing, judgment is hereby rendered declaring
respondent SUPREME PACKAGING, INC. and/or MR. ALVIN LEE, Plant Manager,
with business address at BEPZ, Mariveles, Bataan guilty of illegal
dismissal, ordering said respondent to pay complainant his separation
pay equivalent to one (1) month pay per year of service based on the
average monthly pay of P10,800.00 in lieu of reinstatement as his
reinstatement back to work will not do any good between the parties as
the employment relationship has already become strained and full
backwages from the time his compensation was withheld on February 23,
1995 up to January 31, 1997 (cut-off date) until compliance, otherwise,
his backwages shall continue to run. Also to pay complainant his
13th month pay, night shift differential pay and service incentive
leave pay hereunder computed as follows:
a)
Backwages
- P248,400.00
b)
Separation Pay
- P140,400.00
c)
13th month pay
- P 10,800.00
d)
Service Incentive Leave Pay -
2,040.00
TOTAL
P401,640.00
Respondent
is also ordered to pay ten (10%) of the amount due the complainant as
attorney’s fees.
SO
ORDERED.[3]
The
respondents seasonably interposed an appeal with the NLRC.
However, the appeal was dismissed by the NLRC in its Decision[4]
dated January 27, 1998, as it affirmed in toto the decision
of the Labor Arbiter. In the said decision, the NLRC
characterized the contract of service between the respondent company
and the petitioner as a “scheme” that was resorted to by the
respondents who, taking advantage of the petitioner’s unfamiliarity
with the English language and/or legal niceties, wanted to evade the
effects and implications of his becoming a regularized employee.[5]
The
respondents sought reconsideration of the January 27, 1998 Decision of
the NLRC. Acting thereon, the NLRC rendered another Decision[6]
dated July 10, 1998, reversing its earlier decision and, this time,
holding that no employer-employee relationship existed between the
respondent company and the petitioner. In reconsidering its
earlier decision, the NLRC stated that the respondents did not exercise
control over the means and methods by which the petitioner accomplished
his delivery services. It upheld the validity of the contract of
service as it pointed out that said contract was silent as to the time
by which the petitioner was to make the deliveries and that the
petitioner could hire his own helpers whose wages would be paid from
his own account. These factors indicated that the petitioner was
an independent contractor, not an employee of the respondent company.
The
NLRC ruled that the contract of service was not intended to circumvent
Article 280 of the Labor Code on the regularization of employees.
Said contract, including the fixed period of employment contained
therein, having been knowingly and voluntarily entered into by the
parties thereto was declared valid citing Brent School, Inc. v.
Zamora.[7] The NLRC, thus, dismissed the petitioner’s complaint
for illegal dismissal.
The
petitioner sought reconsideration of the July 10, 1998 Decision but it
was denied by the NLRC in its Resolution dated September 7, 1998.
He then filed with this Court a petition for certiorari, which was
referred to the CA following the ruling in St. Martin Funeral Home v.
NLRC.[8]
The
appellate court rendered the Decision dated April 28, 2000, reversing
the July 10, 1998 Decision of the NLRC and reinstating the decision of
the Labor Arbiter. In the said decision, the CA ruled that the
petitioner was a regular employee of the respondent company because as
its truck driver, he performed a service that was indispensable to the
latter’s business. Further, he had been the respondent company’s
truck driver for ten continuous years. The CA also reasoned that
the petitioner could not be considered an independent contractor since
he had no substantial capital in the form of tools and machinery.
In fact, the truck that he drove belonged to the respondent
company. The CA also observed that the routing slips that the
respondent company issued to the petitioner showed that it exercised
control over the latter. The routing slips indicated the
chronological order and priority of delivery, the urgency of certain
deliveries and the time when the goods were to be delivered to the
customers.
The
CA, likewise, disbelieved the respondents’ claim that the petitioner
abandoned his job noting that he just filed a complaint for
regularization. This actuation of the petitioner negated the
respondents’ allegation that he abandoned his job. The CA held
that the respondents failed to discharge their burden to show that the
petitioner’s dismissal was for a valid and just cause.
Accordingly, the respondents were declared guilty of illegal dismissal
and the decision of the Labor Arbiter was reinstated.
In its
April 28, 2000 Decision, the CA denounced the contract of service
between the respondent company and the petitioner in this wise:
In
summation, we rule that with the proliferation of contracts seeking to
prevent workers from attaining the status of regular employment, it is
but necessary for the courts to scrutinize with extreme caution their
legality and justness. Where from the circumstances it is
apparent that a contract has been entered into to preclude acquisition
of tenurial security by the employee, they should be struck down and
disregarded as contrary to public policy and morals. In this
case, the “contract of service” is just another attempt to exploit the
unwitting employee and deprive him of the protection of the Labor Code
by making it appear that the stipulations of the parties were governed
by the Civil Code as in ordinary transactions.[9]
However,
on motion for reconsideration by the respondents, the CA made a
complete turn around as it rendered the assailed Resolution dated
December 15, 2000 upholding the contract of service between the
petitioner and the respondent company. In reconsidering its
decision, the CA explained that the extent of control exercised by the
respondents over the petitioner was only with respect to the result but
not to the means and methods used by him. The CA cited the
following circumstances: (1) the respondents had no say on how the
goods were to be delivered to the customers; (2) the petitioner had the
right to employ workers who would be under his direct control; and (3)
the petitioner had no working time.
The
fact that the petitioner had been with the respondent company for more
than ten years was, according to the CA, of no moment because his
status was determined not by the length of service but by the contract
of service. This contract, not being contrary to morals, good
customs, public order or public policy, should be given the force and
effect of law as between the respondent company and the
petitioner. Consequently, the CA reinstated the July 10, 1998
Decision of the NLRC dismissing the petitioner’s complaint for illegal
dismissal.
Hence,
the recourse to this Court by the petitioner. He assails the
December 15, 2000 Resolution of the appellate court alleging that:
(A)
THE
COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO
EXCESS OF JURISDICTION IN GIVING MORE CONSIDERATION TO THE “CONTRACT OF
SERVICE” ENTERED INTO BY PETITIONER AND PRIVATE RESPONDENT THAN ARTICLE
280 OF THE LABOR CODE OF THE PHILIPPINES WHICH CATEGORICALLY DEFINES A
REGULAR EMPLOYMENT NOTWITHSTANDING ANY WRITTEN AGREEMENT TO THE
CONTRARY AND REGARDLESS OF THE ORAL AGREEMENT OF THE PARTIES;
(B)
THE
COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO
EXCESS OF JURISDICTION IN REVERSING ITS OWN FINDINGS THAT PETITIONER IS
A REGULAR EMPLOYEE AND IN HOLDING THAT THERE EXISTED NO
EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN PRIVATE RESPONDENT AND
PETITIONER IN AS MUCH AS THE “CONTROL TEST” WHICH IS CONSIDERED THE
MOST ESSENTIAL CRITERION IN DETERMINING THE EXISTENCE OF SAID
RELATIONSHIP IS NOT PRESENT.[10]
The
threshold issue that needs to be resolved is whether there existed an
employer-employee relationship between the respondent company and the
petitioner. We rule in the affirmative.
The
elements to determine the existence of an employment relationship are:
(1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the employer’s power to
control the employee’s conduct.[11] The most important element is
the employer’s control of the employee’s conduct, not only as to the
result of the work to be done, but also as to the means and methods to
accomplish it.[12] All the four elements are present in this case.
First.
Undeniably, it was the respondents who engaged the services of the
petitioner without the intervention of a third party.
Second.
Wages are defined as “remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece or commission basis, or other method
of calculating the same, which is payable by an employer to an employee
under a written or unwritten contract of employment for work done or to
be done, or for service rendered or to be rendered.”[13] That the
petitioner was paid on a per trip basis is not significant. This
is merely a method of computing compensation and not a basis for
determining the existence or absence of employer-employee
relationship. One may be paid on the basis of results or time
expended on the work, and may or may not acquire an employment status,
depending on whether the elements of an employer-employee relationship
are present or not.[14] In this case, it cannot be gainsaid that the
petitioner received compensation from the respondent company for the
services that he rendered to the latter.
Moreover,
under the Rules Implementing the Labor Code, every employer is required
to pay his employees by means of payroll.[15] The payroll should
show, among other things, the employee’s rate of pay, deductions made,
and the amount actually paid to the employee. Interestingly, the
respondents did not present the payroll to support their claim that the
petitioner was not their employee, raising speculations whether this
omission proves that its presentation would be adverse to their
case.[16]
Third.
The respondents’ power to dismiss the petitioner was inherent in the
fact that they engaged the services of the petitioner as truck
driver. They exercised this power by terminating the petitioner’s
services albeit in the guise of “severance of contractual relation” due
allegedly to the latter’s breach of his contractual obligation.
Fourth.
As earlier opined, of the four elements of the employer-employee
relationship, the “control test” is the most important. Compared
to an employee, an independent contractor is one who carries on a
distinct and independent business and undertakes to perform the job,
work, or service on its own account and under its own responsibility
according to its own manner and method, free from the control and
direction of the principal in all matters connected with the
performance of the work except as to the results thereof.[17] Hence,
while an independent contractor enjoys independence and freedom from
the control and supervision of his principal, an employee is subject to
the employer’s power to control the means and methods by which the
employee’s work is to be performed and accomplished.[18]
Although
the respondents denied that they exercised control over the manner and
methods by which the petitioner accomplished his work, a careful review
of the records shows that the latter performed his work as truck driver
under the respondents’ supervision and control. Their right of
control was manifested by the following attendant circumstances:
1.
The truck driven by the petitioner belonged to respondent company;
2.
There was an express instruction from the respondents that the truck
shall be used exclusively to deliver respondent company’s goods; [19]
3.
Respondents directed the petitioner, after completion of each delivery,
to park the truck in either of two specific places only, to wit: at its
office in Metro Manila at 2320 Osmeña Street, Makati City or at
BEPZ, Mariveles, Bataan;[20] and
4.
Respondents determined how, where and when the petitioner would perform
his task by issuing to him gate passes and routing slips. [21]
a.
The routing slips indicated on the column REMARKS, the chronological
order and priority of delivery such as 1st drop, 2nd drop, 3rd drop,
etc. This meant that the petitioner had to deliver the same
according to the order of priority indicated therein.
b.
The routing slips, likewise, showed whether the goods were to be
delivered urgently or not by the word RUSH printed thereon.
c.
The routing slips also indicated the exact time as to when the goods
were to be delivered to the customers as, for example, the words
“tomorrow morning” was written on slip no. 2776.
These
circumstances, to the Court’s mind, prove that the respondents
exercised control over the means and methods by which the petitioner
accomplished his work as truck driver of the respondent company.
On the other hand, the Court is hard put to believe the respondents’
allegation that the petitioner was an independent contractor engaged in
providing delivery or hauling services when he did not even own the
truck used for such services. Evidently, he did not possess
substantial capitalization or investment in the form of tools,
machinery and work premises. Moreover, the petitioner performed
the delivery services exclusively for the respondent company for a
continuous and uninterrupted period of ten years.
The
contract of service to the contrary notwithstanding, the factual
circumstances earlier discussed indubitably establish the existence of
an employer-employee relationship between the respondent company and
the petitioner. It bears stressing that the existence of an
employer-employee relationship cannot be negated by expressly
repudiating it in a contract and providing therein that the employee is
an independent contractor when, as in this case, the facts clearly show
otherwise. Indeed, the employment status of a person is defined
and prescribed by law and not by what the parties say it should be.[22]
Having
established that there existed an employer-employee relationship
between the respondent company and the petitioner, the Court shall now
determine whether the respondents validly dismissed the petitioner.
As a
rule, the employer bears the burden to prove that the dismissal was for
a valid and just cause.[23] In this case, the respondents failed
to prove any such cause for the petitioner’s dismissal. They
insinuated that the petitioner abandoned his job. To constitute
abandonment, these two factors must concur: (1) the failure to report
for work or absence without valid or justifiable reason; and (2) a
clear intention to sever employer-employee relationship.[24]
Obviously, the petitioner did not intend to sever his relationship with
the respondent company for at the time that he allegedly abandoned his
job, the petitioner just filed a complaint for regularization, which
was forthwith amended to one for illegal dismissal. A charge of
abandonment is totally inconsistent with the immediate filing of a
complaint for illegal dismissal, more so when it includes a prayer for
reinstatement.[25]
Neither
can the respondents’ claim that the petitioner was guilty of gross
negligence in the proper maintenance of the truck constitute a valid
and just cause for his dismissal. Gross negligence implies a want
or absence of or failure to exercise slight care or diligence, or the
entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them.[26] The
negligence, to warrant removal from service, should not merely be gross
but also habitual.[27] The single and isolated act of the
petitioner’s negligence in the proper maintenance of the truck alleged
by the respondents does not amount to “gross and habitual neglect”
warranting his dismissal.
The
Court agrees with the following findings and conclusion of the Labor
Arbiter:
As against the
gratuitous allegation of the respondent that complainant was not
dismissed from the service but due to complainant’s breach of their
contractual relation, i.e., his violation of the terms and conditions
of the contract, we are very much inclined to believe complainant’s
story that his dismissal from the service was anchored on his insistent
demand that he be considered a regular employee. Because
complainant in his right senses will not just abandon for that reason
alone his work especially so that it is only his job where he depends
chiefly his existence and support for his family if he was not
aggrieved by the respondent when he was told that his services as
driver will be terminated on February 23, 1995.[28]
Thus,
the lack of a valid and just cause in terminating the services of the
petitioner renders his dismissal illegal. Under Article 279 of
the Labor Code, an employee who is unjustly dismissed is entitled to
reinstatement, without loss of seniority rights and other privileges,
and to the payment of 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.[29] However, as found by the Labor Arbiter, the
circumstances obtaining in this case do not warrant the petitioner’s
reinstatement. A more equitable disposition, as held by the Labor
Arbiter, would be an award of separation pay equivalent to one month
for every year of service from the time of his illegal dismissal up to
the finality of this judgment in addition to his full backwages,
allowances and other benefits.
WHEREFORE, the instant Petition is GRANTED. The Resolution dated
December 15, 2000 of the Court of Appeals reversing its Decision dated
April 28, 2000 in CA-G.R. SP No. 52485 is REVERSED and SET ASIDE. The Decision dated
February 3, 1997 of the Labor Arbiter in NLRC Case No.
RAB-III-02-6181-5, finding the respondents guilty of illegally
terminating the employment of petitioner Pedro Chavez, is REINSTATED.
SO
ORDERED.
Puno,
J., (Chairman),
Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.
[1]
Penned by Associate Justice Oswaldo D. Agcaoili (retired), with
Associate Justices Renato C. Dacudao and Andres B. Reyes, Jr.,
concurring.
[2]
Rollo, pp. 113-114.
[3]
Id. at 151.
[4]
Penned by Commissioner Rogelio I. Rayala, with Presiding Commissioner
Raul T. Aquino and Commissioner Victoriano R. Calaycay, concurring; Id.
at 177-184.
[5]
Rollo, pp. 183-184.
[6]
Penned by Commissioner Angelita A. Gacutan, with Presiding Commissioner
Raul T. Aquino and Commissioner Victoriano R. Calaycay, concurring; Id.
at 60-73.
[7]
181 SCRA 702 (1990).
[8]
295 SCRA 494 (1998).
[9]
Rollo, pp. 42-43.
[10]
Id. at 13-14.
[11]
Sy vs. Court of Appeals, 398 SCRA 301 (2003).
[12]
Id. at 307-308.
[13]
LABOR CODE, ART. 97(f).
[14]
Tan vs. Lagrama, 387 SCRA 393 (2002).
[15]
Book III, Rule X, Sec. 6(a).
[16]
Tan vs. Lagrama, supra.
[17]
Id. at 399.
[18]
Id.
[19]
Annex C of Respondents’ Position Paper; Rollo, p. 117.
[20]
Ibid.
[21]
Annexes A to C of Petitioner’s Reply to Respondents’ Position Paper.
[22]
AZUCENA, I THE LABOR CODE (1999 ed.) 127.
[23]
Hacienda Fatima vs. National Federation of Sugarcane Workers-Food and
General Trade, 396 SCRA 518 (2003).
Article 282 of
the Labor Code provides: An employer may terminate an employment for
any of the following causes:
(a)
Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his
work;
(b)
Gross and habitual neglect by the employee of his duties;
(c)
Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative;
(d)
Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly
authorized representative;
(e)
Other causes analogous to the foregoing.
[24]
Buenviaje vs. Court of Appeals, 391 SCRA 440 (2002).
[25]
Globe Telecom, Inc. vs. Florendo-Flores, 390 SCRA 201 (2002)
[26]
Philippine Aeolus Automotive United Corporation vs. NLRC, 331 SCRA 237
(2000).
[27]
Id. at 247.
[28]
Rollo, pp. 149-150.
[29]
Cebu Marine Beach Resort vs. NLRC, 414 SCRA 173 (2003).
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