INCUMPLIMIENTO A LAS OBLIGACIONES PACTADAS EN EL ANEXO SSPA

Doctrine:

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. 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 employees work is to be performed and accomplished.

FACTS:

The respondent company, Supreme Packaging, Inc., is in the business of manufacturing cartons and other packaging materials for export and distribution. On 1984, it engaged the services of the petitioner, Pedro Chavez, as truck driver and as such, he was tasked to deliver the respondent company’s products from its factory to its various customers, mostly in Metro Manila.

Sometime in 1992, Chavez asked respondent company’s plant manager his desire to avail himself of the benefits that regular employees were receiving such as overtime pay, nightshift differential pay, and 13th month pay, among others but the same was never given.

On 1995, Chavez filed a complaint for regularization with the Regional Arbitration Branch 3 but before the case could be heard, respondent company terminated the services of Chavez prompting Chavez to amend the 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 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.

ISSUE: Whether or not Chavez was respondent company’s employee or was a private contractor.

LA RULING: The LA found Chavez to be respondent company’s employee thus finding respondent guilty of

illegal dismissal. It held that the petitioner was a regular employee of the respondent company as he was performing a service that was necessary and desirable to the latters 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.

NLRC RULING: The NLRC initially affirmed the LA’s decision but later on reversed it decision declaring that no

employer-employee relationship existed. 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.

CA RULING: Initially, the CA reversed the NLRC’s decision ruling in favor of Chavez but later reconsidered the

same ruling in favor of 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

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 petitioners complaint for illegal dismissal.

SC RULING:

The court held that an employer-employee relationship existed and that Chavez was not a mere private contractor.

Applying the four-fold test, the SC found:

First. Undeniably, it was the respondents who engaged the services of the petitioner without the intervention of a third party.

Second. 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. 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.

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 petitioners services albeit in the guise of severance of contractual relation due allegedly to the latters 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. Hence, while an independent contractor enjoys independence and freedom from the control and supervision of his principal, an employee is subject to the employers power to control the means and methods by which the employees work is to be performed and accomplished.

37. COCA-COLA BOTTLERS PHILS., INC. v. CLIMACO G.R. No. 146881 February 5, 2007 AZCUNA, J.

Doctrine:

The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct, or the so-called “control test”, considered to be the most important element. The issuance by the principal of guidelines does not establish control by principal.

FACTS:

Dr. Climaco is a medical doctor who was hired by the petitioner by virtue of retainer agreement. The agreement states that there is no employer-employee relationship between the parties. The retainer agreement was renewed annually. The last one expired on Dec. 31, 1993. Despite of the non-renewal of the agreement, respondent continued to perform his functions as company doctor until he received a letter in March 1995 concluding their retainer agreement.

Respondent filed a complaint before the NLRC seeking recognition as a regular employee of the petitioner company and prayed for the payment of all benefits of a regular employee.

ISSUE: Whether or not an employer-employee relationship existed between petitioner Coca-Cola Bottlers and

respondent Dr. Climaco.

LA AND NLRC RULING: The Labor Arbiter and the NLRC found that the company lacked the power of control

over Dr. Climaco, therefore no employer-employee relationship existed.

CA RULING: Court of Appeals ruled that there existed an employer-employee relationship. It held that Coca-

Cola’s power to control petitioner is present because the particular objectives and activities to be observed and accomplished by the latter are fixed and set under the Comprehensive Medical Plan which was made an integral part of the retainer agreement. Moreover, the times for accomplishing these objectives and activities are likewise controlled and determined by the company. Petitioner is subject to definite hours of work, and due to this, he performs his duties to Coca-Cola not at his own pleasure but according to the schedule dictated by the company.”

The CA added that Dr. Climaco should be classified as a regular employee having rendered 6 years of service as plant physician by virtue of several renewed retainer agreements.

SC RULING:

The court held no, upholding the decisions of both the LA and the NLRC. The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct, or the so-called "control test," considered to be the most important element. The Labor Arbiter and the NLRC correctly found that Coca Cola lacked the power of control over the performance by respondent of his duties. The petitioner company, through the Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not control the means and methods by which respondent performed his assigned tasks.

The NLRC affirmed the findings of the Labor Arbiter and stated that it is precisely because the company lacks the power of control that the contract provides that respondent shall be directly responsible to the employee concerned and their dependents for any injury, harm or damage caused through professional negligence, incompetence or other valid causes of action.

In addition, the Court finds that the schedule of work and the requirement to be on call for emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement.

The Court agrees with the Labor Arbiter and the NLRC that there is nothing wrong with the employment of respondent as a retained physician of petitioner company and upholds the validity of the Retainership

38. GABRIEL v. BRILON

G.R. No. 146989 February 7, 2007