WAGES PAID PER TRIP DO NOT DETERMINE THE EXISTENCE OR ABSENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP

Wages that are paid in terms of per-trip basis for drivers do not establish employer-employee relationship. This arrangement is a mere mode of payment of wages and does not determine the existence or absence of such relationship.

Labor Code 2018 Edition (as re-numbered and updated per RA 10151 and DOLE D.A. No. 1, Series of 2015) by Atty. Villanueva is now available in all branches of National Book Store and Fully Booked nationwide 

Expedition Construction Corporation, et al. vs. Alexander M. Africa, et al.
G.R. No. 228671, December 14, 2017

Facts:

Petitioner Expedition Construction Corporation (Expedition), with individual respondents Simon Lee Paz and Jordan Jimenez as its Chief Executive Officer and Operations Manager, respectively, is a domestic corporation engaged in garbage collection/hauling.

It engaged the services of Africa, et al. as garbage truck drivers to collect garbage from different cities and transport the same to the designated dumping site.

Africa, et al. filed separate cases (which were later on consolidated) against Expedition for illegal dismissal, various money claims, damages and attorney’s fees.

Africa, et al. alleged that in August 2013, they were illegally terminated from employment when they were prevented from entering the premises of Expedition without cause or due process. They claimed that they were regular employees of Expedition. They said that they were required to work a minimum of 12 hours a day, seven days a week, even on holidays, without rest or vacation and were not paid the minimum wage, among other employee benefits. They also averred that the costs of repair and maintenance of garbage trucks were illegally deducted from their salaries.

Expedition countered that Africa, et al. were not illegally dismissed. It averred that it entered into separate contracts with the cities of Quezon, Mandaluyong, Caloocan, and Muntinlupa for the collection and transport of their garbage to the dump site. It engaged the services of Africa, et al., as dump truck drivers, who were oftentimes dispatched in Quezon City and Caloocan that the need for Africa, et al.’ services significantly decreased sometime in 2013 after its contracts with Quezon City and Caloocan City were not renewed. It nonetheless tried to accommodate Africa, et al. by giving them intermittent trips whenever the need arose.

Expedition that Africa, et al. were its employees. It claimed that Africa, et al. were not part of the company’s payroll but were being paid on a per trip basis. Africa, et al. were not under Expedition’s direct control and supervision as they worked on their own, were not subjected to company rules nor were required to observe regular/fixed working hours, and that Africa, et al. hired/paid their respective garbage collectors. As such, Expedition claims that Africa, et al.’s money claims had no legal basis.

In response to said averments, Africa, et al. claim that they worked under Expedition’s control and supervision considering that: (1) Expedition owned the dump trucks; (2) Expedition expressly instructed that the trucks should be used exclusively to collect garbage in their assigned areas and transp01i the garbage to the dump site; (3) Expedition directed them to park the dump trucks in the garage located at Group 5 Area Payatas, Quezon, City after completion of each delivery; and (4) Expedition determined how, where, and when they would perform their tasks.

LA Ruling:

The LA dismissed Africa, et al.’s complaints and held that there was no employer-employee relationship between Expedition and Africa, et al. The LA did not find any substantial proof that Africa, et al. were regular employees of Expedition.

First, Africa, et al. had no fixed salary and were compensated based on the total number of trips made. Next, Expedition had no power to terminate Africa, et al. More importantly, Africa, et al. performed their work independent of Expedition’s control.

The LA ruled that Africa, et al. were independent contractors, contracted to do a piece of work according to their own method and without being subjected to the control of Expedition except as to the results of their work.

Africa, et al. appealed to the NLRC where they insisted that they were under Expedition’s control and supervision and that they were regular employees who worked continuously and exclusively for an uninterrupted period ranging from four to 15 years and whose tasks were necessary and desirable in the usual business of Expedition.

NLRC Ruling:

The NLRC dismissed Africa, et al.’s appeal and affirmed the ruling of the LA.

The NLRC similarly found no evidence of an employer-employee relationship between Expedition and Africa, et al. The NLRC did not consider as evidence the alleged admission of Expedition, et al during the mandatory conciliation conference since statements made in these proceedings are regarded as privileged communication.

Likewise, the affidavits of Rosales and Godoy did not help Africa, et al.’ cause as the affiants were not emp1oyees of Expedition but of some other company. The NLRC opined that Africa, et al. were project employees hired for a specific undertaking of driving garbage trucks the completion and termination of which was coterminous with Expedition’s contracts with the Local Government Units (LGUs).

As project employees, Africa, et al. were not dismissed from work but their employment simultaneously ended when Expedition’s contracts with Quezon City and Caloocan City expired. There being no illegal dismissal, the NLRC found no basis in awarding Africa, et al. their money claims.

Undaunted, Africa, et al. filed a Motion for Reconsideration. Africa, et al.’s motion for reconsideration and modified its earlier Resolution. This time, the NLRC ruled that Africa, et al. were employees of Expedition in view of Expedition’s admission that it hired and paid Africa, et al. for their services. The NLRC was also persuaded that Expedition exercised control on when and how Africa, et al. would collect garbage.

The NLRC, however, sustained its earlier findings that there was no illegal ratiocinating that Africa, et al. were merely placed on a floating status when the with Quezon City and Caloocan City expired and thus were merely waiting to be re-assigned to other similar work.

As there was no dismissal to speak of, the NLRC ordered Africa, et al.’ reinstatement but without payment of backwages. However, due to Jack of clients where Africa, et al. could be re-assigned, the NLRC opted to award separation pay in lieu of reinstatement.

Expedition filed a Motion for Reconsideration attributing error on the NLRC in ruling that there was an employer-employee relationship and in awarding separation pay despite the finding that there was no illegal dismissal. Expedition also questioned the NLRC’s computation of separation pay and sought the remand of the case to the LA for proper determination of the correct amount. This motion, however, was denied by the NLRC.

Expedition sought recourse to the CA via a Petition for Certiorari.

CA Ruling:

The CA rendered a Decision dismissing Petition for Certiorari and ruling in favor of Africa, et al..

The CA affirmed the Resolution of the NLRC insofar as the existence of an employer-employee relationship between the parties. The CA noted that Africa, et al. were hired and paid by Expedition. Further, Expedition exercised the power to provide and withhold work from Africa, et al.

Most importantly, the power of control was evident since Expedition determined how, where and when Africa, et al. would perform their tasks. The CA held that the Africa, et al. needed Expedition’s and supervision in the performance of their duties.

The CA likewise ruled that Africa, et al. were regular employees entitled to security of tenure because they continuously worked for several years for the company, an indication that their duties were necessary and desirable in the usual business of Expedition.

The CA, however, did not agree with the NLRC that Africa, et al. were on floating status since Expedition, et al did not adduce proof of any dire exigency justifying failure to give Africa, et al. any further assignments. The CA observed that the irregular dispatch of Africa, et al. due allegedly to the decrease in the need for drivers led to the eventual discontinuance of Africa, et al.’ services and ultimately, their illegal termination.

Accordingly, the CA ruled that Africa, et al. were illegally dismissed when Expedition prevented them from working, and consequently, ordered their reinstatement with full back wages.

Expedition filed a Motion for Reconsideration on the ground that the CA erred in finding that Africa, et al. were its employees and that Africa, et al. were illegally dismissed. It impugned the award of reinstatement and back wages in favor of Africa, et al., submitting that an amount of financial assistance would be the more equitable remedy for Africa, et al.’s cause.

It, then, manifested its willingness to offer financial assistance to Africa, et al. in the amounts equivalent to the separation pay awarded to Africa, et al. in the NLRC Resolution.

Expedition’s motion was denied by the CA. Hence, the petition before the SC.

Issue/s:

Whether or not the payment of wages on per-trip basis determines employer-employee relationship

Whether or not separation should be awarded even if there was no illegal dismissal

SC Ruling:

The SC partly granted the petition.

Read more on employee dismissal: Guide to Valid Dismissal of Employees

The SC held that jurisprudence has adhered to the four-fold test in determining the existence of an employer-employee relationship, to wit: “(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”‘.

In ruling that Africa, et al. were employees of Expedition, the CA found all the elements of employer-employee to be present. Citing the records the CA held that Expedition hired Africa, et al. as dump truck drivers and paid them the amount of P620.00 per trip.

The CA held that Expedition wielded the power to dismiss Africa, et al. based on Expedition’s admission that when the dispatch of drivers became irregular, it tried to accommodate them by giving trips when the need arose. The control test was likewise established because Expedition determined how, where, and when Africa, et al. would perform their tasks.

As clearly admitted, Africa, et al. were engaged/hired by Expedition as garbage truck drivers. Second, it is undeniable that Africa, et al. received compensation from Expedition for the services that they rendered to the latter. The fact that Africa, et al. were paid on a per trip basis is irrelevant in determining the existence of an employer-employee relationship because this was merely the method of computing the proper compensation due to Africa, et al. Third, Expedition’s power to dismiss was apparent when work was withheld from Africa, et al. as a result of the termination of the contracts with Quezon City and Caloocan City. Finally, Expedition has the power of control over Africa, et al. in the performance of their work.

It was held that “the power of control refers merely to the existence of the power and not to the actual exercise thereof.” As aptly observed by the CA, the agreements for the collection of garbage were between Expedition and the various and Africa, et al. needed the inspection and supervision of Expedition to effectively perform their work in accordance with the stipulations of the agreements.

Moreover, the trucks driven by Africa, et al. were owned by Expedition. There was an express instruction that these trucks were to be exclusively used to collect and transport garbage. Africa, et al. were mandated to return the trucks to the premises of after the collection of garbage.

Expedition determined the clients to be served, the location where the garbage is to be collected and when it is to be collected. Indeed, Expedition determined how, where, and when Africa, et al. would perform their tasks.

Africa, et al. were independent contractors nor project employees. There was no showing that Africa, et al. have substantial capital or investment and that they were performing activities which were not directly related to Expedition’s business to be qualified as independent contractors.

There was likewise no written contract that can prove that Africa, et al. were project employees and that the duration and scope of such employment were specified at the time Africa, et al. were engaged. Therefore, Africa, et al. should be accorded the presumption of regular employment pursuant to Article 280 of the Labor Code which provides that “employees who have rendered at least one year of service whether such service is continuous or broken shall be considered as regular employees with respect to the activity in which they employed and their employment shall continue while such activity exists.”

Furthermore, the fact that Africa, et al. were performing activities which were directly related to the business of Expedition confirms the conclusion that Africa, et al. were indeed regular employees. Having gained regular status Africa, et al. were only be dismissed for just or authorized cause after they had been accorded due process.

In illegal dismissal cases, the employer has the burden of proving that the termination was for a valid or authorized cause. However, it is likewise incumbent upon an employee to first establish by substantial evidence the fact of his dismissal from employment by positive and overt acts of an employer indicating the intention to dismiss. It must also be stressed that the evidence must be positive and convincing. Mere allegation is not proof or evidence.

This case, there was no positive or direct evidence to substantiate Africa, et al.’s claim that they were dismissed from employment. Aside from mere assertions, the record is bereft of any indication that Africa, et al. were barred from Expedition’s premises. If at all, the evidence on record showed that Expedition intended to give Africa, et al. new assignments as a result of the termination of the garbage hauling contracts with Quezon City and Caloocan City where Africa, et al. were regularly dispatched.

Despite the loss of some clients, Expedition tried to accommodate Africa, et al. and offered to engage them in other garbage hauling projects with other LGUs, a fact which Africa, et al. did not refute. However, instead of returning and waiting for their next assignments, Africa, et al. instituted an illegal dismissal case against Expedition.

Note that even during the mandatory conciliation and mediation conference between the parties, Expedition manifested its willingness to accept Africa, et al. back to work. Unfortunately, it was Africa, et al. who no longer wanted to return to work. In fact, in their complaints, Africa, et al. prayed for the payment of separation pay instead of reinstatement.

Here, there was no sufficient proof that Africa, et al. were actually laid off from work. Thus, the CA had no basis in ruling that Africa, et al.’s employment was illegally terminated since the fact of dismissal was not adequately supported by substantial evidence. There being no dismissal, the status quo between Africa, et al. and Expedition should be maintained. However, it cannot be denied that their relationship has already been ruptured in that Africa, et al. are no longer willing to be reinstated anymore. Under the circumstances, the Court found that the grant of separation pay as a form of equitable assistance is deemed equitable.

As a measure of social justice, the award of separation pay/financial assistance has been upheld in some cases even if there is no finding of illegal dismissal citing the case of Eastern Shipping Lines, Inc. vs. Sedan.