076 PEDRO CHAVEZ vs NLRC

G.R. No. 146530, January 17, 2005

TOPIC: Employer-Employee Relationship
PONENTE: CALLEJO, SR. J.

AUTHOR:
NOTES: (if applicable)

FACTS:
Chavez was hired by herein private respondent-employer Supreme Packaging, Inc. as a truck driver on October
25, 1984. The company furnished Chavez with a truck, and Chavez was tasked to deliver the companys products
from its factory in Bataan to various customers in Metro Manila. Most of Chavezs delivery trips were made in
the nighttime, starting at the factory on 6PM, and returning thereto in the afternoon two or three days later. The
company gave Chavez routing slips, which indicated the chronological order in which the deliveries were to be
made. Some deliveries were printed with the words RUSH, which indicated that Chavez had to give first priority
in delivering these products to certain customers. Initially, the company paid him P350/trip for his services,
which was later increased to P480, then P900. In 1992, Chavez talked to the companys plant manager and
expressed his desire to avail of the regular benefits that the regular employees of the company were receiving,
such as overtime pay, night shift differential, and 13 th month pay, among others. The plant manager, herein corespondent Alvin Lee, promised to give these benefits to Chavez, but subsequently failed to do so. On February
20, 1995, Chavez 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, however, Supreme Packaging, Inc. terminated
Chavezs services as truck driver. Consequently, on May 25, 1995, Chavez filed an amended complaint against
the respondents for illegal dismissal, unfair labor practice, and non-payment of overtime pay, night shift
differential pay, 13th month pay, and other benefits. The company for its part denied the existence of an employeremployee relationship between it and Chavez, averring that Chavez was an independent contractor as evidenced
by the Contract of Service that Chavez and the company entered into. Said Contract of Service stated, inter
alia, that (a) Chavez is designated as a Contractor, (b) due to the volume of the products, the Contractor is free to
hire his own two helpers, over whom he shall have absolute control and disciplinary power, (c) the Contractor
shall exercise direct control over his work, but accountable to the Principal (the company) for any damaged or
lost goods, and (d) that the Contractor shall hold the Principal free and harmless from any liability or claim that
may arise by virtue of the Contractors non-compliance to the existing provisions of the Minimum Wage Law, the
Employees Compensation Act, the Social Security System Act xxx 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. Therefore, said the company, since Chavez had sole control over the means and
methods by which his work was to be accomplished and even exercised control over his helpers and paid their
wages, Chavez was not a regular worker subject to regularization.

ISSUE: Whether or not there was employer-employee relationship

HELD: YES

RATIO:
The Supreme Court applied the four-fold test in this wise: (1) the company undeniably engaged the
services of Chavez as a truck driver, (2) Chavezs being paid on a per delivery/trip basis was merely a method of
computing compensation, and thus Chavez was definitely paid wages in contemplation of Article 97(f) of the
Labor Code, (3) the companys power of dismissal over Chavez was inherent in the fact that they engaged his
services, and the company exercised this power when they terminated Chavez. As to the fourth and all-important
control test, the Court compared an independent contractor to an employee, and defined an independent
contractor as 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. In this case, the Court said that Chavez performed his work as a truck driver not as an
independent contractor but an employee for and under the companys supervision and control, for the reasons
that: (a) Chavez did not have substantial capitalization for his own tools, machinery, or work premises, in that
even the truck driven by Chavez belonged to the company, (b) Chavez was specifically ordered by the company
to use the truck for the delivery only of the companys products, and even to park the truck only at two parking
spaces designated by the company, (c) the manner and method in which the delivery itself was to be made was
directed by the company through the routing slips, and (d) Chavez performed his services exclusively for the
company for an uninterrupted period of ten years. These facts show that notwithstanding the Contract of
Service, an employer-employee relationship existed, and 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.

CASE LAW/ DOCTRINE

DISSENTING/CONCURRING OPINION(S):