G.R. No. 242255 - Province of Sulu vs. Medialdea

Supreme Packaging, Inc. (respondent company) is a manufacturer of cartons and packaging materials.
Pedro Chavez (petitioner) was engaged as a truck driver by the respondent company on October 25, 1984.
His task was to deliver the company’s products from the factory in Mariveles, Bataan to various customers, mostly in Metro Manila.
The petitioner was furnished with a company truck and made delivery trips mostly at night starting at 6:00 p.m., returning after two or three days.
Deliveries were made according to company-issued routing slips indicating order, time, and urgency.
Payment evolved from P350.00 per trip to P900.00 per trip at the time of alleged dismissal.

In 1992, petitioner requested benefits similar to regular employees, e.g., overtime pay, nightshift differential pay, and 13th month pay, which were promised but never granted by respondent Alvin Lee, the plant manager.
On February 20, 1995, petitioner filed a complaint for regularization with the NLRC.
Prior to the hearing, petitioner’s services were terminated by the respondent company.

On May 25, 1995, petitioner filed an amended complaint for illegal dismissal, unfair labor practice, and non-payment of benefits.
Respondents denied employer-employee relationship, claiming petitioner was an independent contractor as evidenced by a “contract of service” dated December 12, 1984, subsequently renewed twice.
The contract specified:

Payment on a per-trip basis depending on truck size.
Contractor to provide helpers and control over them.
Contractor’s absolute control and indemnification of respondent company from labor claims.
Route limited to Mariveles to Metro Manila, subject to further agreement if changed.

Respondents argued petitioner had control over his work, hired helpers, and the contract governed their relationship.
Alleged dismissal was due to petitioner’s failure to properly maintain the truck, resulting in significant repair costs.

Labor Arbiter (February 3, 1997) found respondents guilty of illegal dismissal, declaring petitioner a regular employee due to necessity of his service and 10+ years of continuous work. The contract was ruled null and void as a circumvention of constitutional labor protections.
NLRC affirmed the Labor Arbiter’s decision on January 27, 1998, also denouncing the contract as a scheme to evade labor protections.
Respondents’ motion for reconsideration was granted by the NLRC on July 10, 1998, reversing its prior ruling, declaring no employer-employee relationship existed. The NLRC emphasized lack of control over means and methods and upheld the validity of the contract of service.
Petitioner’s motion for reconsideration was denied by the NLRC on September 7, 1998.

CA, on April 28, 2000, reversed the NLRC’s July 10, 1998 decision, reinstating the Labor Arbiter’s ruling finding an employer-employee relationship. The CA stressed:

Petitioner’s service was indispensable and continuous for 10 years.
Lack of substantial capital or ownership of truck negated independent contractor status.
Control was evident by routing slips showing order, priority, urgency, and timing of deliveries.
Petitioner’s filing of complaint negated abandonment claims.
The contract was a device to evade labor law provisions.

On motion for reconsideration, CA reversed itself on December 15, 2000, upholding the contract of service and NLRC’s dismissal of the illegal dismissal complaint. The CA reasoned:

Giving undue weight to the contract over Article 280 of the Labor Code defining regular employment.
Erroneously finding no employer-employee relationship due to absence of control.

Whether an employer-employee relationship existed between Supreme Packaging, Inc. and Pedro Chavez despite the “contract of service.”
Whether the petitioner was validly dismissed, or his dismissal constituted illegal dismissal.
Whether the contract of service was a valid agreement or a scheme to circumvent labor protections under Article 280 of the Labor Code.