Case Summary (A.C. No. 10567)
Key Dates
Hiring: October 29, 2010.
Incident (nap while waiting for loading): December 9, 2011; termination communicated December 10, 2011.
Complaint filed with NLRC: December 12, 2011.
Labor Arbiter decision: June 29, 2012.
NLRC decision: November 16, 2012; NLRC resolution denying reconsideration: February 28, 2013.
CA decision: July 10, 2015; CA resolution denying reconsideration: October 21, 2015.
Applicable Law and Constitutional Basis
Constitutional framework: 1987 Philippine Constitution (decision rendered in 2016).
Statutory framework: Labor Code provisions on just and authorized causes for dismissal (Articles 297–299, formerly Articles 282–284) and Article 97(f) defining “wage” (remuneration capable of being expressed in money, including commission basis). Doctrine: four-fold test for employment relationship (selection/engagement, payment of wages, power of dismissal, and control) with emphasis on the control test (right to control means/manner as determinative). Procedural due process: notice and hearing prior to dismissal.
Statement of Facts
Petitioner alleged he was hired as a truck driver by respondent on October 29, 2010, issued a company ID, assigned to a GPT branch in Manila, and paid on a percentage (per-trip/commission) basis. On December 9, 2011, petitioner took a nap while waiting to be loaded; deliveries were completed on schedule. On December 10, 2011, respondent’s helper informed petitioner that his employment was terminated for sleeping on the job. Petitioner filed a complaint for illegal dismissal with money claims before the NLRC.
Respondent’s Defense
Respondent denied an employer-employee relationship, asserting: (a) petitioner was paid only on a per-trip commission basis and not wages; (b) petitioner was not required to report regularly and could offer services to other companies; and (c) respondent did not control the means and methods of petitioner’s work. Respondent further claimed termination for “serious transgressions and misconduct.”
Labor Arbiter and NLRC Findings
Labor Arbiter (June 29, 2012): Found petitioner to be a regular employee because his service as a truck driver was indispensable to respondent’s business; concluded dismissal was illegal for lack of just cause and lack of due process. Ordered respondent to pay backwages and separation pay (aggregate P80,145.52).
NLRC (November 16, 2012): Affirmed the Labor Arbiter. Applied the four-fold test: respondent engaged petitioner directly; commission payment did not negate employment; respondent’s power to dismiss inherent in selection/engagement; respondent exercised control as shown by determination of delivery areas and schedules. NLRC sustained monetary awards. NLRC denied reconsideration.
Court of Appeals Ruling
The CA granted respondent’s petition for certiorari and set aside the NLRC decision, dismissing petitioner’s complaint for lack of merit. The CA concluded that the elements of payment of wages and control were absent: petitioner received commissions (varying by cargo, distance, fuel) rather than wages; there was no evidence respondent controlled means/methods of performance; petitioner could render services to other companies and was not required to report regularly; the company ID merely identified an authorized driver to clients.
Issue before the Supreme Court
Whether the Court of Appeals correctly found grave abuse of discretion on the part of the NLRC in holding that an employer-employee relationship existed and that petitioner was illegally dismissed.
Standard for Reviewing Certiorari and Grave Abuse of Discretion
Grave abuse of discretion requires a capricious, despotic, or whimsical exercise of judgment so gross as to amount to an evasion of duty. In labor cases, grave abuse may be found where NLRC findings are unsupported by substantial evidence. Although Rule 45 generally limits the Supreme Court to errors of law, the Court may review factual findings when the findings of the labor tribunals and the CA are contradictory, necessitating a re-examination of the record.
Supreme Court’s Analysis on Employer-Employee Relationship
The Court applied the four-fold test as the governing standard: (1) selection and engagement, (2) payment of wages, (3) power of dismissal, and (4) power to control. It emphasized that the control test focuses on the employer’s right to control both the end and the means to achieve it, and that only the right to control need be shown, not its actual exercise.
- Selection and engagement: Undisputed that respondent hired petitioner as truck driver for GPT.
- Payment of wages: Commission (per-trip) payment does not negate employment. Article 97(f) defines wages to include commission-based remuneration; jurisprudence recognizes commission-paid workers may still be regular employees.
- Power of dismissal: Inherent in respondent’s selection and engagement of petitioner.
- Power to control: Supported by evidence that respondent owned the trucks assigned to petitioner, the cargoes were exclusively for respondent’s clients, and respondent set the schedules and routes. The Court found no substantiation for respondent’s claim that petitioner worked for other companies.
Case Syllabus (A.C. No. 10567)
Procedural History
- Petition for review on certiorari filed before the Supreme Court assails:
- Court of Appeals (CA) Decision dated July 10, 2015 and Resolution dated October 21, 2015 in CA-G.R. SP No. 129784.
- The CA rulings had set aside the National Labor Relations Commission (NLRC) Decision dated November 16, 2012 and Resolution dated February 28, 2013 in NLRC LAC No. 08-002277-12 / NLRC NCR Case No. 12-18409-11.
- Original action: petitioner Mario N. Felicilda filed a complaint for illegal dismissal with money claims before the NLRC, docketed as NLRC NCR Case No. 12-18409-11 (complaint dated December 12, 2011).
- Labor Arbiter (LA) Decision dated June 29, 2012 ruled in favor of petitioner and awarded monetary relief.
- NLRC affirmed the LA in its Decision dated November 16, 2012 and denied reconsideration in its Resolution dated February 28, 2013.
- Respondent filed a petition for certiorari to the CA (dated May 1, 2013). The CA, in a Decision dated July 10, 2015, set aside the NLRC and dismissed petitioner’s complaint; petitioner’s motion for reconsideration to the CA was denied in the Resolution dated October 21, 2015.
- Supreme Court granted certiorari under Rule 45 and reviewed whether the CA correctly found grave abuse of discretion on the part of the NLRC.
Factual Background
- On October 29, 2010, respondent Manchesteve H. Uy allegedly hired petitioner Mario N. Felicilda as a truck driver for respondent’s trucking service operating under the business name “Gold Pillars Trucking” (GPT).
- Petitioner was issued a company identification card (ID), assigned at one of GPT’s branches in Manila, and was paid on a percentage (per trip/commission) basis.
- On December 9, 2011, petitioner took a nap at the work station while waiting for his truck to be loaded. The trucks and cargoes were delivered to respondent’s clients on schedule.
- On December 10, 2011, respondent’s helper informed petitioner that his employment was terminated due to his act of sleeping while on the job.
- Petitioner claimed he was dismissed without just cause and without due process and that his act of taking a nap did not prejudice respondent’s business.
Parties’ Positions
- Petitioner:
- Alleged illegal dismissal and sought money claims (backwages, separation pay).
- Maintained he was hired as a truck driver, issued a company ID, assigned to a GPT branch in Manila, and paid on a percentage basis.
- Respondent:
- Denied existence of an employer-employee relationship.
- Asserted petitioner was: (a) paid only on a per trip “percentage” basis and not required to regularly report for work; (b) free to offer services to other companies; and (c) not under respondent’s control regarding means and methods of performing his job.
- Claimed the company ID did not indicate an employer-employee relationship but only that petitioner was an authorized driver for respondent’s clients.
- Alleged termination resulted from petitioner’s “serious transgressions and misconduct,” causing loss of trust and confidence.
Labor Arbiter’s Ruling
- Labor Arbiter Virginia T. Luyas-Azarraga, in a Decision dated June 29, 2012:
- Found in favor of petitioner.
- Held that petitioner’s service as a truck driver was indispensable to respondent’s business, concluding that petitioner was a regular employee.
- Reasoned that as a regular employee petitioner could be dismissed only for just or authorized cause and with due process; none was shown.
- Ordered respondent to pay an aggregate sum of P80,145.52 representing backwages and separation pay.
NLRC Ruling
- NLRC Decision dated November 16, 2012, affirmed the LA Decision:
- Found an employer-employee relationship based on: (a) respondent engaged petitioner’s services without the aid of a third party or manpower agency; (b) payment on a percentage basis did not negate employment status; (c) respondent’s power to dismiss was inherent in his selection and engagement of petitioner; and (d) respondent exercised control and supervision as evidenced by determination of petitioner’s delivery areas and schedules.
- Concluded respondent failed to show lawful cause for dismissal and sustained monetary awards.
- NLRC Resolution dated February 28, 2013 denied respondent’s motion for reconsideration.
Court of Appeals Ruling
- CA Decision dated July 10, 2015 (CA-G.R. SP No. 129784) set aside the NLRC Decision and dismissed petitioner’s complaint for lack of merit:
- Found absence of the elements of payment of wages and control necessary to establish an employer-employee relationship.
- Emphasized petitioner was paid commissions only (variable depending on cargo, length of trip, fuel consumption) and that