Upod vs. Onon Trucking and Marketing Corporation

A worker engaged on a per trip basis who performs activities usually necessary or desirable in the usual business or trade of the employer, and who has rendered at least one year of service, attains the status of a regular employee whose dismissal must comply with both substantive and procedural due process; a contract stipulating that the engagement ends upon completion of each trip does not create a valid fixed‑term employment that extinguishes security of tenure.

Onon Trucking and Marketing Corporation engaged in the wholesale and retail of products. It hired Rodrigo A. Upod as a hauler/driver in April 2004. Upod’s primary task was to travel to the San Miguel Brewery plant in San Fernando, Pampanga, withdraw stocks, and deliver them to various grocery stores according to routes specified by the company. He was compensated on a per trip basis, receiving 16% of the gross revenue per delivery. After a suspension in 2009, he was rehired in 2014 and continued performing deliveries until February 2017, when the company abruptly ceased assigning trips to him.

• Nature of the engagement: Respondent Onon Trucking and Marketing Corporation hired petitioner Rodrigo A. Upod in April 2004 as a hauler/driver. His duties consisted of traveling to the San Miguel Brewery plant in San Fernando, Pampanga, withdrawing stocks, and distributing them to grocery stores. He was paid on a per trip basis, receiving 16% of the gross revenue for each trip.
• Interruption and resumption: Upod’s service was interrupted from 2009 to 2014 due to a suspension on the ground of alleged abandonment. He was rehired in 2014 and continuously reported for work thereafter.
• Cessation of assignments: In February 2017, respondent company stopped providing Upod with delivery assignments. He nonetheless continued maintaining the company’s hauling trucks for a few days before realizing that his continuous employment was no longer possible. He subsequently left and filed a complaint for illegal dismissal.
• Company’s version: Respondents denied the existence of an employer‑employee relationship. They asserted that Onon Trucking hired independent freelance drivers, paid on a per delivery basis, and that each engagement ended upon delivery of the goods or return to the warehouse, whichever came first, without need of further notice.
• Labor Arbiter’s findings: The Labor Arbiter found all four elements of employment present: selection and engagement, payment of wages (per trip method), power of dismissal inherent in hiring, and the company’s control over Upod’s performance — including ownership of the truck and determination of delivery routes.
• NLRC’s findings: The NLRC found no employment relationship, emphasizing the per trip contract’s provision that each engagement ended upon delivery, and that Upod’s services were limited to two to three times per week.
• Court of Appeals’ findings: The appellate court agreed that there was an employer‑employee relationship but concluded that Upod was a fixed‑term employee who voluntarily signed per trip contracts; thus, his dismissal was valid upon the expiration of each contract.

• Regular employment: Upod maintained that he was a regular employee under the four‑fold test, having performed activities necessary and desirable to respondent company’s business for more than a year. As a regular employee, he could only be dismissed for just or authorized causes.
• Illegal dismissal: Upod argued that respondent company failed to comply with both substantive and procedural due process, rendering his dismissal illegal. He prayed for separation pay in lieu of reinstatement, backwages, 13th month pay, and attorney’s fees.

• No employer‑employee relationship: Respondents denied any employment relationship and contended that Upod was an independent freelance driver whose engagement was governed by a per trip contract that expired upon delivery or return to the warehouse.
• Valid termination: Respondents asserted that there could be no illegal dismissal because each engagement automatically ended without further notice, and the cessation of assignments merely reflected the expiration of the contractual period.

• Employer‑Employee Relationship: Whether petitioner sufficiently established the existence of an employer‑employee relationship with respondent company.
• Nature of Employment: Whether petitioner was a regular employee, a fixed‑term employee, or an independent contractor.
• Validity of Dismissal: Whether petitioner’s dismissal was illegal, and what monetary awards are due.

• Employer‑Employee Relationship: All four elements of the four‑fold test were present. Selection and engagement was shown by the company’s hiring of Upod as a driver from 2004 to 2017, with an interruption, totaling about eight years. Payment of wages was made on a per trip basis, which is merely a method of computing compensation and does not negate employment. The power to dismiss was inherent in the power to hire. The power of control was demonstrated by the company’s ownership of the truck and its specification of delivery routes, indicating it directed not only the result but the manner in which Upod performed his work. The ruling in Chavez v. NLRC — where a per trip driver was declared an employee based on similar indicia of control — was applied.
• Nature of Employment: Upod was a regular employee. Under Article 295 [280] of the Labor Code, an employee is regular if engaged to perform activities usually necessary or desirable in the employer’s business. As a wholesale and retail entity, respondent company necessarily required delivery drivers. Upod performed these necessary tasks for more than one year, ripening his status into regular employment. The per trip engagement did not make him a fixed‑term employee; the supposed expiration of a per trip contract could not defeat the security of tenure guaranteed to regular employees.
• Validity of Dismissal: The dismissal was illegal. Respondent company stopped assigning trips to Upod in February 2017 without asserting any just or authorized cause and without affording procedural due process. A regular employee’s termination cannot be effected by the mere lapse of a period stated in a per trip contract. Upod was therefore entitled to backwages from February 2017 until the finality of the decision, separation pay equivalent to one month’s salary per year of service reckoned from 2014, and 13th month pay limited to three years prior to the filing of the complaint. Attorney’s fees were awarded because Upod was compelled to litigate. The monetary awards earn six percent (6%) interest per annum from finality until fully paid. Respondent Interior was not solidarily liable absent any showing of malice or bad faith.

• Four‑Fold Test of Employment — An employer‑employee relationship is determined by: (1) selection and engagement; (2) payment of wages; (3) power of dismissal; and (4) the power to control the employee’s conduct. Payment on a per trip basis is merely a method of computing compensation and does not negate the existence of employment.
• Regular Employment under Article 295 [280] — An employee becomes regular if engaged to perform activities usually necessary or desirable in the usual business of the employer, except where the employment is for a specific project or undertaking whose completion has been predetermined, or is seasonal. Any casual employee who renders at least one year of service, whether continuous or broken, is also considered regular with respect to the activity.
• Insufficiency of Per Trip Contracts to Create Fixed‑Term Employment — A per trip contract that merely stipulates the engagement ends upon delivery does not create a valid fixed‑term employment for a regular employee. Security of tenure cannot be circumvented by contracts that artificially impose a period on services that are necessary and continuous.
• Illegal Dismissal Consequences — An illegally dismissed regular employee is entitled to reinstatement without loss of seniority rights, full backwages, and other benefits. Where reinstatement is not viable, separation pay of one month per year of service is awarded in addition to backwages.
• Corporation’s Separate Liability — Corporate officers are generally not personally liable for corporate labor obligations unless they acted with evident malice or bad faith in dismissing the employee.

• “The fact that petitioner was paid on per trip basis does not negate the existence of an employer‑employee relationship; for the same is simply a method for computing compensation. 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 the presence or absence of the elements of an employer‑employee relationship.”
• “As an entity engaged in the wholesale and retail of various products, respondent company must necessarily engage the services of delivery drivers, such as herein petitioner, for the purpose of getting its products delivered to its clients. To be sure, since petitioner had performed acts necessary and desirable to respondent company’s business and trade for more than a year, his status had already ripened to a regular employment.”

• Chavez v. National Labor Relations Commission, 489 Phil. 444 (2005) — Followed. The Supreme Court applied Chavez to hold that a driver paid on a per trip basis, using company‑owned trucks, following company‑issued routes and instructions, was a regular employee. The control exercised by the company over the driver’s performance was materially the same.
• Cielo v. National Labor Relations Commission, 271 Phil. 433 (1991) — Followed. The Court relied on Cielo to rule that a driver in a trucking business who performed tasks necessary to the business and served beyond six months attained regular status.

• Article 295 [280], Labor Code of the Philippines — Defines regular and casual employment. Applied to hold that Upod, having performed tasks necessary to the employer’s business for more than one year, was a regular employee.
• Article 294 [279], Labor Code — Security of tenure provision. Applied as basis for requiring just or authorized cause and due process before termination of a regular employee.
• Article 306 [291], Labor Code — Money claims prescribe after three years. Applied to limit the 13th month pay award to three years prior to the filing of the complaint.
• Article 224 [217], Labor Code — Jurisdiction of Labor Arbiters. Applied to confirm that the Labor Arbiter correctly dismissed claims for non‑payment of SSS, PhilHealth, and Pag‑IBIG benefits, which fall under the exclusive jurisdiction of the respective agencies.

Perlas‑Bernabe, S.A.J. (Chairperson), M. Lopez, Rosario, and J. Lopez, JJ., concurred.