Jardin v NLRC
G.R. No. 119268 February 23, 2000
DIGEST
● This is a special civil action for certiorari seeking to annul the NLRC's decision and
resolution in a labor case.
● Petitioners were taxi drivers for Philjama International Inc. (operating "Goodman Taxi")
under the boundary system, earning an average of P400 daily.
● The company deducted P30 from their earnings daily for washing fees, which petitioners
believed was illegal.
● Petitioners formed a labor union to protect their rights, and upon learning of this, the
company allegedly barred them from driving starting August 6, 1991.
● Aggrieved, petitioners filed a complaint for unfair labor practice, illegal dismissal, and
illegal deductions before the labor arbiter.
● The labor arbiter dismissed the complaint for lack of merit.
● On appeal, the NLRC reversed the decision and declared that petitioners were
employees, ordering:
○ Reinstatement of the petitioners with back wages.
○ Reimbursement of the washing fees.
● The company filed a second motion for reconsideration, and the NLRC ruled that the
relationship between the parties was leasehold, not employer-employee, and dismissed
the case for lack of jurisdiction.
ISSUE
whether or not employer-employee relationship exists, admitted is the fact that complainants are taxi
drivers purely on the "boundary system" (YES)
RULING
● In determining the existence of an employer-employee relationship, the Supreme Court
applied the four-fold test from Sara v. Agarrado (G.R. No. 73199, October 26, 1988). The test
includes: (1) selection and engagement of the employee; (2) payment of wages; (3) the
power of dismissal; and (4) the power of control over the employee's conduct. Among these,
the Supreme Court emphasized that control is the most important, meaning that if the
employer reserves the right to control not just the results but also the means by which the
employee's work is done, an employer-employee relationship exists.
● In this case, the NLRC found that the respondent did not pay the drivers wages. Instead, the
drivers paid a fee for the use of the taxis. The drivers were also free to conduct their trade as
they wished and were beyond the physical control of the respondent once they were on the
road. Additionally, the drivers paid for their own fuel and bore the cost of vehicle repairs.
These factors led the NLRC to conclude that the relationship was one of leasehold rather
than employment, falling under the Civil Code rather than the Labor Code.
● However, this reasoning goes against prevailing jurisprudence. In previous cases, the
Supreme Court has ruled that the relationship between owners/operators and drivers under
the boundary system is one of employer-employee, not lessor-lessee. The Court explained
that in a lease, the lessor loses control over the leased object, but in the boundary system,
the owner/operator retains supervision and control. The owner, who holds a certificate of
public convenience, must ensure the driver follows routes and regulations. Furthermore, the
fact that drivers do not receive fixed wages but only earn what exceeds the boundary does
not negate the existence of an employer-employee relationship. This doctrine has been
applied to relationships between bus owners and conductors, auto-calesa owners and
drivers, and taxi operators and drivers.
● As taxi drivers perform activities necessary for the respondent's business, they are
considered employees. The Supreme Court also reiterated that termination of employment
must comply with the law. Articles 282, 283, and 284 of the Labor Code enumerate the just
and authorized causes for dismissal, and Article 277(b) sets out the requirement of notice
and hearing. In this case, the respondent had no valid cause to dismiss the petitioners, nor
were the required notices provided, making the dismissal illegal.
● Under the law, employees who are unjustly dismissed are entitled to reinstatement without
loss of seniority rights and to full backwages, including allowances and benefits, from the
time their compensation was withheld until their actual reinstatement. For employees
dismissed after the effectivity of Republic Act No. 6715 on March 21, 1989, full backwages
mean the amount due without deductions for earnings from other sources during the period
of illegal dismissal. Since the petitioners were terminated on August 1, 1991, they are
entitled to full backwages based on their last daily earnings.
● As for the daily deductions for washing the taxis, the Supreme Court ruled that these were
not illegal. After completing their work, it is customary for drivers to clean the vehicle, and
this practice is common in the taxi industry. Hence, the petitioners are not entitled to
reimbursement for the washing charges.
